The Inheritance Trap
When family businesses attempt to outwit mortality, the results are rarely harmonious.
In December of 2023, Rupert Murdoch, ninety-two years old and still formidable, flew to London to inform two of his daughters that he was effectively erasing them from the governance of his media empire. He had prepared talking points. He had also, with his eldest son Lachlan, retained a Nevada law firm, enlisted a former United States Attorney General, and recruited two obscure ex-state legislators to serve as pliant board members. The initiative had been given a name—Project Family Harmony—which, in retrospect, seems less like irony than provocation.
The meeting with his daughter Elisabeth did not go well. “You are completely disenfranchising me and my siblings,” she told him. “You’ve blown a hole in the family.”
The next morning, while eating breakfast, Murdoch collapsed. Doctors arrived and determined that he had merely fainted—the stress and jet lag proving too much even for a man who had spent seven decades bending governments and reshaping the information diet of the English-speaking world. He recovered, composed himself, and sent word to his advisers: the plan would proceed.
What followed was a fourteen-month legal conflagration that culminated in a secret trial in Reno, Nevada, where members of one of the world’s wealthiest families testified against one another under oath. A probate commissioner named Edmund J. Gorman Jr. presided. In December of 2024, he issued a ninety-six-page ruling that denied Murdoch’s petition in terms that managed to be both legally precise and personally devastating. Rupert and Lachlan, Gorman wrote, had engaged in a “carefully crafted charade” motivated not by the interests of the trust’s beneficiaries but by a desire to “permanently cement Lachlan Murdoch’s control” and preserve his father’s ideological legacy. The effort, Gorman concluded, had been conducted in “bad faith.”
The Murdoch succession war is exceptional in its scale and its geopolitical stakes—the future of Fox News, after all, is not a small matter in American political life. But the underlying dynamics are drearily familiar to anyone who has studied the taxonomy of family-business failures. A patriarch who cannot distinguish between his company’s interests and his own desires. Children whose relationships have been deformed by decades of competition for paternal favor. A legal instrument—in this case, an irrevocable trust—that was designed to impose order but instead became a battlefield. And, threading through it all, the fundamental delusion that animates most succession planning: the belief that the founder can continue to exert control from beyond the grave.
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The Murdoch family trust was born, as so many consequential legal arrangements are, from the wreckage of a marriage. In 1999, Rupert divorced his second wife, Anna, after thirty-one years, having fallen for Wendi Deng, a young executive in his Asia division (see: Lost in the Company. The Perils of Going Into Business with Your Spouse). Anna, who under California law was entitled to half of everything Rupert had built during their marriage, made a fateful sacrifice during the divorce negotiations: she relinquished that claim in exchange for ensuring that Rupert’s four existing children—Prudence, from his first marriage, and Elisabeth, Lachlan, and James, her own—would inherit his fortune after his death. The divorce agreement specified that control would be divided equally among the four. Rupert would have no say in who ran things after he was gone.
By 2006, the family had agreed to bring Grace and Chloe, Murdoch’s daughters with Deng, into the trust as financial beneficiaries, though without voting power. The structure was complex: six subtrusts, each representing one child, all bound together until 2030, when the arrangement expires and the beneficiaries become free to sell their shares to outsiders. Until then, the shares must be held as a single bloc, voted by a board whose composition changes upon Rupert’s death. While he lives, Rupert controls four of the six votes. When he dies, those votes will be distributed equally among the four eldest children.
This is the arrangement that Rupert and Lachlan tried to circumvent with Project Family Harmony—and it is the arrangement that, for now, remains in force. The trust expires in less than five years. If the siblings cannot agree on how to proceed, the empire that Rupert spent his life constructing may pass out of family hands entirely.
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The academic literature on family-business succession is extensive and uniformly sobering. Researchers have documented what practitioners call “the generational curse“—the statistical near-certainty that a family enterprise will fail to survive its founder. A frequently cited study by the consulting firm McKinsey found that only about thirty per cent of family businesses survive into the second generation; by the third generation, the figure drops to twelve per cent. The causes are varied but predictable: unresolved sibling rivalries, unclear governance structures, the founder’s inability to relinquish control, heirs who lack interest or aptitude, and—perhaps most destructive—the founder’s tendency to treat succession planning as an extension of his own psychological needs rather than as a fiduciary responsibility.
