Murdochs face off in a Reno courthouse over family trust

Rupert Murdoch wants to amend the trust to ensure control passes to his oldest son. Three of his other children oppose the change.

Rupert Murdoch and wife Elena Zhukova arrive at court in Reno, Nevada. Picture: Supplied

For decades, the downtown courthouse here near the banks of the Truckee River offered easy divorces to Hollywood celebrities and other visitors seeking a quiet dissolution of their marriages.

Now, the same courthouse is the site of another family dispute — one over control of Rupert Murdoch’s global media empire.

A trial is getting under way Monday to determine whether the 93-year-old patriarch can change a trust holding the family’s assets, which include roughly 40pc voting stakes in Fox News parent Fox Corp and Wall Street Journal and The Australian owner News Corp.

Murdoch wants to ensure that when he dies control of the trust passes to his oldest son, Lachlan. Three of his other children, James, Elisabeth and Prudence, oppose the change because they would stand to lose voting power. The proceedings are closed to the public and the media.

Rupert and Lachlan Murdoch arrived early Monday for the start of the trial, holding hands with their wives as they climbed the courthouse steps. Lachlan’s siblings arrived earlier in a caravan of black SUVs.

Families have long placed ownership of assets into trusts, a financial tool that enables wealth to be passed to future generations outside the probate court system. A handful of states, including Nevada and South Dakota, have been competing to be the most attractive home for those trusts.

“It’s almost become an arms race among the states to create better statutes,” said Lou Robinson, president and chief executive of Alliance Trust Company, which acts as a Nevada trustee for families from around the world.

Trust lawyers say Nevada’s advantages include strong asset protection from creditors, the ability to establish a trust that lasts 365 years and no state income tax. The state also offers muscular privacy provisions that allow court proceedings related to trusts to be kept secret.

“Anybody who is either the trustee or a beneficiary can petition to have the matter sealed, and so that way nobody can see what’s going on,” said Dara Goldsmith, an attorney in Las Vegas.

That is the approach the Murdochs chose. All filings in the case have been kept under seal by Washoe County probate commissioner Edmund “Joe” Gorman. The little information available publicly shows there are at least five days set aside for the hearing. Petitions to open up the proceedings have failed.

Rupert Murdoch is arguing that shifting voting control of the trust to Lachlan should be allowed because it is in the best interest of all the beneficiaries, including his other children.

The 113-year-old courthouse is a landmark in downtown Reno with a towering copper dome. The courtroom where the Murdoch case will play out is in a 1960s extension of the complex, where most days the dockets are filled with routine criminal proceedings. More typical probate matters are handled by phone conference.

In Washoe County, Gorman makes recommendations on probate cases. The parties in a case have two weeks to request a review from a probate judge.

The case was so shrouded in secrecy that it was named “The Doe 1 Trust” in the court system’s website in recent weeks, with no details about who was involved or their points of contention. The court has now acknowledged that “Doe 1 Trust” involves the Murdoch trust.

A representative for the Murdoch trust had argued that the secrecy was necessary because family members could be at risk if private and sensitive information about them were made public, according to court documents viewed by the Journal.

A group of media outlets, including the New York Times, CNN and the Washington Post, countered that the level of secrecy in the case “does not pass constitutional muster” at both the federal and state levels.

“The public has immense interest in which of Murdoch’s children will succeed him,” the media group said in court filings. “The succession will affect thousands of jobs, millions of worldwide media consumers, and the American political landscape.”

Dow Jones