Michael Jackson Estate’s record deal raises questions

Michael Jackson Estate’s record deal raises questions

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.  Michael Jackson Estate

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 (although he subsequently said in an interview that another attorney in his office prepared them, not him). Because of these documents that his law firm 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, or his law firm, 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.

Michael Jackson Estate

Categories: Celebrities, Estate Planning, Trusts, Wills
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  • Laureliete

    It does seem a little iffy at best that the lawyer who is benefiting so much from his “clients” estate is the same lawyer that prepared the will and then didn’t really do the job well enough to keep it out of probate court, which is the whole point of trusts and wills. Perhaps there was more and he was just going to get more money by going in front of a judge. You know there had to be some reason he supposedly didn’t know how to “fund a trust” correctly. A man like John Branca who was with Michael on and off for 25 years must have known what he was doing. The question is – Did Michael Know? I’m still trying to figure out who the attorney was that supposedly represented Michael Jackson AND Sony during a negotiation for all of Michaels music rights. The deal was truly in Sony’s favor and supposedly changes were made when it was “discovered” that one unethical lawyer represented both entities. Sony had to know they were being represented by the same lawyer and didn’t care. Why are there no repercussions now – and now Sony gets rights to his entire music collection -dead or alive? Why hasn’t the music rights to all of his hits been an issue for the estate? Especially WITH Sony? Boycott!

  • Laureliete

    It does seem a little iffy at best that the lawyer who is benefiting so much from his “clients” estate is the same lawyer that prepared the will and then didn’t really do the job well enough to keep it out of probate court, which is the whole point of trusts and wills. Perhaps there was more and he was just going to get more money by going in front of a judge. You know there had to be some reason he supposedly didn’t know how to “fund a trust” correctly. A man like John Branca who was with Michael on and off for 25 years must have known what he was doing. The question is – Did Michael Know? I’m still trying to figure out who the attorney was that supposedly represented Michael Jackson AND Sony during a negotiation for all of Michaels music rights. The deal was truly in Sony’s favor and supposedly changes were made when it was “discovered” that one unethical lawyer represented both entities. Sony had to know they were being represented by the same lawyer and didn’t care. Why are there no repercussions now – and now Sony gets rights to his entire music collection -dead or alive? Why hasn’t the music rights to all of his hits been an issue for the estate? Especially WITH Sony? Boycott!

  • Anon.

    With the impending release of MJ’s album next month (Dec. 2010) it is being reported that the vocals on the song “Breaking News” may not be MJ’s voice. Wouldn’t ‘experienced’ executors with a background in the music industry have been more careful to make certain that the vocals on the song were actually MJ’s before releasing it to the public? The MJ fans are now fighting with each other. Some are asking for a boycott of the album, others are pre-ordering the album and there is a ton of discourse among the fans.

    Is any of this good for the Legacy of Michael Jackson? I tend to doubt it. So much for Branca and McClain’s ‘experience’…..

    Please consider writing a book on MJ’s estate in the future. The fans are highly interested in everything MJ.

  • Anon.

    With the impending release of MJ’s album next month (Dec. 2010) it is being reported that the vocals on the song “Breaking News” may not be MJ’s voice. Wouldn’t ‘experienced’ executors with a background in the music industry have been more careful to make certain that the vocals on the song were actually MJ’s before releasing it to the public? The MJ fans are now fighting with each other. Some are asking for a boycott of the album, others are pre-ordering the album and there is a ton of discourse among the fans.

    Is any of this good for the Legacy of Michael Jackson? I tend to doubt it. So much for Branca and McClain’s ‘experience’…..

    Please consider writing a book on MJ’s estate in the future. The fans are highly interested in everything MJ.