posted on Dec, 15 2006 @ 12:49 AM
They have living trusts and limited companies set up, with a secretary who pays the bills FOR them. Using their money, of course. But no, they
don't write checks every month.
Their homes are owned by trusts with bland names that could belong to anybody. This way, if you look in the tax rolls, you cannot find out where they
live, because they don't actually own a home--the trust does. And with a limited liability company, they can avoid death taxes. They transfer the
limited co., which has paper debts (to the human tenant), making it have no high net worth, even though it owns a multimillion dollar estate.
When the father dies, the son inherits the holding company. Since it has a net value under $200,000 the heir pays no estate tax. And the home
technically never changed hands--the company that owned it last year was the same that owns it this year.
Same with their cars. A rich family will sell all their cars to a holding company. If you're a cop, and run their tags, you get the owner as some
bland company in Nevada or Delaware. So they have REAL privacy from detectives and cops and whatnot.
The cool thing is, they cannot be sued for their homes. If you sued for one of them, they actually have no wealth; the home is owned by the company,
the car by a trust, etc. and so forth.
And if you DO manage to sue the person, you get a portion of a limited liability company. LLC's in most states don't have to pay proportional
dividends. Meaning that each year, the family holders in the company vote on what dividends each stakeholder receives. Suppose you get Bob's stake
in the LLC in a divorce settlement, or a paternity suit or malpractice or whatever. Fine, the rest of the family decides not to pay Bob's share any
dividend for the next 99 years. So you now own worthless paper.
In most states, an LLC can stipulate that the shares cannot be sold or exchanged without the consent of the voters, and escheat to the company itself
upon the death of the stakeholder. This means that you CANNOT be awarded someones share in an LLC as part of a lawsuit, since you might vote to sell
off the company's assets or something. The law is designed to prevent hostile takeovers, but it can also be used as a tax and liability shelter.
It's perfectly legal too.
And here's the kicker.
You can do the same thing. In my state, it costs $200 a year in filing fees, and you don't need a lawyer. And you can pool your cars homes or
whatever with your family, and make sure that you don't go bankrupt because the neighbor kid breaks into your backyard and drowns himself in your
pool. Normally, his family would sue to take your house; but in this situation, they can't, since the house is jointly owned by the members
of the LLC, and they cannot be punished for YOUR misbehavior in letting criminals break in and drown. Besides, if your company owes all its equity in
loans (to you), the property cannot be confiscated, because it is already encumbered as collateral on the loans. Never mind that you've never picked
up the money from the LLC; it's owed, and cannot be confiscated from your LLC co-owners, the prior creditors . . .