Thursday, January 15, 2026

The Vault Part 5: The Dynasty The 1,000-Year Plan: How Seven States Abolished the Rule Against Perpetuities, Why Dynasty Trusts Can Last Forever, and How the Rockefellers, Waltons, and Keswick Family Turned Opium Money Into Permanent Wealth That Will Never Be Taxed Again

The Vault Part 5: The Dynasty

🔒 THE VAULT SERIES:
Part 1: What They Are | Part 2: Where They Hide | Part 3: How They Invest | Part 4: The Industry | Part 5: The Dynasty (You Are Here - FINALE)

The Vault Part 5: The Dynasty

The 1,000-Year Plan: How Seven States Abolished the Rule Against Perpetuities, Why Dynasty Trusts Can Last Forever, and How the Rockefellers, Waltons, and Keswick Family Turned Opium Money Into Permanent Wealth That Will Never Be Taxed Again

In 1997, Alaska became the first state to abolish the Rule Against Perpetuities—a centuries-old law that forced trusts to terminate after a certain period (typically 21 years after the last living beneficiary's death). Delaware followed in 1998. Then South Dakota. Then Rhode Island. Today, seven states allow trusts to last forever, and several others allow them to last 300-1,000 years. Why does this matter? Because once you put $10 million into a dynasty trust and allocate your Generation-Skipping Transfer (GST) tax exemption, that wealth can grow tax-free for eternity. At 7% annual growth, $10 million becomes $803 million in 90 years (three generations). In a dynasty trust, it keeps compounding. Your great-great-great-grandchildren—people who won't be born for 150 years—will inherit billions. And the IRS will never touch it again. This is how the opium traders' descendants still collect rent. This is how the Rockefellers are now in their 7th generation of wealth. This is the vault's final form.

The Rule Against Perpetuities: Why It Existed (and Why It Died)

The Original Purpose

The Rule Against Perpetuities was established in English common law in the 17th century (formally codified in the Duke of Norfolk's Case, 1682). The rule stated:

"No interest in property is valid unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest."

Translation: You can't create a trust that locks up wealth forever. Eventually, it must distribute to actual living people.

The reasoning was social and economic:

Dead people shouldn't control the living (the "dead hand" problem)
Perpetual trusts remove wealth from circulation
They create permanent aristocracies (exactly what America was supposed to prevent)
They concentrate wealth across generations without redistribution

For over 300 years, this rule forced wealth to eventually return to the taxable economy.

The 1997 Revolution: Alaska Breaks the Rule

In 1997, Alaska abolished the Rule Against Perpetuities entirely. Delaware followed in 1998. The race was on.

Why did states do this? Competition for trust business.

States earn revenue from:

Trust company registration fees
Annual trust filing fees
Legal and accounting work in-state (generates jobs, tax revenue)
Attracting wealthy residents

By abolishing perpetuities, states could attract trillions in trust assets. South Dakota alone now holds over $500 billion in trust assets—more than its entire state GDP.

STATES THAT ABOLISHED OR WEAKENED PERPETUITIES:

NO LIMIT (FOREVER):
• Alaska
• Delaware
• South Dakota
• Rhode Island
• New Jersey
• Pennsylvania (some exceptions)

VERY LONG LIMITS:
• Wyoming: 1,000 years
• Nevada: 365 years
• Florida: 360 years
• Tennessee: 360 years
• Texas: 300 years

BONUS: 7 STATES WITH NO STATE INCOME TAX + ABOLISHED/LONG PERPETUITIES:
• Alaska (forever)
• Florida (360 years)
• Nevada (365 years)
• South Dakota (forever)
• Texas (300 years)
• Washington (150 years)
• Wyoming (1,000 years)

If you want to avoid federal estate tax AND state income tax, and let your wealth compound for 1,000 years, Wyoming is your jurisdiction.

Dynasty Trusts: The Legal Structure

What They Are

A dynasty trust is an irrevocable trust designed to pass wealth down through multiple generations while avoiding estate and generation-skipping transfer taxes at each generational transition.