The Murdoch case exemplifies nearly all of these failure modes, but it also illuminates a less commonly discussed phenomenon: the way that succession planning itself can become a mechanism of family destruction. The very act of designating a successor—or, in Rupert’s case, attempting to alter the rules so that only one child inherits power—forces into the open conflicts that might otherwise have remained latent. It requires parents to make explicit the rankings that most families prefer to leave unspoken.
“The moment you start talking about who gets what, you’re really talking about who you love most,” a prominent estate lawyer told me recently, speaking on condition of anonymity because he advises clients in similar situations. “And once that’s out in the open, you can’t put it back.”
Rupert Murdoch, in his testimony, made no effort to disguise his preference. Lachlan, he said, was the only one of his children capable of running the business and the only one who shared his conviction that Fox News was vital to the future of “the English-speaking world.” James, he said, had shown “poor judgment” repeatedly. Elisabeth and Prudence, in his telling, were simply wrong about the direction the company should take. The trust, as structured, gave them power they did not deserve and would not use wisely.
But what Rupert presented as a pragmatic business judgment, Commissioner Gorman saw differently. The effort to change the trust, Gorman concluded, was not really about protecting the beneficiaries’ financial interests—it was about preserving Rupert’s ideological legacy. And that, under Nevada law, was not a permissible reason to alter an irrevocable trust.
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The Murdoch trial produced its share of lurid details—the code name “Troublesome Beneficiary” used to refer to James, the diagram presented to Rupert with a large “X” superimposed on his youngest son’s subtrust, the hasty recruitment of William Barr, who was placed on retainer by Fox and indemnified against claims including “fraud in the exercise of fiduciary duties.” But perhaps the most revealing evidence was the communication between Rupert and his ex-wife Anna, mother of Lachlan, Elisabeth, and James.
In early 2023, Anna reached out to Rupert to encourage him to resolve the succession question. She had, two decades earlier, negotiated the trust provisions that now constrained him—insisting that her children retain equal power after Rupert’s death. But age, it seems, had altered her perspective. “You are the kingpin,” she wrote to him. “You still hold the power.”
Rupert replied with a mixture of self-pity and conviction. He shared her desire for “peace all around,” he said, but the facts were clear: Lachlan was the best person to run the business, and James had repeatedly shown poor judgment. Then he broadened his frame. “Fox and our papers are the only faintly conservative voices against the monolithic liberal media,” he wrote. “I believe maintaining this is vital to the future of the English-speaking world.”
Anna agreed. “I’m sure James and Kathryn are very comfortable in their own circle of like minded Woke friends,” she replied. “Fox is playing a huge and important role in calling out the idiocies that surround us. I sometimes fear that America is doomed because of the wrongheadedness of the cultural elites.”
It is a remarkable exchange—a former spouse, now in her late seventies, endorsing a plan that would disenfranchise one of her own children. But it also reveals something essential about the Murdoch succession fight, which is that the family’s divisions are not merely personal or financial. They are ideological. James has been public in his criticism of Fox News’s editorial direction, particularly its coverage of the 2020 election and the January 6th insurrection. Elisabeth and Prudence have expressed concerns about climate-change coverage. Lachlan, by contrast, has been a reliable steward of his father’s worldview.
What makes the Murdoch case unusual is not that politics has intruded into a family business—that happens all the time—but that the family business is itself a political operation. Fox News is not merely a profit center; it is, in Rupert’s own formulation, a crusade. And crusades do not lend themselves to compromise.
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Why Nevada? Nevada Asset Protection Trust
The Murdoch family trust was incorporated in Nevada for reasons that have little to do with the state’s casinos and everything to do with its statutes. Over the past two decades, Nevada has engineered itself into one of the world’s premier trust jurisdictions—competing not with neighboring states but with the Cayman Islands, the Channel Islands, and the Cook Islands. For the ultra-wealthy, the sagebrush state now offers something remarkable: the asset protection of an offshore haven with the legal enforceability of American courts.
