What came as a surprise was the speed that the estate administration process kicked into motion. Here is the brief timeline: MJ passed away on 25 June and the first series of court hearings began four days later. On 1 July, MJ’s Will dated 7 July 2002 was filed with Los Angeles County Superior Court, which became a public document and almost instantly became of public interest. All these took place even before the memorial arrangements were finalized.

In summary, MJ, in his five-paged Will appointed three of his close aides to be his executors; his mother to be the first named guardian and failing which his close friend, singer Diana Ross, would be the substitute guardian. The Will also make mention of a living trust which he created prior to the Will which is known as Michael Jackson Family Trust (“MJFT”) whereby his mother, children and certain charities are the named beneficiaries. Pursuant to the Will, the executors will ultimately “shepherd” all the assets in the estate into. The MJFT, which details are of course, key private and confidential inheritance taxes are still in many countries and this often is the paramount reason why people consider creating trust(s) in addition to a Will.

For MJ’s case, his estate would be looking at Federal Inheritance Tax that could possibly be as high as 45% in addition to the probate fees (to be based on the gross value of the estate) which is value of the estate) which is also applicable in the state of California. Fortunately, neither of such taxes is applicable in Malaysia.

It seems that MJ was well advised in terms of his estate affairs. However many are skeptical of his actual net worth bearing in mind he has been entangled with numerous lawsuits in the past which was later settled out of court with massive sums being paid out as settlement. At the time of his death, it was reported that he has an existing USD300 million loan with Barclays Bank. No doubt, many observers belief that he may be heavily in debt but he certainly is not broke. It is estimated that his interests in Sony / ATV alone is worth approximately USD 1 billion on top of royalties which will be channeled into his estate or trust (which is yet to be determined) is also extremely significant.

The executors would now have to determine what are the assets belonging to the estate. There could be a possibility that the aforementioned valuable assets might have been settled into or assigned to the MJFT which means that there is a possibility that the estate’s assets are significantly less as compared to the existing debts in such circumstance. If the estate has insufficient assets to settle all the debts, the estate would be technically insolvent. In all likelihood when this happens, the creditors would embark on a hunting spree to claw back as many assets as possible. This would possibly include tracing the assets that was previously settled or assigned into the MJFT and if this materializes, the assets held by the MJFT may be vulnerable.

Translating the above into Malaysian context, the fundamental principles of estate planning are very much similar. Generally, a Will is where a testator bequeaths his/her assets to the selected beneficiaries, appoints guardian(s) for his/her minor children and appoints person(s) whom he/she trusts to be the executor(s) of the estate. The testator may also make provisions for testamentary trust(s) if certain assets are to be held on trust for a period of time, in accordance to the testator’s instructions. However, one need to be mindful that all debts and liabilities would have to be settled by the estate before any bequeaths can be fulfilled. In addition, a Will also becomes a public document the moment it is filed in the court for the application of probate. Therefore, if there are certain assets, which are to, given to selected individuals who details are to remain private, living trusts would be the available option to establish such arrangements.