Key features:

Irrevocable: Once created, grantor can't change terms (this is what makes it work for tax purposes)
Perpetual or very long: Lasts as long as state law allows (forever in 4 states, 300-1,000 years in others)
GST-exempt: Generation-Skipping Transfer tax exemption allocated at creation
Multiple generations: Beneficiaries include children, grandchildren, great-grandchildren, and beyond
Professional trustee: Usually a trust company in the chosen state
Spendthrift provisions: Protects assets from beneficiaries' creditors, divorces, lawsuits

How GST Exemption Works

The Generation-Skipping Transfer (GST) tax was created in 1976 specifically to prevent dynasty trusts. It imposes a 40% tax when wealth passes to grandchildren or beyond (skipping a generation).

But there's an exemption:

GST TAX EXEMPTION AMOUNTS:

• 2024: $13.61 million per person ($27.22M per married couple)
• 2026: Set to drop to ~$7 million per person (inflation-adjusted from 2017's $5.49M)
• 2025 planning window: Use-it-or-lose-it opportunity before reduction

HOW IT WORKS:
• Allocate GST exemption to dynasty trust at creation
• All future growth is GST-exempt forever
• Trust can last 1,000 years and never pay GST tax again

Here's the magic: You only pay tax once (when you fund the trust), then allocate your GST exemption. After that, the trust can grow and pass down for 1,000 years without ever triggering another GST or estate tax.

The Compounding Effect

According to estate planning analysis, here's what happens:

DYNASTY TRUST GROWTH PROJECTION:

ASSUMPTIONS:
• Initial funding: $10 million
• Annual return: 7%
• Time period: 90 years (3 generations)
• No estate tax at each generation

TRADITIONAL TRUST (terminates, assets distributed, estate tax at each generation):
• Generation 1 (30 years): $76M, minus 40% estate tax = $45.6M to Gen 2
• Generation 2 (30 years): $347M, minus 40% estate tax = $208M to Gen 3
• Generation 3 (30 years): $1.58B, minus 40% estate tax = $950M
TOTAL TO FAMILY: $950 million

DYNASTY TRUST (perpetual, no estate tax ever):
• 90 years of compounding at 7%: $10M → $10.63 BILLION
• All beneficiaries can access trust distributions
• Principal remains in trust, continues growing
DIFFERENCE: $9.68 BILLION more wealth

This is why one estate planner described dynasty trusts as "wholly disinheriting the IRS."

Real Dynasty Case Studies

The Rockefellers: 7 Generations and Counting

John D. Rockefeller died in 1937 with a fortune of $1.4 billion (equivalent to $340 billion in 2024, adjusted for GDP). Today, there are over 200 living Rockefeller descendants, and the family fortune is estimated at $11 billion.

How did wealth survive 7 generations?

The Structure:

1934: Before his death, Rockefeller created multiple trusts for his children
1952: His son, John D. Rockefeller Jr., created trusts for his grandchildren
Trusts contained: Shares of family companies, real estate, oil assets
Key provision: Trusts could last "for lives in being plus 21 years" (maximum under Rule Against Perpetuities at the time)
Modern structure: Family office (Rockefeller & Co.) manages pooled family wealth
1934 Trusts expired in 2000s: Assets rolled into new structures (likely dynasty trusts in Delaware/South Dakota)

The result: Oil money from the 1870s still supports 200+ descendants in 2025.

The Waltons: Walmart's Perpetual Machine

Sam Walton died in 1992. Today, his heirs are worth $338 billion combined—making them the richest family in America.

How they did it:

Early planning: Sam Walton put Walmart shares in trusts in the 1950s-1970s (before explosive growth)
Family Limited Partnership: Walton Enterprises LLC owns 46.87% of Walmart
Multiple trusts: Each child has separate trusts, all holding Walmart shares
Annual gifting: Used annual gift tax exclusions to transfer wealth before estate tax
Valuation discounts: LLC shares valued at 20-30% discount vs. public shares
Result: Estimated to have avoided $3+ billion in estate taxes through strategic planning

According to Bloomberg's analysis, the Walton family structure is designed to keep wealth in the family for at least 100 years, possibly indefinitely if rolled into dynasty trusts as laws allowed.

