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Michael Jackson's estate was recently valued at just $7 million by its advisors. The IRS seemingly disagrees, indicating the estate owes $702 million in taxes. Jackson's estate appears to be ready to tell the IRS to just "Beat It"; they've recently hired one of the country's top tax litigation firms.
Several major discrepancies exist surrounding the value of Jackson's likeness and his trust interest that controls his music as well as The Beatles' music. At first glance, the position does appear to be quite aggressive. Jackson's estate valued his likeness at $2,105 and the trust interest at $0. The IRS believed Jackson's likeness was worth $434 million and the trust interest was closer to a $469 million valuation.
In an uncommon turn of events, the IRS has responded to the estates executors with a 40% penalty rate rather than the traditional 20% rate. The 40% rate is clearly intended to send a message.
Ultimately, time with tell what Jackson's estate is really worth. This is yet another high profile estate which reminds us all the unexpected happens. A little proactive estate planning can go a long way towards protecting your heirs, your legacy, and your assets. Put "updating my estate plan" on your to do list for 2014.