The historically low U.S. interest rates since 2009 are making Jackie O. trusts more popular and spurring tax planners to develop variations designed to squeeze out even more tax savings. Whatever is left at the end goes to a beneficiary, usually the donor’s heirs, without any tax bill.
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.
A Patton Boggs lawyer, Aubrey Rothrock, said in a statement that the Waltons’ lobbying supported “private foundation reforms to create new incentives for charitable giving” and did not involve “the specific issue of repealing the estate tax.”.
The trusts were set up to last for two years, and to pay out $217 million in stock and cash to Audrey Walton.
The difference between the GRAT and the Jackie O. trust is that the GRAT pays an annuity back to the person who set up the trust, rather than to a charity. Morgan represents the branch of the family that includes Wal-Mart founder Sam Walton’s three surviving children and eight grandchildren. Patriarch Sam Walton, who founded Wal-Mart in Bentonville, cultivated an image as a regular guy from Oklahoma who enjoyed quail hunting and drove a beat-up Ford pick-up truck. The stadium holds 12,000 people and opened in 1928 originally being called West Campus Field.
, It is named for Audrey J. Walton (wife of Walmart co-founder James "Bud" Walton) who donated $1 million in 1995 toward the building of a new 5,800 capacity grandstand to replace the original grandstand.
There’s little sign that the estate tax has significantly eroded the family’s fortune.
“It’s beyond belief,” said Wendy Gerzog, a professor at the University of Baltimore and a former U.S. tax court lawyer who has written extensively about the discounts. She said the practice creates “a world of unreality.”. Her views were shaped by growing up on a farm and representing a state with many small family businesses that could be hurt by the tax, she said. The current low interest rates make it all the more likely that a GRAT bet will be a win rather than a tie. Think of all the jobs they’ve created, at all levels. He estimated that single trust would last 39 years and would leave $2.2 billion for Helen Walton’s heirs. President Obama has repeatedly called for closing the Walton loophole in his annual budget proposal, estimating it would save $3.9 billion over 10 years. McDermott and other lawmakers, and the Treasury Department under both U.S. Presidents Bill Clinton and Barack Obama, have proposed eliminating some discounts involving transfers between family members. According to IRS data, the Waltons are by far the biggest users of Jackie O. trusts in the U.S. “It’s not what you gather, but what you scatter that tells what kind of life you have lived,” she used to say, a phrase memorialized on the walls of the company’s Sam’s Club stores. It’s unfortunate to have people who, when Mom and Dad pass on, they leave you a billion dollars for which you’d done nothing.”. The Waltons’ example highlights how billionaires deftly bypass a tax intended to make sure that the nation’s wealthiest contribute their share to government rather than perpetuate dynastic wealth, a notion of fairness voiced by supporters of the estate tax like Warren Buffett and William Gates Sr. Estate and gift taxes raised only about $14 billion last year. His five-and-dime-store business was still in its infancy and his oldest child was 9. Walton Enterprises is essentially a vehicle for holding the family’s Wal-Mart stock.
Still, professional planners have sometimes held up the Waltons as a model.
Audrey Walton’s bet turned out to be a tie because nothing was left over for her daughters. He and his wife Audrey had two children. From 2007 to 2011 -- the years for which the IRS provided public copies of the trusts’ tax returns -- they did so handily. Morgan, the Walton family spokesman, declined to say whether the Waltons have ever claimed such discounts. That growth means the four Helen Walton trusts have been accumulating assets faster than they give them away. Most of the money for Walton’s museum -- more than $1 billion, including endowments -- came from the Walton Family Foundation, the family’s main charitable arm, which also spends hundreds of millions of dollars a year on education reform and environmental protection. Aided by Democrats such as Blanche Lincoln, an Arkansas senator, Congressional Republicans in 2001 passed a temporary measure that would phase out the tax over 10 years. “Merci Alice Walton, pour la vision!” reads another. “You have to be someone who’s willing to say, ’I don’t need this extra money,’” Anzivino said.
Another Walton pioneered a tax-avoidance maneuver that is now widely used by U.S. billionaires. If the stock rose in value so that money was left over at the end, it would go to her daughters tax free. With a big enough spread between the actual performance and the IRS rate, a Jackie O. trust can theoretically save so much tax that it leaves a family richer than if it hadn’t given a dime to charity. Celebrities Audrey Walton Net Worth Audrey Walton Net Worth 2020, Age, Height, Relationships, Married, Dating, Family, Wiki Biography At the end of the 1990s, an effort to repeal the estate tax gathered force, supported by a group of billionaire families and their lobbyists at Patton Boggs LLP, a Washington law firm.
The trusts own stakes in Walton Enterprises that generated dividend yields of about 7 percent a year, more than three times what Wal-Mart stock paid out during the same period, and better than any stock in the Dow Jones Industrial Average. Her sunglasses shielding her eyes from the glare, she thanked just about everyone else who had played a role, from the architect and construction workers to the Northwest Arkansas Council. After the IRS’s Tax Court losses, estate planners began recommending that taxpayers create family holding companies, just to generate the discount.
Spending as much as $35 million for a single work, she quickly amassed the collection that would form the basis of Crystal Bridges. Here’s the catch: Walton claimed she owed no gift tax when she set up the trusts, because, under the IRS’s valuation formula, nothing would remain for her daughters. In 1993, Audrey Walton put $200 million of Wal-Mart stock into a pair of “grantor retained annuity trusts” or GRATs, to benefit her daughters, Ann and Nancy.
One alternative floated at a Senate Finance Committee hearing in 2008 was to value the donation when the trusts actually give the money to charity, rather than guessing at the amount beforehand. It is primarily used for American football, and is the home field of the University of Central Missouri.
The money put into these trusts is ostensibly for charity.
The IRS rate of 3.6 percent was the lowest since 1970, and Treasury yields rose the next month.
The trusts returned about 14 percent a year before taxes during that period, according to a Bloomberg analysis of IRS filings. Because of share buybacks, its control of the company has actually increased, from 40 percent to 49 percent. An amount set by the donor is given away each year to charity. The family’s estate-planning efforts are well shielded from public view. In this era, Warren Buffett and William Gates III have pledged publicly to give away all but a nominal amount to philanthropy. Representatives of all these donors or their families declined to comment or didn’t return calls. Have a confidential tip for our reporters? Sam’s retailing success made his family the richest since the Rockefellers, who themselves were pioneers in estate-tax avoidance.
Because assets are locked up for decades, such trusts are attractive only to the wealthiest families, said John Anzivino, a principal at Kaufman Rossin & Co. in Miami. In 2005, Walton grabbed the art world’s attention with a series of purchases. Barring a stark reversal of fortune, at least that much money will probably pass to Helen Walton’s heirs. Helen Walton funded her first Jackie O. trusts not with Wal-Mart stock, the family’s biggest asset, but with a stake in Walton Enterprises LLC, the family office upstairs from the bike shop. 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. Audrey J. Walton Stadium on the campus of the University of Missouri is the home of the Missouri Tigers track and field teams and the Missouri Relays track and field meet.
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