Jackson's mother moves to control his estate
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LOS ANGELES -- So, who gets Michael Jackson's riches?
His mother took the first step yesterday, when she petitioned the Superior Court of California to be named the administrator of the late singer's estate. Katherine Jackson said in the filing that she was acting to ensure that Michael Jackson's three children are the beneficiaries.
It was the opening salvo in a complicated battle for a fortune that includes a lucrative music catalog of the King of Pop's own hits, the rights to songs by the Beatles and the Neverland ranch that could one day be a tourist attraction.
There is even an elaborate video production, dubbed the "Dome Project," that was overseen by Mr. Jackson and finished two weeks before he died.
The high stakes and array of people involved likely will make the fight far more convoluted than recent high-profile squabbles over the estates of singer James Brown and ex-Playboy playmate Anna Nicole Smith.
"There's no doubt that there's going to be a big battle," said Alexis Martin Neely, a Los Angeles-based estate attorney. "It's going to be very messy, and I don't see anything comparing to this."
Complicating matters is that few, if any, people know all the details of the reclusive entertainer's financial affairs. His mother's filing, for example, declares that Mr. Jackson died "intestate," or without a will. But that is in dispute. Another person with knowledge of Mr. Jackson's business matters, who spoke on condition of anonymity because of the material's sensitive nature, told The Associated Press on Friday that there is a will, which would take precedence in court.
Becoming an estate administrator "puts a vast amount of power in one person's hands," said Roy Kozupsky, a lawyer with Smith, Gambrell & Russell. The person would have the power to sell assets, make deals and decide how to pay off creditors, he said.
At stake is Mr. Jackson's 50 percent ownership in Sony/ATV Music Publishing, a company itself estimated to be worth $2 billion; Mr. Jackson's own recordings and songwriting rights, which could be worth more than $150 million; and his joint ownership of the Neverland ranch.
Katherine Jackson said in her filing that she intends to use the estate's assets for "the exclusive use of the decedent's [Mr. Jackson's] three children."
Mr. Jackson, who died Thursday at age 50, left behind three children: son Michael Joseph Jr., known as Prince Michael, 12; daughter Paris Michael Katherine, 11; and son Prince Michael II, 7. The youngest was born to a surrogate mother; the first two were born to ex-wife Deborah Rowe.
Mr. Jackson married Ms. Rowe, an Australian who had served as his nurse, in 1996 and divorced her in 1999. She gave up all custodial rights to their two children in a 2006 settlement. But California family law specialists say she may have a strong claim if she asserts her custody rights.
Ms. Rowe's intentions aren't clear; she has made no public statement since Mr. Jackson's death. But Iris Finsilver, an attorney who represented her in the custody case, told the Associated Press on Friday that it was likely that Ms. Rowe would seek custody. A complicating factor is a contract that Ms. Rowe signed with Mr. Jackson waiving her parental rights. She later went to court to void that, and an appeals court ruled in her favor in 2006. Mr. Jackson and Ms. Rowe settled the issue out of court on undisclosed terms.
The list of potential parties seeking a piece of Mr. Jackson's estate is long, ranging from financial firms to companies involved in his planned comeback. Among them is AEG Live, the concert promoter that booked him for 50 sold-out performances at London's O2 arena starting next month. AEG Live reportedly gave him a $20 million advance, which it may seek to recover. AEG Live declined to comment.
A big part of determining what the estate is worth -- and how much it owes in taxes -- will depend on how much Mr. Jackson owed to creditors. Estimates put the tally around $400 million.
The federal government will be able to collect around 45 percent in tax on the value of the estate's assets, minus its debts and administration costs including attorney fees.
It appears that the most valuable assets will likely remain in the estate's control. The Sony/ATV stake and 100 percent of Mijac, the company that controls Mr. Jackson's own music, were held in a trust whose beneficiaries are his children. That trust is safe from creditors, Al Malnik, its former trustee and Mr. Jackson's business adviser from 2002 to 2005, said yesterday.
Mr. Jackson used those assets as collateral to secure $200 million in loans from Bank of America in 2001. He then refinanced several times. Mr. Malnik said the loan total reached $275 million by the time he quit as trustee in 2005. Fortress Investment Group LLC, which took over control, sold off the loans entirely "over a year ago," said company spokeswoman Lilly Donohue.
It is unclear who holds the loans now, but one candidate is Colony Capital LLC, a Los Angeles real estate firm owned by billionaire Thomas Barrack, which also set up a joint venture with Mr. Jackson to own Neverland, the 2,500-acre property in Santa Barbara County that once included amusement park rides and zoo animals. Mr. Barrack had lunch Saturday at Neverland with Jackson brothers Jackie, Jermaine and Tito.
Mr. Jackson's estate is still growing through record sales and songwriting rights. So far this year, some 297,000 of his albums have sold in the United States, and that does not include last week, when sales spiked in the wake of his death.
Mr. Jackson's existing works will continue to sell well, said Keith Caulfield, senior charts manager for Billboard magazine. "He's good for at least a half a million albums a year," he said.
Songwriting rights also keep earning revenue. Mr. Jackson wrote many of the songs he recorded, including "Beat It," "Bad," and "Black or White." For the past three years, he has ranked among the top-earning 100 U.S. songwriters for royalty payments collected by Broadcast Music Inc.
First Published June 30, 2009 12:00 am
