For three decades, the founder’s wealth had consisted largely of the company he had built. He knew its factories, customers, and executives. Nearly every important financial decision in his life came back to the business.
Then he sold it. A single operating entity became a half-billion dollars in liquid wealth — and created an entirely new set of problems.
“His first question was: Now what?” recalls Sharon L. Klein, president of family wealth at Wilmington Trust, a prominent custodian of multigenerational wealth, describing the predicament the client faced after liquidating his firm.
How should the money be invested? How much should pass to his children? What if one divorced or was sued? When should grandchildren be told how rich they were? Above all, how could the fortune grow and survive for generations?
His advisers proposed an architecture: A trust model that could cover all the different branches of the family. Limited-liability companies (LLCs) to hold particular assets, such as real estate, a manufacturing company, and a private equity partnership, while reducing taxes to a minimum and protecting clients from lawsuits. A family office to coordinate lawyers, accountants, and investment managers. A professional trustee to administer the trust and control distributions to beneficiaries.
The structures created to make all that possible have transformed American wealth management. They have also produced one of the great ironies of modern finance.
For two decades, the battle against hidden wealth had a clear target: secret offshore bank accounts. American regulators pressured Swiss banks to reveal account holders, pursued tax havens in the Caribbean, exposed shell-company networks in Panama, and led efforts to build a global system for exchanging financial information.
The campaign was one of the great successes of modern financial regulation. The numbered Swiss account — the enduring symbol of hidden wealth — became an endangered species.
The money is no longer hidden. But the owner often still is. And the place where ownership most often disappears from view is not a tropical island or Alpine banking center, but the United States itself.
Wealth managers increasingly describe the U.S. as the world’s most attractive destination for capital seeking privacy, thanks to powerful trust laws, sophisticated ownership structures, and the protection of American courts.
That shift — from hidden money abroad to hidden ownership in the U.S. — is becoming one of the most consequential and hotly debated developments in global finance. Critics argue it is reshaping capital flows, influencing asset prices, depriving governments of tax revenue, and impeding the growth of more productive new enterprises. And they are rebutted with equal vehemence by defenders of the new trust model.
Trusts and family offices argue that opacity of ownership is an inevitable side effect — rather than the aim — of the new architecture. Their brief is to make their clients’ fortunes last. The proliferation of investment vehicles — private credit, passive and active ETFs, alternative assets, and cryptocurrency, among others — demands different trust strategies. And those strategies must further evolve in reaction to changes in tax laws and regulations.
“Complexity isn’t just an issue for regulators and folks on the outside,” says Lynn Halpern, head of trusts and estates at Bessemer Trust, which oversees over $200 billion in assets for more than 3,000 ultra-wealthy families, foundations, and endowments. “Complexity can plague families who are participants in trust structures as well.”
But critics contend that even if opacity is a byproduct rather than the objective, the new architecture of wealth has made ownership and control increasingly difficult for outsiders to trace.
“There are valid reasons that people don’t want their wealth to be known publicly,” says Anat Admati, an economist and finance professor at Stanford University who focuses on transparency and regulation. “But financial secrecy has become a prominent and highly problematic issue.”
By comparison to more recent wealth management structures for the ultra-rich, the offshore banking bargain of old was simple.
Clients placed money into a discreet Swiss or Caribbean account. In return for confidentiality, they accepted high fees, conservative investment management, and mediocre returns. For clients, the calculation was straightforward: Did the taxes avoided justify the cost of secrecy and the legal risk of discovery?
The U.S. assault on Swiss banking secrecy began in earnest in 2008, when federal prosecutors and the IRS targeted UBS, Switzerland’s largest bank, for helping wealthy Americans conceal offshore accounts. Two years later, Congress enacted the Foreign Account Tax Compliance Act (FATCA), requiring foreign financial institutions to report information on U.S. account holders or face stiff penalties.
The ensuing investigations, settlements, and disclosure agreements did more than expose thousands of secret accounts. They punctured a centuries-old culture of Swiss banking confidentiality and reshaped the global offshore wealth industry.
UBS acquired its longtime Swiss rival Credit Suisse in 2023, only to inherit another scandal involving secret offshore accounts. In May 2025, Credit Suisse admitted conspiring to conceal more than $4 billion in offshore accounts from U.S. authorities and agreed to a settlement exceeding $500 million with the Justice Department. “UBS was not involved in the underlying conduct and has zero tolerance for tax evasion,” UBS declared at the time.
On its website, the bank now warns clients that it is legally obliged to disclose their identities, account balances and other financial information to tax authorities under international reporting agreements.
Yet even as Washington weakened the old Swiss model, the U.S. was emerging as the leading jurisdiction for fortunes seeking privacy, legal protection, and discretion. Today, the Tax Justice Network, a British-based research and advocacy group campaigning for financial transparency, ranks the United States first — meaning worst — on its Financial Secrecy Index.
The money no longer had to disappear into a secret account in Zurich or Geneva. It could be openly invested in stocks, private-equity funds, businesses, and real estate.
