Why Won’t Michael Jackson’s Children Inherit His Money Until They Are Forty?

When the King of Pop died, he left behind him not only a musical legacy but also a legacy of debt. Poor financial decisions left him debt ridden near the end of his life. Nevertheless, Michael Jackson didn’t die a pauper. As with many celebrities, even after his death his estate continues increasing in value. Continued record sales will bolster his estate, leaving a considerable amount of money to his heirs after his debts are paid. His young children could become billionaires before their eighteenth birthdays, but they won’t.

Many parents hope their children won’t make the same mistakes that they made in their youth, and Jackson must have hoped his children would not be as reckless with their money as he was. In his trust he set out to ensure his children would learn from his financial mistakes. How does Jackson’s trust ensure his children won’t squander their money and end up as debt ridden as their father?

In his will, Michael Jackson left the entirety of his estate to the Michael Jackson Family Trust, and it’s within the trust that the actual breakdown of his estate occurs. He has designated a committee of trustees, including his mother Katherine, to handle the distribution of his assets. (Katherine is guardian of his children, and she is to inherit forty percent of his estate.) A closer look at the trust will reveal why Jackson’s children won’t be spending their entire inheritance any time soon.

Jackson’s trust lays out a very specific timeline for the distribution of money to his children. The Michael Jackson Family Trust specifically stipulates that his children will not receive their full inheritance until the age of forty. Until that time the children will receive an allowance, which is determined by the trustees. Upon turning twenty-one each child can appeal to the trustees for money. When they turn thirty, the children will receive one third of the remaining share. At thirty-five, they will get half their remaining share. It is not until they are forty that Jackson’s children will receive their full inheritance.

What if one of his children requires extra funds before they are forty? The trust stipulates that a child’s distribution may be accelerated in the following situations: if the child wishes to start a family, buy a home, or engage in a business venture. Nevertheless, the trustees are under obligation to ensure any business venture or investment is sound. Jackson’s trust allows for some flexibility, but even the parameters of flexibility are designed to ensure his children won’t carelessly spend their money.

In addition to financial responsibility, perhaps Jackson also wished to teach his children a little bit about generosity. Though he left his estate to be divided amongst his three children and mother, Jackson also left twenty percent of his estate to be distributed amongst children’s charities.

Is this breakdown the best way to ensure Jackson’s children will learn financial responsibility before inheriting billions? It is hard for us to determine whether this is the best breakdown or not, for each family’s situation is unique. It is up to each family to decide what is best for their children after they’re gone. Jackson sought to ensure his children won’t receive their full inheritance until they have matured into adults, and have hopefully learned how to handle their finances. For his family, this may indeed be the best breakdown.

A qualified estate planning attorney can help you find the best way to distribute your assets after you’re gone.  Helping families determine the best estate plan for their needs is what we do at the Law Offices of Daniel O. Hands, P.C. For some families, an inheritance distributed over the course of time is the best choice.