Trusts are a common estate planning vehicle.
Generally, revocable trusts can be changed or revoked at any time before the settlor’s death.
Irrevocable trusts can be changed but it is very difficult to do. To change an irrevocable trust, the settlor must consent, and the beneficiaries must all consent.
If someone does not consent, the parties proposing the change to the irrevocable trust can petition a court to allow for the change.
In life, circumstances and desires change.
What happens when the creator of an irrevocable trust, well after the trust’s creation and funding, changes his or her mind about the trust’s dispositional scheme?
That is the question currently plaguing the family of Rupert Murdoch (“Murdoch”), the patriarch of the Murdoch media empire which owns News Corporation (The Times, The Sun, and The Wall Street Journal) and Fox (Fox News).
One of Murdoch’s trusts, the irrevocable Murdoch Family Trust, holds News Corporation as its major asset.
When created in 1999, the trust provided that, at Murdoch’s death, control and decision making over the company would be divided equally amongst Murdoch’s four oldest children, Prudence, Elisabeth, Lachlan, and James.
Murdoch now wants Lachlan to have exclusive control and decision making over News Corporation, including Fox News, in large part because he believes Lachlan would continue the company’s agenda as it has been put forth during Murdoch’s life. As expected, the children have differing opinions, and family disagreements have ensued.
Can Murdoch change his trust to reflect his current desires?
Murdoch’s proposed changes to the trust are now being litigated in the Nevada courts.
In fact, a Nevada court commissioner recently denied Murdoch’s petition to change his succession plan and give more control to his son.
The commissioner reasoned that the trust is by definition irrevocable, and Murdoch and Lachlan acted in “bad faith” to change it to give Lachlan eventual exclusive power over the media conglomerate.
This is likely the beginning of the Murdochs’ litigation, not the end.
It appears that Murdoch will appeal the commissioner’s decision and continue his attempt to change his irrevocable trust and his succession plan in the new year.
While only the rarified few are in the financial and business stratosphere of the Murdochs, we all own assets and many of us are business owners, whose succession is or will eventually be a real issue.
Our legacies, including our business legacies, are in our own hands.
How we plan the control and disposition of those assets, including businesses, at our death is one of the most important decisions we can make.
And without careful and expert estate planning, our legacies may never become a reality.
If you are interested in planning your legacy, including determining whether a revocable or irrevocable trust should be part of that plan, reach out to your estate planning attorney at Fox, O’Neill, & Shannon.
Photo: Moulton law
