"Own Nothing, Control Everything"

[Rain]

Would someone mind clearing up this popular Rockefeller quote for me?

 

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[Vigilante]

I would be interested in GlobalWealth's take on this quote.

 

[psaco131]

Post from yahoo answers

"I think he meant that if you try to own a specific something, you are forced to attach yourself to that something (like property or money, for instance). You are limiting yourself to what you can really do if you try to own something. You always have to watch your back, you always have to play watchdog watching over that piece of territory you own, to make sure no one takes it. That is force, not power. True power does not require you to hold something down (owning something) to be able to remain in control. One should be like a remote control -- to be in control of all the channels but not limiting oneself to just a few channels. Otherwise, you'll never know what the other channels are like. Be like a Puppetmaster, not a slave driver. Everyone is your puppet, but you only operate behind the scenes using invisible strings and are not bound to them. Let go, and you'll know what power is."

 

[Pete799p]

The best example I could think of to how this would play out is for an investment company like a hedgefund or REIT. You as the owner of the trust or hedgefund do not personally own any of the hard assets but you control them.

Another way of looking at it would be a business that purchases everything via an unsecured line of credit or loan void of a personal guarantee. In this regard you personally do not own anything the business does but you get to control all of it.

This has been my interpretation it could be way off of the point he was trying to make but it seems like pretty descent idea anyways.

 

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[911Carrera]

The thing with these old time quotes is we don't in what context the person said the phrase. Could mean a couple different things based on what he was talking about..

 

[BrucetonGuy]

IMO, I believe that he was referring to trusts. With a trust (or REIT) you do not own the assets...the trust does....but you can control what goes into the trust. I believe that the Rockefeller's put a large majority of their fortunes into trusts as asset protection.

EDIT: Just read what Pete wrote above.....Agreed!

 

[Rain]

But isn't ownership the big rule of entrepreneurship? If you don't have equity, you don't technically have a business, ya know?

At the same time, however, Rockefeller clearly wasn't an idiot (I read that he'd be worth around 10x as much as Bill Gates if he were alive today, with his money adjusted for inflation), so I don't feel right dismissing his elusive knowledge just like that.

It almost seems like he is saying that it's better to control billions or trillions of dollars in government, than to own your own company and make millions yourself. Of course, he owned his oil company and wasn't a politician, so that's probably not what he meant either...

Sometimes you can't help but wonder.

 

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[Skys]

I would be interested in GlobalWealth's take on this quote.

+10000 (has to be 5 characters)

 

[healthstatus]

Think about the publishing business, they own the RIGHTS to distribute someone else's work. Realtors have the rights to sell a house or a building that they don't own for a commission. Shipping business, someone may own (or have the rights to) a specific route, or docking space, then lease that route to the owner of the ship. This is the classic, middleman strategy.

 

[deepestblue]

Currently reading Rockefeller's "Random Reminiscences" book. Before the companies were split up, Rockefeller owned what is now basically all of the major oil/gas/whatever companies in the world (Chevron etc. etc.). If he had remained owner of all of this it is almost impossible to imagine what the net worth of his offspring etc. would be today - I'm sure his personal net worth would have exceed $1 trillion.

 

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[GlobalWealth]

I would be interested in GlobalWealth's take on this quote.

True power does not require you to hold something down (owning something) to be able to remain in control.

You as the owner of the trust or hedgefund do not personally own any of the hard assets but you control them.

I believe that the Rockefeller's put a large majority of their fortunes into trusts as asset protection.

I'm not sure how much more I can add to this as there are several excellent examples and descriptions here.

Essentially the idea is to control the asset without direct ownership. When you directly own something you open yourself up to liability. You also have limitations and sometimes can lack the ability to scale.

For example, a hedge fund manager controls 100's of millions or billions in assets, but likely owns a very small percentage. But his income is derived from the portfolio under control.

Another example is using investor or bank money to build a real estate portfolio. In a simple example you may have 10 rental houses worth $100k each but you may only have 5% equity in each house. This means you control $1m in assets but only have $50k in equity (ownership).

Using companies and trust is a great way to create a veil of privacy around your assets to shield ownership. For example with US real estate investors we frequently set up land trusts for clients to own their properties. This means they don't personally own the asset, but control them indirectly through their trustee (which we usually establish as a Private Wyoming LLC which they do own).

