5 ms·

Well yeah, there are two systems, and so two paths that get followed. I don't mean legal systems, I mean financial systems. Most people live in a world where

Well yeah, there are two systems, and so two paths that get followed. I don't mean legal systems, I mean financial systems. Most people live in a world where they have to own something to have it. They buy a house to live in, a car to drive and so on. The law can decide you owe something so they take an asset that you own. But people with wealth don't generally live like this. They structure their financial lives to separate value from risk. They control wealth, they use wealth, but they don't "own" it. Joe Public and the media are bad at understanding this distinction. They equate wealth with ownership. The law understands it though, so Joe Public doesn't understand the law. The solution here is not to rail against the system. The solution is to understand it, leverage it, educate and be educated. There are legal structures that exist to protect assets. Yes, you need to reach some level of success to make use of them, but lots of people reach that level and don't use them, thus exposing unnecessary risk to those assets. If you "own" a business of any size, you should get educated on this.

mindslight 3y ago
You're brushing off that these structures require an outsized level of wealth to pay the salaries of enough other people to make every legal entity a group project with diffuse responsibility. Without that, most judges are just going to say you're personally responsible for everything regardless of the legal structures you've set up. So no, it's not just a matter of us plebs learning how to use the system - it really is designed to privilege capital over individuals. For example see the blatant dynamic of the "Limited Partnership" predecessor to the LLC.
- bruce511 3y ago
  The amount of wealth required and the actions of judges will depend greatly on your situation and the local legislation. Consult a good financial advisor for the best solution in your jurisdiction.
  - int_19h 3y ago
    That in and of itself is not cheap.
    - bruce511 3y ago
      Cheap is in the eye of the beholder. Insurance is not cheap. It exists to mitigate risk. But in most places the overall cost is probably less than $1000 per year for the protection of the sorts of values most of us are likely to acquire.
  - mindslight 3y ago
    I've read a bit about asset protection. The big problem I see is that how do you trust advice/strategies from any given advisor/attorneys will actually hold up, rather than simply being an expensive piece of paperwork that gets disregarded right as it's needed. Perhaps I'd feel differently if say I were in one of the few states that explicitly respected self settled asset protection trusts. But as things stand I'm somewhat salty that say even a straightforward LLC seemingly can't be relied upon to protect from the liability exposure of owning a rental property, when done by an individual. Meanwhile corpos have successfully convinced courts to create post-facto liability shields between business units that hadn't even been structured that way ahead of time.
gorgabal 3y ago
But if the system is unjust it is also our moral duty to attempt to dismantle it no? Just accepting the system and abusing it is not going to make the world a better place. This is why other commenters are upset, as you blatantly abuse immoral structures.
- bruce511 3y ago
  The systems exist for a reason. Losing my life's accumulation at age 60 to a greedy or unscrupulous character is not a risk I personally want to take. But if you feel that you can dismantle the system, then by all means go for it. Personally I don't want to dismantle the system as it allows me to better manage risk.
  - Repulsion9513 3y ago
    > The systems exist for a reason. Because the rich like them. > Losing my life's accumulation at age 60 to a greedy or unscrupulous character is not a risk I personally want to take. So why is the answer "allow people to avoid their liabilities" instead of "don't give people liability to greedy or unscrupulous characters"? > Personally I don't want to dismantle the system as it allows me to better manage risk. Personally I don't want to dismantle the system as it favors me*
    - bruce511 3y ago
      >> Because the rich like them. Because smart people like them. Those smart people use them to protect their own wealth, and often end up as advisors to rich people. They certainly work for rich people, yes, but they also work for average people who have accumulated enough that they want to reduce the risk of losing it. >> So why is the answer "allow people to avoid their liabilities" That's a somewhat inaccurate characterization of what they do. Firstly, liabilities don't exist in a vacuum. They exist because a creditor agrees to extend you credit under specific terms and conditions. That credit entails risk to the creditor, which they allow for, and charge an interest rate to cover. They go into this understanding the parameters of the loan, and the risks / rewards in making it. Financial structures allow you to limit the boundaries of that transaction. They allow you to decide what is "in" and what is "out" of the transaction. By contrast lumping all your assets and liabilities together makes you a juicy target for aforementioned unscrupulous characters. >> instead of "don't give people liability to greedy or unscrupulous characters"? Because you cannot control this. If you have a bank loan, of any kind, you already breaking this rule. Banks are some of the worst offenders when it comes to bad creditor behavior. If you rent a building or premise from someone, and that someone sells to a new person, well, congratulations that new person just entered your personal or business life. >> Personally I don't want to dismantle the system as it favors me* Absolutely. Banks and corporations already have the deck stacked well in their favor. I'm a big fan of any part of the system that protects me from their predatory clutches.
