5 ms·

It's a whole different way of thinking though. I'm probably at the exterme end of it: my siblings and I have decided that we will form a trust in which we will

It's a whole different way of thinking though. I'm probably at the exterme end of it: my siblings and I have decided that we will form a trust in which we will all be equal owners and any company we start(or wealth we acquire individually) will be owned by the trust. The upside? It distributes the risk and almost ensures that none of us will ever go broke. The downside(for some people)? When one of us flips the company, the wealth will be equally distributed between my siblings, irrespective of whether they actually worked at the company or not.

lurker19 15y ago
Why 100% split? Why not a fractional share with a dollar cap, like social security? That could rednce the effect of freeloading, while still providing security in case the richest of you feels less generous in the future.
- badclient 15y ago
  I suppose that could be done but financial security is only partial goal. The other goal of unity and equality is probably a little more important and that breaks pretty quickly if there is significant disparity between our standard of living. This reduces the chance that any sibling will have a lifestyle that is relatively more affluent than the others. And when we get a freeloader, it encourages the other siblings to not give up on his life. It may be easier to give up if you can tell yourself "well he is getting what he deserves". This assumes a great deal of good faith, obviously. It can easily go bad and turn into resentment if (a) we get a freeloader and (b) he remains a freeloader all his life. But even in that worst case scenario, the hope(from our cultural upbringing) is that there will be less resentment(for the financial unfairness) and more sadness/empathy for the sibling who went the wrong way all his life. My father's brothers have been on this model for couple decades and it has mostly worked out. They've had multiple freeloaders at one point turn into super productive contributors a decade later(and after lots of hardwork by the non-freeloading siblings towards the freeloaders). This model is most easy when you are still young and life is simple(as it is for us now). It becomes very challenging after we all have wives, children and grandchildren and different local interests and politics. It usually leads to (somewhat bitter) splitville where assets are divided. This is one area my siblings and me are most weary of and want to do a better job of than our prior generations.
jonbro 15y ago
This is super interesting. Did you know of anyone else that set up these types of family trusts, or was it just your dad and his brothers? Did you do anything to make it legally binding, and how long have you been doing it for? Has it pushed you to take more financial risk due to the fact that you have fallbacks? Are there any other things that are shared in the trust, or just companies that you own? So many questions.
- badclient 15y ago
  Are there any other things that are shared in the trust, or just companies that you own? It's really not about the companies nor is it even legally binding in most cases with these arrangements(there is a lot of argument for/against making it legally binding). This idea dates back generations when joint families were more common. Also see this if you haven't: http://news.ycombinator.com/item?id=3071593 http://news.ycombinator.com/item?id=3071593 Has it pushed you to take more financial risk due to the fact that you have fallbacks? This plays out every single day in one way or the other. Example 1: One of the core points which I grew up hearing from my dad is that my money isn't really mine--it's the family's. Where as in American culture we largely teach kids independence from an early age, my dad never made me feel like I have to work as a teenager to have pocketmoney. His money was mine. What if he didn't have money to give me? I'd be expected to be sensitive enough to understand and work - so I can help the family(not so much myself). Example 2: Last year I was in school and my (normally well to do dad) hit a rough patch. Our entire family finances were fucked. So I picked up a few coding gigs, worked my ass off and made the checks go straight to my dad. Of course, my school friends thought I should be loaded at the end of the project. When I told them 100% of the money went to my dad, they were shocked. Some even tried to tell me "bro you're stupid!" :) May be. But that's my culture :) And so far I love it! Example 3: Earlier this year, I just packed my bags one day and moved to NYC to live with my brother indefinitely. As I understand, this is not common in American culture. And even when a really close friend lets you do it, it is seen as "owing" a favor. But in our case, I did not owe my brother a favor or explanation on why I was going to live with him in his one bedroom apartment. In fact, I'd have to give an explanation to my family if I decided not to live with him. It's expected that if you live in the same city, you live together if you are family. Oh btw, I have a full-time job now but my brother pays 100% of the rent. And I'm saving up cash from my job so one of us can potentially quit in a few months and take a shot at the start-up game again. None of this is planned or negotiated well in advance. My Dad could call me tomorrow and ask me for 100% of the money in my account and I'd send it without reservation. He'd do the same for me--though out of respect for being the father, he has more right to question me about why I need money than my right to question him. =) Few months ago I had a major financial disaster when a client turned out to be fraudulent, putting me over $10,000 in the red. That's a lot of money for a freelancer. This is when I was able to call up my dad and pretty much the problem was immediately taken care of(he's doing a lot better now financially than last yr). In a few years, my dad will be retired. He won't be getting a social security check from the gov and he barely has savings for retirement because he mostly invested them in his kids--knowing they'd take care of him after retirement. So he'll be getting money transfers from all of his kids every month after retirement. That's our social security =)
gbhn 15y ago
I find this really interesting as well. I'd really appreciate a longer account of your thinking and the details, if you wouldn't mind. I've mulled over a similar idea, but done nothing with it.
- badclient 15y ago
  Read this if you haven't: ) http://news.ycombinator.com/item?id=3071593 http://news.ycombinator.com/item?id=3071593

lurker19 15y ago

Why 100% split? Why not a fractional share with a dollar cap, like social security? That could rednce the effect of freeloading, while still providing security in case the richest of you feels less generous in the future.

