Mon. May 20th, 2024

SUCCESSFUL DYNASTY TRUSTS IN HISTORY: THE ROCKEFELLER FAMILY

The Rockefellers, a legendary family synonymous with generational wealth, have successfully passed down their legacy for ages. But how did they achieve this? The answer lies in two key instruments: life insurance and trusts. In this article, we’ll delve into the powerful strategy they used to create an enduring financial legacy.

The Role of Trusts

At the heart of the Rockefeller strategy is the concept of trust. A trust is a legal arrangement that outlines how assets should be managed and distributed. Even after the trust creator has passed away, their wishes continue to guide how the assets are used. This mechanism ensures that the wealth generated endures for generations to come.

Life Insurance Connection

A critical component of this strategy is life insurance. By taking out life insurance policies on family members, such as the father in this example, the Rockefellers ensured that upon their passing, a substantial sum would be available for their beneficiaries. This sum is the “death benefit,” and it plays a central role in fueling the cycle of generational wealth

Successful Dynasty Trusts in History: The Rockefeller Family

Dynasty trusts have played a crucial role in preserving wealth and fostering a lasting financial legacy for many affluent families throughout history. One excellent example is the Rockefeller family, whose strategic use of dynasty trusts has made them one of the most prosperous and enduring family dynasties in the world.

Who Started It?

The Rockefeller dynasty trust was established by John D. Rockefeller, the American business magnate and philanthropist who founded the Standard Oil Company in 1870.1 As the wealthiest individual of his time, Rockefeller developed values and traditions to keep his family together and preserve their wealth for over 150 years.2 In 1934, he established the family’s first trust, which laid the foundation for the creation of the dynasty trust in 1952,3 both managed by Chase Bank, that would protect the interest of family descendants for generations.4

Standard Oil would go on to control 90 percent of US refineries and pipelines, and Rockefeller became the wealthiest man in the world and one of the first billionaires.5 Standard Oil now operates under ExxonMobil and Chevron corporations.

What Does the Trust Hold?

The Rockefeller dynasty trust encompasses significant and diversified assets, including equities, real estate, energy, technology, private investments, and philanthropic foundations.6 A strategic approach to protecting resources in trusts has allowed the family to preserve wealth and adapt to economic upheaval and fluctuating markets.

Who Benefits from It?

For over 150 years, multiple generations of Rockefeller family members have benefited from the trusts that successfully passed down wealth to support their financial literacy and education.7 This in turn allowed them to continue the family’s charitable pursuits in education, healthcare, business, and more.8

Other Accomplishments and Philanthropic Initiatives

Beyond the financial aspects, the Rockefeller dynasty trust drives numerous philanthropic initiatives. It utilizes financial resources to encourage a sense of stewardship and philanthropy to shape the family’s financial future and guide each generation to make responsible impacts on society.The Rockefeller Foundation was established in 1913, addressing global challenges such as public health, education, scientific research, and environmental conservation, and still plays a pivotal role in shaping cultural institutions today.10

The Rockefeller Trust Is Still a Success

The last surviving grandchild of the Rockefeller patriarch, David Rockefeller, died at age 101 in March 2017. His oldest son, David Rockefeller Jr., 76, continues to protect the family’s financial security and philanthropy. The Rockefeller net worth is currently valued at $8.4 billion, spread out over 170 heirs.11 Various trusts have helped fund projects ranging from the arts to international trade.12

Tips When Considering a Dynasty Trust 

Since setting up and funding a trust is a complex process, it could take some time to create the right strategy that aligns with your goals and maximizes trust benefits. You may have multiple options to protect your estate and your family’s future. Professional guidance helps determine the best possible decisions for your situation.

A dynasty trust is a flexible estate planning tool, designed to hold, control, and distribute property over many generations. You decide how the money is transferred, to whom, and when. Think about what you want for your family’s future and clearly articulate your goals to help future generations succeed.

Dynasty trusts are powerful tools for those who want to provide both a lasting legacy and financial security for future generations. The Rockefeller dynasty trust is a testament to the enduring success of well-structured and meticulously managed trusts and estate planning strategies.