sanderjd 3y ago
No, I disagree that the solution is to understand and leverage this system. It is good to identify things that are bad and advocate for changing them. Yes, it is a useful step to understand the details of how things work and how they came to be the way they are, but that does not imply accepting them as inevitable and playing along.
Repulsion9513 3y ago
> Joe Public and the media are bad at understanding this distinction. They equate wealth with ownership. The law understands it though, so Joe Public doesn't understand the law. Or Joe Public believes the law is wrong and understand (correctly) that the relevant metric is practical wealth rather than whether or not some fictional entity theoretically owns it.
HeyLaughingBoy 3y ago
> The solution is to understand it, leverage it Truer words were never spoken! The system exists, take advantage of it. Of course, when you do, don't tell anyone or you'll be accused of being "an asshole who is taking advantage of loopholes in the system" by those who don't understand that it isn't a loophole, it is the system!
- deleted 3y ago
  [deleted]
- k8svet 3y ago
  Yeah, how dare people be upset when you wave capital in their face and say "stop being poor and then you can take advantage of your peers like I do. It's okay, its The System". Come on.
  - bruce511 3y ago
    Firstly, as i mentioned, there are costs to reducing risk, so it's counter productive to educate poor people on how to structure assets when they have no assets. So the idea of "stop being poor" is not in play. This doesn't make you rich, it is the reduction of risk that comes with being "rich". (For some definition of rich). Secondly it's not "taking advantage" in a pejorative sense. It doesn't make other people poorer. It protects assets from creditors. Specifically assets that are not designated as collateral for specific credit. It's better to think about this like insurance. You pay something to reduce risk. Taking out insurance isn't an affront to poor people, or a sign of excess capital. Your comment though is a common reaction. There's this notion that making use of financial structures hurts the little guy. Or makes people poor. It does neither. Rather, I would consider that those who should use it, but don't, are either uneducated, or lazy, or irresponsible, or some combination of all 3. The education part can be fixed. Clearly, just like insurance, to use it or not is a choice. Everyone is free to make their own choices, and determine their appetite for risk. Unfortunately financial management is not taught at school, and those who never learn it tend to be those who also "end up with nothing."
    - 3y ago
k8svet 3y ago
What on Earth difference does this distinction make to "Joe Public", exactly, given that they lack the wealth to navigate these systems? "Ooh wow, I better understand how the system is specifically structured to grant inherit privileges to those with wealth, now I feel... ???"
- K0balt 3y ago
  Significant assets (anything over say, 10k in value) should probably be owned by a trust, corporation, or anonymous offshore LLC or foundation. (Escalating by value). The cost of doing this runs about 300-1000-3000 a year.
  - nothercastle 3y ago
    It’s hard to get access to a professional that understands how to do this legally and can advise appropriately. Most financial advisors just peddle overpriced high fee index funds. Like how do you even find someone like that.
    - bruce511 3y ago
      Onshore trusts are simple to set up and administer. Google "trust accountant" and you should find someone in your area.
    - mrandish 3y ago
      There are law firms that specialize in setting up trusts. We found a local firm who handled setting up a trust for our family and it was pretty straight forward and not very expensive. If your family has assets >$1M it's definitely something worth looking into (and quite possibly for lesser amounts too depending on your situation). There are a variety of potential benefits (tax, inheritance, legal liability, etc) but one that shouldn't be underestimated is how much it can simplify the paperwork, process and delay at death vs just having a will. If you are elderly and have kids, creating a proper trust in sync with your will is one of the nicest things you can do for your kids. Having recently been through the death of a couple of parents, one who left a well-organized trust and the other who just had a standard will, the difference in work required and stress involved was night and day.

