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Michael Jackson died in 2009. His estate is still in court.
His daughter, Paris Jackson, has asked the estate to pay $1,165,481.90 of her legal fees, according to TMZ. That follows an April ruling in her favor that ordered $625,000 in 2018 bonuses paid to the estate’s lawyers returned to the estate. (1)
Executor John Branca objects. He argues she’s “trying to collect fees for unrelated legal battles.” (1) Meanwhile, the estate is asking the court to approve more than $9 million for six years of its own lawyers’ work. (2)
To be fair to the executors, they’ve done a lot. Jackson died owing more than $500 million, and the estate says it’s now worth $2 billion. (2)
I’ve been a CPA since 1981, and I served as executor of my parents’ estate. Most of us will never leave $2 billion. But the same machinery — probate court, executor fees, lawyer fees, family fights — can take a much bigger bite out of a modest estate.
Take California, where Jackson’s estate is handled. State law sets the executor’s fee as a percentage of the estate: 4% of the first $100,000, 3% of the next $100,000 and 2% of the next $800,000. (3)
The executor’s lawyer gets paid on the same schedule, and it’s figured “without reference to encumbrances” — meaning the mortgage isn’t subtracted first. (4) Probate there typically takes 9 to 18 months. (5)
Here are five ways to keep your family out of that kind of fight.
1. Run the numbers on your own estate
Say you die in California owning a $750,000 house with a $300,000 mortgage, and not much else. Under that schedule, the executor’s fee would be $18,000, and the lawyer’s another $18,000.
That’s $36,000 out of $450,000 in actual equity, before your kids see a dime. Not every state uses a fee schedule; many allow “reasonable” fees instead. But every state’s probate costs time and money.
2. Use a living trust to sidestep probate
Assets held in a properly funded revocable living trust generally pass to your heirs without going through probate. No court-supervised fee schedule, and far less public paperwork.
The catch: The trust only works for what you actually put in it. A trust with your house or brokerage account still titled in your own name doesn’t bypass probate. They have to be in trust.
If you don’t have a plan yet, start with one. Without a plan, courts decide everything, probate drags on for months, and loved ones are left guessing. Shield them with a will, a trust or both — today.
A will locks in exactly who gets what — yours in minutes for $199. A trust goes further, not only bypassing probate, but controlling how and when heirs inherit, starting at just $499. Get started right now.
3. Put beneficiaries on everything you can
Retirement accounts, life insurance and payable-on-death bank accounts go straight to the person you name on the form. They skip probate entirely.
That’s why life insurance is one of the cleanest ways to leave money behind, especially to cover final bills and taxes so your heirs aren’t forced to sell the house in a hurry.
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4. Pick your executor like you’re hiring for a job
Because you are. When I settled my parents’ estate, it meant bank accounts, tax returns, the house and a lot of phone calls. Pick someone organized, honest and able to get along with your heirs.
Here’s a CPA tip most families miss. The IRS says, “All personal representatives must include fees paid to them from an estate in their gross income.” (6)
For the record, I didn’t charge my parents’ estate for being the executor. If you have someone knowledgeable and competent in your family, you could do the same thing.
An inheritance, on the other hand, generally isn’t income to the person receiving it. So when your executor is also one of your heirs, waiving the fee and simply inheriting the money can leave them ahead after taxes. Have them run the numbers with a tax pro.
5. Put pay and power in writing, then talk about it
In your will or trust, spell out whether your executor or trustee gets paid, how much and whether they can hire lawyers at the estate’s expense. Vague documents invite lawsuits.
Then tell your family what’s in the plan while you’re still around to explain it. Surprises are what start fights. Yet in a 2021 Gallup poll, only 46% of U.S. adults said they had a will, although 76% of those 65 and older did. (7)
If your estate includes investments, a pension or property in more than one state, a professional can help you coordinate it all. I’m thinking of going down this road, not only because of my estate plan, but also because I’d like to spend less time on my investments and more on boating. And if something should happen to me, I want my not-interested-in-the-stock-market wife to be protected from nefarious characters.
Finding a responsible advisor is much easier these days. For example, SmartAsset matches you, free, with up to three fiduciary advisors who are legally required to put your interests first. They spot tax savings and planning gaps you might miss.
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The bottom line
Michael Jackson’s estate can afford its legal bills. It turned a mountain of debt into a fortune. Most families don’t have that cushion, and every dollar spent in probate court comes straight out of what your heirs get.
You can’t control how your kids will feel when you’re gone. You can control how much paperwork, cost and confusion you leave them.
The best thing you can leave your family isn’t money. It’s a plan that keeps them out of court and on speaking terms.
Sources: 1. TMZ; 2. TMZ; 3. California Probate Code (via Justia); 4. California Probate Code (via Justia); 5. Judicial Branch of California; 6. IRS; 7. Gallup
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