The dispute began when the IRS audited the estate’s federal estate tax return and claimed that the estate “undervalued its assets” and owed an additional $700 million in taxes and penalties. The estate disputed the IRS’ claim and won in court in 2021. However, the estate also filed a motion for reconsideration of the court’s value of Jackson’s music catalog. That case is still pending.
Until that case is decided, the value of Jackson’s estate cannot be determined and the IRS and estate cannot agree on the value of deduction in the federal estate tax return.
Jackson’s three kids, Prince, 27, Paris, 25, and Bigi, 22, are listed as beneficiaries to the late King of Pop’s trust, while his mother, Katherine, 94, is the sole beneficiary of a subtrust. Jackson’s trust calls for 20% of his estate ‘as valued for federal estate tax purposes’ to be given to charity and the remaining assets distributed to subtrusts. As the legal battle continues, the estate is providing for Jackson’s kids and mother through “the family allowance.”
Through all of this, Katherine and Bigi remain at odds over Katherine’s effort to use funds from the estate to cover the legal fees she incurred in a separate ongoing dispute over Jackson’s music catalog and its sale to Sony.
Katherine is arguing that the executors of the estate are not awarding enough to its beneficiaries and that they can afford to cover her legal costs.
“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,” her court filing reads, according to People.
The filing also disputes the executors’ belief that 20% of the estate must be donated to charity before additional assets are distributed — one of the factors holding up distributions to Katherine and her grandchildren in the first place.