Privacy and your ecosystemApril 24, 2009 - Phil HodgenRandom
Privacy is important. Your financial affairs are your business. And you are leaving more footprints than you realize. This came up in a phone conversation with another lawyer today. We’re doing some remedial privacy work–putting the toothpaste back in the tube. It is possible, but expensive.
When you consider your own asset privacy (“Who knows about this account?”) consider the people who touch it. From high to low: Senior Vice Presidents to file clerks. Then consider that people change jobs. Frequently. And in their heads they carry knowledge of your situation. Over 10 or 20 years and there will be dozens of people, completely unknown to you, who will know about your assets.
I’m not talking about secrecy here — the “how will they ever find out?” theory of tax planning. That’s for morons, frankly. As unpleasant as taxation can become, it is cheaper to pay the taxes. Don’t make a money problem into a jail problem. I’m talking about the simple prudence of asset protection at the extreme end, and “Don’t bother me with sales pitches” at the mundane end. And for some of my clients, asset protection means “I remain alive.”
People don’t need to know about you and your money. The more people that know stuff and the longer that a particular asset holding structure has been in place, the more likely you are to experience privacy failure.
Memo to all personnel: confidentiality is good. Only a few people should know. You should trust those people. And you should change your structures periodically and carefully.