Rupert Murdoch has built what the New York Times has described as “the most influential conservative media empire in the world.”² It could be argued that Rupert has had as much impact on American society over the last 25 years as anyone. However, it appears he has been less successful in building his family.³

‘I’m not saying I’d make a better CEO. That’s unsaid.’⁴

Conflict within the Murdoch family was made public in recent litigation, originally filed and litigated under seal but later described in great detail in three February New York Times articles.⁵ As part of the divorce from his second wife Rupert created an irrevocable trust (the Murdoch Family Trust) to hold the voting shares of Fox Corporation and News Corp, providing that after his death control of his media empire would be split evenly among his four oldest children: Prudence, Elisabeth, Lachlan and James. Over time, Rupert became convinced that Lachlan, who shares Rupert’s conservative political views, should control the companies, but Rupert had a problem: he had locked a succession plan he no longer wanted into a trust he generally could not amend.

Why An Irrevocable Trust?

I advise clients to retain as much control over their assets and autonomy in their estate plans as possible, so most trusts I draft are revocable trusts. However, in addition to the divorce context for creation of the Murdoch trust, clients create irrevocable trusts for at least four reasons, giving up some autonomy in pursuit of other goals.

Protection against creditors. If I don’t have the unilateral right to revoke a trust and reclaim its assets, my creditors also might be barred from getting the assets. The simplest form of this planning is the creation of a third-party trust, where I create an irrevocable trust for someone else. Such a trust can be protected from the claims of my creditors and the beneficiaries’ creditors. More complicated is a “self-settled” asset protection trust, where I create a trust for my benefit funded with my assets but argue that my creditors can’t reach the trust assets. Tennessee’s version is called a “Tennessee Investment Services Trust” or “TIST.”⁶

Protection against ex-spouses. Perhaps the most feared creditor is an ex-spouse. A TIST or an irrevocable trust for the benefit of descendants can be beyond the reach of an ex-spouse in divorce actions.

Protection against self. A person who wants to protect his assets from his own problematic decision-making can contribute assets to someone else as trustee of a trust that is irrevocable at least for a time. Doing so places the assets outside the control of the person seeking protection from self.

Protection against estate taxes. Some clients transfer assets to irrevocable trusts is to save federal estate taxes (FET) by removing the assets from the person’s estate for FET purposes. If I have more than I expect to need and already view my estate largely as my descendants’ inheritance, I might be willing to give up control of and benefit from the assets during my lifetime in exchange for reducing the FET my estate will have to pay at my death.

‘I love you and I’m glad you’re a part of my life, but I am taking legal action against you.’⁷

The primary problem with irrevocable trusts is that they can’t be amended or revoked unilaterally. Besides panic, what could Rupert do when he recognized this problem? Within the Murdoch Family Trust, Rupert retained one potential out: he had reserved the right to revise a child’s subtrust if he acted in good faith and for the sole benefit of the child. He revised the four children’s shares to try to give ultimate control to Lachlan, arguing that would benefit each child by maximizing company value under one leader. In response to Rupert’s actions, Prudence, Elisabeth and James filed a lawsuit challenging the proposed changes. The case went to trial and the probate commissioner ruled that Rupert had not proved good faith, so future control of the trusts did not change. I understand that the ruling has been appealed as of this writing.

Revising an Irrevocable Trust

When drafting irrevocable trusts, we try to provide for reasonably foreseeable events, but after a trust is created, things can change in ways that make the trust terms undesirable. Marriage, divorce, birth/adoption, substance abuse and other health or financial issues can all create a desire to change trust provisions. Sometimes, clients’ perspectives, wishes and goals just change over time. In Tennessee, what can a client do if she no longer likes the terms of an irrevocable trust she created or another created for her? There are several possible options to get what she wants.⁸

Nonjudicial Settlement Agreement (NJSA) under Tenn. Code Ann. § 35-15-111. Section 111 allows the Trustee and “qualified beneficiaries,”⁹ to the extent the agreement does not violate a “material purpose” of the trust, to agree outside court to various things, including the interpretation or construction of the terms of the trust; direction to a trustee to refrain from performing a particular act or the grant to a trustee of any necessary or desirable power; transfer of a trust’s principal place of administration; liability of a trustee for an action relating to the trust; the governing law of the trust; the criteria for distribution to a beneficiary where the trustee is given discretion; and the approval of an investment decision, delegation, policy, plan or program. An NJSA can be the easiest solution to obtain but, given the relatively narrow focus of section 111 and the additional requirements for modification under § 35-15-411 (discussed below), appears intended to interpret and administer existing trust terms, not to change trust terms.¹⁰

Modification under Tenn. Code Ann. § 35-15-411. If a proposed change seems outside the scope of 111 but all qualified beneficiaries¹¹ consent, Section 411 provides a two-pronged approach to modifying the terms of a noncharitable irrevocable trust, one approach if the settlor (creator of the trust) is living and one if the settlor is deceased.Under 411(a), during the settlor’s lifetime a noncharitable irrevocable trust may be modified (or terminated) by the trustee upon consent of all qualified beneficiaries, even if the modification is inconsistent with a material purpose of the trust, if the settlor does not object to the proposed modification (usually within 60 days). Thus, agreement of the trustee and all qualified beneficiaries and acquiescence by the settlor bypasses the need for court approval.

