The best tax gurus in the country made sure the money stretched as far as necessary. Now it’s time to see what kind of personal influence takes root in its shade.
For someone often derided as living in a bubble of “old money,” George H.W. Bush didn’t accumulate a whole lot of cash.
Arguably he didn’t need to. The whole point of dynastic wealth is that it creates a seamless support system from cradle to grave.
On that level, the real legacy a family like the Bushes creates isn’t ever going to be denominated in dollars.
Cash comes and goes. But there’s an assumption that it’s being invested in developing people.
The real question is whether those people deliver a return on that investment through glory, replenishing the collective pool of wealth or simply maintaining the family system.
All about houses
Bush famously wasn’t a self-made millionaire before the 1960s, when he was already in his early 40s.
The presumption there is that he didn’t personally inherit a huge amount of wealth early on. Tax returns back it up.
He starts from 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.
By the standard of the time, these were still impressive numbers. But even then, it wasn’t exactly dynastic money.
The real money belonged to the family’s friends like the Harrimans, the Kravises and so on. It was about being in the right crowd and having just enough freedom to go in on the right venture.
That’s the inheritance the Bushes have always passed on. They receive opportunities, connections and maybe a few bills are paid in advance.
Nobody’s becoming a billionaire in that world. But all the trappings of the millionaire lifestyle are practically built in.
So Bush might’ve gotten a little from his grandfather in his early 20s and then another $1 million at most when his father dies.
That’s the money that goes into that famous “blind trust” when he goes into politics.
For a Bush of his era, it’s just money. The real non-negotiable asset is of course the summer house in Maine.
Bush paid $800,000 cash for it when he joined the Reagan White House. He sold his Texas residence to raise the money.
Famously the 1031 exchange he tried to make switching houses backfired because he still claimed Texas residency and so got no tax break on the capital gain.
The fact that having to pay the tax irritated him only proves that he wasn’t made of money. It was more than a paper inconvenience.
Either way, he owned the Kennebunkport house and became the symbolic head of his branch of the family.
Owning the house made him the gatekeeper and the patriarch. Formally or not, he controlled summer, allocating bedrooms and weekends.
He interacted with all the kids, cousins and grandkids. Watching their behavior taught him who they were becoming.
It’s a funny story about the house. It hasn’t been passed on through inheritance for generations and has never been put into a trust.
That was okay decades ago. The relative willing to take on the house would buy it from the previous owner’s estate and that was that.
Now it’s assessed at $13 million and $8 million of that is for the land alone.
Buying it would trigger roughly a $12 million capital gain today and wipe out the entire estate tax exemption for him and Barbara.
Planning (succession and otherwise)
That said, Bush had world-class tax planning on his side. The family lawyer in Houston has been with him since the 1980s.
She’s very good at what he does. The house might not be in a trust yet but right now it’s owned by a shell partnership that plays a similar role.
Bush owned the partnership and the lawyer filed all the paperwork. Reading between the lines, she’s set up a lot of family shells over the decades.
Whether that’s a matter of the Bush kids going to her to structure their own activities or Barbara’s charitable fund operating out of her office, she’s at the heart of everything.
Now that both George and Barbara are gone, maybe the partnership rolls into a trust to distribute shares in the house to the kids.
There might also be life insurance to cover the transfer. We just don’t know.
In that scenario, as long as the kids see value in keeping the house, the trust pays the bills. Otherwise, one day it sells and distributes the cash.
The fact that Jeb is building a house on that land reveals that he’s interested. He might even buy out other stakeholders according to the family tradition.
In that scenario, he’s the new head of the branch of the family that cares about Maine. Heirs decide how much that matters to them and plan their vacations accordingly.
If nobody steps up, the memories will ultimately convert into cash. It happens to every family sooner or later.
For now, Bush gave the kids a great start. They’re successful, affluent, productive members of society.
Whether they inherit millions is practically beside the point at this stage. The Texas house is an afterthought even though it justified his decades of no-state-tax residency.
The kids and grandkids will probably get heirlooms instead.
Of course presidential memorabilia is worth a lot of money. But most of that went to his library where his political legacy is preserved.
(The lawyer hosts that foundation too. Finding the right lawyer is the key to any well-designed dynastic plan.)
Otherwise, there might not be a lot of cash. George didn’t live all that lavishly so his government pension probably picked up a lot of the everyday expenses.
Whatever cash was left in that trust might well have accumulated for the beneficiaries. But interesting story there, a lot of the income seems to have gotten funneled to the kids early on.
They might well have taken their distributions when they were young enough that it made a big difference setting them up in lives of business and philanthropy.
The future of the Bush name rests on their shoulders. They don’t need the money any more than George did.
Maybe the experience shaped by that house helps them perpetuate the legacy. Right now I don’t see a lot of fighting over the house, although it could happen.
Jeb has first claim by right of actually building there. G.W. doesn’t seem interested, but it’s hard to say.
Big family symbols bring big families together but they also tear them apart. Either way, what happens to that house will define the next generation of the Bush dynasty.
Let’s see how well they learned their lessons.