badclient 15y ago
I suppose that could be done but financial security is only partial goal. The other goal of unity and equality is probably a little more important and that breaks pretty quickly if there is significant disparity between our standard of living. This reduces the chance that any sibling will have a lifestyle that is relatively more affluent than the others. And when we get a freeloader, it encourages the other siblings to not give up on his life. It may be easier to give up if you can tell yourself "well he is getting what he deserves". This assumes a great deal of good faith, obviously. It can easily go bad and turn into resentment if (a) we get a freeloader and (b) he remains a freeloader all his life. But even in that worst case scenario, the hope(from our cultural upbringing) is that there will be less resentment(for the financial unfairness) and more sadness/empathy for the sibling who went the wrong way all his life. My father's brothers have been on this model for couple decades and it has mostly worked out. They've had multiple freeloaders at one point turn into super productive contributors a decade later(and after lots of hardwork by the non-freeloading siblings towards the freeloaders). This model is most easy when you are still young and life is simple(as it is for us now). It becomes very challenging after we all have wives, children and grandchildren and different local interests and politics. It usually leads to (somewhat bitter) splitville where assets are divided. This is one area my siblings and me are most weary of and want to do a better job of than our prior generations.

jonbro 15y ago

This is super interesting. Did you know of anyone else that set up these types of family trusts, or was it just your dad and his brothers? Did you do anything to make it legally binding, and how long have you been doing it for? Has it pushed you to take more financial risk due to the fact that you have fallbacks? Are there any other things that are shared in the trust, or just companies that you own? So many questions.

badclient 15y ago
Are there any other things that are shared in the trust, or just companies that you own? It's really not about the companies nor is it even legally binding in most cases with these arrangements(there is a lot of argument for/against making it legally binding). This idea dates back generations when joint families were more common. Also see this if you haven't: http://news.ycombinator.com/item?id=3071593 http://news.ycombinator.com/item?id=3071593 Has it pushed you to take more financial risk due to the fact that you have fallbacks? This plays out every single day in one way or the other. Example 1: One of the core points which I grew up hearing from my dad is that my money isn't really mine--it's the family's. Where as in American culture we largely teach kids independence from an early age, my dad never made me feel like I have to work as a teenager to have pocketmoney. His money was mine. What if he didn't have money to give me? I'd be expected to be sensitive enough to understand and work - so I can help the family(not so much myself). Example 2: Last year I was in school and my (normally well to do dad) hit a rough patch. Our entire family finances were fucked. So I picked up a few coding gigs, worked my ass off and made the checks go straight to my dad. Of course, my school friends thought I should be loaded at the end of the project. When I told them 100% of the money went to my dad, they were shocked. Some even tried to tell me "bro you're stupid!" :) May be. But that's my culture :) And so far I love it! Example 3: Earlier this year, I just packed my bags one day and moved to NYC to live with my brother indefinitely. As I understand, this is not common in American culture. And even when a really close friend lets you do it, it is seen as "owing" a favor. But in our case, I did not owe my brother a favor or explanation on why I was going to live with him in his one bedroom apartment. In fact, I'd have to give an explanation to my family if I decided not to live with him. It's expected that if you live in the same city, you live together if you are family. Oh btw, I have a full-time job now but my brother pays 100% of the rent. And I'm saving up cash from my job so one of us can potentially quit in a few months and take a shot at the start-up game again. None of this is planned or negotiated well in advance. My Dad could call me tomorrow and ask me for 100% of the money in my account and I'd send it without reservation. He'd do the same for me--though out of respect for being the father, he has more right to question me about why I need money than my right to question him. =) Few months ago I had a major financial disaster when a client turned out to be fraudulent, putting me over $10,000 in the red. That's a lot of money for a freelancer. This is when I was able to call up my dad and pretty much the problem was immediately taken care of(he's doing a lot better now financially than last yr). In a few years, my dad will be retired. He won't be getting a social security check from the gov and he barely has savings for retirement because he mostly invested them in his kids--knowing they'd take care of him after retirement. So he'll be getting money transfers from all of his kids every month after retirement. That's our social security =)

gbhn 15y ago

I find this really interesting as well. I'd really appreciate a longer account of your thinking and the details, if you wouldn't mind. I've mulled over a similar idea, but done nothing with it.

badclient 15y ago
Read this if you haven't: ) http://news.ycombinator.com/item?id=3071593 http://news.ycombinator.com/item?id=3071593