Tax Fight Reveals Murphy's Philosophy on Wealth

by Mark Friedman  on Monday, Sep. 27, 2010 12:00 am  

"We understood, the three of us, how vitally important it was to have a seat at the table of each of these companies," Martha Murphy said.

The plan called for the creation of Charles H. Murphy Jr. Family Limited Partnership to hold the shares of stock in the various Murphy entities. Charles Murphy Jr. contributed to the partnership assets worth $89 million, about 40 percent of his total assets at the time.

He also created a limited liability company, Murphy Family Management LLC, to manage the partnership. The three members of the LLC were Charles Murphy Jr., who owned 49 percent, and Madison and Martha, who each owned 25.5 percent, a split that required at least two shareholders to agree to any action. Charles Murphy Jr. contributed assets valued at $1 million, while Madison and Martha each contributed assets of about $500,000. The LLC is among the assets of the partnership.

Outside of the partnership, Charles Murphy Jr. still held about $130 million in assets, which were used for his living expenses.

And Charles Murphy Jr. was pleased with the partnership.

The partnership "best met the needs and goals and aspirations that we had," Madison Murphy said. "Charles and we all were concerned about keeping this voting block of Murphy, Deltic and First United in one place. ... We also wanted centralized management and professional management; this vehicle did that. It also allowed Pop to continue a pattern of making exclusion gifts and other gifts to his family members, but yet retaining the voting control."

In Deltic Timber alone, Charles Murphy Jr.'s family and extended family members own about 25 percent of the outstanding stock. That family tree spans four generations and includes more than 100 people. 

"This was one of the things that was really a driver for Charles was ... keeping the voting in one place, not fractionalizing the assets," Madison Murphy said.

Under Madison and Martha's management of the partnership, the value of the assets grew from $91 million in 1998 to $400 million in 2008, Madison Murphy said.

 

Chest Pains

In 2001, after suffering chest pains, Charles Murphy Jr. scheduled an appointment with a cardiologist. The doctor discovered Murphy's coronary arteries were blocked but the condition could be controlled with medication and a slowing down of his lifestyle.

 

 

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