The fate of the $16B Walton estate
Helen Walton's will could finally turn the Wal-Mart founder's family into a philanthropy powerhouse, says Fortune's Carol Loomis.
(Fortune Magazine) -- The death of Helen Robson Walton at 87 last month - and a will that provides for philanthropy - may finally turn America's richest family into one of its most charitable.
Helen and her late husband, Wal-Mart founder Sam, always appeared to be heading toward large-scale donations. But when Sam died in 1992, most of his money passed to Helen. And though she increased her giving to an extent, the Waltons remained - as critics have noted - a relatively small force in philanthropy.
That is going to change, and the money will come from Wal-Mart (Charts, Fortune 500) shares. On March 30, according to Wal-Mart's just-published proxy statement, Helen owned only about $37 million of Wal-Mart shares directly. But the family's true vault of wealth is a company called Walton Enterprises LLC, which holds about 1.68 billion Wal-Mart shares, worth $82 billion.
And at her death Helen, by all indications, owned one-fifth of the LLC. It would be simplistic to say that she was therefore worth one-fifth of $82 billion, or $16.4 billion. For complex reasons, one-fifth of Walton Enterprises is worth less than one-fifth of that firm's assets.
Even so, Helen died a billionaire many times over, and if her will were to say - just to speculate - that all her wealth should go directly into the already existing Walton Family Foundation, it would leap from an also-ran to one of the three largest foundations in the U.S. Eventually the enlarged foundation would need to be financed by sales of Wal-Mart stock. The Waltons indeed announced after Helen's death that sales could be expected down the line.
The plot thickens, because one of Sam and Helen's sons, John, then 58, was killed tragically in 2005 in the crash of an experimental plane he was piloting. He, too, appears to have died owning a one-fifth interest in Walton Enterprises - and today that share is owned by his estate.
John Walton was considered the most philanthropically minded of the Walton children, who also include Rob, 62; Jim, 58; and Alice, 57. But no one knows what John's will said about philanthropy or bequests to his wife and son because it has been sealed, without explanation, by a judge in his hometown of Jackson, Wyo. It is extraordinarily unusual for a will to be sealed, but Wyoming is known as "friendly to wealth" - it has no estate tax or income tax - and the Jackson court appears to be a special pal.
No doubt the lawyers handling the John Walton estate have been arguing with the IRS about the valuation of Walton Enterprises. But in the meantime, the estate and certain affiliates have been getting impressively richer because they control a hot Phoenix solar-module maker, First Solar, that went public last November at $20 a share and was recently $64. The estate and its affiliates sold $115 million of stock in the IPO and still own stock worth $2.5 billion. That doesn't match holding Walton Enterprises, but it's not bad.
From the May 14, 2007 issue