The SafeEstates Blog

Watch For Falling Prices?

The holiday shopping season is upon us. Will you do most of your shopping online or at brick and mortar retail stores? Will you shop early or wait for falling prices? Do you know Walmart, the largest retailer in America, gets about 10% of its total revenue from online sales?
Sam Walton bought his first store in 1945 at age 26 in Newport, Arkansas. When the landlord refused to renew the lease, Sam was forced to sell the store to the landlord. Undeterred, Sam bought a different store 200 miles away in Bentonville, Arkansas. By 1962, Sam and brother Bud owned 16 stores. They opened the first Walmart that same year in Rogers, Arkansas. When Sam died in 1992 there were 1,960 Walmart stores employing 380,000 people. His estate was worth about $8.6 billion.
Sam and Bud’s company stock is now owned by their five living children and other family members. Sam’s oldest son, Rob Walton, served as Walmart chairman 1992 to 2015. Rob’s son-in-law, Greg Penner, is the current Walmart chairman. Sam’s son, Jim Walton, is chairman of Arvest Bank, largest bank in Arkansas and owned almost entirely by the Walton family. Collectively the Walton family owns a little under 50% of Walmart’s stock. The company has grown to more than 11,500 stores. The family’s combined wealth in 2020 is about $225 billion.
How did Sam and Bud manage to keep the company in the family and keep it growing? How did they avoid the bite of estate tax? They had a plan and executed it very well. Their business succession plan was simple: do not give up control of the company. Although the company stock has been publicly traded since 1970, the family has hung on to enough shares to maintain control. Sam Walton started his estate plan in 1953 when he gave a 20% stake in the family business to each of his children, keeping 20% for himself and wife Helen. Sam was 35 at the time! The planning continued through Helen’s death in 2007. Their estate plan included a combination of marital deductions, charitable trusts (“Jackie O.” trusts), grantor retained annuity trusts, family limited partnerships, private foundations, and other common tools available to everyone.
If you own a successful small business, should you be as aggressive with your succession plan as Sam Walton? Have you identified and trained a young successor? When will you pass the torch?
Regardless of the outcome of the 2020 Presidential election, estate taxes will not be a concern for most Americans. If you have accumulated more than $5 million in assets, keep estate taxes on your radar. If you have accumulated more than $20 million in assets, this is a good time to review your estate plan with your estate planning attorney, accountant, and financial advisor. We help families keep safe estates.
~ Randy Hooper