Michael Jackson‘s estate has announced that the trusts for his mother, Katherine, and his three children, Paris, Prince, and Bigi, cannot be funded until an ongoing dispute with the IRS is resolved.
In a May 28 filing obtained by PEOPLE, the executors of Jackson’s will stated that as long as legal disputes continue, the trusts for his beneficiaries cannot be funded. However, these issues do not affect the substantial amounts of money already allocated to them.
All three children are beneficiaries of the estate and receive substantial financial support. Katherine, a life beneficiary of a portion of the trust, has received more than $55 million since Jackson’s death. The estate emphasizes that virtually all of Katherine’s requests for care or maintenance have been granted.
In a statement to PEOPLE, the estate assured that Jackson’s family members still receive payments through an allowance. “In annual reports provided to the probate court, anyone can see that the Estate provides Michael’s mother and children with very substantial amounts of money to support them,” the statement reads. “The Estate has a very cooperative relationship with Michael’s children and ensures they are well taken care of, just as Michael would have wanted.”
The legal dispute began when the IRS audited the estate’s federal estate tax return and issued a deficiency notice, claiming the estate undervalued its assets and owed an additional $700 million in taxes and penalties. Although the estate disputed these assessments and won in 2021 after a tax court trial, a motion for reconsideration regarding the court’s valuation of Mijac (Jackson’s music catalog owned by Sony Music) remains pending.
Until the estate’s value for tax purposes is determined and agreed upon by the IRS, the California Franchise Tax Board has requested that a portion of the estate remain under administration to resolve the remaining legal issues and distribute to the Michael Jackson family trust.
John Branca and John McClain, the executors of Jackson’s will, rejected the request because they cannot determine a safe amount to distribute at this time. Additionally, the trust requires that 20 percent of the estate’s value for federal estate tax purposes be distributed to charity before the remaining assets can be distributed to sub-trusts. A resolution of the dispute is necessary to determine this charitable contribution.
Meanwhile, the estate continues to provide for Jackson’s children and his mother through the family allowance.
This filing comes two months after Katherine responded to her grandson Bigi’s objection to her using funds from Michael’s estate to pay her legal fees in a separate ongoing dispute with the executors over the singer’s catalog sale to Sony. Katherine argued that the executors are being too frugal with the estate’s funds and can afford to cover her requested costs. She also contested the requirement that 20 percent of the estate be donated to charities before any preliminary distributions to other beneficiaries.
Katherine is not a direct beneficiary of the estate like Jackson’s children but is the sole beneficiary of a sub-trust in his will.
