It’s True: Most Wealthy People Know How to Hide Money

It’s True: Most Wealthy People Know How to Hide Money

How to Hide MoneyIt is true that most wealthy people know how to hide money, but not in the way you likely think and that is the subject that our estate planning blog reviews today.

Most wealthy people, the powerful and the fabulous seem to have a knack about keeping their money in safe places. It is often said that most wealthy people know how to hide money, but the reality is that they do not usually hide money in the first place, since 9/11 and the Patriot Act, that is almost impossible anyways. The rich do not hide their assets; they protect them in such a way that they cannot easily lose them. To this effect, they use special legal instruments such as the a properly drafted, funded and managed family trust, which provides true asset protection.

How to Hide Money – In a Legal Manner

Prior to the 9/11 terrorist attacks, many wealthy individuals swore by offshore trusts located in the Caribbean and other jurisdictions where the laws related to corporate finance offered a certain level of secrecy and obfuscation that was considered to be nearly reprehensible by taxation and law enforcement officials in the United States. Public opinion about these offshore trusts was generally negative since it seemed as if the rich who used these instruments were up to no good.

Protecting Your Assets: How Most Wealthy People Go About It

There is a major difference between hiding money and protecting your assets. An eccentric rich man may choose to bury his cash deep underground and then choose to live the life of a pauper for the purpose of not giving way to any suspicions as to his true net worth. While this hypothetical situation may seem reasonable to a certain extent, what would happen if this wealthy, yet eccentric, man is subject to a civil liability lawsuit?

In the hypothetical case above, a plaintiff filing a civil lawsuit against an affluent man who likes to bury his riches could persuade an order from the court to investigate the respondent’s finances. If the investigation determines that the respondent is indeed the owner of significant cash buried underground, the next step might be a court order directing the rich man to comply with the terms of the ruling in the case or potentially be subject to being thrown in jail for ignoring the judges order. If the ruling compels the respondent to pay the plaintiff a million dollars, the wealthy man cannot dodge legal responsibility since the court found him to be the owner of the hidden cash. What if he was not the owner of the money?

Affluent people also know how to hide money in divorce cases; contrary to popular opinion, this does not involve the use of prenuptial agreements.  In fact, prenups tend to do more harm than good from a legal point of view under many circumstances. In general, the rich know that hiding money is not a good idea in a post-9/11 of extraordinary fiscal transparency and suspicion. The rich do not hide their fortunes; they protect them by getting rid of the burden of ownership through instruments like a family trust fund such as the UltraTrust®, which is an irrevocable trust structured in such a way to take responsibility away from rich people while still allowing them to control their property and finances.

In essence, wealthy persons who use a family trust like the UltraTrust® for asset protection cannot lose their fortunes because they do not legally own them; however, this cannot stop them from being able to enjoy their mansions and luxury sports cars because they still have use over how their finances should be invested and used. This is an instrument that is not only efficient for asset protection; it can also be used instead of prenups and for estate planning purposes.  We have all leased a car or rented an apartment.  In these cases we get to utilize the assets and the benefits from the assets utility, but at no point do we own them – that is the big difference.

If you need help strategizing a plan specific to you and your family’s needs, email us at custserv@nullultratrust.com or call (888) 538-5872 for a free 30 minute consultation.


TELL US what you think about how to hide money in the Comments Box below.  What is the craziest story you have heard or experienced? Why?

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4 Comments

  1. Gene
    March 9, 2015

    Thank you for the enlightenment above…perhaps investments and accounts might indeed be transparent, but I would think that some folks like to hide their money as much as possible so it stays as “liquid” as possible in their own hands. It would also be foolhardy to be place oneself under the thumb of exhorbitant tax laws without taking as maximum a tax advantage as possible.

    Thus, a question from a novice: Can a Trust purchase, structure, or create financial instruments that serve the dual purpose of asset protection while engaging in maximum tax benefits in foreign institutions ?

    Can the LLC be the beneficiary of the Trust? an offshore Trust?

    Again, please forgive me, I am only a novice with questions on the above

    and….thank you

    • vkimura
      March 11, 2015

      Thank you for your questions. A Trust may be able to (we would need to see what you are trying to do) purchase, structure, or create financial instruments that serve the dual purpose of asset protection while engaging in maximum tax benefits in foreign institutions or any 3rd party. Could we imagine a scenario that it was possible? yes.

      Anyone can be a beneficiary of a trust, even your dog, but who is going to have ownership of the LLC? We would just want to make sure that this is really what you want because there may be more efficient ways to structure it.

      Best Regards,
      UltraTrust Estate planning Blog

    • Lon Fairbrook
      March 15, 2015

      A trust created by an attorney can never provide a tax benefit to the beneficiary and specifically answering your question is NO
      ”Can a Trust purchase, structure, or create financial instruments that serve the dual purpose of asset protection while engaging in maximum tax benefits in foreign institutions ?”

      • vkimura
        March 15, 2015

        Thank you Lon for your keen insight on the family trust and a trust fund. Is increasing the amount of money that the beneficiary gets by avoiding the estate tax considered a “tax benefit” to the beneficiary? Perhaps not in the truest sense of the word, but the beneficiary benefits by getting more inheritance because of less tax being paid.

        Also if the beneficiary is typically given the k-1 and s/he is in the highest personal tax bracket and elects for the trust to pay the tax instead of taking the K1, the overall combined income taxes paid are lower if the trust pays the taxes. Is that a tax benefit? All we are saying is that there are often times scenarios where “never” is a dangerous word because with some creative brainstorming there typically are scenarios that we can find to make the word never obsolete.

        Best Regards,
        UltraTrust Estate planning Blog

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