Rupert Murdoch’s real succession drama − why the future of his media empire could hinge on a legal effort in Nevada

Rupert Murdoch is attempting to alter an irrevocable trust that holds significant ownership in Fox Corp. and News Corp., which impacts various media outlets. Currently, the trust stipulates that upon Murdoch's death, his four oldest children—Lachlan, James, Elisabeth, and Prudence—will equally determine the future of the media empire. Murdoch's efforts, dubbed "Project Harmony," aim to ensure Lachlan remains in control, hoping to prevent familial conflicts. This legal maneuver has been kept secret, with proceedings occurring in a confidential Nevada probate court.

Trusts are estate planning tools that manage and distribute property, often used to minimize taxes, protect assets, and avoid probate. Trustees, who manage the trust's property, are fiduciaries obligated to act in the beneficiaries' best interests. Trusts can prolong a donor's control over their property through appointed trustees.

In Nevada, irrevocable trusts can be modified by court order if all beneficiaries agree, or through "trust decanting" by trustees. Nevada's laws also allow settlors to maintain greater secrecy about trusts, even from beneficiaries. The Murdoch Family Trust's secrecy and location in Nevada align with these protective laws.

The trust dispute stems from Murdoch's 1999 divorce agreement ensuring his children would inherit News Corp. Murdoch's current concern is that equal governance among his children might lead to conflicts, particularly due to differing political views, threatening the company's stability. Although the trust is irrevocable, it allows changes made in good faith for beneficiaries' benefit. Murdoch argues that Lachlan's sole governance would be more profitable for the trust.

A court will decide if Murdoch's proposed changes are in good faith. This case highlights the complexities of trusts in managing family businesses and the challenges of ensuring harmony among heirs.

For more information see "Rupert Murdoch’s real succession drama − why the future of his media empire could hinge on a legal effort in Nevada" The Conversation, July 30, 2024. 

Special thanks to Naomi Cahn (University of Virginia School of Law) for bringing this article to my attention.