Why are we fascinated by stories about Michael Jackson’s estate? Perhaps his finances were a bit like his public persona: enthralling, disturbing, messy, and always of interest.
AP, The Wall Street Journal and The New York Times have written about MJ’s fortune and money woes: he earned more than $700 million as a solo artist and owned half of the Beatles’ catalog (which could be worth up to $500 million), yet he was at least $400 million in debt when he died June 25.
A couple of news organizations have used the occasion of the King of Pop’s passing to educate the public on the controversy related to the estate tax. Only 0.82 percent of estates paid the tax in 2004, according to an AP primer. And the number likely will drop, because this year the amount exempted from the tax was raised from $1.5 million to $3.5 million. Jackson’s camp likely will end up with a substantial bill –– some estimate $80 million –– for estate taxes.
When a person dies, his or her assets are added up to arrive at the “gross estate.” Any property willed to the surviving spouse is deducted, tax-free, along with contributions to charity and funeral expenses. What’s left over is the “taxable estate.” Set aside the $3.5 million exemption, and what’s left after that is taxed at a rate of 45 percent.
The current tax is set to expire Jan. 1, 2010, and won’t return until 2011. But Congress is expected to restore the 2010 tax at its current rate and exemption. A WSJ editorial has called this sensible fix “the largest increase in the death tax in U.S. history.” And a National Review blog post claimed that the “big losers” from eliminating the one-year moratorium “will be average workers who otherwise would have gained from a larger capital stock and entrepreneurs’ greater job creation efforts.”
Every dollar in taxes Michael Jackson’s estate has to pay is a dollar that won’t go to his mother and three children. The final amount remains in question, because evaluating the worth of his assets could take years.
“The government is not going to take a Beatles record as payment,” Roy Kozupsky, a New York estate lawyer told AP. “They want to be paid in cash.”
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I guess his doctor and him were a match made in heavan then. His doctor had some serious debt problems.
I’ve speculated that these debt worries perhaps led him to cut corners on his ethics in regards to Jacko’s death. Check out my story at… http://www.thedebtgazette.com/2009/07/jacksondoctordebt/