El Conquistqdor Francisco de Orellana

El Conquistqdor Francisco de Orellana
The Conquistador who put the Amazaon baisn "on the map"....Francisco Orellana

Thursday, May 10, 2012

You Can’t Hide Money Unless You Know This “Secret”

By Erika Nolan, Executive Publisher

Johnny Carson once joked, “The difference between a divorce and a legal separation is that the legal separation gives a husband time to hide his money.”

In the lounge at the Hamilton Princess hotel in Bermuda, about seven years ago, I was offered a choice. I was setting up an investment account.

The advisor leaned in and whispered, “Now, you don’t have to put your husband’s name on this account. It’s up to you. But if things go bad between you, and his name is on this account….well, it will be too late.”

I did the fair thing – I added Patrick’s name to the account. After all, the money was “our” money… earned by both of us. Now, after nearly 14 years of marriage, things are still rosy (knock on wood) and the majority of our wealth has been built together.

Putting money out of reach – from a spouse, children, business partners, or even employees – is a rather unsettling, but very popular topic. Just last week, the WSJ ran a full page story telling of how hiding money from your spouse has gotten harder… but the truth is there is a simple way to protect your wealth.
Discretion – Less is Really More

Money is easier to disguise when it never surfaces. This may not seem like a secret, but it is. Using a bit of discretion and living beneath your means may seem counter to the “American Way” but it’s smart.

Bragging and flashing cash is a big risk these days. The less you flaunt your wealth – and your personal details – the less likely people are to reach into your pockets. Often, you are your own worst enemy. A few of the wealthiest people I know look like average, every-day people.

My one good friend is worth tens of millions of dollars, easily. And for the duration of our decade-long friendship, I’ve rarely seen him dressed in much more than a pair of khakis, a button-down shirt and a muted cashmere sweater tossed around his shoulders.

Another friend of similar means chose to pay cash for his cars – buying mid-level Japanese models because he finds them reliable. He lives in a very nice, but modest house for his wealth. Outside of those closest to him, no one has a clue about his net worth.

A long-time Sovereign Society member, I’ll call him Paul to maintain his privacy, has been attending our offshore events for years. I met him in early 1999 and frankly, he was dressed like a building maintenance man. I still remember his bright yellow t-shirt and his tan Dickies. Years later, he still wears nearly the same outfit to our events, but I now know he owns multiple apartment buildings in New York City.

The other mistake many people make, other than flashing the cash, is volunteering private information. Telling people about your wealth is one of the fastest ways to get on the radar.

I fly roughly 75,000+ miles a year and I’m always amazed at the stories complete strangers tell me during the course of the flight. Small talk is fine…but revealing your net worth, bragging about your latest real estate development, divulging your portfolio assets, and the like makes no sense.
Say Good-Bye to Technology

Besides keeping your lips sealed, use discretion with today’s technologies. As the WSJ rightfully points out, smart phones, text messages, Facebook and computer transactions all leave a trail that can easily be picked up by a spouse. And, these trails are very hard – if not impossible – to wipe out. But, the WSJ falls a bit short with their advice.

I am a huge advocate of not using electronic communication for anything truly confidential. This is especially true when it comes to offshore accounts, trusts, etc.

If you want to ensure real privacy over your financial information, you have to go back to basics.

Elect to have any detailed financial statements from banks or brokerage firms held for you. Then instruct the companies to forward the documents to a lawyer. Normally, asset-protection or family attorneys offer this service, and this is especially true if you are a client. Opt to go to the lawyer’s office to open and review the mail, make any necessary phone calls or sign any necessary papers. Leave any documents you need to retain in the custody of the lawyer to ensure maximum privacy where it is shielded by the rules of lawyer-client privilege. Shred anything that isn’t worth saving.

My advice is to use discretion when it comes to your wealth, and that applies to everyone…except governments and tax authorities. There you must be fully transparent and fully compliant. Tax returns are not part of public record so they can’t be accessed without a lawyer and a judge.

Unfortunately, many people make their most private financial details “public” all by themselves. Keep your secrets to yourself. It will save you thousands.

In Wealth & Prosperity,



Erika Nolan

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