Understanding MJ Estate & Correcting Misconceptions
Over time some events and statements coming from the fans made us realize that not everyone understands MJ Estate, will and probate, trusts and this results in some common misconceptions. In this thread we will try to provide some brief information about stuff and correct some misconceptions.
I tried to answer most common questions. Please post any questions you might have.
Michael Jackson Estate is under probate.
Probate in layman's terms is the process of first paying the debts of the deceased and then distributing the assets to the beneficiaries.
MJ Estate is still working on paying the debts and believes they request at least one more year.
Q- Why are the beneficiaries being paid an allowance?
Because the law requires first the debts to be paid. Beneficiaries can only get the assets after the debts are satisfied
Q - How is the allowance is determined?
It's determined by a court on a need basis.
Q- What is court's role on this probate?
A judge is overseeing this process. Estate is reporting their accounting to the court and some decisions require court approval as well.
Can Katherine get information about what Estate is doing?
Absolutely. Estate is required to give her notice and basic information. She can also ask for detailed information - just as her lawyer currently have an ongoing motion to examine the accounting of MJ Estate.
Q - How much money did MJ Estate earned?
Per Estate Accounting filed with the court , they generated $475 Million in gross earnings as of July 2012.
Q - Didn't Billboard reported a $1 Billion number? What was that?
That was an estimation done by Billboard based on long term value of the deals and full prices. For example Billboard calculated CD sales by using an average CD price ($10 -$12) while actually Michael's share is significantly lower. That was a long term estimation of current deals in place.
Q- If MJ Estate earned $475 Million why didn't they pay all the debts?
Because $475 M is in gross earnings not profit. Estate still has to pay their expenses, salaries, beneficiary allowances, legal fees, taxes etc. So the net income is significantly lower.
Q - How much debt MJ Estate paid?
Significant amounts. They have reported that they expected to pay personal loans by the end of 2012. So most of creditor claims has been resolved (up to $30M), debt to AEG has been paid (around $30 M) and loan on Mijac (around $70 M) is to be paid by December 2012. It seems like the only debt remaining would be loan on Sony / ATV.
Q- Why hasn't MJ Estate given any money to charity as Michael's will requires?
As mentioned as probate rules, first the debt has to be paid and only after that MJ Estate can give money to the beneficiaries including the charities. Some people have been unfairly criticizing MJ Estate without understanding the basic legal rule. I also have to note that Estate also asked the judge to allow them to set aside $30 Million for the beneficiaries - which includes charities.
Q - Why is the probate taking this long? Is this normal?
Yes it's normal. The bigger and the more complex the business affairs the longer it takes. An extreme example would be Marilyn Monroe Estate which was under probate over 30 years - due to never ending disputes.
Q- What happens after the probate is over?
Michael's will asks the assets to be transferred into two trusts. One for Katherine and one for his kids.
Q- How much money would Katherine and MJ's kids will get after the probate?
Trustees (Branca and McClain) would continue to manage the trusts.
Katherine is supposed to get whatever is necessary for her care. There's no set amount for her. It's totally determined by the trustees/ executors. Katherine will not be getting any lump sum payment or ownership of any assets.
Michael's kids is supposed to get an allowance until they are 21 years old. Trust allows them to be given money for buying a house, starting a family & business , going to school etc even they are younger than 21. When they are 21 they start getting the income, starting 30 they are starting to get the principal assets. When they are 40 , they will get the full control of the assets.
Q - Is this normal?
Yes it is. In the case of highly valuable and high income Estates, it's common practice to divide up the distribution and give the control to the children at a later age. It's all to protect the children from being taken advantage of and giving them the control at a mature age. For example Lisa Marie Presley got control over her fathers Estate when she was 35 years old.
Q- Who owns Neverland?
Michael Jackson Estate with Colony Capital. MJ Estate owns 87.5% undivided interest at Neverland.
Q- What does undivided 87.5% interest mean?
It means although MJ Estate has a higher share and Colony Capital have the minor share, they have same use rights. In other words even though Colony Capital only owns 12.5% of Neverland, they can use the 100% of the property. It also means that all the decisions has to be done collectively.
Q- I'm hearing "Save the Neverland" or "Buy Back Neverland", what are those?
Those are either a huge misconception or a scam. As I said Estate owns 87.5% undivided interest in Neverland. Neverland is also being taken care of and in real good shape. It doesn't require any saving.
Fans trying to buy Neverland is impossible. First well because it's not for sale and second Colony Capital cannot sell their share without the approval of MJ Estate. So it won't happen, unless both Colony Capital and MJ Estate decide to sell it and a judge approves it. Just don't give anyone any money to buy or save Neverland.
Source - http://www.mjjcommunity.com/forum/threads/127080-Understanding-MJ-Estate-amp-Correcting-Misconceptions