I have an unusual fascination with celebrity estates, especially those gone wrong. Using those estates as instructive lessons regarding how to avoid disaster has provided many a topic for this blog. I often discuss the benefits of creating and reviewing an Estate Plan regularly. Simply put, none of us should leave our legacy to chance. Not long ago, I wrote about the Murdoch family and the latest drama surrounding them in A Message from the Murdochs. Recently, a friend sent me a link to a New York Times Magazine article expanding that narrative. The article provides a much deeper dive into the underlying facts, worthy of any Succession plot. The article explains that this saga began years ago and came to a boiling point. Turns out, my first article in this series barely scratched the surface of this complex legal and family drama.
As the first part of this two-part article indicated, Rupert Murdoch (“Rupert”) understands legacy better than most. Late in 2023, Rupert filed a petition to amend the terms of an irrevocable trust that holds his approximately 40% interest in News Corporation (“News”) (which owns The Wall Street Journal) and Fox Corporation (“Fox”) because he wanted to solidify leadership of his empire and decided that his eldest son, Lachlan Murdoch (“Lachlan”), was the child best-suited to the task. According to the New York Times, Murdoch initiated the petition to prevent James Murdoch (“James”), Elisabeth Murdoch (“Liz”), and Prudence Murdoch (“Prue”) from receiving their respective voting rights in the entities because he disagreed with their politics.
As the New York Times Magazine article explained, Rupert created the subject trust in 1999 when he divorced his second wife, Anna, so that he could marry his third wife. At that time, three of his four children, Lachlan, James, and Liz, all worked in the family business and competed to assume control of the companies. As part of the negotiations during the divorce, Rupert and Anna agreed that upon Rupert’s death, his four children, Lachlan, James, Liz, and Prue would split control of the companies. None of his future children, if he had any, would have any rights to the companies. Note that this is an unusually harsh Estate Planning result. Rupert then married his third wife and within five years they had two children, Grace and Chloe Murdoch. At that time, he negotiated with his oldest children to restructure the plan to split his fortune equally among all six children, but the youngest two would have no voting rights. The restructured trust expires in 2030 but until that time, the shares remain together and essentially under Rupert’s control. The trust allows Rupert to make modifications to it if such change benefits the beneficiaries.
After restructuring the plan in the early 2000s, the older children continued to compete with one another, hoping that Rupert would name one of them as his successor. Several years into the battle scandal rocked the company, forcing Rupert and the children to pivot. Late in 2019 Lachlan became chief executive of Fox and co-executive chairman of Fox and News, which title he shared with Rupert until he retired in late 2023. As the plan currently works, one corporate trustee administers the trust. The corporate trustee has a board of six directors. Each child with voting rights appoints one director, and each director has one vote. Rupert appoints two directors, each of whom has two votes, ensuring that Rupert maintains control during his lifetime. His four votes split among the four children with voting rights if he dies prior to 2030. Thus, notwithstanding Lachlan being the sole child with a title and the attendant responsibilities, James, Liz, and Prue also have voting rights. Rupert sought to change that by amending the trust to consolidate voting rights in Lachlan and deprive James, Liz and Prue of their voting rights. Given his advanced age and the looming expiration date of the trust, Rupert needed to act quickly.
In December 2024, the probate commissioner issued a 96-page opinion denying Rupert’s amendment. The commissioner suggested that Rupert and Lachlan acted in bad faith, that the newly appointed directors worked to cement Lachlan’s control and in so doing abused their discretion and breached their fiduciary duties. While Rupert and Lachlan have moved to appeal the decision, sources indicate that an overturn of the decision seems unlikely. It will be interesting to see if Rupert attempts something else as men like him rarely concede defeat. At 93 years old, he’s running out of time to impose the changes that he wants prior to the trust’s expiration in 2030.
We can take numerous lessons from this case although the biggest one is that incorporating flexibility into an Estate Plan helps prevent later litigation. That should be the last resort as it rarely ends the way the parties intend and generally only benefits the lawyers. Here, it seems that this last battle ended a long-standing family feud. Murdoch’s children have discovered his true feelings regarding their role in the future of his empire, and that is probably a bitter pill to swallow given their earlier involvement in the companies. No family is immune from squabbles, although a well-drafted, flexible Estate Plan may prevent future litigation. While we get to watch the reality that served as the basis for the hit TV show Succession, it’s hard to imagine living with the emotional toll that has resulted from the events leading up to this result. Don’t leave your legacy to chance; too much can go wrong if you do. Talk to a qualified Trusts and Estate practitioner to ensure that your Estate Plan works for you.
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