The Murdoch family’s version of the HBO show Succession was recently on display in a Nevada courtroom. Rupert Murdoch, the 93-year-old patriarch of the family, identified his son Lachlan as the heir apparent of Fox Corp., home of conservative news network Fox News, and News Corp. Lachlan is currently the executive chair and CEO of Fox Corp. and chair of News Corp.
Lachlan is believed to share Rupert’s conservative political views, which would better protect the brand and value of Fox News. Note that James Murdoch, Rupert’s son and Lachlan’s brother, recently signed a public letter endorsing Vice President Kamala Harris for president. That certainly conflicts with the public positions of Fox.
However, part of Rupert’s estate plan includes an irrevocable trust that provides for the voting shares of Fox Corp. and News Corp to go in equal shares to his four oldest children: Prudence, James, Elisabeth and Lachlan. Rupert now seeks to give full voting control to only Lachlan.
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Estate planning in Nevada
Nevada has long sought to establish itself as a premier trust destination and is perhaps best known in the estate planning world for its domestic asset protection trusts (DAPTs). A DAPT is a trust that is designed to protect the creator’s, or grantor’s, assets from his or her own creditors. This is also called a self-settled spendthrift trust.
Currently, only 17 states have laws that permit a DAPT. Nevada is one of those states. The others are Alaska, Delaware, Hawaii, Michigan, Mississippi, Missouri, New Hampshire, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Virginia, West Virginia and Wyoming.
To establish a Nevada trust or any other DAPT state, you do need to have sufficient contacts with that state. However, you need not actually be a resident of that state, and your assets or real property need not be located in that state. Typically, jurisdiction or required contact is definitively established by using a Nevada trustee.
There are a few Nevada trust companies that can fill that role at your direction. You can continue to be the investment trustee to retain direct control over your assets. Most Nevada trust companies prefer that, as there is less liability for the trust company because it is not directly managing the investments.
Typically, a Nevada LLC or another DAPT state LLC is used to hold assets that are in turn helped by the DAPT. Note that a Nevada LLC provides substantial protection, as collectors are typically limited to receiving amounts distributed from the LLC to the creditor and cannot pierce or seize assets held in the LLC.
Many practitioners rate Nevada as the strongest, or one of the strongest, jurisdictions providing the best asset protection. In making that determination, consideration is given to the following factors:
- Strength of the state statute
- The fact is that Nevada has no state income tax
- The statute of limitations for pre-existing creditors
- Nevada has no exceptions for child support claims
- Nevada has no exception for pre-existing tort creditors
- Nevada has no requirement for a solvent certification
- The need for clean and convincing evidence to establish a fraudulent transfer (a transfer to avoid a creditor)
- The ability to decant or modify the trust
- Nevada LLCs provide strong charging order protection
Nevada allows privacy in disputes
Perhaps the most overlooked characteristic is the ability for privacy within Nevada courtrooms. Parties and judges may hold hearings behind closed doors and even not publish the matter on the court’s public docket. With a private docket, how does anyone file to seek access? Perhaps due to the exceedingly high level of public interest in the Murdoch Family Trust, the Nevada court uncharacteristically disclosed a general docket information page, which was established under the name The Matter of the Doe Trust PR23-00813. The case itself remains sealed and not available for public review or scrutiny.
A media coalition sued for access by reporters — and even cameras in the courtroom — asserting that the public has a right to know. The request was denied, as the judge held that this was “essentially a private legal arrangement.” The denial is under appeal.
This ability to keep disputes like this private is a substantial advantage in Nevada over virtually all other jurisdictions. While this is certainly true for the Murdochs of the world — high-net-worth, high-profile families — we all would like to keep family discord or dirty laundry private. For instance, imagine how different the media coverage would have been had Johnny Depp and Amber Heard been allowed to keep private their highly emotional litigation.
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