Michael Jackson’s kids cut off from trust money until estate settles IRS dispute

Michael Jackson’s kids cut off from trust money until estate settles IRS dispute

Michael Jackson’s children, Prince, Paris, and Bigi, along with his mother Katherine, are currently unable to access funds from his trust due to an ongoing dispute between the late singer’s estate and the IRS. This financial impasse stems from a tax audit that led to a significant disagreement over the valuation of Jackson’s estate.

The IRS conducted an audit and issued a note of deficiency, claiming that the estate had undervalued its assets and owed an additional $700 million in taxes and penalties. This dispute has been dragging on for years, and despite a favorable ruling for the estate in 2021, the matter remains unresolved.

In 2021, the estate contested the IRS’s findings in tax court and emerged victorious. However, the estate’s legal team subsequently filed a motion for reconsideration regarding the value of Michael Jackson’s music catalog, known as Mijac, which is owned by Sony Music. This motion is still pending, leaving the estate’s value undetermined for tax purposes.

As the legal battle continues, attorneys representing the estate requested that a portion of the estate be distributed to the Michael Jackson family trust. However, this request was denied by the executors, John Branca and John McClain, who argued that they could not determine a safe amount to distribute at this time.

The executors further explained that the trust requires 20 percent of the estate’s value, as determined for federal estate tax purposes, to be donated to charity before any remaining assets can be distributed to sub-trusts. This means that resolving the dispute is essential to determine the size of the charitable contribution and proceed with any distributions to the beneficiaries.

In the meantime, the executors suggested that the estate provide for Michael’s children and mother through a “family allowance.” This allowance would ensure that the family’s immediate financial needs are met while the legal issues are being resolved.

The situation has also led to internal family disputes. Bigi Jackson has been involved in a legal battle with his grandmother Katherine, who attempted to use money from the estate to cover her legal fees for an undisclosed court case. Katherine argued that the executors were being overly frugal with the estate’s funds and that they could afford to cover her legal costs.

Katherine’s filing stated that the executors were holding onto the estate’s assets to maintain control and avoid the more liberal distribution requirements of the trust. She also contested the necessity of making charitable contributions before distributing funds to other beneficiaries.

The ongoing legal wrangling has left Michael Jackson’s beneficiaries in a state of financial limbo. Prince, Paris, and Bigi, who are the primary beneficiaries of the trust, along with Katherine, who is a sole beneficiary of a sub-trust in Michael’s will, are all waiting for the resolution of the dispute to access their inheritance.

The executors have emphasized that until the estate’s value is finalized and the IRS dispute is settled, they cannot safely distribute any funds. This cautious approach is intended to ensure that the estate can meet its tax obligations and fulfill the charitable contributions required by the trust.

The legal battle over Michael Jackson’s estate has been ongoing for years, and it remains unclear when a resolution will be reached. Until then, the beneficiaries will have to rely on the family allowance to meet their financial needs.

This complex situation highlights the challenges of managing a high-profile estate with significant assets and legal disputes. The executors are tasked with balancing the needs of the beneficiaries with the legal and financial obligations of the estate, a task that has proven to be both challenging and contentious.

As the dispute continues, the Jackson family and the executors will need to navigate the legal complexities to reach a resolution that satisfies all parties involved. Until then, Michael Jackson’s children and mother will remain cut off from the trust funds that were intended to provide for their financial security.

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