Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Sunday, June 10, 2012

How Mitt Romney's Family Trust Reached $100 Million

Images-13Mitt Romney's 1995 Romney Trust fascinates financial advisers because it is worth $100 million and the Romneys have reportedly paid no gift tax in accumulating this vast amount in their trust. Advisers speculate on the different combinations of trust strategies that were used to achieve this feat. Assuming that between 1995 and now the Romneys gave gifts to the trust that reached the maximum gift tax-exempt amount each year, to turn $11.89 million into $100 million, the trust needed to grow at an average return rate of 26%. Assuming that the Romney trust only invested in private equity and that private equity returned 4% more than the S&P 500 in every year from 1995 until now, Wealth Management speculates that the following techniques may have been used. 

Mitt Romney's advisers may have combined an family limited partnership (FLP), a grantor retained annuity trust (GRAT), a charitable lead annuity trust (CLAT), and intra-family loans. For a more detailed account of how these strategies added up to $100 million, please click here.

This combination is one of many different ways that advisers could have reached the $100 million within the trust. Mitt Romney's position at Bain Capital probably opened unusual private equity opportunities to him as well. However it was achieved, the success of his trust is an example of how effective a savvy adviser can be when they utilize various strategies available.  

See Jonathan Bergman, Unlocking Mitt Romney's Family Trust, WealthManagement.com, June 8, 2012. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

https://lawprofessors.typepad.com/trusts_estates_prof/2012/06/how-mitt-romneys-family-trust-reached-100-million.html

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