This minimizes their personal exposure and liability without giving up any control.

But isn't ownership the big rule of entrepreneurship? If you don't have equity, you don't technically have a business, ya know?

Not necessarily. If you run an online company that earns $500k/y and you reap 100% of the reward, does it really matter who owns it?

For example, your online company could be a Delaware LLC. That LLC could be owned by a Cook Islands Trust with you as beneficiary of the trust. You would also be the manager of the Delaware LLC. In this case you have now ownership (the Cook Islands Trust owns the company), but you have complete control.

If you chose to sell the company, your Cook Islands Trust would be the receiver of funds from the sale, but you get to direct the use of those funds.

 

[Rain]

I'm not sure how much more I can add to this as there are several excellent examples and descriptions here.

Essentially the idea is to control the asset without direct ownership. When you directly own something you open yourself up to liability. You also have limitations and sometimes can lack the ability to scale.

For example, a hedge fund manager controls 100's of millions or billions in assets, but likely owns a very small percentage. But his income is derived from the portfolio under control.

Another example is using investor or bank money to build a real estate portfolio. In a simple example you may have 10 rental houses worth $100k each but you may only have 5% equity in each house. This means you control $1m in assets but only have $50k in equity (ownership).

Using companies and trust is a great way to create a veil of privacy around your assets to shield ownership. For example with US real estate investors we frequently set up land trusts for clients to own their properties. This means they don't personally own the asset, but control them indirectly through their trustee (which we usually establish as a Private Wyoming LLC which they do own).

This minimizes their personal exposure and liability without giving up any control.





Not necessarily. If you run an online company that earns $500k/y and you reap 100% of the reward, does it really matter who owns it?

For example, your online company could be a Delaware LLC. That LLC could be owned by a Cook Islands Trust with you as beneficiary of the trust. You would also be the manager of the Delaware LLC. In this case you have now ownership (the Cook Islands Trust owns the company), but you have complete control.

If you chose to sell the company, your Cook Islands Trust would be the receiver of funds from the sale, but you get to direct the use of those funds.

Per your last example, you would still actually own it, but just through proxy... a legal loophole to minimize or eliminate liability. Is this accurate?

 

[PatrickP]

I have heard (could quite possibly not be true I don't know for sure) that the Kennedy Compound has over 50 Trusts. For example the driveway has its own trust, the pool has its own trust etc.

 

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[GlobalWealth]

Per your last example, you would still actually own it, but just through proxy... a legal loophole to minimize or eliminate liability. Is this accurate?

In the example with the Cook Islands Trust, you would no longer legally own the asset. A trust is a legal contract where you 'give' your assets to a trustee to manage as fiduciary for the beneficiaries. You no longer have legal title. But you do retain control.

 

[GlobalWealth]

I have heard (could quite possibly not be true I don't know for sure) that the Kennedy Compound has over 50 Trusts. For example the driveway has its own trust, the pool has its own trust etc.

LOL, that wouldn't surprise me in the least. Segregation of assets also minimizes your liability and can create opportunities.

For example, you may own 100 high value domain names and operate 10 of them as businesses. The domains are considered IP and could be owned by a separate entity (controlled by you) and leased to your operating companies (controlled by you).

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

 

[Tarheelfan2009]

I agree with Global Wealth that this quote refers to trusts, but I also think that Rockefeller is pointing towards a broader view and a mindset and not just referring to finances. The Rockefeller family managed to form a vast amount of indirect ownership over national and global economics, organized religion, foreign policy, and more than 100 schools and universities via non-profits, trusts, councils, groups, and corporations.

When you have the ability to make money via a corporation...minimize taxable profit via non-profit...control competition and trade via council (Council of Foreign Relations, Council of Americas)...control public opinion via political connections...and finally control and shelter gained assets via Trusts then you have really "Owned Nothing, But Controlled Everything".

Rockefeller takes that quote to a whole new level.