mindslight 3y ago

You're brushing off that these structures require an outsized level of wealth to pay the salaries of enough other people to make every legal entity a group project with diffuse responsibility. Without that, most judges are just going to say you're personally responsible for everything regardless of the legal structures you've set up. So no, it's not just a matter of us plebs learning how to use the system - it really is designed to privilege capital over individuals. For example see the blatant dynamic of the "Limited Partnership" predecessor to the LLC.

bruce511 3y ago
The amount of wealth required and the actions of judges will depend greatly on your situation and the local legislation. Consult a good financial advisor for the best solution in your jurisdiction.
- int_19h 3y ago
  That in and of itself is not cheap.
  - bruce511 3y ago
    Cheap is in the eye of the beholder. Insurance is not cheap. It exists to mitigate risk. But in most places the overall cost is probably less than $1000 per year for the protection of the sorts of values most of us are likely to acquire.
- mindslight 3y ago
  I've read a bit about asset protection. The big problem I see is that how do you trust advice/strategies from any given advisor/attorneys will actually hold up, rather than simply being an expensive piece of paperwork that gets disregarded right as it's needed. Perhaps I'd feel differently if say I were in one of the few states that explicitly respected self settled asset protection trusts. But as things stand I'm somewhat salty that say even a straightforward LLC seemingly can't be relied upon to protect from the liability exposure of owning a rental property, when done by an individual. Meanwhile corpos have successfully convinced courts to create post-facto liability shields between business units that hadn't even been structured that way ahead of time.

gorgabal 3y ago

But if the system is unjust it is also our moral duty to attempt to dismantle it no? Just accepting the system and abusing it is not going to make the world a better place. This is why other commenters are upset, as you blatantly abuse immoral structures.

bruce511 3y ago
The systems exist for a reason. Losing my life's accumulation at age 60 to a greedy or unscrupulous character is not a risk I personally want to take. But if you feel that you can dismantle the system, then by all means go for it. Personally I don't want to dismantle the system as it allows me to better manage risk.
- Repulsion9513 3y ago
  > The systems exist for a reason. Because the rich like them. > Losing my life's accumulation at age 60 to a greedy or unscrupulous character is not a risk I personally want to take. So why is the answer "allow people to avoid their liabilities" instead of "don't give people liability to greedy or unscrupulous characters"? > Personally I don't want to dismantle the system as it allows me to better manage risk. Personally I don't want to dismantle the system as it favors me*
  - bruce511 3y ago
    >> Because the rich like them. Because smart people like them. Those smart people use them to protect their own wealth, and often end up as advisors to rich people. They certainly work for rich people, yes, but they also work for average people who have accumulated enough that they want to reduce the risk of losing it. >> So why is the answer "allow people to avoid their liabilities" That's a somewhat inaccurate characterization of what they do. Firstly, liabilities don't exist in a vacuum. They exist because a creditor agrees to extend you credit under specific terms and conditions. That credit entails risk to the creditor, which they allow for, and charge an interest rate to cover. They go into this understanding the parameters of the loan, and the risks / rewards in making it. Financial structures allow you to limit the boundaries of that transaction. They allow you to decide what is "in" and what is "out" of the transaction. By contrast lumping all your assets and liabilities together makes you a juicy target for aforementioned unscrupulous characters. >> instead of "don't give people liability to greedy or unscrupulous characters"? Because you cannot control this. If you have a bank loan, of any kind, you already breaking this rule. Banks are some of the worst offenders when it comes to bad creditor behavior. If you rent a building or premise from someone, and that someone sells to a new person, well, congratulations that new person just entered your personal or business life. >> Personally I don't want to dismantle the system as it favors me* Absolutely. Banks and corporations already have the deck stacked well in their favor. I'm a big fan of any part of the system that protects me from their predatory clutches.

sanderjd 3y ago

No, I disagree that the solution is to understand and leverage this system. It is good to identify things that are bad and advocate for changing them. Yes, it is a useful step to understand the details of how things work and how they came to be the way they are, but that does not imply accepting them as inevitable and playing along.