Under 411(b) and (c), following the settlor’s death a noncharitable irrevocable trust may be modified (or terminated) upon the unanimous agreement of the trustee and all qualified beneficiaries if such modification does not violate a material purpose of the trust. Additionally, following the settlor’s death a noncharitable irrevocable trust may be modified upon consent of all of the qualified beneficiaries if the court concludes that modification is not inconsistent with a material purpose of the trust. Thus, if all qualified beneficiaries agree and either the trustee or a court determines that the modification would not violate (or is not inconsistent with; I’m unsure whether that’s different) a material purpose of the trust, the irrevocable trust can be modified.

Under 411(g), if not all qualified beneficiaries consent to a proposed modification of the trust under subsection (a), (b) or (c), as applicable, the modification may be approved by the court.

“Decanting” under Tenn. Code Ann. § 35-15-818. Although “decanting” implicates numerous legal questions related to decanting requirements and limitations, fiduciary duty, creditor rights, trust administration, income tax, gift tax, estate tax and generation-skipping transfer tax, when other methods are ineffective to bring about a desired result, decanting (if the facts fall correctly) can provide a way for a trustee unilaterally to change the terms of a trust. (Of course, trustees understandably might be hesitant to make some changes without beneficiary consent or court approval.)

A trustee who has authority to invade the principal of a trust, to make distributions to or for the benefit of one or more persons, generally may instead exercise that¹² authority by appointing (decanting) all or part of the principal of the trust in favor of a trustee of a second trust, provided (among other requirements) the exercise of that authority is in favor of the proper objects of the exercise of the power; the second trust’s beneficiaries are all beneficiaries of the first trust; and for distributions made during the settlor’s lifetime, the second trust must not accelerate the beneficial interest of a future beneficiary.¹³

Conclusion

Clients have many reasons to create irrevocable trusts and even more to become disenchanted with them. We can help folks understand the opportunities to make desired changes to such trusts. |||

EDDY SMITH practices with Kennerly Montgomery in Knoxville. He focuses on planning, administration and litigation related to trusts, estates, businesses and nonprofits. Smith is a fellow of The American College of Trust and Estate Counsel and served as chair of the TBA Estate Planning and Probate Section.

NOTES
1. Megan Hemenway, 50 Greatest Succession Quotes From All Four Seasons, Screenrant (June 4, 2023), screenrant.com/succession-series-best-quotes (quoting Karl, “DC,” season 2 episode 9 of Succession (HBO Oct. 6, 2019)). (All quotes from the show are from this site and assumed to be accurate.) Succession is broadly understood to be inspired by the Murdoch family. I watched the first episode, but did not continue watching because I didn’t like any of the characters. I now understand that’s the point. I keep hearing good things about the show, so I plan to try again.
2. Jim Rutenberg and Jonathon Mahler, “Six Takeaways About the Murdoch Succession Fight,” New York Times Magazine, Feb. 13, 2025, www.nytimes.com/2025/02/13/magazine/murdoch-family-trust-dispute-takeaways.html.
3. Rupert has been married five times and divorced four times, and had six children with the first three wives. The litigation discussed here exposed schisms among the children.
4. Connor in HBO’s Succession.
5. Jim Rutenberg and Jonathon Mahler, “You’ve Blown a Hole in the Family: Inside the Murdochs’ Succession Drama,” New York Times Magazine, Feb. 13, 2025, www.nytimes.com/2025/02/13/magazine/rupert-murdoch-succession-family-trust-fight.html, describing what was called “Project Family Harmony.” See also, “Six Takeaways,” supra, note 2; “How the Murdoch Family Trust Works,” New York Times Magazine, February 13, 2025, available at www.nytimes.com/interactive/2025/02/13/magazine/murdoch-family-trust-succession-explainer.html. This column relies on the articles’ recitation of facts. Despite some of those reported details being disputed, it is clear that Rupert, like some of my clients, became dissatisfied with the terms of an irrevocable trust he created.
6. See Tenn. Code Ann. § 35-16-101 et seq.
7. Greg in Succession.
8. An irrevocable trust can provide for a “trust protector” or “trust advisor,” a person who possesses powers to alter or amend the trust that the settlor cannot retain. See Tenn. Code Ann. § 35-15-1201 et seq. This article assumes no such provisions exist.
9. With some limitations and exceptions, a “qualified beneficiary” as of a particular date is a beneficiary who (A) is a distributee or permissible distributee of trust income or principal; (B) would be if the interests of the distributees described in (A) terminated on that date without causing the trust to terminate; or (C) would be if the trust terminated on that date. Tenn. Code Ann. § 35-15-103(25).
10. This understanding is consistent with a discussion in the section comment included by the Tennessee Code Commission.
11. Supra, note 9.
12. See Eddy R. Smith, “If You Build It They Will Come: Tennessee Pursues Trust Preeminence,” Tennessee Bar Journal p. 30, Sept./Oct. 2021, www.tba.org/Smith_TrustPreeminence (describing the decanting power and possible limits on its permissible exercise).
13. There are limits on exercise of the decanting power by a trustee who also is a beneficiary of the original trust.