America is the richest country in the world and it has more billionaires than any other nation. While many of those 724 mega-rich individuals have made their own fortunes, including the world’s richest man Jeff Bezos, a huge number have inherited their wealth just by fortune of birth, such as the heirs of America’s richest families including the Waltons and the Mars family among others. In fact, of the top 50 dynasties on the Forbes 2020 list of wealthy families, who have combined wealth of around $1.2 trillion, 27 also featured on the Forbes 400 list back in 1983. A new report by the Institute for Policy Studies (IPS) think tank says that it is wealth preservation, rather than generation, that is allowing these families to stay so rich.

So how do America’s richest clans look after their family fortunes? Click or scroll through to discover the secret strategies of the nation’s wealthiest dynasties.

Over the years America's tax system has shifted to benefit the wealthy. The IPS report reveals that America’s wealthiest people (0.01% of the population) pay just a sixth of the tax today that they would have done in 1953. In fact, between 1980 and 2018, the taxes paid by American billionaires have decreased by a remarkable 79% when measured as a percentage of their wealth. This includes lower taxes on income, estate and capital gains – all of which the mega-rich already have more of than the typical American. On becoming president of the United States, Joe Biden said that he is committed to reforming how Americans pay tax to make the wealthy play by the same rules as everybody else, which includes reversing the huge tax cuts doled out by Donald Trump in 2017.

Data from the Internal Revenue Service (IRS) recently published by nonprofit news organization ProPublica alleges that America’s 25 richest people paid a “true tax rate” of just 3.4% between 2014 and 2018, compared to the 14% paid by the median American household and the 37% rate currently paid by most people on incomes of $523,600 (£376k) or more, by using tax breaks. 

Giving away your cash can actually help you hold onto it, if you decide to plough your money into think tanks working to reduce your tax payments. Many foundations set up by the ultra-wealthy do benefit those in need, but the IPS report also reveals that some dynastically rich families have used those foundations – which are typically subsidised by the taxpayer – to fund research institutions. In turn, these think tanks advance public policy in a way that benefits the wealthy, such as advocating big tax cuts.

Charles Koch (pictured), whose father Fred Koch was founder of Koch Industries, has established numerous nonprofit institutions that seek to promote wealth amplification agendas. One such organization, the Bill of Rights Institute, provides materials for high school social studies classes but critics say with an agenda of promoting a free market, low-tax society.

Of course you don’t need to establish your own think tank to advocate low tax policy – an existing organization favored by those wishing to pay less tax is the Heritage Foundation, which has a lengthy track record of encouraging anti-tax legislation. Late heir to the Mellon fortune, Richard Mellon Scaife, is thought to have donated around $23 million to the nonprofit before he died in 2014. Similarly Caroline Rose Hunt, who passed away in 2018, was listed as an associate of the organization, and donated annual gifts of between $10,000 and $25,000 to fund the think tank’s anti-tax research.

Some of America’s wealthiest people are serious philanthropists, including Chuck Feeney (pictured), who in the last year succeeded in his goal of going broke before he died by giving away all of his cash to good causes via his charitable foundation, as well as the long list of billionaires who have committed to donating the majority of their wealth during their lifetime by signing up to the Giving Pledge. Passing riches on to future generations is the crux of dynastic wealth however, and so the richest clans don’t give huge portions of their money to charity...

While some super-rich people give directly to causes, most dynastic families are keen for their philanthropy to go through private family foundations, probably due to the considerable tax deductions they receive for setting them up and donating to them on an annual basis. In fact, America’s top 50 wealth dynasties have created 248 family foundations between them – five per family on average – and as of 2018 these contained $51 billion in assets. 

While the private foundations are used to give funds to charity, the IPS report notes how the money held in some foundations is "not always moving out as fast as it might". In fact, the 248 foundations paid out grants to causes at a median rate of just 5.7% of assets, only just over the 5% legal minimum limit. And as many as 98 foundations distributed grants at a rate below 5%.

It's also worth noting that only four billionaire descendants of dynastic families have signed up to Bill Gates, Melinda French Gates and Warren Buffett's Giving Pledge, which would see them give away half of their wealth in their lifetime. 

Billionaires who don’t want to donate their money to think tanks or charities can give their money directly to political candidates, campaigns and political action committees (PACs) that are likely to help them out in the financial long term. And ultra-high-net-worth individuals have parted with incredible sums of money to try and get their candidate of choice elected. In the 2020 election cycle Timothy Mellon, who owns part of the $11.5 billion Mellon family fortune, donated a sensational $60 million to anti-tax PACs, which were supporting the re-election of Donald Trump and his more lenient tax policies.

Being friendly with those in power doesn’t just mean you can help to shape country-wide policies – it also makes it easier to strike up lucrative business deals. For example Ray Lee Hunt, who inherited a large share of oil and gas conglomerate Hunt Consolidated, was able to strike up a deal to buy oil fields in Iraq worth up to $14 billion in 2007, despite the arrangement’s apparent conflict with US policy. The deal was likely given the go-ahead because Hunt was a major supporter of President George W. Bush, alleges the IPS report. 

Establishing a family office allows rich clans to keep their wealth management among the relatives, which can have huge benefits in terms of privacy and control, such as in allowing ultra-high net individuals to pursue higher returns through riskier investments. It is a money preservation tactic used by some of America’s oldest dynasties. John D. Rockefeller (pictured) was the first to form a family office to "preserve" his family wealth. However, it is worth noting that his late grandson David Rockefeller had signed the Giving Pledge. There are approximately 10,000 family offices across the world, half of which were founded in the last 15 years. From the Cargill-MacMillan family to Oprah Winfrey, the family office is a popular means of maintaining huge fortunes.

A dynasty trust allows uber-wealthy individuals to pass wealth down the generations without incurring the estate tax or gift tax that would come with simply transferring the money or leaving it in a will. These trusts can hold onto money for long periods of time – sometimes indefinitely – depending on the agreement. Families that have employed dynasty trusts as a means of managing their finances include the Pritzkers (pictured is JB Pritzker), who have inherited the Hyatt hotels fortune, and the Wrigleys, who are behind Wrigley’s chewing gum.

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