Repulsion9513 3y ago

> Joe Public and the media are bad at understanding this distinction. They equate wealth with ownership. The law understands it though, so Joe Public doesn't understand the law. Or Joe Public believes the law is wrong and understand (correctly) that the relevant metric is practical wealth rather than whether or not some fictional entity theoretically owns it.

HeyLaughingBoy 3y ago

> The solution is to understand it, leverage it Truer words were never spoken! The system exists, take advantage of it. Of course, when you do, don't tell anyone or you'll be accused of being "an asshole who is taking advantage of loopholes in the system" by those who don't understand that it isn't a loophole, it is the system!

deleted 3y ago
[deleted]
k8svet 3y ago
Yeah, how dare people be upset when you wave capital in their face and say "stop being poor and then you can take advantage of your peers like I do. It's okay, its The System". Come on.
- bruce511 3y ago
  Firstly, as i mentioned, there are costs to reducing risk, so it's counter productive to educate poor people on how to structure assets when they have no assets. So the idea of "stop being poor" is not in play. This doesn't make you rich, it is the reduction of risk that comes with being "rich". (For some definition of rich). Secondly it's not "taking advantage" in a pejorative sense. It doesn't make other people poorer. It protects assets from creditors. Specifically assets that are not designated as collateral for specific credit. It's better to think about this like insurance. You pay something to reduce risk. Taking out insurance isn't an affront to poor people, or a sign of excess capital. Your comment though is a common reaction. There's this notion that making use of financial structures hurts the little guy. Or makes people poor. It does neither. Rather, I would consider that those who should use it, but don't, are either uneducated, or lazy, or irresponsible, or some combination of all 3. The education part can be fixed. Clearly, just like insurance, to use it or not is a choice. Everyone is free to make their own choices, and determine their appetite for risk. Unfortunately financial management is not taught at school, and those who never learn it tend to be those who also "end up with nothing."
  - 3y ago

k8svet 3y ago

What on Earth difference does this distinction make to "Joe Public", exactly, given that they lack the wealth to navigate these systems? "Ooh wow, I better understand how the system is specifically structured to grant inherit privileges to those with wealth, now I feel... ???"

K0balt 3y ago
Significant assets (anything over say, 10k in value) should probably be owned by a trust, corporation, or anonymous offshore LLC or foundation. (Escalating by value). The cost of doing this runs about 300-1000-3000 a year.
- nothercastle 3y ago
  It’s hard to get access to a professional that understands how to do this legally and can advise appropriately. Most financial advisors just peddle overpriced high fee index funds. Like how do you even find someone like that.
  - bruce511 3y ago
    Onshore trusts are simple to set up and administer. Google "trust accountant" and you should find someone in your area.
  - mrandish 3y ago
    There are law firms that specialize in setting up trusts. We found a local firm who handled setting up a trust for our family and it was pretty straight forward and not very expensive. If your family has assets >$1M it's definitely something worth looking into (and quite possibly for lesser amounts too depending on your situation). There are a variety of potential benefits (tax, inheritance, legal liability, etc) but one that shouldn't be underestimated is how much it can simplify the paperwork, process and delay at death vs just having a will. If you are elderly and have kids, creating a proper trust in sync with your will is one of the nicest things you can do for your kids. Having recently been through the death of a couple of parents, one who left a well-organized trust and the other who just had a standard will, the difference in work required and stress involved was night and day.