The architecture is deliberate and comprehensive.
The Zero-Exception Rule. Most jurisdictions that offer asset-protection trusts carve out exceptions for certain creditors—divorcing spouses, children owed support, tort victims. Nevada eliminated these exceptions entirely. Once assets are properly transferred into a Nevada Asset Protection Trust and the statutory period expires, no creditor can reach them. Not an ex-wife. Not a child seeking support. Not a plaintiff with a judgment. The trust becomes, in the legal vernacular, bulletproof. This “zero exception creditor” provision is Nevada’s most distinctive feature and its most controversial. It means that a wealthy individual can, with sufficient planning, render himself judgment-proof against virtually any future claim.
The Statute of Limitations. Nevada imposes a two-year window for future creditors to challenge transfers into a trust—among the shortest in the nation. For existing creditors, the period is just six months from discovery. By contrast, Alaska and Delaware maintain four-year lookback periods.
The practical effect: assets transferred in January 2025 achieve full protection by January 2027, regardless of what lawsuits or business failures follow. Time, in Nevada, moves quickly in favor of the wealthy.
Dynasty Trusts. Nevada permits trusts to endure for 365 years—nearly four centuries of tax-free compounding across generations. Assets placed in such a trust escape estate taxation not once but repeatedly: at the death of the grantor, and at the death of his children, and at the death of their children, and on through the centuries. A family that places ten million dollars in a Nevada dynasty trust today could, with reasonable investment returns, pass fifty million or more to descendants in 2390 without a single dollar lost to estate or generation-skipping taxes. South Dakota offers perpetual trusts; Delaware permits them for real property up to 110 years. But Nevada’s 365-year term, combined with its zero state income tax, has proved sufficient to attract billions in assets from families who measure their planning horizons in generations rather than years.
Control Without Sacrifice. Traditional irrevocable trusts require grantors to surrender control—the price of removing assets from one’s taxable estate. Nevada’s innovation was to decouple these requirements. Under Nevada law, the person who creates a trust can also serve as its investment trustee, retaining signing authority over accounts, directing investment decisions, and managing the underlying assets—including private businesses and real estate. The grantor can even retain veto power over distributions. The result is a structure that offers the legal protection of an irrevocable trust while preserving the practical control of outright ownership. For entrepreneurs and family-business owners, this is not a minor convenience; it is the difference between a planning tool they will use and one they will not.
Flexibility Through Decanting. Nevada’s decanting statutes permit trustees to pour assets from one trust into another with different terms—without notifying beneficiaries. If circumstances change, if tax laws shift, if family dynamics evolve, the trust can be modified. This flexibility proved relevant in the Murdoch case: Rupert attempted to use Nevada’s permissive amendment provisions to restructure the family trust in Lachlan’s favor. He failed—but only because Commissioner Gorman found that his actions violated the trust’s requirement of good faith, not because Nevada law prohibited the attempt.
Privacy as Product. For families like the Murdochs, the most valuable feature may be the simplest: secrecy. Nevada probate courts operate under statutes that presume confidentiality. Trust documents, settlement agreements, and court filings can be sealed as a matter of course. When a coalition of media organizations petitioned to unseal the Murdoch case, Judge David Hardy denied the request, writing that a family trust, “even when it is a stockholder in publicly traded companies, is essentially a private legal arrangement.”
This is not an oversight. It is the product Nevada is selling.
The state has deliberately positioned itself as a haven for those who wish to arrange their affairs beyond public scrutiny, competing for trust business the way Delaware competes for corporate charters—by offering terms that clients cannot find elsewhere.
The Limits of Discretion. The Murdoch case illustrates both the advantages and the boundaries of this system. The family obtained the privacy they sought: no cameras in the courtroom, no public access to filings, no obligation to disclose the terms of their eventual settlement. What is publicly known comes almost entirely from leaks. But privacy is not the same as impunity. The same statutes that shielded the Murdochs from public view could not shield Rupert from a commissioner who found his conduct to be in bad faith. Nevada offered discretion. It did not offer immunity from the law.
