The Michael Jackson estate provides good material to apply to everyday planning situations. We have learned that Jackson’s 79 year old mother, Katherine, who is now the legal guardian of his children has petitioned the California Probate Court to replace the special administrators of his estate, music executive John McLain and attorney John Branca.

This raises an important question. Who is best suited to run the “business” of an estate administration? Should the guardian of the children – who presumably has the most at stake – be put in charge of the estate administration, or are there more compelling reasons to name someone else to fill this role?

 I would suggest that the person who is named as the guardian of the minor children should generally be separate from the person or parties who are the administrators of the estate. First, you are looking for completely different qualities in the types of people that you name to fill those roles. Second, the guardian of the minor children usually has their hands full just raising the children and may not have the time necessary to run the business and legal affairs of an estate. Third, the person who is guardian may also have a conflict of interest in filling the role of trustee.

 Let me explain these three points using the Michael Jackson estate as an example, and then applying the concepts to an ordinary citizen’s estate.

 It’s apparent that in filling the role of guardian you want someone who will be devoted to your minor children. They obviously need to be good caregivers, and have the energy it takes to raise children. With each passing generation it seems that the task of raising children is getting more and more difficult. In Michael Jackson’s case – the celebrity factor alone presents numerous challenges and concerns.

 With the average citizen you still need to be cognizant that your minor children’s lives will be uprooted – they may change schools – where they live – where they worship – their whole world is turned upside down.  The person you name as guardian needs to fill an important role as the steady hand in a tumultuous time.

 Contrast this with running the estate administration. These tasks are filled with day to day complexities. Making investment and business decisions is common place when a young family man or woman dies. The estate administrators’ tasks include maximizing the value of the estate, including the income that will be needed to support minor children into adulthood or beyond.

 In the Michael Jackson case it’s evident to me that a 79 year old mother who is serving as the guardian of the children has enough on her hands – and adding to that the creation and management of a music, merchandising and licensing empire should be spearheaded by someone other than her. She may have vast experience in those areas, but as stated – she already has her hands full.

 In the ordinary citizen’s case – if you own a business or a professional practice, time is of the essence. You will need an experienced hand or two to maximize the sales value of that business or practice, or it will likely all be lost in short order. Key employees must be retained to ensure they don’t flock to competitors or become competitors. Their nerves must be calmed that they won’t be out of a job. Customers and clients need assurances that their matters will be taken care of.

 Finally, I would suggest that there is an inherent conflict of interest when the guardian of the minor children serves as a sole trustee over the estate administration. When you separate the functions of administrator from guardian, you are in essence putting checks and balances in to ensure that the estate assets and income aren’t improperly used. Since the beneficiaries of the estate are minors – it is vitally important that they are not put into a position to be taken advantage of, either intentionally or unintentionally.

 Let me leave you with this example to illustrate the point. Assume that the guardian, upon being told that she has the responsibility of raising three minor children, says that she needs a new home to have the space necessary for the new additions in her life. Should she take the estate funds to buy that new house?

 The correct answer is that she should not. While she certainly can charge the estate a reasonable rent during the time that she is raising the kids, and should be reimbursed for all normal and necessary expenses, she should not take money to build or buy a bigger house. The house is in her name, not the children’s. Taking a big chunk of cash to add on to a home or to buy a bigger one, with the equity in the home going to her ultimately, is not a proper use of the estate funds.

 When the guardian is also the administrator, there is no check and balance to discuss these issues and to arrive at something that is fair both for the guardian and for the children.

 When you think about naming guardians and trustees/administrators, keep the Michael Jackson saga in the back of your mind. It is providing good lessons for us all.

 ©2009 Craig R. Hersch