Some Thoughts On The Modern “Family Seat”
Dynasty Trusts, Dividend Growth, Can a Brokerage Account Do What Downton Abbey Did
Gregory Treat, writing at his Avalon Circle Substack, recently published a piece called “Where is the Modern Family Seat?” It is one of the more interesting things I’ve read on wealth planning lately. I had learned of this author by way of Johann Kurtz, who I previously featured on Gentleman Speculator.
My understanding of his idea is that the English family seat, (think Downton Abbey, for my wife), had practical purposes beyond just the physical property. These were: a) income producer, b) training ground, and c) what he calls “prestige capital.” Treat’s idea, as I understand, is that you can replicate the income function today with a diversified dividend portfolio held inside a dynasty trust, and the rule of the old gentry, “pledge the income, never the corpus,” should be the general structure of the modern version.
The internet has a lot of great vision-casting, but sometimes lacks on the specifics. Guys on pods telling you to “think generationally” without ever saying what that means in practical terms. I’m guilty of this. I read Treat as attempting to move beyond this. Here, he gives us a structure (dynasty trust), a rule (income-only pledging), a threshold ($10 million in common stocks), and tells us how the pieces go together.
Most families use their “Dynasty Trust” to fund ventures from its own funds. The trust writes a check into the new restaurant. Co-invests in the cousin’s startup. Backs the brother-in-law’s real estate deal. Every time it does this the corpus is exposed. If the deal goes bad, the trust loses principal. Do it enough and the dynasty trust becomes a slow-motion distribution machine with extra paperwork. The corpus will be gone in a generation and the family will be back to square one, wondering where the money went.
The Churchill model is the exact opposite, and it is the one to copy. The Dukes of Marlborough did not sell Blenheim to fund the next venture. They could not. The entail forbade it. What they did was pledge the income from Blenheim — sometimes years, sometimes decades of it — as security for borrowing, and deploy the borrowed money into the venture. If the venture failed, the creditors took the income for the agreed term, the family ate beans for a while, and the underlying asset survived intact. When the term expired, the income came back and the loop could start again. The corpus was never at risk. Only the cash flow was.
It is also worth noting that Treat is not nudging families towards venture capital, private equity, or the macro-allocator models that are popular high-net-worth advisory conversations. He is arguing that a family should own income-producing public equities and hold them essentially forever. Common stock dividends are one of the only sources of truly “passive income” available to a family that does not want to manage tenants, oversee operators, or chase fund managers. So it’s a simple idea.
I should say upfront: I am not an estate planning attorney. I work with families asking these questions and have a lot of them myself. What follows is me trying on Treat’s ideas.
The House of Hermès
The Dumas family, descendants of Thierry Hermès who founded the luxury house in 1837, control roughly 67 percent of Hermès International. In 2010, Bernard Arnault, the chairman of LVMH, (”the wolf in cashmere”), secretly accumulated a 17 percent stake through derivatives. He called then Hermès CEO, Patrick Thomas, while Thomas was cycling through the French Alps, to inform him of the takeover bid. Thomas told Arnault, in some colorful language, that this was no way to court a business partner.
What followed was a great modern family defense story. Within weeks, about 50 Hermès descendants gathered and created a holding company to consolidate their shares. The holding included a clause requiring any family member wishing to sell to first offer their shares to the group. After years of litigation, LVMH was forced to distribute its stake, and the family restored their ownership to 67 percent. Axel Dumas, a sixth-generation family member, took over as CEO and described the affair as “the battle of my generation.”
Here is where the story may connect to the family seat idea. In 2022, the heirs consolidated something like eight separate family offices and investment vehicles from different branches of the clan into a single entity called Krefeld Invest (named after the German town where Thierry Hermès was born). Last year, Krefeld created a new subsidiary called Breithorn Holding to manage funds and assets beyond the family’s core luxury holdings. They are hiring from Morgan Stanley and Belgian private equity firms. The more than 100 descendants hold a combined fortune estimated at $186 billion.
Perhaps this is what a successful modern family seat looks like. Built on a single family-controlled operating business that compounds and prioritizes family legacy. The dividends, by the way, were about 5.1 billion euros over the last four years.
