The agreement announced today preserves Jackson's wishes as spelled out in his 2002 will and maintains a stable parenting figure in their lives. It also reopens the door to a relationship with Deborah Rowe, who is the mother of Jackson's two oldest children.
Rowe will be allowed to visit her children, as part of the agreement. Those visits will be coordinated by a child psychologist.
Rowe will receive no money from the deal, as she had after previous custody arrangements with Jackson.
The agreement ends the possibility of a lengthy and public custody battle between Katherine Jackson and Rowe. It spares the children, who range in age from 7 to 12, from appearing before a judge and declaring who they would prefer to live with.
The announcement also ends weeks of rampant speculation about who would care for the children and Rowe's intentions, which were never officially announced before today.
Michael Jackson, who died on June 25 at 50, was the sole parent to his three children. He was married to Rowe for three years, but both had described the relationship as borne out of friendship and that Rowe had given birth to Prince Michael, 12, and Paris-Michael, 11, as a "gift." They divorced after Paris-Michael was born.
His third child, 7-year-old Prince Michael II, known as Blanket, was born to a surrogate and the mother's identity has never been revealed.
In a joint statement, attorneys for both women made clear that the agreement was reached with the children's best interests in mind.
"Mrs. Jackson and the family are pleased this matter is resolved and was handled in a caring, thoughtful and courteous manner by the parties and their representatives," L. Londell McMillan and Diane Goodman, attorneys for Mrs. Jackson, wrote in a statement.
"We were all united in our goals to do what is best for Michael's wonderful children, and both Mrs. Jackson and Debbie Rowe were on the exact same page."
Eric M. George, an attorney for Rowe, called the agreement a "dignified outcome." George credited Katherine Jackson's attorneys for their work on the deal, and expressed pride with Rowe for "her integrity and selflessness."
The use of a child psychologist to coordinate and oversee the visits is a smart move, said Dorian Traube, a professor at the University of Southern California's School of Social Work.
"This is a good model for introducing these kids to a woman that they don't know very well," Traube said.
She said child psychologists are often used in situations where children are being reintroduced to a parent who lost visitation privileges. It's often a temporary arrangement, she said, since the aim is for the children and parents to develop their own relationship.
"The whole point of doing this is to build to a point of autonomy," Traube said.
She said an experienced psychologist will also help the children deal with their father's death, and ensure that Jackson's children, family and Rowe "are comfortable because it is an unusual situation."
The children have been living with their 79-year-old grandmother at the family's home in the San Fernando Valley since their father's death. Despite their untraditional upbringing, they have been described as model children.
Katherine Jackson was perhaps her son's most constant and trusted confidante - by his side through the triumphs and successes of his music career and his downfall after being accused of child molestation.
The singer clearly favored his mother as caretaker for his children, designating her as his top choice in his will. His backup was singer and friend Diana Ross.
Although Jackson's children have grown up without a mother, Jackson adored his.
"Every child thinks their mother is the greatest mother in the world, but we Jacksons never lost that feeling," Jackson wrote in "Moonwalk," his 1988 autobiography. "Because of Katherine's gentleness, warmth and attention, I can't imagine what it's like to grow up without a mother's love."
Jackson was fiercely protective of his children, generally shielding or disguising them in public. Their introduction to the public came during Jackson's memorial service, an event broadcast worldwide. Paris-Michael provided the service's most touching moment when she tearfully eulogized her father as "the best father you could ever imagine."
Rowe, 50, who breeds horses and has a home northeast of Los Angeles, has not been a fixture in the children's lives. She met Jackson when she was a receptionist for celebrity dermatologist Dr. Arnold Klein.
Public records show there have been significant gaps in visits between Rowe and her children, but they do not indicate when she last saw them.
In 2001 Rowe wrote of Jackson's parenting when she petitioned to relinquish her parental rights. "Michael has been a wonderful father to the children and I do not wish to share parenting responsibilities with Michael because he is doing so well without me."
At the time, she said she hadn't seen her children in more than a year.
Although much has been made of that decision since Jackson's death, her parental rights were eventually restored and she petitioned for custody after the singer was charged with child molestation in 2003.
Yet she was one of Jackson's strongest witnesses at his 2005 child molestation trial in Santa Barbara.
Rowe described him to jurors during the singer's criminal trial as: "Generous to a fault, good father, great with kids, puts other people ahead of him. Brilliant businessman."
At the time, she testified it had been two-and-a-half years since she saw her children.
Although Rowe never formally petitioned for custody after Jackson's death, the agreement with Katherine Jackson will likely be discussed during a hearing scheduled for Monday in Los Angeles Superior Court. That hearing will now focus more on lingering issues with Jackson's multimillion dollar estate, of which Katherine Jackson has vied for control.
