Katherine Jackson in Court to Discuss Custody, Kids' Allowance, MJ's Estate

Last week Katherine Jackson and Debbie Rowe struck an agreement concerning custody of Michael Jackson's two eldest children, Prince and Paris -- and today that agreement is being finalized in court, along with discussions regarding the allowances for the children and control over the late King of Pop's estate.

Katherine arrived at the L.A. courthouse wearing a cream-colored suit, and appeared visibly upset. Lawyers for Debbie Rowe were also present at this morning's hearing, where Judge Beckloff granted Katherine with permanent full custody of all three children. Debbie herself was not there. Prince, Paris and Blanket have been living with Katherine at her Encino estate since Michael passed away.

Dr. Arnold Klein, MJ's dermatologist, while not physically present, made a surprise showing in the proceedings, represented by Mark Kaplan, who most recently acted as Kevin Federline's divorce lawyer. Dr. Klein is a "third party objector," Kaplan explained to Judge Beckloff.

"He's not objecting to Katherine having the kids but is objecting to the actual custody," Kaplan explained. "He has a long-standing relationship with the children and... he has concerns based on his relationship with the children, with respect to areas such as education and everyday decisions effecting the children. He wants that to be consistent with Mr. Jackson's wishes. He wants to make sure that Mr. Jackson's desires on how the children will be raised will be upheld."

The judge questioned what legal standing Dr. Klein has on the situation, other than "an interested friend." Apparently Dr. Klein, who spent the last Christmas with Michael and the kids, wants a hand in decision-making regarding the kids' education and "long term interests," that coincide with MJ's wishes when he was alive.

In the matter of Blanket's mother, who has never been identified, all her rights were terminated, "therefore there is no single mother for Blanket," says Diane George, Katherine's custody lawyer, and no one is contesting his guardianship.

The court subsequently formally granted Katherine with guardianship of all three kids, saying it's in their best interest to be with their grandmother, setting a future date in eight weeks for a supplemental report.

Judge Beckloff did not reveal how much Jackson's estate would allocate to the kids and Katherine each month, but said it would be granted for six months, and which time a status hearing would be held to review the amount on January 11. The childrens' allowance amount is also sealed.

"These are numbers based on actual numbers when they lived with their father," said the judge, adding that he is inclined to grant 83.5 percent of the amount requested for the children, partly because the requested amount was duplicated in the money granted to Katherine for the childrens' care already.

The court is now taking a half hour break. Stay tuned for more.