Why Mark Zuckerberg is Not Giving 99% of His Facebook Shares to Charity

The big story last week was that Mark Zuckerberg and his wife, according to the NY Times, “vows to donate 99% of his Facebook shares for charity.”

Both media and social media alike went nuts.

This is, however, not the full story. This was, in my opinion, a very big media and publicity spin on a superbly implemented and executed wealth strategy.

Let’s look at what they did. The Zuckerbergs formed a limited liability company (LLC), or, as the NY Times reported, an “unusual limited liability corporate structure.”

I’m not sure how the NY Times finds it unusual, as it’s neither a non-profit nor a charitable trust. The Zuckerbergs set up a for-profit, privately held corporate entity.

The Chan Zuckerberg Initiative, LLC will make investments that will advance the Zuckerbergs’ vision of “personalized learning, curing disease, connecting people and building strong communities.”

The Zuckerbergs will, over the course of their lives, transfer Facebook shares by donating it to the LLC they created. By transferring the shares through a donation, the Zuckerbergs eliminate capital gains tax from their Facebook shares, as well as protect other sources of income by writing off the donation as a charitable contribution.

The Zuckerberg family will still be in control of their fortunes and will still have the power to allocate and invest their money however they please, while limiting and reducing their tax bill.

Wealthy individuals don’t want to own anything; they want to control it.

Mark Zuckerberg is no stranger to advanced tax strategies. His company, Facebook, has proven to effectively limit and reduce the corporate taxes they pay.

The Zuckerbergs are effectively protecting themselves from the biggest wealth destroyer — taxes. Increasing your economic efficiency through proper tax planning and strategy is one way to combat the biggest wealth destroyer out there.

Please note that tax planning and tax strategy does not include avoiding and not paying taxes. You still have to pay your taxes, but you do not have to leave a tip.

Everyone can increase their economic efficiency by legally limiting and reducing their taxes. This can be achieve in many ways, whether it’s implementing a wealth capture strategy, like wealthy elite utilizing tax advantageous vehicles, or moving from your home state to a more tax advantageous state.

Our philosophy is to have more control over the amount of taxes we pay, and, in turn, legally limiting and reducing taxes by paying it now, rather than in the future.

It makes more sense financially to pay taxes on the seed now, rather than on the harvest in the future, as the future has many unknown variables that can determine our tax burden.

I like Mark Zuckerberg, and his company, Facebook, has forever changed the world we live in. Opinions on Facebook are not black and white, there are enormous privacy concerns and Facebook can be extremely Orwellian at times. Despite this, the company has provided a platform for millions of people to connect, share, and launch and grow their businesses, which has also created many jobs.

Warning! Please do not try this at home or on your own, folks!

Please make sure you seek proper legal and tax counsel before you try to legally limit or reduce your own taxes. This is not an area of your Wealth Plan that you want to cut corners on.

When it comes to asset protection, estate planning and tax planning and strategy, you want the best advisors and advice you can find. These are extremely important members of your team.

The most expensive advice you can get is cheap advice!

Happy investing.

Yours in purpose and prosperity,

M.C Laubscher

 

The information, opinions, and financial data presented are for educational purposes only and are not intended as investment advice. No guarantees are made as to the accuracy of the information provided herein. Situations can change from day to day. Every investor should do their own due-diligence to determine which investments are best for them.

You must assume the responsibility and liability for all decisions that you make on the basis of the information herein contained. Valhalla Wealth Financial, makes no warranties, expressed or implied, as to the fitness and accuracy of the information provided or for the results obtained by using the information. Those making investment decisions based on any of the information presented should do so in the knowledge that they could experience significant losses. In no event shall Valhalla Wealth Financial/Laubscher Wealth Management LLC be liable for direct, indirect, or incidental damages resulting from the use of the information.

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