 

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[Toiletcake]

Cook Islands Example

Global Wealth,

In the cook islands example - the asset is owned by the trust and not legally owned by you, that part is understood. The part that I am still fairly unclear on is how you can give up control to a trustee or manager that is truly removed far enough from your circle of contacts to allow for a clean defense should it ever come to a court battle or some type of liability suit. I can imagine the field day the attorneys would have with you when they see that your "friend" is the manager or trustee of the trust in question. I also read about certain "trustee's" that can be arranged or set up and have looted and stolen the assets inside the trust.

How can we protect ourselves from these situations?

I agree with Global Wealth that this quote refers to trusts, but I also think that Rockefeller is pointing towards a broader view and a mindset and not just referring to finances. The Rockefeller family managed to form a vast amount of indirect ownership over national and global economics, organized religion, foreign policy, and more than 100 schools and universities via non-profits, trusts, councils, groups, and corporations.

When you have the ability to make money via a corporation...minimize taxable profit via non-profit...control competition and trade via council (Council of Foreign Relations, Council of Americas)...control public opinion via political connections...and finally control and shelter gained assets via Trusts then you have really "Owned Nothing, But Controlled Everything".

Rockefeller takes that quote to a whole new level.

 

[Toiletcake]

The message in the links below is to basically never hand over control of your trust to a stranger, makes sense but how does that stand up in court.


http://www.theaustralian.com.au/business/news/trustee-fraud-alleged/story-e6frg906-1225702040719

FORMER CPA AND TRUSTEE SENTENCED TO PRISON FOR STEALING OVER $500,000 FROM TRUST FUNDS OF SIBLINGS TO SPEND ON DOLL COLLECTION - The Sheriff's Blogger

 

[GlobalWealth]

how you can give up control to a trustee or manager that is truly removed far enough from your circle of contacts to allow for a clean defense should it ever come to a court battle or some type of liability suit.

First of all, you never fill the role of trustee yourself. A trust is a private contract between counter-parties. If the details of the trust are ever exposed, you can imagine the judge "so you mean you made a contract with yourself to manage your own assets?"

Trusts are the oldest form of legal entity and have existed for thousands of years. The earliest record of them is in Roman times when someone was called to go to war and his neighbor had to take care of his property for his remaining family. Modern trust law stems from British common law, which is essentially what most of the world follows in trust cases.

In essence, you do need to give up control to a trustee. Ideally you use a professional trust company that is well regarded. There are always examples of trustees running off with the grantors dough, but those stories are mostly just stories. In reality it is more likely that your local Bank of America banker drains your account and moves to Colombia.

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.

 

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[Rain]

Thanks + Speed.

GlobalWealth, assuming you utilize this trust technique, and in the event of a lawsuit, is it possible that you could just get a lien slapped against you (where they simply steal a percentage of your income, as you no longer technically own the asset) since they won't be able to outright take your asset?

Does this strategy really protect your wealth, or does it just make it harder for someone to rob you blind in court?

 

[Vigilante]

Thanks + Speed.

GlobalWealth, assuming you utilize this trust technique, and in the event of a lawsuit, is it possible that you could just get a lien slapped against you (where they simply steal a percentage of your income, as you no longer technically own the asset) since they won't be able to outright take your asset?

Does this strategy really protect your wealth, or does it just make it harder for someone to rob you blind in court?

wow great question

 

[PatrickP]

What are you or your company doing that you think someone will sue you and win?

Seriously lawsuits are not something an atty takes on unless they see a VERY good chance of winning.

So what would be a scenario that you could foresee being sued?

 

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[GlobalWealth]

is it possible that you could just get a lien slapped against you (where they simply steal a percentage of your income, as you no longer technically own the asset) since they won't be able to outright take your asset?

You've got to expand your thinking a bit here. I lien is an encumbrance of an asset. For example, you could have a lien placed on real estate that you own.

But if you trust owns the real estate, you have no real estate to attach a lien to. You can get a wage garnishment, but this is inconsequential if you are a business owner. There are a multitude of ways you can take money from your company as an entrepreneur -only one way as an employee.

Does this strategy really protect your wealth, or does it just make it harder for someone to rob you blind in court?

You would find it very difficult to locate a very wealthy person/family that did not utilize trust structures with their assets. You can find lots of pseudo-wealthy and non-wealthy people/families that don't.

Who would you rather emulate?

I say that in jest, but the reality is that you should try to follow in the footsteps of those you wish to emulate. Obviously if you haven't reached the level of wealth where this is financially feasible, it doesn't make sense.

