Wills, Trusts & Estates Prof Blog

The billion-dollar battle of the Murdoch empire comes down to Reno courtroom

Since Monday, billionaire Rupert Murdoch, 93, and his team of lawyers have been in probate court, fighting over the fate of his media empire, including Fox News, The Wall Street Journal and The New York Post.

Murdoch wants son Lachlan Murdoch, who currently runs the vast collection of publishing and television companies, to have full control after his death. But to do that, Murdoch has to break an irrevocable trust set up during his second divorce. The way the trust stands now, operational control will be shared equally among Murdoch's four oldest children. James, Elisabeth and Prudence Murdoch are arguing against their father's desire to change the trust.

According to the Times, Murdoch "is arguing in court that only by empowering Lachlan to run the company without interference from his more politically moderate siblings can he preserve its conservative editorial bent, and thus protect its commercial value for all his heirs."

The Times reported that the Nevada probate commissioner found "Murdoch could amend the trust if he is able to show he is acting in good faith and for the sole benefit of his heirs."

When Murdoch dies, according to his irrevocable trust, his voting shares of FOX and News Corp. are set to go equally to his four oldest children. Murdoch wants it to go to son Lachlan, who runs FOX and is the chair of News Corp. Murdoch set up the trust during a previous divorce. Irrevocable trusts are usually set up for tax reasons and can't be changed without permission from beneficiaries or a court order.

Both sides are in front of Probate Commissioner Edward Gorman Jr. He was appointed as the commissioner in 2019. According to the county's website, he came to Nevada in 2009 for the abundant outdoor and community activities. He was an attorney and did estate planning, probate and business matters. He has been on the board of the Reno Host Lions club Charity and the Reno Jazz Orchestra. Gorman ruled earlier this year that if Murdoch can prove changing the trust is being done for the benefit of his heirs, he can change it, according to the New York Times. He also ruled against multiple petitions to the court for media access.

For more information see Siobhan McAndrew "The billion-dollar battle of the Murdoch empire comes down to Reno courtroom," Reno Gazette Journal, September 18, 2024. 

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

Heirs’ partition action not barred: Dog’s longevity leads to property dispute

The Rappahannock County Circuit Court ruled that a property settlement agreement (PSA) allowing a man to live on property during his dog's life did not prevent his heirs from seeking to partition the property after the dog outlived him. The PSA had minimal instructions for the scenario where the man died before the dog, which occurred.

The man's ex-wife opposed the partition and filed a plea in bar, arguing the PSA prevented the heirs' action. Judge James P. Fisher disagreed, stating that the PSA did not bar partition and that the heirs' claim was compatible with the parties' original intent to eventually divide the property. Fisher found insufficient evidence to enforce the PSA as a restrictive covenant or equitable servitude, concluding that the PSA's terms were too vague to bar partition.

Fisher emphasized that while the PSA allowed the ex-wife temporary rights to the property, the intention was always for the land to be divided between the parties or their heirs. The plea in bar was overruled, allowing the partition case to proceed.

For more information see Nick Hurston "Heirs’ partition action not barred: Dog’s longevity leads to property dispute," Virginia Lawyers Weekly, September 16, 2024. 

Special thanks to Deborah Matthews (Virginia Estate Planning Attorney) for bringing this article to my attention.

Five Common GST Allocation Mistakes and How to Avoid Them

The Generation-Skipping Transfer Tax (GSTT) is a complex aspect of estate planning that aims to prevent large wealth transfers from bypassing estate taxes by skipping generations. The article outlines five common mistakes taxpayers make in GST exemption allocation. These mistakes include failing to account for automatic GST exemptions for unreported gifts, overfunding trusts without enough GST exemption, and relying too heavily on automatic GST exemption allocation. Additionally, gifting to Spousal Lifetime Access Trusts (SLATs) without understanding gift-splitting implications and making distributions to non-skip persons from GST-exempt trusts can lead to inefficiencies in applying the GST exemption.

The first mistake involves taxpayers neglecting to report certain generation-skipping transfers on Form 709, which complicates tracking the GST exemption allocation. This can result in an incomplete gifting history, causing difficulties when determining the remaining GST exemption in the future. To avoid this, the article recommends filing a gift tax return even if not required, and maintaining a detailed record of automatic GST exemption allocations to ensure accurate future planning.