There is a particular irony in the outcome. Rupert Murdoch has spent his career acquiring things—newspapers, television networks, film studios, governments’ attention. He built his empire through relentless deal-making, always willing to pay a premium for control. And yet he may lose that empire not because of competition from Elon Musk or Mark Zuckerberg but because he was unable to make a deal with his own children.
The failure, in one sense, was structural. An irrevocable trust, by definition, cannot be easily altered. Rupert agreed to its terms in 2006, when succession seemed a distant concern and family harmony still appeared achievable. By the time he recognized the danger, it was too late. The trust had become a trap.
But the failure was also, in a deeper sense, characterological. Rupert Murdoch accumulated power for seventy years. He could not imagine relinquishing it—not to his children, not to death, not to the legal instruments he himself had created. And so he tried to cheat. He assembled his lawyers and his loyalists; he devised his scheme and gave it a hopeful name. He flew to London to sell his daughters on a plan that would erase them.
“You’ve blown a hole in the family,” Elisabeth told him.
He had. The question now is whether anyone can repair it.
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Epilogue: The Settlement
In September 2025, the Murdoch family dispute reached its conclusion—not through a court verdict, but through a negotiated surrender. James, Elisabeth, and Prudence agreed to exit the family trust entirely in exchange for a reported $3.3 billion, roughly $1.1 billion each. Lachlan retained sole control. A new trust was established to secure his voting power, insulating him from future challenges. Rupert, at ninety-four, had achieved his primary objective: his conservative legacy would continue under his chosen son, free from interference by his more politically moderate children.
The December 2024 ruling had forced Rupert and Lachlan to the negotiating table. Facing a losing legal hand and the prospect of prolonged public exposure, they paid a premium to make the problem disappear. The siblings held the leverage, and they used it. The price of family harmony, it turned out, was the family itself. James, Elisabeth, and Prudence have no remaining governance role in the companies their father built. The legal dispute is finished. The personal relationships, by all accounts, are not.
A Note on Sources
The settlement deed and the specific terms of the new trust arrangement remain confidential. Nevada probate courts are favored by high-net-worth individuals precisely because they offer exceptional privacy; Judge David Hardy explicitly ruled against media petitions to unseal the case, stating that a family trust is “essentially a private legal arrangement.” On December 23, 2025, the Nevada Supreme Court found that Commissioner Gorman had misinterpreted the law in ordering blanket secrecy and ordered a file-by-file reconsideration of confidentiality—but as of this writing, the core documents remain sealed.
What is publicly known comes almost entirely from leaks. This article draws on materials published by The New York Times and The New York Times Magazine in February 2025—reporters Jonathan Mahler and Jim Rutenberg obtained access to more than three thousand pages of trial records, including the complete transcript and private correspondence between family members entered as evidence. It also draws on legal analysis from the Law Society of New South Wales Journal (March 2025), reporting by CNN, The Guardian, NPR, and The Hollywood Reporter on the September 2025 settlement, and news of the Nevada Supreme Court’s December 2025 ruling.
Founder and Managing Partner of Skarbiec Law Firm, recognized by Dziennik Gazeta Prawna as one of the best tax advisory firms in Poland (2023, 2024). Legal advisor with 19 years of experience, serving Forbes-listed entrepreneurs and innovative start-ups. One of the most frequently quoted experts on commercial and tax law in the Polish media, regularly publishing in Rzeczpospolita, Gazeta Wyborcza, and Dziennik Gazeta Prawna. Author of the publication “AI Decoding Satoshi Nakamoto. Artificial Intelligence on the Trail of Bitcoin’s Creator” and co-author of the award-winning book “Bezpieczeństwo współczesnej firmy” (Security of a Modern Company). LinkedIn profile: 18 500 followers, 4 million views per year. Awards: 4-time winner of the European Medal, Golden Statuette of the Polish Business Leader, title of “International Tax Planning Law Firm of the Year in Poland.” He specializes in strategic legal consulting, tax planning, and crisis management for business.
