World-class tax planning has had a big impact on the Bush family, with earned and inherited money stretched as far as possible. The Bush dynasty has had excellent financial advice, and it shows, by virtue of being almost invisible.
The whole point of multi-generational family wealth when properly handled is that no one appears to have a lot of cash and no one needs a lot of cash. That’s true in the case of George H.W. Bush, who enjoyed the benefits of a life-long support system. Interesting details are provided by Wealth Advisor in the article “American Dynasty: What G.H.W. Bush Leaves Behind (And Who Steps Up To Inherit).”
Bush begins near zero on paper, sells his oil company and lets the interest accumulate. When his father dies, he doesn’t record more than a $1 million windfall. At that time, these were still impressive numbers, but it wasn’t exactly dynastic money. For a Bush of his era, it’s just money. The real non-negotiable asset is the Maine summer home. He paid $800,000 cash for it when he joined the Reagan White House and sold his Texas place to raise the money. However, his 1031 exchange switching houses backfired, because he still claimed Texas residency and so got no tax break on the capital gain.
Interestingly, the Kennebunkport house hasn’t been passed on through inheritance for generations and has never been put into a trust. The relative willing to take on the house would buy it from the previous owner’s estate, but it’s currently assessed at $13 million. Purchasing it would trigger roughly a $12 million capital gain today and wipe out the entire estate tax exemption for he and Barbara.
However, President Bush had world-class tax planning and the family lawyer in Houston has been with him since the 1980s. The house isn’t in a trust yet, but it’s owned by a shell partnership that plays a similar function.
Bush owned the partnership, and now that both George and Barbara are gone, the partnership might roll into a trust to distribute shares in the house to the children. If that’s the case, provided the kids see value in keeping the house, the trust pays the bills. Otherwise, they will sell it one day and distribute the proceeds.
Much of the family income from a trust seems to have been given to the heirs long ago. This may have helped them get started in business and philanthropy.
It should be noted that George and Barbara did not live a lavish life. They likely used his government pension for everyday expenses. While presidential memorabilia is very valuable, most of those items have gone to the library, where his political legacy is being preserved for posterity.
Reference: Wealth Advisor (December 3, 2018) “American Dynasty: What G.H.W. Bush Leaves Behind (And Who Steps Up To Inherit)”
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