HOW WAL-MART FOUNDERS KEEP THEIR BILLIONS

If you were one of America’s richest families, how would you avoid paying estate taxes? That is a question that the Walton family, the founders of the ubiquitous Wal-Mart mega-chain, must answer on an annual basis. With an estate value reaching into the hundreds of billions of dollars, the Waltons’ exploitation of legal loopholes is nothing short of admirable. Critics say that the Waltons’ deft manipulation of the system prevents proper taxation, which was designed to require the wealthiest Americans to actually contribute to their government.

One way the Waltons protect their wealth: heavy donations to charity and trusts. Those trust funds are structured so that the Waltons are not required to pay taxes on gifts they make to their heirs. Their exploitation of these legal loopholes is costing the U.S. government a great deal. Just 1 percent of the $1.2 trillion in taxable estate money passed down each year ends up in American coffers. Most of that money is passed down by groups of extraordinarily rich individuals and families who are advised about skirting the taxes that apply to their estates.

The nation’s wealthiest Americans use trusts to protect their fortunes from the mandatory 40 percent tax on any estate valued at $5.25 million for single people and $10.5 million for married couples. Estate planners have touted the Waltons’ model for avoiding estate taxes as one of the most brilliant in recent history. The key to the Waltons’ success resided in the fact that founder Sam Walton split his business among his heirs early, before the endeavor became wildly successful.

With that in mind, business owners would be wise to consider drafting a comprehensive estate plan while their operations are still in their infancy. Walton had already created a specific estate plan for his business when it began in 1953. In many instances, early action can save estate planning headaches for future generations.

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Written by Luis E. Barreto

Luis E. Barreto

Luis is a probate and guardianship litigator with over 23 years of experience in the field. Determination of heirs, will contests, breaches of fiduciary duty, removal of personal representatives, guardians and trustees are just some of the types of litigation he addresses. In addition, he administers non-contested estates and guardianships.