Entertainment
Michael Jackson’s Children Blocked from Trust Funds Over $700M Tax Dispute
Michael Jackson’s three children – Prince, 27, Paris, 25, and Bigi, 22 – along with his mother Katherine, 94, have been barred from accessing funds from the late singer’s trust due to an ongoing legal battle between Jackson’s estate and the Internal Revenue Service (IRS) over a $700 million tax bill.
The dispute arose when the IRS audited the estate’s federal estate tax return and claimed that it had “undervalued its assets,” resulting in an additional $700 million in taxes and penalties owed. While the estate initially won in court in 2021, it later filed a motion for reconsideration regarding the court’s valuation of Jackson’s music catalog, which is still pending.
Michael Jackson and children
Until this case is resolved and the value of Jackson’s estate is determined, the IRS and the estate cannot agree on the deduction amount for the federal estate tax return. Consequently, the estate’s co-executors, John Branca and John McClain, have denied requests from the beneficiaries to release funds, citing the ongoing IRS audit.
Family Feud Over Legal Fees
The situation is further complicated by a separate legal feud between Katherine Jackson and her grandson Bigi. Katherine has been attempting to use funds from the estate to cover legal fees incurred while challenging the $600 million sale of Jackson’s music assets to Sony, a move supported by Bigi and approved by a judge.
Katherine’s lawyer, Adam Pines, accused the executors of “trying to punish” her for contesting their actions and claimed they would have paid the legal fees if they were related to other litigation. Pines suggested the executors are intentionally withholding payments until Katherine passes away.
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Trust Distribution Requirements
According to the court filing, Jackson’s trust stipulates that 20% of his estate, as valued for federal estate tax purposes, should be donated to charity, with the remaining assets distributed to subtrusts. However, Katherine’s filing disputes the executors’ belief that charitable donations must be made before any distributions to beneficiaries, arguing that “nothing in the Trust requires those payments to be made before any preliminary distribution to other beneficiaries.”
Bigi, on the other hand, has requested the court deny Katherine’s request, stating that “a reversal on appeal would be an extreme longshot” and that her decision to appeal is “not for the benefit of the heirs.”
As the legal battle continues, the estate is providing for Jackson’s children and mother through a “family allowance,” but no funds from the trust itself will be distributed until the tax dispute is resolved and the estate’s value is finalized.