 


The Rockefeller Life Insurance Strategy for building Multi-Generational Wealth and a Lasting Financial Legacy

John Davison Rockefeller Sr. 

He was an American Business Magnate and a Philanthropist.

He was considered the World’s first Modern-day billionaire and the Wealthiest Person to have ever lived.

It is estimated that he would have a Net Worth of almost $400 Billion in today’s Dollars.

He was richer than Elon Musk who has a Net Worth of $240.7 Billion today.

As quoted by Robert Kiyosaki”

“It is not how much you make that counts, but how much Money you keep.”

And As quoted again by Robert Kiyosaki”

“There are only two things you can Invest: Time & Money. Of the two, Time is more important.”

The Rockefeller Family have followed a set of Principles and Practices that has protected and grown the family wealth for generations and are still getting paid off the legacy – especially the one John D Rockefeller set up more than 100 years ago. This is a tremendous legacy. 

Would we like to build and leave a legacy?

Is it possible for us to live wealthy, not only leave our kids better off than we were, but also spark a financial legacy of wealth and empowerment that lasts for generations?

Well, we can do all of those things utilizing what we call “The Rockefeller Method”?

What is The Rockefeller or Waterfall Life Insurance Strategy

The term “Waterfall Concept” refers to a popular estate planning strategy that facilitates Tax-Deferred Rollover or Transfer of a Cash- Value Life Insurance policy from one generation to the other.

Which is not available with other types of Investments which are subject to Year-on-Year Income Tax or Capital Gains Tax.

Irrevocable Life Insurance Trust

  • The Rockefellers used the most tax efficient way by a series of irrevocable trusts that helped pass down wealth to future generations.
  • These Trusts both fund and remain funded through life insurance policies, and include strict stipulations that protect the family from the risk of irresponsible behaviour.

Transfer One’s Life Insurance Policy To Someone Else

  • A person can transfer his rights, title and interest in a life insurance policy to another by assigning it to them.
  • This is usually done in order to provide security for a loan or secure the financial interest of the other person. After the insurance policy is assigned, the assignee is set to receive the benefits from it.

Additional Advantages of Waterfall Strategy

  • The waterfall concept can also help avoid some of the pitfalls that can apply to gifts and other large-scale transfers of wealth.
  • Without requiring the involvement of potential costly lawyers and intermediaries.

This Waterfall of Wealth benefits each generation involved

For us as the Parent or grand parent

  • We keep control of the life insurance policy. 
  • We can reduce our tax liability on some of our other investments by redirecting them into a tax-advantaged life insurance policy. 
  • While we own the policy, we can use access to the policy’s cash value.  

For the kids or future generations 

  • When ownership transfer happens, our child gets permanent Life insurance for their family. 
  • They can access the policy’s cash value to pay for things like education, buying a house other real estate, building their own retirement, or continuing the financial legacy that we’ve started for future generations.

The Waterfall of Wealth Method is a great way for us to pass wealth down to future generations in a secure and tax efficient way that still gives us control and use of the funds while we are still alive.

 

This is our legacy.

We want to live a long life with great sight and with thriving stamina

It may not be billions like the Rockefellers’, but we have been given the power to create wealth.

Through the power of compounding, a small amount of money can grow over time into a substantial sum.

Compounding and Time are an investor’s best friend.

Always remember “The longer the Policy Term, the more we gain with Tax-Deferred Compound Interest or Perpetual Uninterrupted Compound Interest”

Watch the video “The Rice and the Chessboard” 

Compound Interest causes exponential growth. The power of compounding is one of the most powerful forces in finance. This concept allows investors to create large sums with little initial capital.

“Learn to Produce, Preserve, and Perpetuate Wealth for Generations to come.”

If we desire it, we can do it.

The two key Principles of Financial Planning are “Inflation” and “Longevity”.

And as stated in the official Report of

The Expert Committee on Longevity Finance was published by the International Financial Services Centres Authority (IFSCA) on April 12, 2022.

