Here for YOU Today and There for your FAMILY Tomorrow

Why the Michael Jackson Estate is Still not Wrapped up

03/07/2017

Why the Michael Jackson Estate is Still Not Wrapped Up

“Depending on the outcome of the case, Jackson’s estate could be on the hook for more than $500 million in taxes and $200 million in penalties…”

U.S. Tax Court Judge Mark Holmes is overseeing hearings on the value of the Gloved One’s estate. Depending on the findings, the estate may need to pay more than $500 million in taxes and $200 million in penalties. Jackson’s former attorney, John Branca, claims that Jackson was in debt to the tune of $400 million when he died.

As reported in a recent article in Accounting Today, “Court hears IRS dispute over value of Michael Jackson estate,” Jackson’s estate originally claimed it considered his name and likeness essentially worthless. Jackson’s reputation was tainted by child-abuse allegations and strange public behavior. The estate first estimated his name and image to be worth only $2,105, although it later said they could be worth $3 million. The IRS thought the number was more than $434 million. An estate of this size and public prominence, hardly needed a red flag like this.

After Jackson’s 2009 death, a documentary on rehearsals for his comeback tour grossed $261 million, Cirque de Soleil created a successful show with his music and Jackson’s songs and memorabilia continue to generate big sales figures.

However, it’s the valuation on the date of Jackson’s death that counts for estate tax purposes. The value of the estate on that date is what matters, not necessarily its value when it is exploited afterwards. However, the IRS examines post-valuation date events to determine the value. Since Jackson’s estate did a terrific job in exploiting the music catalog and the name and likeness after the date of death, there’s plenty of evidence of what the value of his name and likeness might have been worth on the date of his death. The estate will say that you can’t look at those post-valuation date events because they have nothing to do with what it was worth on the day he died. The licensing agreements weren’t in place, and his image was damaged, the estate’s attorneys will argue.

The IRS will respond, however, that it doesn’t matter what Jackson was doing with his name and likeness. In light of the fact that the music promoter AEG was supporting a multimillion-dollar comeback tour for him when he died, shows that he was worth far more. That tour suggests that maybe it wasn’t just his death that caused the renewed interest. Perhaps if Jackson lived another year, this cash flow would have been inevitable.

Before it can come to a final conclusion, the Tax Court will review expert testimony, valuation reports and other documents, which are under seal as part of an active case. Judge Holmes will take all of these factors into consideration and come to a final decision.

Do you live in Miami-Dade, Broward, or Palm Beach counties in Florida? Laws are constantly changing-- has your estate plan been reviewed in the last 2-3 years? Call me (954-888-1747) right away for peace of mind. I can help!

  • My practice is exclusively estate planning and probate,
  • I have prepared numerous estate plans in 16 years of practice,
  • I have administered estates and trusts through Probate all over Florida,
  • I am a Certified Financial Planner Professional™, and
  • I am here for YOU today and there for your FAMILY tomorrow.

Reference: Accounting Today (February 8, 2017) “Court hears IRS dispute over value of Michael Jackson estate”

Testimonials
★★★★★
Why would we recommend D.T.F.? Several Reasons: Your ability to explain complex estate problems, clearly and patiently; your total lack of arrogance and pretense; a strong feeling that you are motivated by what you perceive is best for your client, rather than what would generate the largest legal fees; finally, and importantly, you are a lovely guy.
★★★★★

Two words cannot sum up the entire process of creating my “trust.” I enjoyed your attention to detail, your patience of explaining terms and conditions until I understood, also giving me copies to read and understand. Thank you for your suggestions on what was best for “me” but still allowing me to make my choice. Most of all, thank you for thinking of “me.” Wells Fargo said “you were the best” I cannot deny that. Again thank you very much for everything. Anna is an asset or a compliment to the firm. She is warm and very caring. It was great doing business. Thank you.

P.M.