Amassing Billions
Spurred by historically low interest rates that magnify the tax savings, the richest Americans have amassed at least $20 billion in trusts like those used by the Waltons. They include Elaine Marshall, the Koch Industries Inc. director, and Fidelity mutual funds’ Johnson family.
A 40 percent tax is levied at death on estates of more than $5.25 million for an individual or $10.5 million for a couple. Total lifetime giving to heirs that exceeds those thresholds is also taxed at 40 percent, preventing people from avoiding the estate tax through early handouts.
Closing just two estate tax loopholes -- ones that the Waltons appear to have used -- would raise more than $2 billion annually over the next decade, according to Treasury Department estimates. That doesn’t count taxes lost to the type of charitable trusts the Waltons used to fund projects like the museum; the department hasn’t estimated that cost.
‘More Unfair’
In a sign of just how much money is at stake, the IRS is trying to collect as much as $2.8 billion from the estate of the Michigan industrialist William M. Davidson, according to a petition filed by Davidson’s family in U.S. Tax Court in June. The IRS is challenging the validity of some of Davidson’s maneuvers, which were different from the ones the Waltons use.
“The whole tax structure since I came to Congress actually has gotten more and more unfair,” said James McDermott, a Washington Democrat who’s been in the House since 1989 and has sponsored unsuccessful bills to close estate-tax loopholes.
Guarding the Waltons’ wealth as it passes from one generation to the next is the task of a handful of staffers laboring in an unmarked suite in Bentonville, above a bike shop called Phat Tire. Walton Enterprises LLC manages the world’s biggest fortune in a nondescript office that even employees of the coffee shop next door have never heard of.
The family’s estate-planning efforts are well shielded from public view. The wills of Alice’s parents, Sam and Helen, on file in an Arkansas probate court, reveal little about their financial arrangements. That of her brother John, who died in 2005, was sealed by a Wyoming judge.
Waltons’ Model