Rupert Murdoch, 93 year old billionaire, whose holdings include huge media outlets Fox News, The Wall Street Journal and the New York Post among others, has been attempting to alter a family trust created by him in circa 1999.
Like many business-minded parents, Mr Murdoch underwent a succession planning exercise, involving his four children and his larger media outlet holdings in the late 20th century. It appears that Mr Murdoch created the Murdoch Family Trust in 1999 to hold shares in some of his larger media outlets, under which Mr Murdoch’s four children would equally inherit the shareholdings upon his death. However, fast forward to 2024 and Mr Murdoch no longer deems the original trust structure appropriate or suitable for his vision for the future of the various outlets. He sought to vary the terms of the Trust in favour of his eldest son whose political views are reportedly most akin to his own.
What sparked the Murdoch family’s court case, which in itself gained widespread media attention, was an attempt by Mr Murdoch to vary the terms of the family trust. This purported variation was argued not to exclude any of his children, but rather served the purpose of giving the eldest son greater control and more “votes” over the various media holdings following concerns over the “lack of consensus” among his four children.
Principles of creating a trust in the UK
Once the creator of the trust (the Settlor) has settled their assets into a trust, the legal ownership of such assets transfers to the trustees, for the benefit of the beneficiaries. The roles and duties of trustees are to be respected and taken very seriously. Those in the role of trustee are held to a high standard, particularly in relation to their duty of care and fiduciary duties to act in good faith and in accordance with the best interests of the beneficiaries.
Trusts are a popular option for business people undergoing a personal estate planning exercise for the purposes of tax planning whilst retaining control of assets; they also often form an integral part of business succession planning for the years ahead. They are commonly drafted on a discretionary basis, providing the trustees with wide powers and discretion in relation to their decision making powers and abilities, sometimes including the power to add or remove beneficiaries and importantly decide how and when trust assets are distributed among beneficiaries.
It is common procedure that once a trust is created it is irrevocable in nature and as such the Settlor may have a very limited role, if any role at all, in administering the trust, however this will be dependent on the terms of the trust.
Lessons from the Murdoch Family Trust
Succession planning, especially in a family business context, can be a complex and challenging process, often requiring foresight and preparation for various potential business scenarios. Trusts can be a valuable planning tool in the right circumstances, but must be considered carefully. The Murdoch family trial emphasises the importance of thoroughly understanding the terms and structure of a trust and the implications that these may have. Key trust components to consider can include the level of flexibility within the trust, the degree of control retained by the Settlor, and whether the trust is revocable or irrevocable.
Therefore, when undertaking the exercise of succession planning, consideration should be given to the team of advisors who can provide comprehensive input throughout the process. Each succession plan is unique, and there is rarely a “one-size-fits-all” solution as such. Therefore, seeking professional legal, financial, and tax advice is crucial. This proactive and holistic approach allows for a thorough assessment of available options and the determination of the best course of action tailored to one’s specific circumstances and future goals. By doing so, one can hopefully avoid the sort of contentious and emotional disputes that have affected the Murdoch family in recent years.
For legal guidance and advice regarding estate planning, please contact Fiona Kirkpatrick or Anna Thompson in our Private Client team for more information.
While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.
