A Nevada probate commissioner ruled last week against billionaire media scion Rupert Murdoch’s attempt to change his family’s trust in order to guarantee that his eldest son, Lachlan, would have broad control over his massive empire. Murdoch attempted to remove three of his less conservative children’s voting rights on the company’s board, stripping their power to potentially change Fox News' right-wing bent.
It’s a fascinating story Vanity Fair dubbed “perhaps the greatest setback in the 93-year-old mogul’s career.” And while many might have once yawned at the estate planning of the ultra wealthy, this private-turned-public succession drama is giving us a glimpse into the inner machinations of the one of the world’s richest families and corporate behemoths. It comes on the heels of “Succession,” HBO’s monumentally successful drama that ended last year and was based not-so-loosely on the Murdoch family.
The Murdochs' legal proceedings are "of great interest to people, and it just fits into this cultural moment,” Allison Tait, a law professor at the University of Richmond and expert in trusts and estates, told Salon. “People are trying to understand the ways that these trusts are used, and how things work.”
Murdoch presides over much of the world’s conservative media networks. He owns Fox News and News Corp., a conglomerate that owns The Wall Street Journal, The New York Post, MarketWatch, The Sunday Times, Dow Jones, Barron’s and scores of other publications, as well as the book publisher HarperCollins. Murdoch’s net worth is estimated at $12 billion, according to the Bloomberg Billionaires Index.
He has always intended to pass his media empire to Lachlan and his three other children: James, Elisabeth and Prudence. Their financial stakes in the trust were not in question; rather, Murdoch was attempting to consolidate their voting power under Lachlan, who shares their father’s deep conservatism, The New York Times reported. As the publication put it: “If Mr. Murdoch fails to lock in Lachlan’s leadership of the company, he will be unable to ensure that Fox News will remain a right-wing news outlet after his death, putting in jeopardy the legacy of the conservative empire he had spent his life building.”
Murdoch called upon a provision that allowed him to make changes to the trust if it were in the best interest of its beneficiaries, arguing there may be financial repercussions should Fox News shift away from conservatism. But he and Lachlan only notified the other Murdoch children of the proposal just days before the trust’s representatives were scheduled to vote.
Probate Commissioner Edmund J. Gorman Jr. wrote that the attempt amounted to a “carefully crafted charade” to “permanently cement Lachlan Murdoch’s executive roles," according to a sealed court document obtained by the Times.
“Oligarchs are oligarching, and we now have TV shows about how it works,” Tait told Salon. “And now, we have these actual courtroom cases happening. So people all around them, both on TV and in the newspaper, are getting a better understanding of how oligarchs oligarch.”
What is a trust?
A trust is a legal document that allows a person to place their assets — which could include stock, bonds, cash or real estate — under the ownership of the trustee, which is typically either an individual or a financial institution. That trustee then manages the trust’s assets for its beneficiaries, those who were chosen to receive the trust’s assets.
A revocable trust can be changed or revoked at any point. But an irrevocable trust typically cannot be changed or revoked after its creation, even if the trustee's personal circumstances change significantly from the time they set up the trust.
“It's somewhat common for circumstances to change, and for someone to come back and say, ‘I'd like to change the terms of this trust,'” Reid Kress Weisbord, a professor at Rutgers Law School and expert in wealth transfer and estate planning, told Salon. “I think less common is when the court actually grants that type of modification.”
The wealthiest families often opt for an irrevocable trust, for a key reason. When you put your assets in an irrevocable trust, you technically don’t own them anymore — they’re owned by the trust — and aren’t considered part of your taxable estate. This means those assets can be exempt from estate taxes, which can range from 18% to 40% of the estate’s value. In 2024, only estates worth more than $13.6 million for individuals and $27.2 million for married couples were subject to the tax, according to Kiplinger.
“The less it looks like you own something, the more protection you get from creditors, including taxing authorities,” Tait said. “According to people who want to protect their money, that’s the beauty of these irrevocable trusts.”
Trusts, both revocable and irrevocable, also typically offer the advantage of privacy. Whereas a standard last will and testament can be changed in most circumstances, they are filed in court and could be available to the public. Trusts, on the other hand, are private legal documents that don’t have to be filed publicly.
What kind of trust does Murdoch have?
The circumstances in which Murdoch’s trust was formed may shed light on why he opted for an irrevocable trust.
It was set up in 1999 amid his divorce from his second wife, Anna Torv, according to The Financial Times. Rather than seek the full amount of money she was entitled to, Torv “demanded” Murdoch put his assets in a trust for their three children — Lachlan, Elisabeth and James — as well as for Prudence, Rupert’s daughter from his first marriage, the publication reported. The four children received equal financial holdings, and one board vote each in the company.
"It appears that as part of the divorce settlement, the reason for doing it was to make sure it could not, then, at any point, be unwound," said Naomi Cahn, a law professor at the University of Virginia and expert in trusts and estate planning.
Mitchell Gans, a professor of law at Hofstra Law School and an expert in estate and gift taxes, speculated that a provision allowing amendments could potentially jeopardize the tax benefits that come with an irrevocable trust. Gans said the point may have been instead to make sure Murdoch wouldn’t remove any of their children as beneficiaries.
“There are two ways to do that,” Gans said. “You could have a contract saying, ‘I'll make a will and I won't change my will.’ Or, you could do an [irrevocable] trust.”
Tait, of the University of Richmond, said she assumes the trust still enjoys the tax benefits because while it's technically possible to change an irrevocable trust, it's extremely difficult.
“Obviously, whoever drafted it for him is probably well paid and well trained,” Tait said.
Why was the trust based in Nevada?
The Murdoch family’s legal battle played out in probate court in Nevada, where the trust was formed. Nevada has some of the strongest asset protection laws in the country; trusts created in the state can be shielded from creditors, lawsuits, bankruptcies and other financial risks.
Nevada also doesn’t have a state income tax or inheritance tax. Inheritance taxes aren’t terribly common, but can rise as high as 15% to 18% of the inheritance’s value. But state income taxes account for a large source of state government revenues — on average, representing 38% of states’ collected taxes, per the Tax Foundation.
“Nevada certainly does try to attract trust business,” Cahn told Salon. “It's one of the most protective of these assets, and it does have particular privacy with respect to trust proceeding.”
Nevada also allows individuals and families to form “dynasty trusts,” which can last up to 365 years and allow assets to be passed down for generations without being taxed. In most other states, trusts can only exist for anywhere from 20 to 120 years, depending on the circumstances.
It's not clear whether Murdoch had a dynasty trust or another form. But the saga represents “a cautionary tale about what can happen when you bring family disputes into court,” Kress Weisbord said.
“This is turning into quite a public spectacle, and I'm sure it's not good for the family," Kress Weisbord said.
A lawyer for Rupert Murdoch, told The New York Times that his client and Lachlan were disappointed with the ruling and intended to appeal.
James, Elisabeth and Prudence told the media they “hope that we can move beyond this litigation to focus on strengthening and rebuilding relationships among all family members.”
