OK, enough already about Michael Jackson's estate, but unfortunately I think that his estate plan has created some confusion when it comes to understanding a basic estate planning term - "Family Trust."
Traditionally in the estate planning arena a "Family Trust" is another term used for the "B Trust" in an AB Trust system that is commonly used by married couples to maximize the use of each spouse's exemption from federal estate taxes. In fact, Family Trust is the term that I use in my clients' estate planning documents, but at my last firm they used the term "Bypass Trust" and at the firm before that they used "Credit Shelter Trust." No big deal - all of these terms refer to the B Trust in an AB Trust plan.
So leave it to Michael Jackson to create confusion by naming his Revocable Living Trust the "Michael Jackson Family Trust." No, Michael Jackson's "Family Trust" isn't a B Trust, Bypass Trust, Credit Shelter Trust, or even a Family Trust in the traditional sense of the term - it's simply the name Michael Jackson decided to use for his Revocable Living Trust (or more likely what his estate planning attorney decided to name the trust). He could have named it the "Michael Jackson Revocable Trust" or the "Michael Jackson Living Trust" or even the "Thriller Trust" - in other words, the name of a Revocable Living Trust, or of any trust for that matter, really isn't important. Instead, what is important is what the written trust agreement says.
So the bottom line is don't let Michael Jackson's estate plan confuse you - his Family Trust has nothing to do with saving on estate taxes in the traditional sense of a Family Trust - it's just a name.
- Definition of Family Trust
- Definition of Exemption From Estate Taxes
- What is a Revocable Living Trust?
- What is an AB Trust?
- Benefits of a Revocable Living Trust vs. a Will
- Michael Jackson's Will vs. the Michael Jackson Family Trust
- A Collection of Blogs About Michael Jackson's Estate and Family Trust