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Sadly, Paul Allen has died after a protracted battle with cancer.  Allen was a shrewd financier whose estate, remarkably, is unlikely will owe the IRS any of his $20 billion estate.  Now that is an estate plan that works!!

In the 1980s, when Paul Allen learned he was facing a major health crisis, he left his lucrative position with Microsoft with a plan of putting his financial house in order. As it turns out, he was able to live with his cancer for many more years thus allowing for the creation of a long-term plan.

After retirement, Allen spent his life enjoying in a diversity of interests, everything from real estate development, to ownership of the Seattle Seahawks. Funding these ventures was his financial holding company: Vulcan Inc.  This company virtually ran his investments, his sports teams and owned his collection of high-tech toys. Vulcan became his alter ego which means remains virtually impossible to separate his personal from his corporate holdings without dire consequences on the distribution of these assets.  He made sure upon inception that Vulcan operated with or without his instructions.

Vulcan was an impressive endeavor, with their investment of billions of dollars serving to reshape Seattle.  In addition to local sports teams, the company owns everything from museums to a local movie theater.

Allen was a lifelong bachelor with only a sister and her children as his family. All of the family works for Vulcan in some capacity although his sister’s youngest child is still in school.  Whether any of his family will ever own the company in their own right is unknown.

The real mystery is how he set up his holding company and was able to keep the IRS out of the beneficiary column. During his lifetime, Allen maintained full ownership and control of the company and the private equity structure of the firm ensures its privacy.

It should be noted that Allen had signed the giving pledge, where the world’s billionaires promise to give most of their wealth away. It is important to note, however, that by handing formal ownership of his assets to the holding company he fulfilled that commitment. In other words, he had his cake and, well, you know the rest. That, however, is likely all we will ever know about this very effective, albeit private plan.

ReferenceWealth Advisor (October 22, 2018) “Paul Allen Had A $20 Billion Estate Plan (The IRS Can’t Touch)”

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