The Plan

This post is an overview of the current “The Plan”. The one that will carry the family forward for the next…well hopefully couple, three generations. Like all sensible plans there is no expectation that it will survive contact with The Enemy.

The objectives are:

  • Manage and Grow Wealth
  • Minimize Family Friction
  • Maximize Synergy
  • Honor Founding Couple

The way the plan attempts to achieve this is through a Family LLC that holds the family wealth and is run by the descendants of the original founding parents. The model is the Walton Enterprises LLC which serves as the holding company for the vast fortune from the Wal-Mart empire.

Our fortune is far far more modest. Even more so if evenly divided among my three kids, and their kids, and so forth. Even well managed fortunes can disappear from dilution over generations which is why you often hear “Shirtsleeves to shirtsleeves in three generations”. This is probably less of an issue today with smaller families but still a valid concern.

Still if my three kids have three kids of their own then our 4th generation blossoms from 1 heir in the 2nd to 9 in the 4th. Divide a million bucks 3 ways isn’t too bad. Divide it up 9 ways and it’s barely a down payment on a condo.

So between inflation and dilution family fortunes must grow a lot just to stand still. Every generation has to add to the pot if the family is to maintain wealth.

I will say it’s likely a heck of a lot easier when the core financial holding generates $2B a year in dividends (Walton Enterprises owns around 1.68B shares of Wal-Mart which pays about $1.21 per share in dividends) but as long as you add to the core until it reaches a critical mass my assertion is that even modest families like mine can create something with legs.

My parents left me a nice sum…and fortunately my wife and I have already made and saved enough for our own retirement so I have the luxury of saving it rather than needing to use it for myself. Rather than divvy it up into 3 smaller chunks my intention is to keep it together and add to it.

The kids will end up with control of money rather than access to money. If they can work together then the result will be greater than the sum of the parts. The control of wealth will provide indirect benefits for them while the distributions will provide extra serfs to help them build their own FIEFdom without depleting the core wealth…but build their own FIEFdom they must do themselves.

Managing and growing wealth is going to be rather simplistic…and that will be the next post…


  • You do not have permission to view this forum.