Following the sad and tragic deaths of Michael Jackson and Farrah Fawcett, we are all reminded of how fragile our lives can be and how quickly things can change. The death of these two iconic figures should be a call for many to get their estate plan in order. It should be noted that the reality is that most people die without a will in our country. Some really smart and famous people, Abraham Lincoln, Howard Hughes, and Pablo Picasso, die without taking the time to draw up a will.

Many of us procrastinate, downplay our personal need or the legal importance of drafting wills, trusts, living wills, and durable powers of attorney. The complexities of combining and coordinating diverse assets, such as individual assets, jointly owned assets, retirement plans, life insurance, annuities, and business interests, seem too daunting for some. For others, they don’t realize the importance of seeing all of their assets from a big picture perspective; that is, when all is said and done, who ends up with what. Is the division of assets fair and equitable for all concerned after payment of taxes, debts, and estate administration costs?

For many, the untimely death of Michael Jackson has raised these and many other estate planning issues. At this time, no one knows if he had a will and/or a trust for his children, or if his estate plan was current. But by looking at his situation (and speculating a bit), some important estate planning considerations for the rest of us can be explored:

Guardianship: It is unclear what provisions Mr. Jackson had in his will (assuming there is a valid will) for his children. The first word from the media is that this will be a messy court battle over the issue of guardianship of his children, even if his will indicates his preference for guardianship. Even if contested, the appointment of guardian in a will would still be a very important factor in any legal challenge and in any event it is always wise to state the wishes of the guardian. The object lesson is clear: Parents with young children must clearly see the need for a will indicating their choice of guardian for their children.

Trusts: No one knows if Mr. Jackson had established trusts for his children. Although it appears that his estate is now insolvent, this situation will likely change with post-mortem sales of his music someday providing assets and wealth for his children (think post-mortem income from Elvis’s estate). Presley). Hopefully, he established trusts that will protect and manage his assets. To increase the chances of becoming competent adults, he may have drafted provisions in his trust in a way that develops his sense of personal initiative and responsibility and still meets his basic needs. Experienced estate planning attorneys explore this type of forward planning when it comes to dealing with children and their anticipated needs if parents die prematurely.

Specific legacies: The media has speculated that a large part of his estate (his rights to Beatles songs) was donated to Paul McCartney. This generosity may be commendable, but from an estate planning perspective, this legacy can pose problems. First, if your estate is indeed insolvent, this legacy asset would not be available for your estate to be sold and the proceeds used to pay off the estate’s debts and/or benefit your children. Second, in general, bequests such as these are often given in ways that do not generate estate taxes. This could distort the way assets are divided among beneficiaries. The point here is that this bequest may have made sense when the will was originally drawn up when Mr. Jackson was wealthy, but this bequest could be quite problematic in the current situation. The lesson here is that an estate plan should be reviewed periodically as family needs and financial situations change over time.

Special Needs Trusts: Farrah Fawcett died leaving behind a son who is in jail with addiction problems. Issues for people with children with special needs are often downplayed, overlooked, or not fully considered. As her only daughter, did she leave all her wealth to her son? Did his will of hers provide that he would receive her inheritance upon her death or did he provide a trust for her benefit? If she set up a trust, what kinds of provisions and conditions did she make to provide benefits to you? These difficult questions arise not only for children with addiction problems, but also for children with cognitive deficits, physical disabilities, and emotional problems. Also, special needs trusts may be necessary when children receive public assistance from state and local governments.

The bottom line: Protect your family and protect your hard-earned wealth. Take time to plan your affairs with an experienced estate planning attorney. Remember, if you die without a will or trust, your state’s intestate laws will control who gets your assets and how they get your assets. When it comes to young children, courts generally place children’s estates in trust according to what the judge deems appropriate. In addition, the judge will determine who will be the trustee of any trust placed on your children and will determine who should be the guardian of your children. These and other important considerations should be determined by you and not by a court of law, so do it and do it now so you don’t leave problems like the ones Michael Jackson and Farrah Fawcett may have left behind.

© Steven J. Fromm, 2009