Consider a typical modern transaction. A luxury condominium in Miami is purchased through a Delaware limited-liability company owned by a trust established in South Dakota. The funds arrive through regulated financial institutions. The property is recorded in public filings. The transaction is legal and fully integrated into the financial system. Yet identifying the human being behind the structure requires navigating layers of trusts, companies, and jurisdictions.
That is the central paradox of modern financial transparency. Governments have never had more information about financial flows. Banks monitor transactions. Regulators exchange data. Compliance departments have expanded dramatically. International reporting systems have created unprecedented visibility into cross-border accounts. Yet identifying who ultimately controls large pools of wealth remains surprisingly difficult.
Regulators refer to this challenge as “beneficial ownership” — the effort to identify the real people behind trusts, shell companies, private funds, family offices, and other legal entities that fragment ownership. The global push for transparency is led by organizations such as the Financial Action Task Force and enforced in the United States through the Financial Crimes Enforcement Network (FinCEN).
But tracing beneficial ownership can be arduous. After Russian oligarch Suleyman Kerimov was sanctioned in 2018 for alleged money laundering and financial corruption, U.S. government investigators spent years unraveling a web of shell companies, LLCs, and a Delaware trust before establishing that he was the beneficial owner of more than $1 billion in U.S. assets.
Such efforts have become even more difficult under the Trump administration. In March 2025, it exempted U.S. companies and citizens from reporting beneficial ownership information to FinCEN. Critics point out that a foreign investor can easily create a U.S. company that is indistinguishable from a domestically owned business unless investigators trace its beneficial ownership.
The administration “contradicted fifteen years of bipartisan work by Congress to end the scourge of anonymous shell companies,” said Ian Gary, executive director of the FACT Coalition, a nonprofit alliance that advocates for greater financial transparency and stronger anti-money-laundering laws, in a statement following the government's announcement.
Trusts have existed for more than a century. Wilmington Trust — now a subsidiary of the M&T Bank Corporation — was founded in 1903 to manage the growing fortune of the DuPont family. Bessemer Trust was launched in 1907 to administer the financial holdings of the Phipps family.
Both trusts have experienced a dramatic increase in clients and assets under management, especially over the last decade, to accommodate the fast-growing numbers of U.S. and foreign ultra-wealthy families. And those numbers will leap higher over the next two decades as tens of trillions of dollars pass from older generations to younger ones.
According to Wilmington’s Klein, critics focus too much on opacity and tax-savings. “Trust-planning is about so much more,” she says. “It’s about making sure that families are equipped to preserve and steward wealth for many generations.”
Trusts were designed not only to protect wealth from creditors, regulators, and tax collectors, but also from the decisions of the families themselves. Planners must guard against “the enemy within,” explained a 2009 article in the STEP Journal published by the Society of Trust and Estate Practitioners, the international professional association for trust and estate advisers. — “Putting it bluntly,” the article continued, “how can you stop the family from pushing the self-destruct button?”
Such concerns are hardly theoretical. The descendants of the Pritzker family, builders of the Hyatt hotel fortune, became embroiled in years of bitter litigation in the early 2000s after some heirs accused other family members and trustees of mismanaging trusts and diverting hundreds of millions of dollars. The dispute ultimately led to settlements exceeding $1 billion and the dismantling of much of the family’s centralized trust structure.
The Pritzker family’s public unraveling illustrated the very danger that trust professionals had long warned about: Fortunes painstakingly accumulated over generations can be dissipated in a single generation by family conflict as readily as by creditors or governments.
Protecting wealth therefore became only part of the mission. Increasingly, trust lawyers and state legislatures began redesigning trusts, creating new legal tools intended not simply to preserve assets but to improve family governance, adapt to changing circumstances, and insulate fortunes from an expanding array of legal, financial, and personal risks.
“Trusts are extremely versatile and can do a laundry list of tasks that we look to accomplish for a client,” says Justyn Volesko, co-head of Cerity Partners Family Office, an estate and tax planner for ultra-high-net-worth families.
That laundry list has led to a series of trust-related innovations, the most prominent including:
Directed trusts — No single trustee possesses investment, tax, business and family expertise, and instead, responsibilities are divided among specialists;
Silent trusts — The trustee withholds information (or even the existence of the trust) from its beneficiaries until a specific milestone is met, such as a child reaching a certain age;
Non-judicial settlement agreements — This obliges families to resolve disputes privately without lengthy public litigation;
Dynasty trusts — Perhaps the most consequential innovation, dynasty trusts were developed after more than half the states abolished or diluted the Rule Against Perpetuities, thus allowing trusts to preserve family wealth for generations, or, in some jurisdictions, indefinitely;
Decanting — Like pouring wine into a decanter and leaving the sediment behind, decanting allows trustees to transfer assets into a new trust while leaving outdated provisions behind and preserving the trust’s original purpose.
