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The Murdochs go trust shopping, Bezos goes AI shopping, and the wealthy are all shopping at  Hermès 

The latest battle royale inside the Murdoch family has all the plot twists and sibling rivalries of a season of “Succession” (with life imitating art, imitating life). There’s the political and personal vitriol between James and Lachlan, the future of a media empire, and Rupert’s end-run around his three children.

Yet when it comes to large wealth and families, the most intriguing detail emerging from the case relates to the family trust. The centers of power and wealth for Murdoch have long been in London, New York, Los Angeles and Australia. But while creating the trust that would enshrine the Murdoch empire for generations, Murdoch chose Reno, Nevada.

This week, I take a look at why Nevada has become the global capital for family trusts — and why trusts in the U.S. are exploding in size and number. With more than $80 trillion expected to be passed down to the next generations in the coming decades, trusts will become an increasingly prominent feature — and battleground — in the wealth economy. Murdoch’s choice of Reno has broad implications for both the family legal battle and the ultimate control of News Corp and Fox.

I also look at Jeff Bezos’ family office and his AI shopping spree. I reveal the city with the largest number of millionaires per capita (useful for anyone looking for wealthy customers). I explain why Hermès is the undisputed King of Luxury and why a fictional princess’ famous gold bikini just auctioned for $175,000.

Thanks for reading! Feel free to email me story ideas, tips, questions and suggestions. Let’s keep following the big money and spreading the Inside Wealth!

Best, Robert

Rupert and Lachlan Murdoch walk together as they arrive on the third day of the annual Allen & Company Sun Valley Conference, July 13, 2017 in Sun Valley, Idaho. Credit: Drew Angerer | Getty Images

The Murdoch family feud taking place in an obscure Nevada court highlights the state’s surging popularity as a global center of family trusts and a friendly home to the world’s biggest fortunes.

According to legal industry rankings, Nevada is now the top state in the country when it comes to so-called asset-protection trusts like the one at the center of the Murdoch dispute. The state’s unique combination of no income taxes, iron-clad secrecy protections and strong defenses against creditors makes it the ideal location for big family trusts created to protect assets.

Nevada doesn’t report the total amount of assets in its trusts. The state’s fast-growing industry of trust and estate attorneys, trust companies and facilitators keeps a deliberately low profile. Yet experts estimate the state likely has hundreds of billions of dollars in trust assets locked away in nondescript office buildings or trust companies, offering little to no visibility to the outside world.

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

South Dakota is a “close second,” and then “there is a big drop off for the next batch with Tennessee, Delaware and others,” Oshins added.

Nevada’s advantage puts it at the forefront of a massive wealth surge pouring into the asset-protection trusts. The U.S. hosted more than $5.6 trillion in trust and estate assets as of 2021 — more than double the level of 2011, according to data from economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman. The estimate is just “the top of a multi-trillion-dollar iceberg,” according to the group, since many trusts are not reported to the IRS.

Much of the recent growth is being driven by The Great Wealth Transfer, in which over $80 trillion is expected to be passed down to the next generations, according to trust and estates attorneys. The possible expiration next year of the estate and gift tax exemption, which currently lets couples give away up to $27 million tax-free, is also driving the creation of news trusts. Fears of a national wealth tax, the IRS crackdown on wealthy taxpayers and a wave of foreign millionaires and billionaires using the U.S. as the latest offshore tax haven are also fueling demand.

In the arms race among states to attract the hundreds of billions of dollar in new trust assets, Nevada has a comfortable lead. Its legislature frequently updates its trust laws and regulations to make them more attractive.

Nevada has no state income tax, no corporate income tax and no inheritance tax, which helps trusts grow in value without being taking out a chunk. Its secrecy laws are also among the strictest in the country. In 2009, the legislature passed a law stating that any records submitted to the Division of Financial Institutions are “confidential.” All trust cases are confidential, even without a court order.

