Meanwhile, “the Estate provides Michael’s mother and children with very substantial amounts of money to support them,” the late singer’s estate said in a statement
Daniela Avila is an editorial assistant at PEOPLE. She has been working at PEOPLE since 2021. Her work previously appeared on The Poly Post.
The trusts of Michael Jackson’s mom Katherine and three kids Paris, Prince and Bigi cannot be funded until an ongoing dispute between his estate and the IRS is resolved, the estate’s executors say in a new legal filing.
In a May 28 filing obtained by PEOPLE regarding the King of Pop’s ongoing estate case, the executors under his will state that so long as the legal disputes continue, the trusts of his beneficiaries cannot be funded. However, the distributions do not affect the money they are allocated.
All three children are beneficiaries of the estate and receive a substantial amount of money. Katherine is a life beneficiary of a portion of the trust, and a source close to the estate says that she has received more than $55 million since the singer’s death. “Virtually no request of Mrs. Jackson for her care or maintenance has been declined,” the estate contends in recent filings, obtained by PEOPLE.
In a statement to PEOPLE, the “Thriller” singer’s estate said that his family members still receive payments through an allowance.
“In annual reports provided to the probate court, which are publicly available, 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 whenever they need anything, the Estate works with them to ensure that they are very well taken care of, just as Michael would have wanted.”
The ongoing legal dispute began when the IRS audited the estate’s federal estate tax return and “issued a note of deficiency” claiming that the estate “undervalued its assets” and owed “an additional $700 million in taxes and penalties,” the filing states.
In 2021, the estate disputed those assessments and won in 2021 after a trial in tax court. Since then, however, the estate filed a motion for reconsideration regarding the court’s value of Mijac (his music catalog owned by Sony music) that remains pending.
Therefore, the value of the estate for tax purposes has not been determined. Once it is, the IRS and the estate need to agree to the value of deduction before a final judgment can be entered.
While that process is underway, the California Franchise Tax Board requested that a portion of the estate “remain subject to administration” while the remaining legal issues are resolved to distribute to the Michael Jackson family trust.
John Branca and John McClain, the executors under the will of the pop star, rejected the request because they cannot “possibly determine what amount could be safely distributed at this time,” per the filing.
In addition, the trust “requires that 20 percent of the estate ‘as valued for federal estate tax purposes’ be distributed to charity before the remaining assets of the estate can be distributed to sub-trusts,” the executors say in their filing, adding that, “a resolution of the dispute is “necessary” to determine the charitable contribution.
Until then, the executors state that the estate continues to provide for the kids and his mother through “the family allowance.”
The new 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.
In the filing, Katherine alleged that the executors are being too frugal with how the estate money is being awarded to its beneficiaries and argued that they can afford to cover the costs she’s requesting.
The filing stated, “… it seems clear to [Katherine] that the Executors are holding all of the assets in the Estate in order to keep control over them, and to avoid the more liberal distribution requirements of the Trust.”
The filing also made an argument against 20 percent of the estate being donated to charities: “…Nothing in the Trust requires those payments to be made before any preliminary distribution to other beneficiaries.”
Katherine herself is not a beneficiary of the estate like the singer’s children, but is instead a sole beneficiary of a sub trust in Michael’s will.
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