Last month’s blog had a discussion and some ideas regarding some huge oversights with high profile celebrities and their lack of estate planning. This month I wanted to continue the discussion with an article written by Greg Iacurci in the Oct 1, 2018 version of Investment News.com. This article illustrates that sometimes a seemingly unlikely person plans ahead.
MAC MILLER, a 26-year-old American rapper and music producer who died Sep 7, 2018, in California, had a will and its contents are similar to those of musical phenomenon Michael Jackson.
The fact Mr. Miller even had a will may surprise some people, given Mr. Miller’s youth. Other famous much older musicians – Aretha Franklin and Prince, to name recent examples – have died without wills, tying up their fortunes in court-overseen complex legal processes.
Mr. Miller, whose legal name was Malcolm McCormick, reportedly had a net worth of about $9 million at the time of his death, the cause of which officials have yet to verify.
“What impresses me about this guy is, he is single, young, has no kids and he took the time to do this,” said Charlie Douglas, an estate planner. “Really rare for anybody, no less someone who’s an artist in the music industry.”
Mr. Miller left his entire estate to a trust, the Malcolm McCormick Revocable Trust, according to his will. He named himself as the trustee of the trust.
Michael Jackson took the same approach in his will, giving his estate to the Michael Jackson Family Trust, of which he was a trustee. Mr. Jackson died in 2009.
The use of revocable trusts is a common strategy for celebrities and residents of California and has become more popular with the general public & estate planners.
A revocable trust is essentially a “will in a different form,” said Bruce Steiner, estate planning attorney with Kleinberg Kaplan Wolff & Cohen.
Unlike wills, revocable trusts take proceedings out of probate court, which is a notoriously challenging arena for Californians. Estate executors in California must deal with the court during the administration process more than in “most every other state,” Mr. Steiner said.
PRIVATE VERSUS PUBLIC
But perhaps more importantly, revocable trusts are private, whereas terms of a will are a matter of public record. Some news reports have said Mr. Miller left his estate to his parents, but experts said this is purely speculation – it’s impossible to know from the details of his will.
“We have no idea who gets what,” Mr. Steiner said. “Maybe he left it to his favorite charity, or maybe to someone other than the parents and siblings and didn’t want us to know.”
The Key to ensuring an estate stays out of probate is funding a trust during one’s lifetime, Mr. Douglas said. In Mr. Miller’s case, that would have meant retitling assets like a house and investment accounts so they weren’t owned in his name as Malcolm McCormick the individual but rather as trustee of the Malcolm McCormick Revocable Trust.
“Your trust is like buying a new car, but it won’t run correctly if you don’t put gas in the car,” Mr. Douglas said. “The gas for the revocable trust is you retitling the asset during your life so that you avoid probate.”
Mr. Douglas, who heads a family office, said Mr. Miller’s will serves as a “pour-over” will – it’s a catchall in the event Mr. Miller forgot to retitle an asset during his lifetime so that the property controlled by the will would then “pour-over” into his trust.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual estate planning. Situations discussed are for illustrative purposes only and will be different for each individual’s situation.
This information is not intended to be a substitute for specific individualized estate planning advice. We suggest that you discuss your specific issues with your financial advisor & a qualified legal & estate planning attorney.