Nevada is also unusual in having “no exception creditors” — meaning even ex-spouses, child support claims or lawsuit plaintiffs can’t gain access to a trust. Perhaps Nevada’s most powerful advantage, and the one with direct bearing on the Murdoch case, is trust flexibility.

At the center of the Murdoch case is the Murdoch Family Trust, which holds the powerful voting shares in News Corp. and Fox Corp. that effectively control the companies. (The trust also contains the family farm in Australia, the Murdoch art collection and its Disney shares.)

Under the arrangement’s current terms, when Rupert Murdoch dies, control of the trust would pass to four of his children: Lachlan, James, Elisabeth and Prudence. Each would get one vote, meaning no sibling could gain control without the others. The trust was created as an irrevocable trust, meaning it’s designed to be permanent.

Yet according to the New York Times and the Wall Street Journal, Rupert Murdoch has moved to rewrite the trust to give Lachlan control after Rupert’s death. He argues that it’s in the best financial interests of the other children, which at least some of them have challenged. (Spokespeople for News Corp. and Fox declined comment.)

Changing an irrevocable trust is virtually impossible in many states. Yet in Nevada, it’s common, thanks to a special carve-out known as “decanting.” Nevada allows irrevocable trusts to be decanted, or changed, into a new trust as long as certain provisions are met. In the case of the Murdoch dispute, Rupert will have to prove to a probate court that he is acting “in good faith and for the sole benefit of the heirs.”

“In Nevada, you can usually fix those things fairly easily,” said Elyse Tyrell, a probate lawyer with Tyrell Law PLLC in Henderson, Nevada. 

The trial starts in September. Trust and estate attorneys in Nevada said it’s slightly unusual for a trust donor — in this case Rupert Murdoch — to argue that he’s acting in the interests of heirs who are opposing him. Yet if he can make the case that Lachlan’s control would maximize the financial value of News Corp. and Fox Corp., and therefore benefit all the siblings, the court may take his side.

It's also unusual for a family to be able to create a trust in Nevada without business or personal ties. Being a resident in Nevada is not a requirement for establishing a trust. None of the Murdochs appear to own any homes in Nevada, and none of their businesses have any public headquarters there.

“Normally a family would have some ties in Nevada to establish trust, either living here or having real estate,” Tyrell said. “I don’t believe any of the Murdochs ever lived here.”

Tyrell said it was also notable that the case and trust were in Reno and Washoe County rather than Las Vegas.

“Maybe they wanted something more remote,” Tyrell said, “so it would be harder for reporters and the media to come and find.”

Jeff Bezos at the Allen & Company Sun Valley Conference on July 10, 2024 in Sun Valley, Idaho. Credit: David Grogan | CNBC

Jeff Bezos has been making up for lost time when it comes to living large. Since 2019, he has purchased a $165 million estate in Los Angeles, a $78 million compound in Hawaii, a $119 million five-apartment spread off Manhattan’s Madison Square Park and multiple homes on Miami’s exclusive Indian Creek for a combined $177 million. He’s spending much of the summer on his new $500 million yacht with his fiancé Lauren Sanchez, who’s sporting a new multi-million-dollar ring.

Yet Bezos’ least noticed and perhaps biggest shopping spree is in artificial intelligence, through his family office.

According to data from FINTRX, all of the investments made this year by Bezos’ family office — called Bezos Expeditions — have been in artificial intelligence.

In January, he invested in the Series B round of Perplexity AI, an AI-powered search engine company. He also invested in a follow-on round in April.

Family offices don’t disclose amounts invested. Yet the value of Bezos Expeditions’ January investment likely doubled by April, since the company says its valuation soared to between $2.5 billion and $3 billion.

Then in February, Bezos Expeditions invested in Figure AI, the humanoid-robot company that also counts Nvidia and Microsoft as investors.

In July, he invested in a Series A round of Skild AI, which is focused on making AI systems for machines and robotics devices.

Bezos Expeditions has always tilted heavily toward tech. Fully 70% of his family office investments are in technology, according to FINTRX. The next biggest category is consumer goods, at 16%, followed by financial services and manufacturing, both at 13%. But now, his primary focus seems to be AI.

