This post is part of a mini-series on the invisibilized power of trusts in modern financial capitalism. Read the rests of the posts here.
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One common critique of trust law is that it exacerbates wealth inequality by creating layers of financial secrecy for families with substantial assets. By obscuring asset ownership through baroque legal vehicles invented by the “wealth defense industry,” elite families are able to preserve their wealth by avoiding financial obligations, most notably tax obligations. As I’ve written in these pages before, “if the money is hard to find, it is hard to tax, just as it is hard to divide during a divorce.”
Nevertheless, there is another, complementary, way of linking trust law and inequality, which is to look at how asset-protection trusts settle within the built environment and, hiding in plain sight, produce visible effects on the landscape. In other words, the financial secrecy that asset-protection trusts afford to high-wealth families produces visible, mappable results—rendering clear to even casual observers the direct relationship between trusts and inequality, wealth management and poverty governance.
Whose Shore is Offshore?
Trusts are ubiquitous in traditional offshore jurisdictions, as well as in new American “onshore offshore” jurisdictions, from the Cayman Islands to Wyoming and Nevada. As “offshore” locations, these sandy shores and prairies are defined by their distance from an imagined main street of banking institutions. But what is onshore and what is offshore is, of course, a matter of perspective and a prioritization of both geographies and communities. And this prioritization has tangible colonial and postcolonial effects (as does trust law writ large) on local families and communities, extractive effects that appear when we look not at the financial institutions themselves but at the actual daily lives of those who live and work in these jurisdictions, the local “onshore” communities.
Scholars stake out different positions on the benefits of offshore finance to the local communities, and the picture varies by jurisdiction. However, the benefits that supposedly accrue to these “treasure islands” through tourism and tax revenue do not always materialize, and industries that pre-date the arrival of financial services are crowded out. This is equally true in the new American “onshore offshore” jurisdictions. In Wyoming, for example, trust companies managed around $31 billion in assets in 2022, but because Wyoming has no corporate (or personal income) tax, the financial services boom does not benefit residents through tax revenue. Likewise, in South Dakota, despite an increase in the total assets held in trust in that state from $57.3bn to $355.2bn over the ten-year period between 2010 to 2020, not a penny of state tax revenue resulted. Furthermore, benefits that are supposed to come in the form of job creation and money spent by financial services employees in the local economy are also a mixed bag.
Wealth, consequently, is funneled in and out without reaching the local families and communities in meaningful ways. Schools and public benefits programs receive little funding; low-income families face housing precarity (in Wyoming and South Dakota these families are predominantly from indigenous and immigrant communities); and the most highly remunerated jobs in the financial services jobs go to out-of-state professionals along with some in-state professionals who were already within top income brackets – another example of billionaire colonialism.
Parking Money on Park Avenue
Outside of the financial secrecy jurisdictions, connective and extractive financial relationships between wealth and financial precarity can also be seen in the major cities, or what Rowland Atkinson calls “alpha cities.” New York and London, where there is a tremendous market for ultra-high-end real estate purchases, demonstrate the critical role of trusts in facilitating the purchase of high-end real estate, as well as in providing financial privacy.
In the Time Warner Residences in New York, for example, a report from The New York Times found that “a majority of owners have taken steps to keep their identities hidden, registering condos in trusts, limited liability companies or other entities that shield their names.” In London, a Financial Times report uncovered that £122 billion of luxury real estate was owned by corporate entities or trusts located in secrecy jurisdictions. As Atkinson writes, “[w]alk down any residential street in Westminster… and you can be confident that, on average, every tenth home that you pass is owned by an offshore company.”
These luxury apartments, which sit empty most of the time, are problematic not only because of the mode of purchase but the impacts that such wealth management strategies have on the surrounding neighborhoods. In one study of luxury real estate in Boston, the authors found that twelve of the highest-priced luxury developments built during 2008-2018 had an average unit price of $3M and that over 35% of the units were purchased by trusts or LLCs. Meanwhile, in 2015, “not one single home mortgage loan was issued for African American and Latino families in the Seaport District and the Fenway, two Boston neighborhoods with thousands of new luxury housing units.” Relatedly, studies have revealed that “[l]ocation – including proximity to high-end development – also affects price changes…. it’s the poor neighborhoods bordering rich ones that suffer the largest rent increases.”
Luxury properties, “safety deposit boxes in the sky,” sit vacant while driving up prices in adjacent areas. And luxury real estate, as well as the trusts that purchase such properties, serve as mechanisms to compound the fortunes of elite families, further enabling them to segregate themselves from public spaces and obligations and creating new forms of place-based inequality.
Taking to the Sea
Finally, after securing a status residence, many ultra-rich families and individuals also use their trusts to purchase elite necessities like private jets or yachts. Unsurprisingly, fringe trust companies offer a range of private banking services designed specifically for this purpose. The Wilmington Trust website, for instance, has prominently placed information about “strategic approaches” to buying a yacht. Yacht companies themselves also helpfully address the question of “Should your Yacht Be in a Trust?” And airplane financing and purchase is presented in the same way (along with materials about how to navigate FAA regulations).
That the ultra-rich are adopting these trust-based strategies is evident. While it is public knowledge that Roman Abramovich owns six yachts worth at least $1 billion, previously undisclosed records have recently revealed that he owns at least 10 more yachts and vessels through offshore companies and trusts. Similarly, Bernard Arnault, one of the world’s richest men, owns a superyacht named Symphony through a Maltese-registered company. These superyachts, similar to the one that David Geffen owns, have amenities like a double-height cinema, spas and salons, onboard swimming pools, and full-time staffs of up to fifty people. When it comes to private jets, as one investigative reporter found, the Bank of Utah has managed airplane trusts containing the private jets of Russian oligarchs.
While these dirty luxuries generally operate in secrecy – traveling through isolated waters and private airports – the harmful marks that they leave in their wake have been well-documented. An Oxfam report from October 2024 found that private jets and superyachts were some of the biggest producers of toxic emissions. Elon Musk owns at least two private jets, which together “produce 5,497 tonnes of CO2 per year. This is the equivalent of 834 years’ worth of emissions for the average person in the world, or 5,437 years’ worth for someone in the global poorest 50%.” Superyachts are even worse. Oxfam reported that 23 superyachts owned by 18 billionaires averaged an annual carbon footprint equal to more than three times the emissions of the billionaires’ private jets. Because of these “unequal emissions,” temperatures rise, climate events increase, and the families who deal with the fallout are those living closest to the margin of precarity.
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Trusts, of course, are not the only “wealth management” mechanism available to help shield elite assets from financial obligations and allow the ultra-rich to isolate themselves, financially and geographically. Trusts are indeed only one piece of a typically complex puzzle that includes LLCs, corporate entities, private foundations, and family offices. Nevertheless, trusts are a ubiquitous wealth planning tool that enables personal financial privacy while producing seismic and very public forms of inequality.
