The Young Man's Guide to Protecting Wealth

Keeping your plunder safe from gold diggers

If the money keeps rolling in, what's a girl to do?
Cream a little off the top for expenses—wouldn't you?
But where on earth can people hide their little piece of heaven?
Thank God for Switzerland!
- Evita

I'm one of the members of the Tortuga Society with several successes under my belt. I've built and sold a number of companies with eight and nine digit exits, run a hedge fund, and I'm currently helping to advise a number of our members on how to build for their future—since Tortuga isn't just about job stacking, that's just one path to financial security.

But today I'm here to offer some advice to aspirational young ambitious sorts looking ahead down that road toward success and wealth.

You may be fortunate enough to find yourself in a position of relative comfort and wealth - by having your own company that happens to spin off a good amount of cash, through job stacking, simply holding a good job with restricted stock units or stock options or a solid bonus/profit-sharing program, or some piece of equity in a firm that is acquired, goes public, or otherwise has a profitable liquidity event. Or even by the old fashioned means of inheriting it. Don’t count on winning the lottery. And if you’re planning on marrying into money, well, ask advice from someone more attractive than me.

Usually I give advice from the other side of that equation, though: if you have some money and you’re attracting suitors, how do you ensure that they’re not just trying to fleece you?

The best way, of course, is to be good at assessing someone’s character - but this is one of those sorts of traits that doesn’t often come intuitively: as the saying goes, good judgement is gained from experience, and experience is gained from bad judgement. Learning to cold-read people is a skill, and a valuable one, but it is one that even if you know how to do it well, you may not actually do so while in the midst of a romantic whirlwind. It requires a certain detachment to be able to still assess people calmly when your blood is up.

Incidentally, there is a pretty good way to do this (which people still don’t do) - if you have a trusted wingman, who you know has your own best interests at heart and is not competing with you for the prize, and he warns you off, take his advice. But when you’re infatuated and your best friend is telling you “yo, I don’t know: I think your girl is playing tic-tac-toe” it’s frequent that you’ll only have eyes for your inamorata and ignore any good advice to the contrary.

It’s pragmatic to ask “is this person legitimately interested in me for me” but you can easily get too far down the rabbit hole of second-guessing people. Do you have chemistry? Do you have some mutual interests without being obsessively joined? Do you still have fun together when you’re not spending buckets of money on impressing them?

A relatively straightforward screening question (and kind of a fun discussion in general) is “what is your idea of the good life?”

Have you got similar visions for life: are you socially compatible, do you both want similar things culturally and from the future and from a family, do you want to live the same sorts of lifestyle and in the same sorts of places? Homesteaders and penthouse nouveau riche are going to need to work some things out; Broadway musical fans aren’t likely to gel smoothly with the country music crowd (yes, this is basically the city mouse / country mouse perspective in both cases); if you’re of different religious or political beliefs, expect that might be worth some discussion about how to and where to make those decisions.

OK, “know yourself” is always good advice - but that, and various dating strategies to keep from becoming too attached to the wrong person aside, how about the more concrete end of it?

Pop culture has glommed on to the concept of the prenuptial agreement - a contract entered into at marriage time that limits resource division if there’s a divorce or separation - and there’s the significantly less common postnuptial agreement where such a contract is entered into between the spouses after marriage (sometimes as a part of defining how a separation is going to work.) These contracts can theoretically specify what assets are separate, how property will be divided upon divorce, and even agree on spousal support ahead of time. This can protect your pre-marital assets and clarify financial expectations.

This is … often less helpful than you’d think.

You don’t want to always want to be trying to out-bluff your spouse

First, it’s rather tremendously disruptive to tell your bride-to-be that she needs to sign off on an agreement before marriage that basically implies she’s a mercenary. You’re only really likely to have any social leverage allowing you to do this if the money in question isn’t actually yours: if you’re inheriting it, and you can present it as “this isn’t what I’m looking for honey, this is what that the family insists on for me to be able to inherit the estate and the big bucks, but if you say no I’ll still marry you and we can elope and get married by Elvis in Las Vegas, it doesn’t matter if we live in poverty and eat ramen together as long as I have you, that’s more important than living in luxury, but if you do agree then of course I’ll be able to take care of you and the kids in a grand lifestyle.” (If she says yes and you’re actually up for it, you can always put your money in a trust and go backpacking across the country with her, then reinvent your lifestyle at the homestead level - but really, do have that conversation first - because YOU may be the one who gets driven crazy by this and your new Mormon tradwife may think the quaint little farmhouse and sewing machine lifestyle is peachy.)

