Publications
Succession: The Brewing Controversy Over the Murdoch Family Trust
The Murdoch Family Trust, Rupert Murdoch's media empire, is embroiled in a significant dispute that has implications far beyond the world of media. As reported by The New York Times, this unfolding drama sheds light on the complexities of managing high-value assets—whether they be media companies, art collections, or estates.
The trust, established during Murdoch's 1999 divorce, was designed to grant voting rights to his older children while securing financial benefits for his younger ones. Now, at 93, Murdoch is in a legal battle with three of his four adult children over who will control the empire after his death. This situation echoes similar conflicts in other media dynasties and offers valuable lessons for anyone managing assets with high emotional and financial stakes.
Key Takeaways:
Succession Planning: Just as family businesses need clear plans for leadership transition, so too do artists and collectors to preserve their legacy.
Governance Structures: Establishing clear decision-making processes is essential to prevent disputes.
Common Goals: Aligning the interests of all stakeholders ensures long-term value preservation.
Professional Mediation: Neutral third parties can help navigate complex dynamics and protect the integrity of valuable assets.
Whether you're managing a media empire or a treasured art collection, the principles at play in the Murdoch case offer crucial insights for ensuring your legacy endures.
The Importance of Building Generational Wealth
The process of building generational wealth is intended to provide younger family members — and even those not yet born with financial opportunities and a head start to long-term stability. Generational wealth refers to financial assets passed down from one generation to the next. They include property, investments and businesses but also other assets, such as collectibles or royalties from oil and gas holdings.
Navigating The Evolving US Estate Planning Landscape
Estate planning has evolved into a vibrant field marked by substantial transformations in recent years. These changes are propelled by updates in legislation, technological advancements, and shifts in societal norms. As a trust and estates attorney, I closely monitor these trends and understand the significance of staying abreast to offer superior service to my clients. Here are the key topics in contemporary estate planning and the advantages of engaging with either large or boutique law firms.
Navigating the Transfer of Ownership and Control
Understanding trusts, family limited partnerships and the ‘Tragedy of the Commons’: Transferring Ownership and Control Through Trusts and FLPs, Advantages of Trusts and FLPs.
The Corporate Transparency Act: Changing the Way Families Doing Business in the United States Think About Confidentiality and Data
On January 1, 2024 – and family businesses that are either US entities or are registered to do business in the US need to make preparations for reporting under the Corporate Transparency Act or face fines and even potential jail time. For many, this act has flown under the radar, and family enterprise advisors should begin helping their clients understand the implications now
Why Having A Chief Of Staff For A Family Business Helps Avoid Disasters
The whole blame nor the whole praise for the failure or success of family businesses lies with the leadership or the collective family business organization. Leadership must understand that there are flaws within the family business organization; and, a leader is willing to undertake the institutional risks to fix those flaws.
Many times it requires more than just an Alpha leader but also a Beta leader, or a chief of staff from outside the organization, such as lawyer , accountant or other professional who is able to execute on the changes as they are needed
Yvon Chouinard And The Patagonia Purpose Trust— What Is It And Will It Work?
The Patagonia Perpetual Trust and the non-profit Holdfast Collective is, in my opinion, and elegant strategy to achieve Yvon Chouinard’s, and his family’s, objectives. Though the Purpose trust they will be able to ensure the succession of the management of the company and, hopefully, its profitable existence for decades to come as well as a high level of satisfaction for all of the stakeholders in the company. Through the Collective, those public policy and charitable purposes of Chouinard will benefit from the profits of the company. The only one who loses will be the government, since if the entire $3 billion value of the company was taxable Chouinard’s estate would owe $1.6 billion, or more if after 2025, in federal estate taxes.
Family Business Sanity Check
What Do You Do When The Family CEO Suffers From Dementia?
The result of such strategic planning by the family, and advised by their professionals, is that the Family always has a “Plan B” to deal with difficult situations, and understand the time and costs needed to implement that Plan B if something like mental illness does strike. Without those strategic options, the family is thrown back onto the tactics available through the courts that may be surprisingly costly and time-consuming.
The Challenge Of Trustee Selection
The most challenging decision an estate planner must make is who to recommend as a trustee for a client. Trusts execute the estate plan, and the trustee is the lynchpin of any trust. The trustee plays multiple roles; a financial and ministerial role; they are responsible for the prudent investment of assets as well as administrative and executive duties of overseeing the trust; the role of consigliere to the family, a trusted advisor and counselor willing to argue with the client when needed, without ambition and giving dispassionate advice
The Tragedy Of The Commons: How A Life Crisis Effects Family Wealth
“Strategic planning, governance, and business processes take a back seat to the immediacy of the leader’s life crisis and how the crisis will be managed, ignored, or denied by the leader and the stakeholders in the organization. Response to the crisis largely determines the future and well-being of the business and the family.” -Steven S. Rolfe, MD
In most cases, a family leader plays the role of the governor of the engine that is the family wealth. The leader has the personal authority to set agendas and make decisions between competing demands on the common resources of the family. So long as they are able to act in such a way, disputes do not rise to the level of threatening the viability of the family enterprise. In Systems Dynamics there is a name for this situation, The Tragedy of the Commons.
FFI: Family Offices and Artwork: Mitigating the risks
Families that use family office services expect family office professionals to help them mitigate risks, both to investments and to concentrated illiquid holdings, such as real estate or closely-held businesses. What sometimes goes overlooked, however, is how to mitigate the risks of ownership of artworks, numismatics, jewelry, cars, and other collectibles. Risk mitigation for these treasures begins with documenting what the client has, aggregating the individual items into collections, and beginning the management of the items as a collection.
Forbes: How Not To Tear A Family Business Apart
A May 2017 article in the Buffalo News by Lou Michel described the case of Aida Corey, her family and Permalink Products, a successful upstate New York manufacturer. It is well written and I strongly recommend you read it. In sum, Aida, who inherited the business from her husband, clearly was both suffering from some form of mental illness and was taken advantage of by non-family advisor who was in a position of influence.
Forbes: Cut Through The Fog: Ten Tests For A Family Business’ Succession Plan
How many know that your estate planning is the strategy to achieve your goals for growth, control, protection and succession?
An estate planning strategy of complexity for the sake of tax savings and starving the family for income to avoid debt will not achieve your goals in the future, since it has nothing to do with preserving the company as a going concern. Tactics used by professionals, such as the use of Family Limited Partnerships, are all about tax and debt avoidance. The estate plan will render your client’s strategies ineffective if your goal is to transfer control of the company intact in the future. Being able to test whether the estate plan works in your overall strategy both before and during implementation allows you to avoid much of the cost and delays of change after implementation.