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Michael Jackson’s Estate: Avoiding Estate Planning Mistakes

Michael Jackson, world renowned pop-icon, died yesterday afternoon of cardiac arrest. While the world mourns, two major questions remain regarding his estate: who will take care of his children and who will take care of his crumbling financial empire?

Jackson had three children with two women (link: CNN.com); ex-wife Debbie Rowe and an unidentified woman. Rowe may have claim to her children, but Jackson’s mother, Katherine Jackson, claims to want all three. It is not clear whether Michael Jackson had a trust or will in place, to take care of his children, in the event of his death.

The Wall Street Journal estimated that Jackson’s assets may be between $500 million and $1 billion, due to his stake in a music publishing catalog, the rights to his own songs and the memorabilia he owned at the time of his death.  However, it is also estimated that his debts may be up to $500 million. Even though his assets most likely exceed his debts, there will be many creditors looking for their due.

This should be a wake-up call to every person in America; do not leave it up to someone else to take care of your affairs after your death. Even if you trust your loved ones, they may not know, nor remember, your specific wishes. You can do something now. Speak to a local attorney about your will . Make sure there are the proper provisions to take care of your financial assets, and your children. You do not need an estate the size of Michael Jackson’s to warrant a will. If you are married or divorced, you need a will. If you own a house, you need a will. If you have children, you need a will. If you have money in the bank, you need a will. If you own a business, you need a will.

Make sure you and your loved ones are prepared.

$8,000 Government Tax Credit Now For Down Payments

The recent downturn of the real estate market pushed panic through many American citizens. In an attempt to calm the storm, our government put forth the American Recovery and Reinvestment Act of 2009; which can be read about at http://www.Recovery.gov. This Act includes a tax credit of up to $8,000 for first time homebuyers. Originally, a homebuyer could access this credit only after filing their 2010 tax return. HUD, the U.S. Department of Housing and Urban Development, recently announced the tax credit can be used towards closing costs and/or down payments; more information is available at http://www.hud.gov/news/release.cfm?content=pr09-072.cfm. You should be prepared for a number of additional steps to the receiving process of this credit at closing. You can visit http://www.arizonamortgageteam.com/new-home-buyer-8000-tax-credit-down-payment-answers-to-questions/ for a good review of the process.

FEATURE	CREDIT AS CREATED JULY 2008 APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008	REVISED CREDIT – EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009
Amount of Credit	Lesser of 10% or cost of home or $7500	Maximum credit amount increased to $8000
Eligible Property	Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence	No change, All principal residences eligible
Refundable	Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser.	No change, Purchasers will continue to receive refund for unused amount when tax return is filed.
Income Limit	Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($15,000 on a joint return). Phases out above those caps ($95,000 and $170,000).	No change, Same income limits continue to apply.
First-time Homebuyer Only	Yes. Purchaser (and purchaser’s spouse may not have owned a principal residence in 3 years previous to purchase.	No change, Still available for first-time purchasers only. Three year rule continues to apply.
Revenue Bond Financing	No credit allowed if home financed with state/local bond funding.	Purchasers can utilize revenue bond financing can use credit.
Repayment	Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 taxes.	No repayment for purchases on or after January 1, 2009 and before December 1, 2009.
Recapture	If home sold before 15 year repayment period ends, then outstanding balance of repayment amount recaptured on sale.	If home is sold within 3 years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009.
Termination	July 1, 2009 (But note program changes for 2009)	December 1, 2009
Effective Date	Purchases on or after April 9, 2009 and before January 1, 2009. Repayment begins after 2010 tax year.	All revisions are effective as of January 1, 2009.

This information is for educational purposes only and shall not be construed as legal advice.