Obviously, most families are not going to build a $186 billion luxury empire. But the question Treat is maybe asking is whether you can get some of the same structural benefits, the protected income, the multigenerational wrapper, without controlling a world-class operating business. His answer is dividend growth equities inside a dynasty trust.
It is a more accessible version of the same idea.
The Dividend Growth Thesis
Treat is recommending a specific style of investing for these structures in dividend growth equities. You buy shares of companies with long histories of increasing their dividend payments year after year. As the companies grow, your income grows with them. So a stock yielding 2.5 percent today that grows its dividend at 8 percent annually will be yielding over 5 percent on your original cost basis in a decade. Both principal and income should increase over time. You never have to sell shares, which means you never face sequence-of-returns risk in the way a total-return investor drawing down principal does. The comfort of watching a rising income stream land in your account every quarter is nice, and (it would appear) useful when looking for financing? Think about a retiree who needs to pay bills and sleep well at night. It’s valuable knowing the checks keep coming and you won’t have to decide when and what to sell.
Treat’s application of this strategy inside a dynasty trust provides a rising income stream to the beneficiaries, allowing for a predictable cash flow across generations. It probably simplifies governance and reduces the need for future trustees to make difficult liquidation decisions (i.e. the dreaded selling of the land to pay debts, etc).
Dividends Are Losing (Lately)
This is less a rebuttal and more a thought experiment. Everything I propose here has tradeoffs too.
There’s a broader trend in corporate finance that has been moving away from dividends for a few decades. S&P 500 companies spent a $1.02 trillion on share buybacks in the twelve months ending September 2025, versus $665 billion in dividends over the same period. Buybacks are more tax-efficient, more flexible, Silicon Valley considers dividends a little old-economy. The result is that the U.S. equity market’s dividend yield has fallen from a historical range of 3 to 6 percent to about 1.1 percent today.
Morningstar says that dividend growth stocks have underperformed the broad U.S. equities for over a decade. The dividend growth index falls on the value side, scores lower than the broad market on profitability and return on capital, and excludes some of the most profitable businesses on earth. No Nvidia, no Amazon, no Alphabet, no Meta. Berkshire Hathaway, the greatest compounding machine of the last sixty years (and source of the family wealth of a previous podcast guest), pays no dividend.
There is this idea of the Dividend Aristocrats. Amongst them, Walgreens was removed in 2024 after cutting its dividend. AT&T broke its streak years earlier. VF Corp cut. You’ll notice that these are sort of mature, boring names.
This leads to the difference between a business that belongs to someone and a business that belongs to everyone (and therefore no one). Many of the largest dividend payers are megacap corporations run by the professional managerial class with little skin in the game. Many are the most overly financialized. Some have been enthusiastic adopters of whatever the current corporate orthodoxy demands, think ESG, DEI, or the Current Thing, etc.
I’m being a little hyperbolic to make a point, but often the mindset at some of these places is that of a rented institution, run by temporary tenants who will move on when the incentives change.
Caesars and Dynasties
Conversely, let me propose that there are two categories of publicly traded companies where the people running the business do have genuine skin in the game.
The first is founder-led tech and frontier companies. These tend to be newer, with Caesar-like founders, individuals with outsized control, vision, and large personal stakes. Obviously you have Tesla, where Musk operates from this logic. So does Meta with Zuck. We invest in a company called AST SpaceMobile. AST’s founder, Abel Avellan, chairs the board, serves as CEO, and previously built and sold a satellite communications company for $550 million. They pay no dividend and probably will not for years.
I think Founder mode is one of the better ideas out of Silicon Valley in recent years, and many of the practitioners of the philosophy think in terms of decades. A dividend screen will probably not find them.
A second category are the (sometimes old-money) family businesses that happen to be publicly listed. These are rare, but tangentially related to our concept. The Hermès story I told above is the archetype. The Dumas, Puech, and Guerrand families use the public listing to provide liquidity and price discovery while maintaining absolute family control over culture and direction. Ferrari operates similarly. Atlas Copco is a Swedish industrial family powerhouse that has been building value and exercising influence for over 150 years.
