Singer-songwriter Michael Jackson died in 2009, but the battle over his estate lives on within his family and with the Internal Revenue Service (IRS).
The abundantly talented Mr. Jackson had a taste for spending. He made millions and paid millions in diverse purchases, some carrying high interest rates. When he passed away, he owed approximately $500 million according to media reports. Creditors surfaced to press claims, some via lawsuits. Since that time, executors have worked to stabilize estate holdings, repay creditors, and resolve litigation against the estate.
As with the estate planning of other celebrities, Mr. Jackson’s estate and will are complex. The history of the IRS and the Jackson estate goes back to an initial evaluation by the IRS that found that the estate had devalued the holdings of Mr. Jackson. The IRS estimated his wealth at the time of his demise at about $482 million. The estate claimed far less. An IRS tax audit in 2013 left the heirs of the state with a $700 million tax bill, about a third of that in penalties.
The tax litigation reached an inflection point in 2021 when Judge Mark Holmes issued a lengthy finding that determined the actual value of the estate at the time of Mr. Jackson’s death was closer to the $100 million mark. Within that ruling, the judge found in favor of the estate regarding the value of Mr. Jackson’s likeness and image. The IRS had claimed a worth of approximately $160 million, although reputational damage due to child abuse charges had significantly dimmed Mr. Jackson’s merchandising prowess.
Since that time, disagreements within the family about disbursements made from the family trust to family members have caused internal strife. Pending motions and a final valuation of the estate continue to delay the distribution of assets to Mr. Jackson’s three children and his mother. At present, Ms. Jackson seeks to challenge Sony over its ownership of Mr. Jackson’s music catalog.
When a final valuation of the estate is reached, the IRS can then re-calculate its tax bill. Because executors are leery of making final distributions with so much still in the air—the beneficiaries of Mr. Jackson continue to wait.
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