Each innovation addressed a different vulnerability — not only to taxes, creditors, or regulators, but to the unpredictable behavior of trustees, beneficiaries, and future generations themselves.
To critics, however, the same innovations that promised greater flexibility and stronger family governance also made trusts increasingly difficult for outsiders to penetrate.
Brooke Harrington, now an economic sociology professor at Dartmouth College, completed professional training, earned a wealth-management credential, and went on to interview 65 wealth managers in 18 countries over nearly eight years. She then published in 2016 her landmark study, “Capital Without Borders: Wealth Management and the One Percent,” tracing how new structures with multiple underlying corporations can allow assets to be transferred back and forth in a Kafkaesque shell game.
“Through wealth managers’ skillful use of tools such as trusts, foundations, and corporations, the game of ‘now you see it, now you don’t’ can go on almost indefinitely, leaving clients’ wealth to grow untouched by tax authorities, creditors, heirs, and anyone else who might want a piece of the fortune,” writes Harrington
Yet Harrington’s account tells only one side of a more complicated story. To the trustees, family-office advisers, and lawyers who design these structures, the modern trust is forced to constantly evolve.
“Wealth has become more complex,” says Wilmington’s Klein. “So the structures that support wealth have to become more sophisticated.”
That philosophy has reshaped American trust law over the past few decades as states entered an increasingly intense competition to become the nation’s most attractive jurisdiction for trusts, promoting what they describe as the modernization of trust law.
“States that are trying to be the premier trust jurisdiction are always looking at each other to see whether they want to adopt some of the laws that are enacted in other parts of the country,” says Bessemer’s Halpern.
In recent years, South Dakota and Nevada have become favorite trust jurisdictions, overtaking Delaware, a longtime leader in trust law modernization. According to Halpern, Delaware remains attractive for Bessemer because its court system is so experienced in dealing with new trust statutes. But Bessemer also maintains trust companies in Nevada.
Some legal experts fear that as each state seeks to attract more trust business, legislators face powerful incentives to weaken traditional legal restraints. Asset protection is expanded and trust duration extended, increasing privacy and granting greater flexibility — not because those changes necessarily produce better trust law, but because they make the jurisdiction more attractive in an increasingly competitive market.
Mitchell Gans, a Hofstra University law professor who is a leading legal authority on trusts and estates, calls it “a competition to the bottom.”
The debate over modern trust law does not end with family governance or financial privacy. As ever-larger fortunes remain intact across generations and are increasingly shielded from taxes, creditors, and the pressures that once dispersed wealth, economists are debating a broader issue: What happens when trillions of dollars remain under perpetual control?
For Stanford economist Admati, transparency is a prerequisite for healthy capitalism. “When ownership, risk, and control become too difficult to understand, markets become less efficient, regulators become less effective, and accountability suffers,” she says.
But Steven Kaplan, an economist at the University of Chicago Booth School of Business who studies private capital and family wealth, sees little evidence that trusts themselves are distorting markets. Wealthy families, he notes, increasingly invest through family offices that resemble university endowments and pension funds, allocating growing portions of their assets to private equity, venture capital, and other alternative investments.
“They are more patient than retail investors,” he says. “They are long-term capital, like endowments and pension funds.”
Nor is Kaplan persuaded that opacity itself poses a significant market problem. Public-company investments must still be disclosed under securities laws, while private equity and venture capital funds are opaque regardless of whether their investors are billionaires or pension funds.
“What’s the externality in the problem?” he asks. “People talk about opacity and I never understand what the problem is.”
Randall Morck, an economist at the University of Alberta, worries less about transparency than about the long-term circulation of capital. Founder-led companies often outperform because founders combine exceptional vision with strong incentives, he argues. By the third or fourth generation, however, descendants may inherit control without possessing the founder’s entrepreneurial talent.
Economies thrive, Morck says, when capital migrates to better managers and more productive enterprises — a modern echo of Joseph Schumpeter’s theory of creative destruction by the relentless renewal of capitalism through innovation. If trusts become increasingly effective at preserving fortunes indefinitely, that process could slow.
“Countries dominated by inherited wealth can become less dynamic and experience slower economic growth because established fortunes tend to preserve existing assets rather than redirecting capital toward new technologies and more productive businesses,” he says.
When the founder who sold his company for a half-billion dollars first sat down with his advisers, he assumed the challenge was financial.
How could taxes be minimized? Which state offered the best trust laws? Should the trust last for generations? Which legal protections mattered most? Those questions carried him into a world of dynasty trusts, directed trusts, decanting, silent trusts and family offices — a sophisticated architecture built to preserve wealth almost indefinitely.
The larger questions raised by that architecture — whether it makes ownership too opaque, or even alters the flow of capital through the financial markets — are unlikely to weigh on his decisions. His concerns are far more personal. He wants to know whether the fortune he created will strengthen his family or divide it, expand opportunity or diminish ambition, become a blessing or a burden.
“The focus nowadays is much more on preparing the family for the money rather than preparing the money for the family,” says Klein.
