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Filed Under:Life Insurance, Life Planning Strategies

5 Ways Rich and Famous Can Hide Assets

Rich and famous people seek out publicity, and publicity seeks them out—often in detrimental ways.

“Individuals with wealth and notoriety are prime targets for having their assets disclosed by the media,” Jim Duggan, a wealth and estate planning attorney at Duggan Bertsch LLC in Chicago, said in a statement.

Duggan says that rather than use their own names when titling their assets, high-profile people should camouflage them with bland, ambiguous names.

“In this way the rich and famous can do their best to ensure that they are the ones receiving all the publicity, not their assets,” he said.

Duggan suggests five pre-emptive planning techniques public figures should consider in order to maintain confidentiality and creditor protection and to avoid probate.

1. Revocable Living Trusts

When the value, assets and inheritors of a public figure’s estate become public knowledge, the estate planning process has failed, Duggan says. This is because assets owned in an individual’s name at the time of death must go through the probate process, the details of which are fully available to the public.

A revocable living trust formed during a person’s lifetime can prevent this situation, he says, as assets are titled in the trust’s name, not that of the individual.

“It is a very simple structure that does not involve the formation of a company or separate tax compliance obligations,” Duggan said. “Upon death, the estate administration happens quickly, confidentially and at a lower cost.”

2. Land Trusts

Real estate purchased by an individual is a matter of public record, which is often publicized. Land trusts offer a discreet alternative way to acquire real estate. They allow an individual to buy an asset for his or her own benefit, but in the name of the trust, says Duggan. This avoids both public probate and public disclosure of the actual beneficial owner.

3. Asset Protection Trusts

“Spendthrift trusts” or asset protection trusts provide protection and confidentiality for assets placed within the trust. Individuals can create an APT for a third party (gift trusts) or themselves (self-settled) to protect wealth during their lifetime.

Properly structured, Duggan says, the assets in an APT are fully protected from outside attack or inquiry. An APT is also a way to isolate separate property, ensuring it is protected from spouses in the event of a divorce.

4. Establishment of LLCs

As wealth accumulates, Duggan says it is best to take it out of personal savings and investment accounts and put it into an account under a limited liability company owned by the individual.

“This becomes a protective investment holding company for the individual, protecting the entity, assets and the owner at the same time,” he says.

The LLC allows the holder to invest anonymously in the name of the company and provides for a wide variety of ownership options, including family, friends and business partners.

5. Investing Through Private Instruments

Certain investments protect not only the wealth invested, but also the investor. For example, individuals can invest through high-level insurance and annuity contracts called private placement contracts.

Rather than investing directly, Duggan says, an individual puts the funds into the private placement contract as premium, and the issuing insurance company invests the funds in its name for the benefit of the client.


For more on high net-worth clients, see:

Estate Planning: Focus on the Legacy, Not the Tax Bill

Ultra-Wealthy Will Transfer $27 Trillion by 2050

Wealthy Investors Still Worried About the Economy

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