Michael Jackson in Hawaii

Michael Jackson Reportedly Racked Up 9-Figures In Debt Before His Death

Home / News / Michael Jackson Reportedly Racked Up 9-Figures In Debt Before His Death

By Afouda Bamidele on June 28, 2024 at 8:45 AM EDT

It has been 15 years since Michael Jackson's tragic demise; however, alleged creditors are not letting his name rest in peace.

The King of Pop reportedly owed over $500 million in debt before his death. The shocking sum was recently revealed in a petition filed by the executors of the late entertainer's estate.

This isn't the first debt to surface after Michael Jackson's death, as his estate has been battling a tax dispute with the IRS.

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Michael Jackson Accused Of Owing Over $500 Million In Debt

Michael Jackson's Estate Says 'Bad' Music Video Outfit Is Worth $271,000

According to new reports, the executors of Jackson's estate filed a petition at the Los Angeles County Superior Court on June 21. They revealed the "Smooth Criminal" hitmaker's death in 2009 left them financially liable for his highly-anticipated tour.

Jackson died while gearing up for his "This is It" concert tour in London, resulting in his estate owing $40 million to the tour promoter, AEG Live. The debts continued with the filing, noting the late singer owed money to more than 65 creditors.

The court documents stressed that executors settled or disposed of most of the creditors' claims and litigation.

However, they are requesting that funds from Jackson's estate —  reportedly valued at $2 billion — be used to reimburse their attorneys for legal services and other expenses from 2018.

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The executors' attorneys, per RadarOnline, claimed it was challenging navigating through Jackson's debts because he "changed business managers, lawyers, and personal managers several times in the years immediately prior to his death."

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Executors Of Jackson's Estate Had To Track Down Documents Around The Country

Michael Jackson seen outside of Dorchester

Because of Jackson's habit of changing employees, the attorneys for the executors of his estate claimed they were forced to track down documents that were "scattered around the country." Part of their argument read:

"At the time of Michael Jackson's death, Michael Jackson's most significant assets were subject to more than $500 million of debt and creditors' claims, with some of the debt accruing interest at extremely high interest rates, and some debt in default."

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The documents also stated, "The Executors, with the assistance of their legal team, worked to bring all debt current, and negotiated and restructured the debt at interest rates far more favorable to the Estate so that the Estate was able to and has paid in full all of the debt that so heavily burdened Michael Jackson during his life."

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Jackson's Estate Is Involved In An IRS Tax Dispute

Michael Jackson seen out and about in Los Angeles

According to legal documents obtained by The Blast, Jackson's mother and children were unable to receive trust funds during the IRS drama involving his estate. The filing revealed that part of the music icon's estate must be given to charity before distributions.

"The Trust requires that twenty 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 documents read.

However, the filing noted that the charitable donations could not happen without resolving the IRS problem. "The trusts for Mrs. Jackson and Michael's children cannot be funded until the tax dispute with the IRS is resolved," the documents stressed.

Jackson's Loved Ones Will Continue To Receive Funds From Their Family Allowance

Michael Jackson waving at fans in Spain

The filing noted that the resolution of the IRS tax dispute "is necessary in order for the Executors to determine the amount of the charitable gift." Hence, executors cannot distribute to the beneficiaries, even if the trust was funded.

"Therefore, Mrs. Jackson and the children's needs would not be able to be met by a distribution to the trust," the legal documents explained, adding:

"It is in Mrs. Jackson's and the children's best interests for the Estate to continue to provide for them through the family allowance, which the Executors are authorized to do."

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Michael Jackson's Music Catalog Rights Put Up For Sale

A close up portrait of Michael Jackson wearing dark shades

In February, The Blast reported that Sony and a likely financial partner were working out a deal to acquire 50% of the estate's interests in Jackson's music catalog. The sale would go for around $800 to $900 million.

The assets named in the reported deal include the King of Pop's "publishing, recorded-music revenues, the "MJ: The Musical"Broadway show and the upcoming biopic, 'Michael.'" The news of the catalog sale came at the heels of a shocking theft.

A hard disk containing Jackson's music and memories was stolen from his longtime collaborator, Brad Sunberg, and its contents were leaked hours later.

This included an exciting encounter between the icon and the Russian boy who voiced a part in the song "Stranger in Moscow."

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