The Mars Family: The Most Private Dynasty

The Mars family (M&Ms, Snickers, pet food brands) is worth an estimated $160 billion. They're so private that most Americans don't even know they exist.

Their structure:

100% family-owned: Mars Inc. has never been public (founded 1911)
Multi-generational trusts: Ownership held through family trusts
No estate tax events: Company never sold, so no realization events
Professional management: Non-family executives run day-to-day operations
Family board: Mars descendants maintain control through board seats
4th generation now: Great-grandchildren of founder still own the company

By keeping the company private and using trusts, the Mars family has avoided almost all estate taxation for 114 years.

The Keswick Family: From Opium to Perpetuity

Remember the Keswick family from our Hong Kong Model series? Descendants of William Jardine's sister, they took control of Jardine Matheson in the 1880s.

Today:

Ben Keswick is Executive Chairman of Jardine Matheson Holdings
Simon Keswick (Ben's brother) is director of multiple Jardine companies
Jardine Matheson: Market cap $20+ billion, still controlled by Keswick family
190+ years: From opium profits (1832) to modern conglomerate (2025)
Structure: Family almost certainly uses trusts/holding companies to maintain control while minimizing taxes

This is the END RESULT of the Hong Kong Model: Opium money (1830s) → Banking/Real Estate (1865-1900s) → Philanthropy/Legitimacy (1900s-1980s) → Dynasty Trusts (1990s-present) → Perpetual wealth.

The Step-Up Basis Loophole: Death as Tax Forgiveness

How It Works

Even without dynasty trusts, wealthy families have another weapon: step-up in basis at death.

When someone dies, their heirs receive assets at "stepped-up basis"—meaning the cost basis resets to current market value, erasing all capital gains.

STEP-UP BASIS EXAMPLE:

SCENARIO:
• Billionaire buys stock in 1980 for $1 million
• Stock grows to $100 million by 2025
• Capital gain: $99 million
• Capital gains tax owed if sold: $23.8 million (20% + 3.8% NIIT)

IF SOLD BEFORE DEATH:
• Pay $23.8M in capital gains tax
• Keep $76.2M

IF HELD UNTIL DEATH:
• Heirs receive stock with stepped-up basis of $100M
• They can sell immediately and pay ZERO capital gains tax
• Tax avoided: $23.8 million

This is why wealthy families never sell appreciated assets. They borrow against them (using securities-based lines of credit at 2-3% interest), live off the loans, and let heirs receive stepped-up basis at death.

The "Buy, Borrow, Die" Strategy

The complete tax avoidance lifecycle:

Buy: Acquire appreciating assets (stocks, real estate, companies)
Borrow: Take loans against assets (tax-free, low interest)
Die: Heirs receive stepped-up basis, sell tax-free, repay loans
Repeat: Heirs do the same thing with their inherited assets

Combined with dynasty trusts, this means wealth can compound for generations without ever triggering capital gains tax OR estate tax.

The Criticism and Failed Reforms

Why Critics Hate Dynasty Trusts

Opponents argue dynasty trusts:

Create permanent aristocracy: Exactly what America was founded to prevent
Concentrate wealth: More inequality as dynasties compound faster than working families
Remove capital from circulation: Trillions locked in trusts, not invested in economy
Defeat estate tax purpose: Estate tax was meant to prevent inherited wealth concentration
Race to the bottom: States compete by weakening protections (same as offshore tax havens)

Proposed Reforms (That Keep Failing)

2021: Biden's Estate Tax Proposals

Eliminate step-up in basis (capital gains tax at death)
Lower estate tax exemption
Close GRAT loopholes
Result: None passed Congress

2025: Upcoming Exemption Reduction

GST exemption drops from $13.61M to ~$7M per person
Estate planning lawyers are urging clients to fund trusts NOW (2024-2025)
Result: Surge in dynasty trust formations before 2026

Every attempted reform has failed because:

