Four Ways the One Percent ‘Hides’ Money

The one percent has utilized several estate planning methods to hide their large and notable purchases from public scrutiny and estate taxes. Four savvy methods used by this elite group of Americans are below:

• Trusts: Settlors set up a trust to drive a family business or act as a personal family bank. Trusts can also help the next generation learn financial responsibility, while giving the older generation an opportunity to watch the learning process. Additionally, the settlor can choose to exclude the word “trust” from the trust’s name to help keep the trust (and its potential assets) confidential.
• LLCs: Luxury real estate buyers have routinely used limited liability companies to secretly make large purchases without attaching their names to the acquisition.
• Private Foundations: Individuals who set up a private foundation can choose any name for the foundation (to help maintain anonymity), but these foundations are subject to stringent rules against self-dealing. Donations of art collections to private foundations can raise red flags regarding self-dealing, especially if the donating party keeps the work “on loan.”
• Agents: Wealthy individuals who plan on making large purchases or contributions can arrange for an agent to act on their behalf, usually with a power of attorney. The principal-agent relationship is completely confidential, and the principal remains anonymous during and after the entire process.

See John Cuneo, What Money? Where?, Town & Country (Feb. 2012).

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.