Trusts overseen in the Kresge five-and-dime building hold all kinds of assets, from stakes in private companies to a castle in Italy. While their holdings aren’t public, securities filings sometimes offer a glimpse. In July, the two top executives at Monster Beverage Corp., the Corona, California- based energy drink maker, shifted $478 million of their stock to undisclosed “entities” controlled by a trust company based in the building.
In 2010, the Pritzker family, whose members include U.S. Commerce Secretary Penny Pritzker, revealed in a securities filing that one branch had moved $360 million of Hyatt Hotels Corp. stock to trusts overseen by a native South Dakotan named Thomas J. Muenster. Muenster, whose sister married a Pritzker, maintains an office in the Kresge building.
The SEC disclosures don’t show whether any of these moves resulted in federal or state tax savings; the amounts exceed what one individual could put in a dynasty trust. Most state and federal tax filings are private, and McDowell declined to comment on specific clients. He said most families that set up private trust companies are attracted by South Dakota’s flexible trust management rules rather than tax avoidance.
‘Family Tradition’
The Monster executives declined to comment through a spokeswoman, as did the Carlson family. Jay Robert Pritzker, his sister Penny Pritzker, and his brother-in-law Muenster didn’t respond to messages seeking comment, nor did Peterffy or Joshua Nash of JHN.
“Our family tradition has been to keep things private,” said Mark Collins, a manager of Dillon Trust Co. “We prefer to keep it that way.”
In 2007, the Wrigley family, heirs to the candy fortune, transferred oversight of family trusts holding $1.9 billion of company stock to a private trust company in the Kresge building, according to an SEC filing.
The family picked South Dakota because of the state’s favorable laws governing the formation of private trust companies, the Chicago family said last week in a statement attributed to William Wrigley Jr. The family said the move didn’t involve any state or federal tax savings.
President Barack Obama has called for closing the dynasty trust loophole in annual budget proposals, even though the change wouldn’t boost tax receipts under his administration. The impact of dynasty trusts on federal revenue is far in the future -- though potentially enormous, said Lawrence Waggoner, a retired professor at University of Michigan Law School.
“The federal government won’t lose out for maybe 90 years, and maybe that’s why Congress is not terribly interested in the subject,” Waggoner said. “The longer they procrastinate, you have larger and larger amounts in perpetually tax-exempt trusts.”