Lobbying: Wealth management industry opposes (they profit from complexity)
Political donations: Billionaire families fund politicians who oppose reform
Complexity: Most voters don't understand dynasty trusts, so there's no popular pressure
State competition: Individual states won't reform (they'd lose trust business to other states)

The Complete Cycle: From Opium to Perpetuity

Connecting All Five Parts

Let's trace the complete wealth preservation system we've documented:

THE COMPLETE WEALTH PRESERVATION CYCLE:

GENERATION 1 (1830s-1860s): WEALTH CREATION
• Generate massive capital through morally dubious means (opium trade)
• Source: Hong Kong Model Part 1 (British opium trade)

GENERATION 2 (1865-1890s): LAUNDERING
• Move profits through banking infrastructure (HSBC founded by opium traders)
• Convert to physical assets (land reclamation, $23B real estate)
• Source: Hong Kong Model Parts 2-3

GENERATION 3 (1900s-1980s): LEGITIMACY
• Strategic philanthropy (donations → knighthoods → "founding families")
• Source: Hong Kong Model Part 4

GENERATION 4+ (1997-Present): PERPETUITY
• Establish family office ($3.2M/year operating cost)
• Invest 70-81% in illiquid assets (hard to value, easy to discount)
• Use Big 4, white-shoe law firms, appraisers ($2M+/year external costs)
• Create dynasty trusts in Alaska/Delaware/South Dakota/Wyoming
• Allocate GST exemption ($13.61M per person)
• Result: Wealth compounds tax-free for 1,000 years

THE VAULT SERIES (THIS INVESTIGATION):
• Part 1: Family office structure (8,030 offices, $5.5T → $9.5T by 2030)
• Part 2: Where they hide (Singapore 400% growth, Dubai +9,800 millionaires, Cayman 100K companies)
• Part 3: How they invest (39% real estate, Geneva Freeport $100B art, valuation games)
• Part 4: The industry ($3.2M/year costs, CIOs at $1M, Big 4 at $212B revenue)
• Part 5: The dynasty (Forever trusts, GST exemption, Rockefellers 7 generations)

FINAL RESULT:
Opium money from 1832 → Banking/Real Estate → Philanthropy → Family Office → Dynasty Trust → Wealth that will never be taxed again, for 1,000+ years

The vault isn't just where money is stored—it's where it goes to live forever. William Jardine's opium profits from 1832 became Jardine Matheson's banking capital in 1865, became Hong Kong real estate in 1890, became philanthropic legitimacy in 1902, became family office wealth in 1997, and now sit in dynasty trusts that can last 1,000 years. The Rockefellers are on generation 7. The Waltons have avoided $3+ billion in estate taxes. The Mars family has kept 100% ownership for 114 years. And 10,720 modern family offices managing $9.5 trillion are all doing the same thing: converting current wealth into perpetual wealth. Seven states abolished the Rule Against Perpetuities. Dynasty trusts can last forever. Once you allocate your GST exemption, the IRS never touches that money again—not in your children's lifetime, not in your grandchildren's lifetime, not in your great-great-great-grandchildren's lifetime. At 7% growth, $10 million becomes $10.63 billion in 90 years. And it keeps compounding. This is the final form of the Hong Kong Model. This is how institutional money laundering works. Not by hiding wealth—by making it permanent.

THE VAULT SERIES: COMPLETE

From opium traders in 1832 to family offices in 2025. From $5.5 trillion today to $9.5 trillion by 2030. From Hong Kong's reclaimed harbor to Singapore's tax havens, Dubai's Golden Visas, Geneva's art vaults, and Wyoming's 1,000-year trusts. We've documented the complete system—how wealth is created, laundered, hidden, invested, protected, and made permanent. The Hong Kong Model isn't history. It's the operating system for the global economy. And now you know how it works.

Sources & Further Reading

Disclaimer: This blog post presents research and analysis based on publicly available sources. All factual claims are cited and linked to their sources. Interpretations and conclusions are my own. This is educational content, not financial or legal advice.

the gipster

Thursday, January 15, 2026