The misconception though is that these structures are only for the uber-wealthy. In reality, and esp. this year due to tax law changes, anyone with a net worth over $1m usd should be considering this.

In 2012, you can make a one-time gift to your trust of up to $5m gift tax free. The current estate tax in the US is 35% of any assets over $5m.

Next year the one-time gift maximum goes to $1m and the estate tax goes to 55% of assets over $1m.

For someone with a $3m estate that moves his estate into a trust, he can eliminate all future estate tax burden. If he does nothing and dies next year, his heirs will owe $1.1m in tax.

 

[Rain]

But if you trust owns the real estate, you have no real estate to attach a lien to. You can get a wage garnishment, but this is inconsequential if you are a business owner. There are a multitude of ways you can take money from your company as an entrepreneur -only one way as an employee.

Does this prevent you from getting hit with personal liens as well?

And thanks for all the info... learned a lot.

 

[biophase]

I'm late to this party, but Id like to put in my explanation of this quote as I have discussed this with RealOG a few times.

Suppose I had an Ipad but every time you wanted to use it, I would let you. Then you effectively control the Ipad's usage time without owning it. Why would you ever need to buy your own Ipad?

If you could set this up with everything in the world, you would never need to own anything.

This is the basic concept of not owning anything that you use. If something happens and someone trys to take your ipad, they cant because you dont have one.

Now assets are different, but if you controlled everything in the manner above you may not need assets or much money.

 

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[GlobalWealth]

What are you or your company doing that you think someone will sue you and win?

Seriously lawsuits are not something an atty takes on unless they see a VERY good chance of winning.

So what would be a scenario that you could foresee being sued?

Mike, frivolous and wrongful litigation happens all the time. I had a call with a guy a few months ago who was a victim of identity theft. He was just a 'good ole boy' with a small house, 50ac farm (family farm) and a buy-here-pay-here car lot. Like many of those guys they sell their notes to factoring companies to raise cash.

In his case, the factoring company guy stole is id and started another company using his info. A couple of years later my guy got a letter from the IRS saying he owed over $400k in taxes. Being a good ole boy, he went to court thinking he could just explain what happened (no lawyer). Unfortunately the IRS came in guns ablazin'.

He lost his temper and was thrown in jail for contempt of court. Stayed there for 6 months until he plea-bargained and got out on time served. Now has a criminal record. While in jail his bank accounts were seized by the IRS and liens put on both properties.

I have countless stories of people who were sued from 'slip-and-fall' situations at the rental properties. Just last week I got a new client who had an issue at a property in TX where the tenant started a meth lab in his rental house. The guy got busted and the town condemned his house.

The point is unforeseen liabilities are just that, unforeseen.

 

[GlobalWealth]

Does this prevent you from getting hit with personal liens as well?

And thanks for all the info... learned a lot.

The idea is to protect your valuable and income producing assets. For example if all of your businesses, real estate and investments are owned by trust/company structures (if done properly) then YOU don't personally own anything.

In this case, any personal attacks against you (financial attacks of course) would result in a potential future creditor holding an empty bag. They would only be able to attach assets that you personally own. Geo-arbitrage (diversification in other jurisdictions) also minimizes your risk by placing your various assets in other jurisdictions making it that much harder for someone to even find, much less pursue those assets.

It's all about the layers.

 

[GlobalWealth]

If you could set this up with everything in the world, you would never need to own anything.

Exactly the point. Good analogy with the ipad.

 

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[Rain]

I'm late to this party, but Id like to put in my explanation of this quote as I have discussed this with RealOG a few times.

Suppose I had an Ipad but every time you wanted to use it, I would let you. Then you effectively control the Ipad's usage time without owning it. Why would you ever need to buy your own Ipad?

If you could set this up with everything in the world, you would never need to own anything.

This is the basic concept of not owning anything that you use. If something happens and someone trys to take your ipad, they cant because you dont have one.

Now assets are different, but if you controlled everything in the manner above you may not need assets or much money.

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.

I do appreciate your input, though, and thanks to GlobalWealth as well.

GlobalWealth, I'll have to consult with you soon.

 

[Vigilante]

It's all about the layers.

speed+