The Probate Lawyer Blog featured this article about the Michael Jackson Estate several weeks ago, posing the question of whether it is ethical for estate executors to seek a 10% fee for certain business deals they reach for such a high-profile estate.  It’s especially problematic when you factor in that one of the executors was Michael Jackson’s attorney.

Well, this attorney, John Branca, and his co-executor, John McClain (a music executive), just hit the mother-load.  It was widely reported yesterday that they brokered a deal worth up to $250 million dollars (that’s right — one quarter of a billion dollars!). What was the deal for?  Sony announced a seven-year distribution agreement for unreleased music recorded by the late King of Pop (as well as related video footage).

Yes that means that Branca and McClain earned $12.5 million each for one deal.

Why do we question this?  For several reasons, actually.  First, it’s the job of executors to bring in as much money as possible for an estate that has earning potential like this estate has.  They shouldn’t need a 10% incentive to do the job they’re required by law to do.

Second, Branca, reportedly, is the attorney who prepared the will and trust that named him as the co-executor and co-trustee.  Because of these documents that he created, he just made $12.5 million — in addition to the other fees he’s already earned (and will continue to earn).

Would it be ethical for an attorney to create a will for a client to sign that leaves $12.5 million to that attorney as a direct beneficiary?  In most cases, no, it wouldn’t.  So why is this attorney allowed to earn that much as an executor fee?

Finally, there’s the issue which we discuss in our book, “Trial & Heirs:  Famous Fortune Fights!”, that Michael Jackson’s Trust wasn’t funded properly.  If it had been, then his estate would have been kept out of court and handled in private.  It’s also entirely possible that his trust document (which hasn’t been released to the public) may have specified what compensation the trustees would have received.

IF that’s the case (just speculating here), then Branca and McClain wouldn’t necessarily have been able to receive this percentage fee.  But, because Jackson’s Trust wasn’t properly funded, thereby requiring it to pass through the probate court process, it opened the door to allow this type of fee to be approved by the judge (again, if the trust document addressed their compensation, which isn’t unusual).  And the judge did approve the executors’ 10% fee in this case.

A properly-used estate plan would have bypassed court entirely.  Jackson’s estate plan didn’t do that.  The attorney who prepared that estate plan now just earned tens of millions of dollars because of that estate plan.

And it’s all legal.  But is it ethical?

Some feel it is.  After all, Branca is a respected entertainment lawyer and McClain is an experienced music executive.  They have the expertise to broker deals like this.  And clearly, judging by the amount of money they’ve brought into the estate, they’re good at what they do.  And Michael Jackson’s heirs are benefiting from their expertise.

If it’s standard to compensate entertainment industry experts with this type of fee, why shouldn’t Branca and McClain earn what may be considered fair compensation in that line of business?

There is some merit to this position.  After all, Michael’s mother, Katherine Jackson, spent months battling McClain and Branca in court over this estate (until she hired a new attorney, at which time she changed her position).  Yet she didn’t object to their 10% fee.  If a primary beneficiary of Michael’s estate didn’t object to this generous fee, why should anyone else?

What do you think?

By Andrew W. Mayoras and Danielle B. Mayoras, co-authors of “Trial & Heirs: Famous Fortune Fights!” and husband-and-wife legacy expert attorneys. As educators across the United States through speaking engagements, print, broadcast, and social media, Danielle and Andrew consistently draw rave reviews and are in high demand. Email them at contact@trialandheirs.com.

The Michael Jackson Estate has been the subject of regular court hearings as Katherine Jackson battled for control over the last several months.  She routinely objected to the decisions of the co-executors John Branca and John McClain.  Recently, she hired a new attorney with the promise of taking the case in a new direction, as I discussed in this recent article about the Michael Jackson case.

Her case took a new direction, all right.  She decided to drop her claim.  That’s right, she stopped fighting and agreed to let the executors run the show without her.

Surprised?  I was.  And I was far from the only one.  Here’s what a lawyer in the case said about Katherine Jackson’s change of heart, according to CNN:

“She has now reneged on her obligation to her family.”  This same lawyer then said that it was “one of the most despicable displays” he’d ever seen in court.  He even accused Katherine of colluding with the estate executors in a “secret deal”.

So who was this attorney representing?  None other than Joe Jackson — Katherine’s husband of 60 years.  Granted, they don’t live together, but obviously, he was taken aback about what happened.

And Joe and his attorney didn’t take it lying down.  In fact, they filed their own petition to remove the executors, claiming they had a conflict of interest and failed to disclose to the court that Michael Jackson was in New York the date the will was signed, calling into question whether it is even valid.

But the judge ruled that Joe Jackson didn’t have legal “standing” to make that claim because he wasn’t a beneficiary.  In other words, he had no horse in the race, so to speak, so he wasn’t allowed to try to remove the executors.  The only ones who can do so are Katherine Jackson, the three children (who are minors — and they act through their guardian, Katherine), or the unnamed charities that so far have not been publicly revealed.

So, at this point, unless Katherine Jackson has another change of heart, or unless another beneficiary comes forward, the legal fighting may be at an end … at least in this court.  Joe Jackson’s attorney has promised to appeal the verdict and try his luck in another court.

He did get one bit of good news.  The judge allowed him to proceed with his request for a monthly allowance from the Michael Jackson Estate in the amount of $20,000/month.  The judge hasn’t agreed to give him that yet, but at least he has the right to file a request for it.

Perhaps trying to pacify her now-angry husband, Katherine Jackson reportedly said she won’t contest his request for an allowance.

Wow this is getting interesting!  And I have a feeling we haven’t heard the last of this issue.  But, we’ll have to wait and see.

The Michael Jackson case shows how important the proper estate planning is for everyone.  The better your legal planning, the less likely you’re family will fight over your money when you’re gone.  So don’t delay; go see a good estate planning attorney now.  Or your family may end up hiring probate litigation attorneys later.

And if you have a loved one in your family who doesn’t want to do estate planning, and you need help convincing him or her, here’s something that may help.

Posted by:  Author and probate attorney Andrew W. Mayoras, co-author of Trial & Heirs:  Famous Fortune Fights! and co-founder and shareholder of The Center for Probate Litigation and The Center for Elder Law in metro-Detroit, Michigan, which concentrate in probate litigation, estate planning, and elder law.  You can email him at blog @ trialandheirs.com. ]]> http://www.trialandheirs.com/estate-planning/katherine-jacksons-shocking-change-of-heart/feed/ 3