There is nothing dramatic about the structure of Michael Jackson's basic estate plan. At least not in California. It looks like Michael Jackson set up a revocable living trust (the Michael Jackson Family Trust) and a "pour over" will (pdf). Most Californians who establish estate plans, even Californians with modest estates, use revocable living trusts to dispose of their property. The trust, not the will, directs how to distribute the individual's assets on death. The will "pours over" to the trust and, in the case of a parent, nominates guardians for minor children.
What is a living trust? It is a written legal document that partially substitutes for a will. With a living trust, your assets (your home, bank accounts and stocks, for example) are put into the trust, administered for your benefit during your lifetime, and then transferred to your beneficiaries when you die.
The terms of the revocable living trust are private. Unlike a will, the trust is not lodged with the court. The terms of the Michael Jackson Family Trust will not become public unless there is a trust contest or other proceeding involving the trust. Or the trust is leaked to the public.
One reason Californians prefer to use a revocable living trust instead of a will to dispose of their assets is the high cost of probate in California. Probating an estate in California is usually much more costly than a trust administration. From the Bar Association's pamphlet:
How could a living trust be helpful at my death?
The assets held in your living trust could be managed by the trustee and distributed according to your directions without court supervision and involvement. This can save your heirs time and money. . . .
If your assets (those in your name alone) are not in a living trust when you die, they would be subject to probate. Probate is a court-supervised process for transferring assets to the beneficiaries listed in one's will. . . .
Probate can take more time to complete than the distribution of property held in a living trust. In addition, assets tied up in probate may not be as readily accessible to the beneficiaries as those held in a living trust. And the cost of a probate is often greater than the cost of managing and distributing comparable assets held in a living trust.
A trust alone will not avoid probate. After someone sets up a revocable living trust, he or she must take steps to transfer assets to the trust. (Some assets are not subject to probate and are not transferred to the trust -- for example, retirement plans with beneficiary designations.) Even though Michael Jackson set up the Michael Jackson Family Trust, a probate may still be necessary if "probatable" assets were left outside the trust. There are some other possibilities, short of a formal probate, such as transferring assets to the trust by means of a Heggstad petition.
From the Bar Association pamphlet:
If I have a living trust, do I still need a will?
Yes. Your will affects any assets that are titled in your name at your death and are not in your living trust or some other form of ownership with a right of survivorship. If you have a living trust, your will would typically contain a pour over provision. Such a provision simply states that all such assets should be transferred to the trustee of your living trust after your death. (This does not mean, however, that your beneficiaries can avoid going through probate for these assets.)
Michael Jackson did what most Californians do when they set up their estate plans. He established a revocable living trust and a pour over will. The Michael Jackson Family Trust, and not Michael's will, dictates how Michael's estate is to be distributed. Most likely, the Michael Jackson Family Trust establishes separate share trusts for each of his children. There may also be distributions to other family members and charity. The trusts for Michael's children may last for their lifetimes with distributions to Michael's future grandchildren. Or the trusts for his children may terminate during their lifetimes. We don't really know.
Which brings us to another reason Californians prefer revocable living trusts to wills -- privacy.