The other mistakes highlight the importance of thorough planning and record-keeping in estate tax strategy. For example, if a trust is overfunded with insufficient GST exemption remaining, a portion of the trust may become taxable, potentially incurring unexpected GSTT liabilities. To address these challenges, the article suggests careful review of all prior transfers, making an affirmative election regarding the GST exemption, and strategically structuring trusts to avoid misallocation or unintended use of the exemption. Ultimately, the article emphasizes proactive estate planning to avoid costly tax consequences.

For more information see Carol G Warley, Amber M Waldman, and Rachel Ruffalo "Five Common GST Allocation Mistakes and How to Avoid Them" ABA Probate and Property Journal, September 1, 2024.

Challenges in Estate Planning with Investment Real Estate

The article provides an in-depth analysis of the key challenges in estate planning for clients with significant real estate investments. First, it highlights the complexities of determining asset value, especially when dealing with varied property types such as residential, commercial, or rental properties. Market fluctuations, local conditions, and valuation techniques all influence the estate's worth, making accurate assessments difficult.

A major challenge addressed is liquidity. Unlike stocks or bonds, real estate isn't easily converted to cash, which complicates paying estate taxes or debts. This is especially important in high-value properties that don't generate sufficient cash flow. The article suggests strategies like taking out life insurance policies or selling certain assets to ensure liquidity.

Another critical issue is succession planning. Real estate assets may face legal disputes or management challenges if not handled properly. The article recommends creating trusts, outlining detailed plans for transferring properties, and considering family dynamics in structuring the estate. Long-term legal and financial planning is essential to avoid complications during the transition, making real estate an intricate aspect of estate planning.

For more information see Mary P. O'Reilly and Andrew L. Baron, "Challenges in Estate Planning with Investment Real Estate" ABA Probate and Property Journal, September 1, 2024.

AI and the Formulation of Critical Data for Trust Mediations

The article discusses how attorneys gather and use information in litigation, emphasizing that the ability to effectively process and apply information distinguishes good attorneys from ineffective ones. While attorneys must analyze facts and legal issues, the balance of information between opposing parties is often unequal. Discovery processes aim to level this imbalance, but time constraints and client needs—especially in trust disputes—can pressure attorneys to settle cases through mediation.

The article then explores the emerging role of artificial intelligence (AI) in assisting attorneys, particularly in trust litigation. AI platforms, including large language models (LLMs) and generative AI, are evolving to help attorneys manage and process information more efficiently. These technologies could soon support mediation, assisting with asset allocation in subtrusts, trust accountings, and other data-heavy tasks. AI's potential to automate complex calculations, verify opposing counsel’s projections, and organize financial records offers significant time and cost savings.

The future of AI in litigation will depend on its growing sophistication and the creative use of technology by attorneys, but its effectiveness in mediations and large-scale information processing is expected to increase dramatically. The question of whether AI can provide wisdom in decision-making remains open for debate.

For more information see John H Sugiyama "AI and the Formulation of Critical Data for Trust Mediations," ABA Probate and Property Journal, September 1, 2024.

Springing Trust Protectors — Now You See 'em, Now You Don’t

The article discusses the growing importance and use of a "trust protector" in estate planning, a role that wasn't widely understood until recently. Trust protectors originated with offshore asset protection trusts, where they provided an extra layer of control over the trust, offering flexibility and security for the settlor, who often hesitated to entrust large amounts of wealth to foreign trustees. This concept has since been adopted in U.S. trusts to allow adjustments to irrevocable trusts without needing court reformations, which can be complex, costly, and time-consuming.

A trust protector is a non-trustee individual with the power to oversee or modify trust provisions to respond to changing circumstances, such as laws, family dynamics, or economic conditions. Their powers may include modifying beneficiaries, relocating the trust, or even altering the trust's terms. However, the extent of a trust protector's powers and responsibilities requires careful drafting.

The article also explores the concept of a "springing protector," a protector appointed only when needed. This approach allows for flexibility without permanently binding the trust to a specific protector. Questions arise around the legal basis, liabilities, compensation, and scope of powers for both permanent and springing protectors, especially in terms of tax implications or potential creditor issues if a protector holds nonfiduciary powers.

Ultimately, the trust protector offers a practical solution to managing unforeseeable changes during the life of a trust, minimizing the need for court involvement and allowing for smoother administration.

For more information see Alexander A. Bove Jr "Springing Protectors — Now You See 'em, Now You Don’t" ABA Probate and Property Journal, September 1, 2024.

Creative life after death − or yes, you can control spinoffs from beyond the grave

The article discusses how the estates of deceased artists, like Michael Crichton, Isaac Hayes, and George Carlin, are involved in legal battles to protect their legacies and control over their intellectual property.

