The King Ranch, comprising over 800,000 acres, is bigger than the state of Rhode Island. It has been under continuous family ownership since its inception in 1853. We can take some financial lessons from King Ranch on creating a durable estate plan. In this article, we’ll talk about how the ranch came about and how the family accomplished this amazing feat of estate planning.
The Beginnings of the Dynasty
Richard King was born in New York City in 1824. When he was nine, his Irish immigrant parents put him into indentured servitude with a jeweler in Manhattan, and he never saw his parents again. At age 11, he escaped and stowed away on a ship bound for Mobile, Alabama.
The ship’s captain, Joe Holland, found and adopted King instead of beating or jailing him. He provided for his schooling and taught him river navigation. At 16, King became a riverboat pilot, which gave him cash flow and a skill that, in 1842, was very profitable.
The Texas Connection
King enlisted in the Navy in 1847 and came to Texas to serve in the Mexican-American war. The war began in 1846 and ended in 1848. He transported troops and supplies during the war and used Navy surplus boats to start his own operation when the war ended.
He was shrewd, fixated on profit, and he liked Texas. In 1853, he took the money he’d saved as a steamboat operator and bought his first land grant, the Santa Gratus, parts of it at two cents per acre. He got a great deal on the land, as scrubby South Texas land was going for one dollar an acre. That first land grant was the origin of the King Ranch.
A Thirst for Expansion
King made his first acquisitions with partnerships but was notorious for edging out his partners, and the pattern persists. The latest lawsuit was in 2001 by the Chapman family.
King began expanding aggressively, making over 60 land purchases. An intriguing fact about the King Ranch expansion is that one part of the ranch extends to Laguna Madre, which runs from Corpus to South Padre or Port Isabel with two ports on either side. That particular inlet was convenient during the Civil War.
Water Is King
Richard King was king of his own nation, and water was a crucial resource in the arid countryside. He had developed mechanical skills as a riverboat captain to keep his riverboat operating since there were no marinas in the desolate territory he traversed. The mechanical skills he built enabled King to build water wells on his land.
With the abundance of water he now had, King went to Mexico and bought cattle for almost nothing during the drought when they would have likely died. He brought them back to the ranch, where there was plenty of water. But he didn’t just bring back cattle. King brought back ranch hands, who became known as Kenos or Kingsmen. They worked the ranch and sent money back to Mexico.
Today, the King Ranch has 300 windmills, 424 water wells, and solar-powered mills, and the descendants of the original Kingsmen still live in Kingsville and work the ranch.
Prospering During the Civil War
The Civil War began on April 12, 1861, and ended on May 9, 1865, and Richard King had everything he needed to profit from the conflict. He could produce cattle, cotton, and other agricultural products with water and his ranch holdings.
The location of the King Ranch was vital to King’s success during the Civil War. King Ranch is close to the ports at Brownsville, Port Morris, and Port Isabel. With his riverboat captaining skills, he became a profiteer and banked a cool million dollars.
Never Sell the Land
King married Henrietta Chamberlain in 1854 near the beginnings of the ranch. King’s son, Robert, was intended to be heir to the ranch, but in 1883, he died of pneumonia. Robert’s death dealt Richard a blow that crushed him. In 1885, just two years later, Richard died of stomach cancer. Before he died, Richard told his family never to sell a foot of the ranch, even though he was deeply in debt by that time.
Henrietta became the owner of the entire estate when Richard died in an all-to-spouse transfer. She was smart, disciplined, and demanding, and she had to be. She now had 500,000 acres and $500,000 in debt to deal with, somewhere near a dollar an acre. In today’s terms, that’s between $15 and $25 million.
Henrietta had previously met Robert Kleberg Senior, a lawyer who had provided legal services in the various lawsuits the King Ranch was going through at the time. Kleberg ended up marrying Alice King, Henrietta and Richard’s youngest daughter. Kleberg was an astute manager, paying off the debt and increasing the ranch’s holdings to 650,000 acres by 1895.
Into the 20th Century
Robert Kleberg Jr. took over the ranch in the 1950s. Part of the cash flow and estate planning that kept the ranch intact included Ford Motor Company licensing the King Ranch name for an upscale version of its Ford F-150 truck. The truck is still listed today, and the 2023 version costs about $80,000. Ford originally designed the truck for the ranch, and the family selected all the features.
The truck isn’t the only branded merchandise. You can also get a King Ranch Cookbook. Still, the King family has no shame in capitalism.
Richard’s first estate plan was to give everything to his spouse, Henrietta, rather than his heirs, who might break up the ranch. When Henrietta died, the ranch contained 1.2 million acres. Alice Kleberg, Richard and Henrietta’s daughter, and her husband, Robert, inherited over 800,000 acres of the land and, in 1934, incorporated it as the King Ranch. Robert Kleberg and Robert Klegerg Jr. designed the corporation to take over the ranch interest and gifting process.
This arrangement became known in the State of Texas as a dynasty trust. For generations, this type of estate planning has kept the ranch intact and the heirs from circumventing Richard King’s original instructions, “Never sell a foot.”