Second, and probably more important: that really only works for assets you bring into the marriage, at least in most (community property) states. If you make a good annual income after you are married (from a single high paying job, a good bonus program, profit sharing, job-stacking, stock options, restricted stock units, dividends, or the like), that’s most likely up for grabs; likewise, if you get rich in some sort of life-changing-wealth fashion like selling/IPOing your company or generally even inheriting after you are married, that prenuptual agreement will not likely protect your nest egg and certainly won’t cover whatever level of wealth wasn’t in the original agreement! And, of course, some states are community property law and others aren’t, so precisely where you get separated might be critically important.

I mean, the lawyers will fight about it, and about child support, and anything else they can - generally, lawyers are paid by the hour, so they’ll be happy the more that either side would like to dispute. But in general, you shouldn’t count on “just have good lawyers” as the answer here, because if your spouse is out to ransack you, they will also have figured out that they should have good lawyers, and they’ll be spending from the same bank account.

Switzerland is lovely, if rather expensive, to visit. But it’s much less the place to stash your cash (anymore) than pop culture made it out to be.

What about the thought that we opened with then: how about hiding your money in Switzerland? That’s … really not going to work. That’s mostly a Cold War era story, so it made good potboilers (or even actual history) back in the day but that mindset is contemporaneous with thinking that the Warsaw Pact is going to cross the Fulda Gap through West Germany, or that you can put yourself through college with the income from an easily obtained part-time job - that era has come and gone.

Even in the days where you might have effectively offshored your wealth into a Swiss bank account, you would have had to be pretty capable about actually concealing your money from your spouse, your accountant, the tax man, and any number of prying eyes - and there’s a lot of interest in busting you if you’re trying any sort of out-and-out tax evasion. But even if you were good at that and had a sufficiently shady accountant and banker… well, the polite way to put that is that Swiss bank accounts are no longer as opaque (or secretive) as they once were due to several changes in international banking laws and regulations over the past few decades. Here's a brief overview:

In 2013, Switzerland partially lifted its bank secrecy for foreign clients, allowing its banks to share information with foreign tax authorities in cases of tax evasion. This was seen as “the end of bank secrecy” and while not completely the case, certainly made it a lot more problematic if you had intentions of stashing money overseas.

Then in 2014, the U.S. passed the Foreign Account Tax Compliance Act (FATCA), requiring foreign financial institutions to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. Switzerland has agreed to comply with FATCA, and in general this basically means Swiss banks just stopped doing business with Americans (seriously, you could have hundreds of millions of dollars and it was not worth the hassle for them - they’d kick you to their US subsidiary out of New York or leave you out in the cold entirely, this even held up international investment funds with US partial ownership.)

Switzerland, like many other countries, has adopted the Automatic Exchange of Information (AEOI) standard. Since 2018, Swiss banks are required to automatically share account information with the tax authorities of the account holders' home countries if those countries have agreements in place. This significantly reduces the secrecy of Swiss bank accounts for tax purposes. That may not impact you from a asset protection standpoint, but it does mean it’s very hard to actually conceal the existence of an asset.

Beyond that, various legal reforms in Switzerland have also aimed at combating money laundering, tax evasion, and terrorism financing, which includes stricter oversight and transparency requirements for banks. Credit Suisse was still fairly cavalier for a while, but they are notably a smoking crater in the ground these days, so don’t get any bright ideas - UBS bought what remains of Credit Suisse and UBS plays by the rules.

However, while the secrecy around Swiss bank accounts has diminished, there still are a lot of merits to banking in Switzerland if you can navigate all the necessary processes required to do so.