Lessons from the King of Pop

Now that the world is getting over the initial shock of Michael Jackson’s sudden and unexpected death last Thursday at the age of 50, we’re getting a glimpse of the star’s mysterious life and lavish spending habits. While there are many questions left to be answered, at the top of the list: What will happen to his estate? Who will take care of his three children?

Jackson is believed to have left behind $400-$500 million in debts, and legal experts say mounting financial questions could take years to clear up–there will likely be major legal battles as creditors and family members stake their claim in the King of Pop’s legacy and estate, which some say could rival that of Elvis Presley and Graceland.

All this drama got me thinking, “Do I have a plan in place should something happen to me? How will my loved ones be cared for?”

It’s a good question we all should ask ourselves, and one way you can ensure that your family is taken care of is to establish a living trust.

What is a living trust?

A trust is an arrangement where one person, called a trustee, holds legal title to property for another person, the beneficiary. You can be the trustee of your own living trust and keep full control over all property held in trust. With a living trust, your assets (your home, bank accounts and stocks, etc.) are put into the trust, administered for your benefit during your lifetime, and then transferred to your beneficiaries when you die.

Why should I establish a living trust?

One of the biggest advantages of a living trust is that property left through the trust doesn’t have to go through probate court, which is the court-supervised process of paying your debts and distributing your property to the people who inherit it.

Probates can drag on for months before the inheritors get anything, and cost thousands of dollars in legal and attorney fees. (Read more on probate FAQ here.)

Does a living trust replace a will?

No. A will is an essential back-up device for property that you don’t transfer to yourself as trustee. For example, if you acquire property shortly before you die, you may not think to transfer ownership of it to your trust–which means that it won’t pass under the terms of the trust document. But in your will, you can include a clause that names someone to get all of the property that you haven’t left to a specific beneficiary.

If you don’t have a will, any property that isn’t transferred by your living trust or other probate-avoidance device (such as joint tenancy) will go to your closest relatives in an order determined by state law. These laws may not distribute property in the way you would have chosen.* Learn more about the difference at LivingTrustvsWill.com.

You can learn more about living trusts:
Nolo – Living Trusts
The State Bar of California

For more information on this important topic, you can also attend Tech CU’s seminar on living trusts next month at our San Jose location:

Wednesday, July 22
5:30 p.m. to 7:00 p.m.

Technology Credit Union
Corporate Office
4th Floor, Suite 450
2010 N. First Street
San Jose, CA 95131
Sign up here

Whether Jackson established a living trust remains to be seen, but we can all learn from his passing. Give your loved ones the power to control your estate through a living trust, instead of subjecting them to government regulations, court rulings, and lawyers’ fees during an already difficult time.

*Source: Nolo.com