"Own Nothing, Control Everything"

[splok]

In Cook Islands there are only 6 trust companies. The manage A LOT of trusts. They would be stupid to jeopardize their millions in annual fees they receive by stealing one person's money.

Of course they would never steal one person's money. You don't go halfway down that path hehe. If they're going to steal, they'll steal everything!

(Though I guess it's not really stealing if they technically own everything to begin with...)

Maybe it has never happened, but black swans are black swans precisely because we had no reason to expect them.

 

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[CommonCents]

Billionaire Steve Jobs Died Tax-Free, Experts Say |

"Billionaire Steve Jobs Died Tax-Free, Experts Say"

Posted by Scott Martin, Contributor - on October 9th, 2011

"Trust experts weigh in on the details of Jobs’ trust and estate plan. The private but methodical technology innovator went well outside the box to ensure that his $6 billion legacy was as perfect as the technology he created.

The empire that Steve Jobs built from garage start-up to $342 billion behemoth now has to find its own direction, but his personal legacy is most likely evolving according to an extremely sophisticated plan.

First things first: nobody we talked to expects his estate to pay a penny in estate tax, no matter what the official rate happens to be."


Tax Minimization | Capital Gains Tax | Charitable Remainder Trust - Rubinstein & Rubinstein, LLP

Here's an overview on trusts. The basic idea is transfer an asset to a trust, the assets can compound tax free similar to an IRA, and are only taxed when there are distributions. Rate is taxed on how the trust earns the distribution (cap gains, dividend income etc..), that's how the wealthy can grow their assets tremendously and have a low tax rate not giving huge chunks to the government.

The trusts and entities own the homes, cars, planes that the beneficiary "uses".

 

[chubbyrain]

An example of "own nothing control everything" that I know about would be a scenario such as this:

Suppose a landowner has 2 acres of land for sale, no planning permission on it and he's asking $50,000. It's been on the market two yers and it's not moving.

So, heres how a "own nothing control everything" might play out.

I would approach the landowner and offer him the full asking price for the land, 50k, as long as he gives/allows me one full year to get a buyer/get planning permission/turn into a fare ground whatever. All the landowner has to agree is not to sell it to someone for the whole year. If I am successful with what I need for the land, then I'll pay him his full asking price. Now, to sweeten it for him, I'll also give him 2k upfront for his time in consideration. This would all be drafted in a contract.

So, now i control his land on an option, and have a whole year to develop on it and it's cost me only $2k. If in that year I can't turn it over then I will simply say farewell and leave him to his over priced unsellable land.

 

[PatrickP]

Chubbyrain has that worked for you in the past?

 

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[Brander]

This segregates the assets from the operations. You may use tax free offshore companies for owing IP while using Delaware LLC's for operations.

Yep, the ones that operate in the market own nothing, the ones that don't operate in the market, own everything that is valuable. I am talking about companies that you control.

 

[GlobalWealth]

Here's an overview on trusts.

Trusts are only one vehicle. There are PPLI (private placement life insurance) policies, captive insurance companies, and foundations too.

 

[biophase]

Good analogy, but when it's time to sell, your friend gets the proceeds, and you get nothing.

Of course, an iPad that's worth under $1000 brand new doesn't really matter anyway, but when you scale it up to a multi-million-dollar-plus company, that could potentially be a problem. You are effectively turning yourself into an employee instead of opting for ownership.

I guess we could tie this back to the old rent vs own argument that often comes up when someone is interested in moving into a home. "Should I rent... or should I own... F*ck. Decision, decisions." Truth is there are pros and cons to both, and I guess that's just how it has to be.

Rain, I think you are missing the point. When you don't need the Ipad anymore, you don't care. You just let your friend have it. Then you go and find an Ipad 2 to control.

Ok, how's this analogy. You buy your mom an Ipad. She owns it, but you have an agreement with her that you can use it whenever you want. And if you want to sell it, she will sell it and she will take the proceeds to buy something else that you can again use whenever you want.

Rent vs. Own is not quite the same. Let's say that your friend says I have an empty house, you can stay in it as long as you want for free. Why do you need to own this house? You have access to it for free, there is no need to own it. Say your friend also let's you borrow his fancy car. All you have to do is put gas in it.

Then one day, something happens and some lawyer says. I see you in that big house and fancy car, I'm going to sue the crap out of you. You say, sue me for what? That's not my house or my car. I don't have anything net worth.

 

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[chubbyrain]

Chubbyrain has that worked for you in the past?

Me personally no, but a good friend of mine taught me this method and he uses it. I forget what book he got it from but I will look into it as it will have more on the topic. He has made some good money from it too.

 

[Rain]

Rain, I think you are missing the point. When you don't need the Ipad anymore, you don't care. You just let your friend have it. Then you go and find an Ipad 2 to control.

Ok, how's this analogy. You buy your mom an Ipad. She owns it, but you have an agreement with her that you can use it whenever you want. And if you want to sell it, she will sell it and she will take the proceeds to buy something else that you can again use whenever you want.

Rent vs. Own is not quite the same. Let's say that your friend says I have an empty house, you can stay in it as long as you want for free. Why do you need to own this house? You have access to it for free, there is no need to own it. Say your friend also let's you borrow his fancy car. All you have to do is put gas in it.

Then one day, something happens and some lawyer says. I see you in that big house and fancy car, I'm going to sue the crap out of you. You say, sue me for what? That's not my house or my car. I don't have anything net worth.

It seems to me that not owning assets is simply an alternative way of being that's still acceptable.

It's not necessarily preferable... it's just another acceptable choice with its own pros and cons.

 

[andviv]

Me personally no, but a good friend of mine taught me this method and he uses it.

Really? This works for him and you are not doing the same? Missing opportunity here, no?

 

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[GlobalWealth]

Really? This works for him and you are not doing the same? Missing opportunity here, no?

Call options are very common in the financial markets, but less used in real estate transactions. I personally know many people who do option contracts on property. If you know the market well, then you can do quite well here.

 

[andviv]

OK, here we go:

Andviv owns 3 airplanes and operates a local airline.

There is a lawsuit (he misplaced somebody's luggage with a supposedly-valuable item in it). Court finds him guilty and he must sell the airplanes to pay the lawsuit.

Andviv is broke.

Or....

Andviv incorporates A inc. He also incorporates A1 LLC, A2 LLC and A3 LLC. Each LLC owns one of the airplanes.

A inc sells tickets and then 'hires' A1, A2 or A3 to provide the service (each LLC operates as separate legal entities)

The passenger with the supposedly-valuable item while flying on A2 LLC airplane. Sues them. Wins. A2 LLC goes bankrupt. A inc, A1 LLC and A3 LLC continue working.

That is a very simplified (and not completely accurate) example.

And yes, I know this has holes, but come on, I am trying to explain it in simple terms.