Recently, the management of Michael Jackson’s Estate has made headlines in the news. Specifically, Paris Jackson (“Paris”), Michael Jackson’s (“Jackson”) daughter, has made claims against the Executors of his Estate due to her concerns over the Executors’ management of the Estate in which she is a beneficiary of.
The concerns brought forward by Paris highlights that, no matter the size of the Estate, the persons involved, and the location, Executors are to manage Estate assets in the best interests of its beneficiaries. And most importantly, if there has been mismanagement, there are legal consequences.
Michael Jackson’s Estate
Jackson passed on June 25, 2009, leaving a Last Will and Testament, dated July 7, 2002 (the “Will”). Under his Will, the Executors that were named and selected by Jackson to be in charge of his Estate were John Branca, an entertainment lawyer, and John McClain, a music executive (Barry Siegel, a financial manager, was also named but declined to act as Executor).
Jackson left the entirety of his Estate in the “Michael Jackson Family Trust”. The beneficiaries of the family trust are his three children (Paris, Prince Jackson Jr., and Prince (Bigi) Jackson II), and his mother (Katherine Jackson).
In the legal proceedings, Paris asked the Court to review the Executors’ management of the Estate, as she had concerns regarding how they had managed the Estate assets and that the management did not align with the best interests of the beneficiaries. Paris alleged that the Executors had: paid themselves excessively in compensation, paid the Estate lawyers excessively, and failed to prudently invest approximately $464 million in Estate assets (thereby losing significant income to the Estate).
Thereafter, following a review of the accounts, Justice Beckloff agreed with Paris and ruled that $625,000.00 in “bonus” payments authorized and paid for by the Executors to third-party law firms (that represented the Estate) were to be paid back to the Estate. Justice Beckloff found that the payments lacked sufficient explanation, were arbitrary, and that the payments were not just and reasonable based on the evidence.
Providing an accounting: A main duty and responsibility of an executor
An executor is a fiduciary and is tasked with certain duties and responsibilities, including, but not limited to: duty to keep proper accounts of all transactions within the estate; treat beneficiaries with an ‘even-hand’ (i.e. equally); make decisions concerning the administration that are in the beneficiaries’ best interests (such as payment of reasonable expenses of the estate and investing trust assets prudently); to not use estate funds for their own personal use; and to take the appropriate compensation (if compensation is permissible under the Will).
The duty to keep proper accounts is an integral responsibility of an executor. As part of this, the executor is to keep track of estate receipts (capital and revenue) coming into the estate and estate disbursements (capital and revenue) coming out of the estate. If compensation is being sought, the executor will need to outline how the compensation was calculated (which transactions were included and excluded from the calculation).
Beneficiaries of an estate have the ability to review the accounts presented and make objections to the accounts if a particular transaction is questionable or inappropriate. They then have legal remedies available to address these objections and to rectify the mismanagement.
Legal remedies in Ontario
If the Michael Jackson Estate had been located in Ontario, Paris would have legal remedies available to her to investigate whether the executors were mismanaging the estate and if they were, relief to make the estate, and consequently her, whole.
In Ontario, an executor is required to provide an accounting to a beneficiary of an estate upon request. If an executor fails to provide the accounting, or there are disputes to certain transactions (called objections) that cannot be resolved, then a beneficiary may commence an Application compelling the executor to pass their accounts (under Rule 74.15(1)(h) of the Rules of Civil Procedure). An executor may also elect to commence an Application to pass their accounts on their own (under Rule 74.18 of the Rules of Civil Procedure).
As part of the Application to pass accounts, if it has been determined by the Court that there were inappropriate transactions such that the executor owes the estate funds, compensation can be reduced, or the Court can order that the executor is to pay funds back to the estate, personally.
If the management of the estate is egregious, it is also open to a beneficiary to bring an Application seeking for the executor to be removed as executor (under Rule 14.05(3)(c) of the Rules of Civil Procedure). Removal of an executor is a high threshold to meet, and the legal principles considered by the Court are:
- the court will not lightly interfere with the testator’s choice of estate trustee;
- clear evidence is required to prove that the removal of the trustee is necessary;
- the court’s main consideration is the welfare of the beneficiaries; and
- the estate trustee’s acts, or omissions must be of such a nature as to endanger the administration of the trust (Meuse v Taylor, 2022 ONSC 1436 at 12).
Based on the information that has been made public concerning Paris’ case against the Executors of Jackson’s Estate, it does not appear that she would be meet this high threshold for removal. However, the Michael Jackson Family Trust is ongoing, and this may be a remedy that she may need to pursue if there is significant mismanagement in the future.
As a spokesperson for Paris said to the press, all she wanted was for transparency and accountability with respect to the administration of the Jackson Estate. If you are concerned about the management of an estate by an executor and would like transparency and accountability, please contact our Estates Team at Siskinds LLP.
References:
Meuse v Taylor, 2022 ONSC 1436
Paris Jackson gets legal win as judge rules $625K returned to Michael Jackson estate – ABC News
Why Michael Jackson’s daughter, Paris, won’t stop ‘til she gets enough from his estate
Paris Jackson Wins Fight to Claw Back $625,000 Paid to Estate Lawyers