And he has plenty of company among family offices. According to the UBS Global Family Office Report, AI is now the favorite investment category for family offices. More than three quarters (78%) of family offices surveyed plan to invest in AI in the next two to three years — the most for any category.

Bezos recently filed a stock-sale plan to unload another $5 billion worth of Amazon shares this year, after selling $8 billion worth earlier this year. With over $13 billion in cash, Bezos will now have even more money to bet on the AI boom.

Credit: Didier Marti | Moment | Getty Images

When it comes to sheer numbers of millionaires, New York has long led the world with nearly 350,000. Yet when measuring millionaire density — or millionaires per capita — the Big Apple is eclipsed by the Little Big City.

Zurich, Switzerland, has the world’s largest number of dollar millionaires per 100,000 people, according to a report from Prime Casino, using data from Henley & Partners and UBS. Zurich has 20,374 millionaires per 100,000 population, meaning one in five Zurich residents is a millionaire.

Singapore ranks second in millionaire density, with 4,305 millionaires per 100,000 people, or 4.3%. Dublin, Ireland, ranks third, with 4.1%, followed by Amsterdam, Netherlands, (4.05%); Sydney, Australia (2.9%); and London, England (2.58%). New York ranked in ninth place at 1.79%.

When it comes to countries by millionaire density, Switzerland also ranks first, with millionaires representing 12.26% of its total population of about 9 million. Australia ranks second, at 6.9%, followed by the U.S. at 6.85% and the Netherlands at 6.55%.

Of course, at this time of year, the global locations with the highest density of millionaires would likely be the Mediterranean, the Hamptons, Nantucket or Aspen. And for billionaire density, this week in Paris probably wins gold.

A model wears a Hermes double-sided scarf in Paris on December 4, 2019. Credit: Alain Jocard | AFP | Getty Images

Hermès has long been regarded as the pinnacle of the luxury pyramid, with the wealthiest customers and most coveted products, like the Birkin Bag.

Now, as the global luxury slowdown accelerates, the gap between Hermès and everyone else is growing.

The luxury industry reported an average sales decline of 1% in the second quarter. Burberry and Gucci were down double-digits, and even powerhouse LVMH reported a meager 1% organic sales growth.

Hermès, however, reported robust sales growth of 13%. What the rest of the industry is calling “normalization of demand” is feeling like normal business for Hermès.  

According to an analyst report by Bank of America, Hermès added 440 million euros in sales for the quarter. Meanwhile, spending on all the other luxury brands fell by 400 million euros.

“This suggests the entirety of 2Q incremental sector demand is at Hermès,” the report said.

Put another way, Hermès ate everyone’s lunch – and then some.

Of course, Hermès is not completely immune to the broad consumer pullback, even among the wealthy. For much of its 187-year history, the company has relied on scarcity and vast unfilled demand to maintain growth and margins. If the luxury downturn is long and severe, even Hermès would see that reservoir of demand dry up. So far, however, Hermès is outlasting the competition.

As one-time Hermès CEO Jean-Louis Dumas liked to say: “Time is our greatest weapon.”

• Ken Griffin just bought a $90 million estate in St. Tropez.

• J. Lo sells $23 million Manhattan penthouse seven years after listing.

• Dubai is expected to be the world’s top wealth magnet for the third year in a row.

• Italy’s new 100,000 euro flat tax for foreign residents is bringing the world’s wealthy to Milan.

• Wealthy Mexicans are stashing cash in Miami real-estate.

• Wealthy families are loading up on gold on fears over government debt.

• Princess Leia’s bikini – the famous outfit worn by actress Carrie Fisher in “Return of the Jedi” just sold at Heritage Auctions for $175,000.

American actress Carrie Fisher on the set of Star Wars: Episode VI - Return of the Jedi directed by Welsh Richard Marquand. Credit: Sunset Boulevard | Corbis Historical | Getty Images

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