Sam Walton’s Amazing Foresight
• Sam Walton founded Wal-Mart in 1962.
• Even before he launched Wal-Mart, Walton ran a
“five and dime.”
• He transferred 80% of the stock in his company to
his children around the time he launched it.
• Much of the family’s wealth is tied up in a family
holding company called “Walton Enterprises.”
When Wal-Mart got big, Walton’s kids profited
Walton Enterprises essentially controls Wal-Mart.
• Not surprisingly, Walton Enterprises owns a lot of
Wal-Mart stock -- 1.6 billion shares of it.
• With 3.2 billion Wal-Mart shares outstanding,
Walton Enterprises owns about half of Wal-Mart.
• That’s about $122 billion worth of Wal-Mart stock -
- and enough to essentially control the company.
Why did he do give so much of it to his kids?
“The best way to reduce paying estate taxes is to give
away your assets before they appreciate.”
--Sam Walton, Made in America
Walton gifted those shares to his kids before Wal-
Mart got huge, so his gift was low in value at the time.
How gifts like that work
If you start a new company, it’s likely worth very little.
• You invest some capital.
• You have some assets and liabilities.
• You may or may not have early earnings.
Your gift is typically valued at its worth on the day you
give it. For a new company, that number can be small.
If you’re giving stock, the recipient typically gets your
original cost basis as part of the gift.
Turning a gift into a multibillion-dollar legacy
When Walton started Wal-Mart, there was no
guarantee it would become the giant it is today.
His children benefitted when the company grew, and
they held on to their appreciating shares.
Because Walton had already handed over most of his
stake in Wal-Mart early in its existence, after he
passed, those gifted shares were not in his estate.
As a result, massive family wealth
Where the Walton money sits now:
• Christy Walton (and family): $37.8 billion
• Jim Walton: $35.4 billion
• S. Robson Walton: $35 billion
• Alice Walton: $35 billion
• Ann Walton Kroenke: $4.9 billion
• Nancy Walton Laurie: $4.2 billion
Data from Forbes, as of June 22, 2014.
What could have gone wrong?
Just because it worked for the Waltons doesn’t mean
it will always work out that well.
• If Wal-Mart had failed or floundered, Walton’s gift to his
kids could have wound up worthless.
• If Walton’s kids had sold or squandered their stakes, they
may have lost most or all of the wealth.
• If the family squabbled instead of worked well together,
the money could have been lost to lawyers, and Sam
Walton could have been too distracted by the fights to
build Wal-Mart into the titan it is today.
What this means to you
• The Waltons effectively control Wal-Mart.
• That limits the influence of other shareholders.
• It makes a hostile takeover of Wal-Mart virtually
• If you have a business that may get big...
• Consider your legacy planning early, while it’s still small.
• Don’t forget the human factors, too.
Per Warren Buffett, a good inheritance from a person of means is "enough money so that they
would feel they could do anything, but not so much that they could do nothing."