Today a lawsuit fit for television begins (think: Succession). The exciting part of this lawsuit is that the battle involves an irrevocable trust. As an estate planning attorney, I’m geeking out.

Unlike divorce, trademark, and personal injury, there aren’t many high-profile estate planning lawsuits, and the few there do mostly occur because someone has died so “excitement” is gauche. But I digress…

Rupert Murdoch and his children are battling over the control of their media empire, the shares, and control of which Rupert put into an Irrevocable Trust. Murdoch is a billionaire, so how does this affect you? Let’s break it down.

 

Related Post: Irrevocable Trust Vs Revocable Trust – What Is The Difference

 

1.) Irrevocable Trusts are commonly used in estate planning.

Rupert created his Trust to keep his shares from his 3rd wife whom he was divorcing. Many of our clients set up and fund irrevocable trusts to shield the assets funded into the trust from their own creditors, primarily their own long-term care costs.

The key to protection is that the person creating and funding the trust (the “Settlor”) must give up control to the Trustees, chosen by the Settlor when the Trust is formed. Similar to Rupert, most of our clients name their adult children as the Trustees.

 

Related Post: Another Reason To Put Your Property In a Trust

 

2.) Choosing assets to gift to the trust requires careful analysis.

According to news sources, Rupert funded his Trust with the shares of his media company so his soon-to-be ex-wife would not receive them for herself. This was the benefit to him. To do this, he gave the shares to a Trust that he does not legally control. Now a few of his children want to broaden the company’s focus and he is concerned about the media company’s brand.

Even if you do not own a multi-media conglomerate, it is important to remember that the assets you place into an irrevocable trust are no longer yours to control. If the benefit of protecting the assets outweighs this loss of control, the next step is to choose a Trustee who aligns with your priorities.

Unlike Rupert, most of our clients do not have the funds to pursue a long court battle to try to amend the trust, so should be prepared to live with the terms of the Trust for life.

 

Related Post: 3 Simple Benefits Of a Living Trust

 

3. Trusts keep your affairs private.

The Judge in Rupert’s Irrevocable Trust lawsuit ruled that the proceedings would be closed to the media because the Trust is a private document. This is why many of our clients choose to execute a trust instead of having their estates go through probate.

Probate is a public proceeding and most of the documents filed are accessible via public records. A Trust (even a revocable one where you do not give up control or use of the assets) keeps the administration and details private.

Trusts, even Irrevocable ones, are a valuable part of a good estate plan. To ensure all of the pros and cons are analyzed, working with an experienced estate planning attorney is highly recommended. If you’re in Connecticut, we can help!

Disclaimer: The information provided in this article does not, and is not intended to, constitute legal advice and is for general informational purposes only.

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