Nevada's secret trust boom is brought to light by the Murdoch family battle.

• The world's largest fortunes are increasingly drawn to Nevada, which is gaining popularity as a global hub for family trusts.
• The state's advantage positions it at the front of a significant influx of wealth into asset-protection trusts in the West.
• The Murdoch Family Trust, which owns the voting shares in News Corp. and Fox Corp., is at the heart of the Murdoch case.

The original article was published in CNBC's Inside Wealth newsletter with Robert Frank, providing a weekly guide for high-net-worth investors and consumers. To receive future editions, subscribe and have them delivered directly to your email inbox.

The ongoing Murdoch family feud in a Nevada court underscores the state's growing reputation as a global hub for family trusts and a welcoming destination for the world's wealthiest individuals.

Nevada has been ranked as the top state in the country for asset-protection trusts, such as the one at the center of the Murdoch dispute, due to its unique combination of no income taxes, strong secrecy protections, and robust defenses against creditors, making it an ideal location for large family trusts aimed at safeguarding assets.

Nevada's trust industry is booming, but the state doesn't disclose the total value of its trust assets. Despite this, experts believe that the state likely holds hundreds of billions of dollars in trust assets, which are kept hidden in nondescript office buildings or trust companies.

According to Steven Oshins, a Nevada attorney and publisher of the most widely cited ranking of states based on their appeal to asset-protection trusts, Nevada has been No. 1 for at least four years.

Oshins stated that South Dakota is a "close second," followed by a "big drop-off" for the next group, which includes Tennessee, Delaware, and others.

Nevada's advantage positions it at the front of a significant wealth influx into asset-protection trusts. The US has more than $5.6 trillion in trust and estate assets as of 2021, which is double the amount in 2011, according to data from economists Thomas Piketty, Emmanuel Saez, and Gabriel Zucman. The estimate is only the tip of a multitrillion-dollar iceberg, as many trusts are not reported to the IRS.

The Great Wealth Transfer, which involves the transfer of over $80 trillion to future generations, is driving much of the recent growth. The possible expiration of the estate and gift tax exemption, which currently allows couples to give away up to $27 million tax-free, is also contributing to the creation of new trusts. Fears of a global wealth tax, the IRS's crackdown on wealthy taxpayers, and the influx of foreign millionaires and billionaires using the U.S. as the latest offshore tax haven are also fueling demand.

Nevada is ahead in the competition among states to acquire new trust assets, thanks to its legislature's frequent updates to its trust laws and regulations.

Nevada does not impose state income tax, corporate income tax, or inheritance tax, allowing trusts to grow without significant deductions. Additionally, its strict secrecy laws make it one of the most private states in the country. In 2009, the legislature passed a law that classifies any records submitted to the Division of Financial Institutions as confidential.

In Nevada, trust cases are publicly recorded, but filing attorneys can use a new 2023 law to keep the trust name, settlors, and beneficiaries confidential without a court order. Additionally, Nevada is one of seven states that allow "silent trusts," which allow the trustee to keep the existence of the trust from the beneficiaries under the trust terms.

Nevada stands out as it does not allow "no exception creditors" to access a trust, even for ex-spouses, child support claims, or lawsuit plaintiffs. Its greatest strength, which is directly relevant to the Murdoch case, is the flexibility of trusts.

The Murdoch Family Trust, which owns the voting shares in News Corp and 21st Century Fox, is at the heart of the Murdoch case. The trust also owns the family farm in Australia, the Murdoch art collection, and its 21st Century Fox shares.

As per the current arrangement, upon Rupert Murdoch's death, the trust's control would be transferred to four of his children: Lachlan, James, Elisabeth, and Prudence. Each child would have one vote, ensuring that no sibling could gain control without the others' consent. The trust was established as an everlasting trust, intended to endure indefinitely.

According to The New York Times and The Wall Street Journal, Rupert Murdoch is reportedly seeking to revise the trust to give Lachlan control after his death, arguing that it's in the best financial interests of the other children. However, some of the children have challenged this move. Spokespeople for News Corp. and Fox have declined to comment.

In many states, changing an irrevocable trust is impossible. However, in Nevada, it is common due to a special provision called "decanting." The state allows irrevocable trusts to be changed into a new trust as long as certain conditions are met. In the Murdoch dispute, Rupert must prove to a probate court that he is acting "in good faith and for the sole benefit of the heirs" in order to change the trust.

A probate lawyer with Tyrell Law PLLC in Henderson, Nevada, stated that in Nevada, fixing those things is usually done easily.

Rupert Murdoch, the trust donor in Nevada, is arguing that he is acting in the best interests of his opposing heirs. However, if he can prove that Lachlan's control would increase the financial value of News Corp. and Fox Corp., and thus benefit all siblings, the court may rule in his favor. The trial is set to begin in September.

It is uncommon for a family to establish a trust in Nevada without any connections to the state, such as business or personal ties. It is not necessary to reside in Nevada to create a trust. The Murdochs do not own any homes in Nevada, and their businesses do not have any public headquarters there.

According to Tyrell, a family typically has connections in Nevada to establish trust, either through residence or real estate ownership. However, he stated that the Murdochs never resided in the state.