International Financial Services Centres Authority (A Statutory Authority established by Government of India)

“Life insurers are uniquely poised to be the only players in the market to cover both the critical risks —

1. The Risk of Dying too Early and

2. The Risk of Living too Long.”

It is always wiser to invest in Life Insurance as early as possible and exploit the 8th Wonder of the World “Compound Interest”

with “Perpetual Uninterrupted Compound Interest”

“Perpetual Uninterrupted Compound Interest”


The Rockefeller’s Secret to Growing Family Wealth Across Generations

Thanks for reading Lasting Financial Security, a daily series of financial stories covering various economic, market, and real estate perspectives that could impact your financial security. I aim to give you the information necessary to make informed decisions to safeguard your wealth. – Adrian Spitters, Private Wealth Advisor, PFC Wealth Solutions.

Want to stay in the know? Subscribe to this series using the button above.

If you like the stories I write, please share. It helps get the information out to people who may benefit.

This article is based on the following article: The Rockefellers’ Legacy Blueprint

Unlock the Rockefeller family’s secret to amassing and expanding wealth across generations with the “Waterfall Method” – a long-term strategy focused on leveraging life insurance to grow family assets perpetually.

At its core, the Waterfall Method utilizes a family trust that purchases and owns large permanent life insurance policies for each family member. But these policies provide more than just a safety net – they serve as dynamic wealth-building instruments.

During their lifetime, family members can access their policy’s substantial cash value through tax-free loans. This provides funds to maintain a high standard of living without diminishing the family’s core capital.

The real power reveals itself later. Upon the death of the insured, the life insurance payout does two crucial things: it repays any outstanding loans, restoring the policy’s value, and the surplus flows into the family trust.

This process ensures that spent wealth gets replenished. Even better, the trust also receives an infusion of additional funds.

So, with each generation, the family wealth not only remains intact but grows exponentially thanks to this perpetual cycle of replenishment and expansion – all happening tax-free within the trust.

A Strategy for Canadians Too

While US insurance and trust laws differ, the core concepts and advantages of the Waterfall Method can also benefit Canadian families seeking sustainable multigenerational wealth growth. Properly structured, Canadians can employ similar insurance-centered approaches offering both security and opportunity.

The Key Advantages

The Waterfall Method’s beauty lies in how it sustainably expands family wealth across generations. It provides:

 

  • Ever-increasing assets to fund the family’s needs 
  • Tax-minimized growth
  • Built-in safety nets offering both security and opportunity

 

This approach isn’t reserved just for the Rockefellers. It’s a scalable strategy adaptable to many situations.

Implement the Waterfall Method, and you can pave the way for your family not only to maintain but reach new heights of financial prosperity for generations to come.


1 Rockefellers v. Vanderbilts: How It Started & How It’s Going, Trust & Will, https://trustandwill.com/learn/rockefellers-vs-vanderbilts (last visited Feb. 28, 2024).

2 Robert Frank, 4 Secrets to Raising Wealthy Kids, According to the Billionaire Rockefeller Family, CNBC Make It (Mar. 28, 2018), https://www.cnbc.com/2018/03/26/david-rockefeller-jr-shares-4-secrets-to- wealth-and-family.html.

3 Abby Schultz, The Rockefeller Legacy, Penta (June 20, 2018), https://www.barrons.com/articles/the- rockefeller-legacy-1529467230.

4 Rockefellers v. Vanderbiltssupra note 1.

5 Id.

6 Sean Fisher, The Rockefellers are Still One of the Richest Families of All Time—5 Ways They Created Generational Wealth, GoBankingRates (Sept. 29, 2023), https://www.gobankingrates.com/money/wealth/the-rockefellers-still-richest-families-all-time-5-ways- created-generational-wealth.

7 Id.

8 Alicja Zelazko, Rockefeller Family, Britannica (Jan. 4, 2024), https://www.britannica.com/biography/Rockefeller-family.

9 Abby Schultz, supra note 3.

10 Our History, The Rockefeller Foundation, https://www.rockefellerfoundation.org/about-us/our-history (last visited Feb. 29, 2024).

11 Robert Frank, supra note 2.

12 From Rockefellers to Rothschilds: How Five Old-Money Dynasties Live Today, LoveMoney, https://www.lovemoney.com/gallerylist/77379/from-rockefellers-to-rothschilds-how-five-oldmoney- dynasties-live-today (last visited Feb. 29, 2024).

13 source 1 source 2  source 3  source 4