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How the Rich Hide Their Assets
By Rocco Beatrice
It's very simple, how the rich hide their assets is not to hide them at all.
The rich use laws to protect their assets. They use legal entities created under the different laws, trust laws, corporate laws, partnership laws, and tax loopholes available to all, not just the rich.
The average guy wants to "own" assets. The rich have learned that "control" is more significant than "ownership." By not owning the asset, they control frivolous lawsuits, they avoid probate, they avoid estate taxes, and they are able to significantly reduce their taxes.
Ownership is the absolute right to possess and use property to the exclusion of others. Control is the control of others or skillfully influencing others to one's advantage.
Ownership is absolute; control is not. If assets are in the absolute control of others, there's no control on how it can be transferred, thus avoiding frivolous lawsuits. Sue me! You'll never get a dime.
The rich have also learned to diversify their assets worldwide. The theory "don't put your eggs in one basket" applies to every one, not just the rich. Everyone has the same opportunity to diversify, the number may be smaller for the average guy, but there is nothing that the rich are doing that is not available to everyone.
Available to all who would like to hide their assets:
· Truly Independent Trustees
· Irrevocable Trusts
· Foreign Trusts
· Limited Liability Companies
· Foreign Limited Liability Companies
· International Business Companies
· Limited Partnerships
· Corporations under Chapter C
· Corporation under Subchapter S
In a post 9/11 world everything is transparent. Everyone is living in a glass house. All transactions are magnified. Economic substance over form is examined, there's no way out.
The rich are taking extra steps to leave the control aspects to others who they trust. The arm of the law is very reaching. Taxes are on a worldwide basis. You can run but you can't hide. Yet the law does not prevent anyone to reposition their assets and to manage their income taxes to their best advantage.
Having a foreign asset protection trust is not illegal. They merely want to know if you have such a structure by filling in the box on your tax return with a simple yes, and if you have positively a foreign structure, the mere reporting does not trigger an examination of your records. It's perfectly legal. The rich hide their assets by repositioning.
About the Author
Rocco Beatrice, CPA, MST, MBA,
Award-winning trust & estate-planning expert
71 Commercial Street #150 Boston, MA 02109
tel: 508.429.0011 fax: 508.429.3034
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