Nevada ‘secret trusts’ provide anonymity along with tax and legal advantages. They are utilized by high net worth individuals and families, like the Murdoch family, to maintain their wealth and stay out of the public eye. State laws allow beneficiaries to avoid paying state income tax on their investments, which is a major draw for the wealthy.
The battle between Murdoch’s daughters highlights how these trusts can fuel family disputes, especially when large sums of money are involved. The feud stemmed from a decision by Murdoch to cut daughter Prudence MacLeod out of the family trust, leaving her with no say over News Corp., the family business.
Such disputes have become common due to the complexity of these trusts and their secrecy clauses. Typically, beneficiaries do not have full knowledge of the trust’s holdings and these can be changed without their consent, creating potential for conflict.
Despite these drawbacks, the financial benefits of Nevada’s trust-friendly laws are helping to fuel a boom. Many wealth management firms and wealthy families are setting up trusts in the state, contributing to a thriving financial sector. This trend is expected to continue as long as the state’s laws continue to offer such significant fiscal advantages.