In 1953, Sam and Helen Walton put what little they had into a family limited partnership that included their four children. They called their partnership “Walton Enterprises.” From this partnership the well-known chain store, Walmart, evolved. Eventually, the partnership assets grew and included real estate, banks and a newspaper. In 1985, the Walton family’s wealth was estimated to be $20 to $25 billion. But when Sam Walton died in 1992, he owned only a 10 percent interest in Walton Enterprises. He had used a family partnership to transfer assets that grew to over $18 billion to other family members without gift or estate tax. To Sam Walton, the gift of a business opportunity to a loved one was much more valuable than a gift of cash. With a flat rate of 55 percent at the time of Sam Walton’s death, this advanced planning saved approximately $10 billion in estate taxes.
“True wealth is not measured in money
or status or power. It is measured in the legacy we leave
behind for those we love and those we inspire.”
(Cesar Chavez, Co-founder of National Farm Workers Association)
Far too often, we see clients come to us with a Limited Liability Company or Family Limited Partnership but have absolutely no idea how to put them to good use. They bought a sales pitch from a smart salesperson, but that smart salesperson had no idea of tax laws, tax structuring, or the documentation needed to effectively use these awesome tools.
A properly prepared Wealth Management Accounting plan will segregate assets in such a way as to achieve the maximum in asset protection, estate planning, tax planning, IRA Rescue, and Medicaid Spend down. It does not make sense to do one without the others.
You’ll do yourself a favor when you take advantage of the fully integrated package of the WMA plan. Done properly, it will not only allow you to have a great asset protection plan but allow you to avoid probate, and lower your income and estate taxes, which is critical to retaining your wealth for the next generation, a worthy goal for all of us.