In our wealth management practice, there is an important reminder that we help some of our extremely wealthy clients to remember: it is better to be in control and not be an owner than to be an owner and have limited control.
What we mean by this is that there are certain legal disadvantages to personally owning something, including tax and inheritance implications. Among these “somethings” that can be owned is stock of a given company.
This is how we should view the recent hoopla surrounding Mark Zuckerberg’s announcement that he will be “giving away” 99% of his ownership in Facebook. The progressive left when berserk. “This is what the wealthy SHOULD be doing! Good for Mark!”
Here’s the deal: this is exactly what the wealthy should be doing indeed, and it is what I might advise (some) people to do (if their situation calls for it). Why? Because what he just did was to transfer the wealth from his own taxable control (ownership) to a new foundation that is controlled by– you guessed it– him. Now he still controls the wealth, but he does not own it; therefore, he will not be taxed on it. That’s right: capital gains tax on the transfer? Nope. Future estate taxes for his heirs? Nada. But what about a tax deduction for the donation? You bet!
Am I saying he shouldn’t be allowed to do this? On the contrary! He should indeed! We need these strategies to protect our wealth!
What should the wealthy person do to protect wealth from the state and from the masses who demand its redistribution? What should the wealth do as a strategy to preserve the long term integrity of his wealth? He should do what Zuckerberg just did. But won’t the media and the Progressive Left be super angry?? Not if you do it under the guise of giving away your wealth for future generations. Like Zuckerberg just did. Then they lavish praise on you!
Robert Wenzel comments on the matter:
Zuckerberg Announces He Is Going To Take His Money Out Of His Left Taxable Pocket and Put It Into His Right Non-Taxable Pocket
We may have our first full-fledged billionaire couple with child, who can most aptly be described as slogan Marxists. It doesn’t appear they have any deep knowledge of Marxism, or any other social theories, they are just sloganeers: “equality for all, especially future generations.”