Rupert Murdoch’s Trust Issues

The HBO program, Succession, echoed in a Nevada courtroom recently. The cable program imagined the machinations of a powerful media family, both craven and conservative. In real life, the succession of Rupert Murdoch, owner of News Corp. and Fox Corporation, was set when Murdoch transferred controlling ownership to an irrevocable trust. Since Murdoch’s retirement and as of September 2024, these corporations have been headed by his eldest son Lachlan Murdoch. Yet, the trust foretold a different story of control.

 

The issue of succession began in December 2023, when Rupert Murdoch applied to change the terms of his “irrevocable” family trust (established in 1999, as the Murdoch Family Trust, or MFT) to ensure that Lachlan would have full control over News Corp, a mass media and publishing company, rather than his three siblings Prudence MacLeod, Elisabeth Murdoch, and James Murdoch, who have equal voting rights.

On December 9, 2024, a Nevada probate commissioner ruled against Rupert and Lachlan Murdoch, concluding that they acted in “bad faith” in their endeavor to amend the irrevocable trust.

The trust divides control of the company equally among four of Rupert Murdoch’s children — Prudence, Elisabeth, Lachlan, and James — after he dies. The elder Murdoch argued that to preserve his businesses’ commercial value for all his heirs, the trust must be changed to allow Lachlan Murdoch to maintain Fox News’ conservative bent. James and Elisabeth Murdoch are both known to have less conservative political views than their father or brother, potentially complicating efforts to ensure that Fox News remains conservative.

Estate planners suggest irrevocable trusts as a key tool for estate and tax planning. Often, these trusts are used to minimize estate tax. They also can insulate the grantor from liability or set out succession planning for business owners. The success behind planning with irrevocable trusts is precisely because they are irrevocable. For most of my clients, such trusts can achieve great tax savings and asset protection and avoid family discord.

I often tell clients that irrevocable trusts are not a prison. There are ways of drafting such trusts to allow for some adjustments or even termination. Rupert Murdoch’s attempt to untie the bindings of the trust he created failed particularly because he was found to be in bad faith. Score one for a liberal theory of justice that supports the rights of all people to fair treatment and secured trust agreements!