These family-controlled compounders do often pay dividends, but they don’t look like classic dividend-growth stocks for your quant ETF. HESAY yields about 1 percent with a five-year dividend growth rate around 31 percent. Ferrari is similar, yielding roughly 1 percent with dividend growth above 30 percent. Atlas Copco yields about 1.5 percent with roughly 11 percent annual growth. The yields are low because these businesses reinvest fairly aggressively. The growth rates are high because the underlying businesses are exceptional.
These old-money family businesses use the public markets themselves as a multigenerational tool. It comes with some risk, but the listing gives minority shareholders liquidity without the family surrendering governance. And in a very real way, we can align our family wealth with theirs.
Estate First v. Portfolio First
You could argue I am just placing the emphasis a bit differently. Treat is optimizing as the estate planner. I am optimizing as an investor. It probably depends on the family, their assets, their stage, which problems are more urgent, and so on.
I suspect you could, in theory, recreate something like a dividend income stream by selling options against positions you actually want to own, whether that is tech, bitcoin, or family-controlled businesses. I do not have experience with the niche lending structure Treat describes to say whether it would work in practice with this kind of synthetic income.
These are all ideas worth working through.
Pledge the Income: To Whom?
This brings me to the idea of pledging the income, not the corpus.
The standard securities-backed line of credit is well-known. You pledge your portfolio as collateral, draw a revolving line, and avoid selling and triggering capital gains. The “buy-borrow-die” strategy built around these lines of credit is common.
But Treat is not talking about this. He wants the beneficiary to pledge their right to receive (I think) future trust distributions, not the underlying securities, as collateral. The corpus (e.g. principal) stays permanently insulated. If the venture fails, the lender gets the distributions for the remaining term. The beneficiary “eats beans” for a while, and the portfolio compounds untouched. In a standard SBLOC, by contrast, the lender can force a sale of the actual securities, sometimes without notice.
A well-constructed dividend portfolio at the 10MM level throws off a meaningful cash yield — the modern analogue of a Churchill drawing £20,000 a year off the family seat. That income services the line of credit. The line of credit funds the prestige capital. The prestige capital generates the social activity. The social activity produces the private deals. The loop closes. And all of it can happen before the family ever acquires the physical seat that will, one day, be the training ground for the grandchildren.
It’s my understanding that dynasty trusts typically include spendthrift provisions prohibiting beneficiaries from pledging their interest. So Treat is proposing an exception that permits income pledging while maintaining protection over the corpus. Who lends against this? Perhaps some private banks with dedicated trust-lending arms? Or maybe the trust lending directly to its own beneficiary at fair market rates, such as with the Family Bank concept?
I would like to see him develop the practical mechanics in a future post. Has anyone built this at scale? Who are the lenders?
Open Questions
I am still not sure yet whether financial assets, by themselves, can serve as the foundation of a multigenerational structure like the one Treat envisions. Physical assets seem to have lindy staying power that a brokerage statement does not. The Flattery’s still have the farm in Northwest Iowa (this is the humble version). The Hermès family has the business, the ateliers, and the culture of craftsmanship. Treat acknowledges this and promises to address it in a future post.
Overall, great to see more good work here on moving beyond the pure “die with zero” mentality. Wealth can have a purpose beyond personal consumption and families are the ideal unit for building something that lasts. Inheritance is a gift and not (merely) a burden, stewardship across generations is a moral duty.
Gregory Treat is doing good work. Read him.
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Disclosure: Flattery Wealth Management and/or its clients hold positions in HESAY, RACE, ATLKY, and ASTS as of May 2026. Other securities mentioned (Tesla, Meta, Berkshire Hathaway, etc.) are for illustrative purposes only and are not current recommendations.
Flattery Wealth Management, LLC is a registered investment advisor offering advisory services in the States of Iowa, Missouri, Kansas, and other jurisdictions where exempt from registration. This communication is provided for informational purposes only and should not be construed as investment advice. It does not constitute an offer, solicitation, or recommendation to buy or sell any specific security or instrument, nor does it endorse any particular investment strategy. Past performance is not indicative of future results.
Thanks for this further commentary on Gregory's piece. Now I have another fine publication to follow. Gregory is doing amazing work.