Michael Crichton’s estate is suing Warner Bros. for allegedly rebooting ER through a new medical drama The Pitt, invoking a "frozen rights" contract Crichton had signed, giving him and his estate approval rights over sequels. Such contractual rights can survive death, allowing estates to enforce them.

Copyright protection extends 70 years after an author's death, as shown by the estate of Isaac Hayes suing Donald Trump’s campaign for unauthorized use of his song, and Donna Summer’s estate’s lawsuit against Ye and Ty Dolla Sign for using her music without permission.

Publicity rights, which prevent unauthorized commercial use of someone’s name or likeness, also persist after death in some states. This is seen in George Carlin’s estate suing a podcast for using AI to mimic his likeness and voice. Little Richard's estate involved estate planning to ensure beneficiaries cooperated in managing his posthumous publicity rights, with penalties for interference.

These cases highlight how legal measures like contracts, copyright, and publicity rights help control the use of an artist’s work even after death, especially in the age of AI, where unauthorized reproductions are more common.

For more information see Naomi Cahn and Reid Kress Weisbord "Creative life after death − or yes, you can control spinoffs from beyond the grave" TheConversation.com, September 13, 2024. 

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

Simple request in Long Island woman's will sparked her son's devastating shotgun rampage on siblings

Joseph DeLucia, 59, from Long Island, fatally shot his three siblings and niece before killing himself after a dispute over their late mother’s estate. His mother, Theresa DeLucia, had left her home to be sold and the proceeds divided among her children, leaving Joseph, who had lived there his entire life, homeless. Struggling with mental health issues and panicked about losing his home, Joseph opened fire during a family meeting.

Despite reassurances from his siblings, Joseph believed he was being left out of the estate. He used a legally purchased shotgun to kill his family members inside the home before taking his own life outside. Neighbors and police noted his declining mental state, exacerbated by his mother’s death and fear of displacement.

Authorities revealed that Joseph had dealt with mental health problems throughout his life, and his hoarding tendencies worsened his isolation. His siblings had traveled from out of state for the meeting, and despite their efforts to resolve the situation, Joseph’s deteriorating mental state led to the tragic outcome.

For more information see James Gordon "Simple request in Long Island woman's will sparked her son's devastating shotgun rampage on siblings" The Daily Mail, September 12, 2024.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

Alleged romantic deception leaves man broke, homeless

Skyler Houston, 29, from Wichita Falls, was charged with exploiting a 66-year-old man by manipulating him into handing over money and property under the promise of marriage. From February to July 2024, she withdrew over $42,000 from his bank account, even stealing his Medicare oxygen equipment, leaving him homeless. Houston’s history includes prior fraud charges, including exploiting a 76-year-old woman and using stolen money to pay her rent.

Houston, currently on probation for other fraud cases, has been arrested nine times since 2020 for fraud, forgery, and credit card abuse. Police are investigating more cases involving elderly victims.

For more information see Larry Statser "Alleged romantic deception leaves man broke, homeless" Texomashomepage.com, September 11, 2024. 

Special thanks to Laura Galvan (Attorney, San Antonio, Texas) for bringing this article to my attention.  

Carol Burnett’s Estranged Daughter Erin Hamilton Speaks Out as Son’s Guardianship Ends

Erin Hamilton, Carol Burnett’s estranged daughter, spoke out about her son Dylan’s court-ordered guardianship ending as he turns 18. She expressed excitement about rebuilding their relationship, noting that Dylan graduated from high school and is now attending film school in New York. Erin shared her pride in Dylan’s achievements and her gratitude for the support he received during the guardianship.

In 2020, Carol and her husband became coguardians of Dylan due to Erin's struggles with addiction. Over time, Erin had supervised visitations, although her behavior led to visitation restrictions. Despite this, she maintained her sobriety and expressed her desire to reconnect with her son.

As the guardianship nears its end, Erin reflected on her sobriety journey and the positive steps she’s taken. She highlighted the importance of her job in treatment, her participation in a 12-step program, and her commitment to staying sober. Erin hopes to strengthen her relationship with Dylan as he enters adulthood.

For more information see Ryan Naumann "Carol Burnett’s Estranged Daughter Erin Hamilton Speaks Out as Son’s Guardianship Ends" InTouch, September 9, 2024.

Special thanks to Laura Galvan (Attorney, San Antonio, Texas) for bringing this article to my attention.