Facebook’s recent IPO made instant billionaires out of all four of the original Facebook founders.
You’ve likely heard of Mark Zuckerberg. He’s the main founder and current CEO of Facebook.
At the tender age of 28, his net worth soared to $19 billion after Facebook’s IPO in May.
Eduardo Saverin is one of the lesser-known founders or Facebook with less than a 5% stake ... but he’s still worth an estimated $3 billion dollars after Facebook’s IPO.
In case you missed the news ... last September Eduardo did what many feel is the unforgivable sin.
He renounced his United States citizenship.
The IRS revealed Eduardo’s decision in April 2012. The public outcry was immediate.
Angry citizens flooded blogs and message boards calling Eduardo a traitor. They accused him of being unpatriotic.
Maybe you’re angry at him too.
After all, a young kid makes billions of dollars, benefits from the American way of life, and then renounces his citizenship?
Sounds pretty selfish. Greedy. Un-American.
“Running away to avoid paying taxes?” they complain. “Shame on him!”
But once you hear Eduardo’s backstory and understand his family history, you may change your mind about his actions.
And even if you don’t change your mind about Eduardo, you’ll definitely learn an important lesson about your own “sovereignty”...
...and how it could mean the difference between the Poorhouse and Easy Street for you and your own family in the coming financial crisis.
The First Flight Was to Protect the Family’s Life
To understand Eduardo Saverin’s decision, you have to go back two generations.
His grandfather, Eugênio Saverin, was a hard working and industrious entrepreneur. But being a Jew living in Germany during the 1940’s didn’t mix well.
Rather than face concentration camps, Eugênio snuck his family out of Hitler’s reach and resettled in São Paulo, Brazil.
Eugênio brought nothing with him except his entrepreneurial spirit.
But that was enough.
By 1952, he founded the kidswear brand “Tip Top,” which went on to become the most popular brand of children’s clothing in Brazil.
The Second Flight Was to Protect the Family’s Fortune
Eugênio had a son, Roberto, who grew into the family business.
Using the entrepreneurial spirit he inherited from his father, Roberto grew Tip Top into a successful franchise of retail chain stores in Brazil.
He increased the family’s wealth by investing in real estate and in some of Brazil’s vast natural resources.
But in 1993, Roberto packed up his bags, took his wife and child (Eduardo) and fled the country.
He did it because of the economic chaos brewing in Brazil at that time. Then President Fernando Collor had just frozen all savings accounts.
Roberto knew more capital controls were coming.
Rather than hand his family’s fortune over to people who hadn’t worked for it, Roberto migrated to the United States. He and his family started a new life in Miami, Florida.
Eduardo Saverin was 11 years old at the time. A few years later he and his family went through the legal process of becoming U.S. citizens.
Up until September, 2011, Eduardo maintained a dual U.S. citizenship along with his native Brazilian citizenship.
(Here’s an interesting side note. Many internet sites claim that Eduardo’s family fled to the U.S. because young Eduardo’s name was found on a list of possible kidnapping targets due to his family’s wealth.
The story spread like wildfire after the book "Billionaires by Chance" presented it as fact.
While it’s a compelling story, we did a little more digging to find out if it was true. What we found was a recent interview (June 2012), given in Portuguese for the Brazilian news magazine, Veja.
In that interview, Eduardo explains that the names of his father and grandfather had been found on a kidnapping list, but the family only found out about it years after moving to the U.S.
(Just thought you’d like to know the real story.)
How America Made Eduardo Rich
Eduardo spent his teenage years growing up in the Miami area. He was a top student and a chess prodigy (The International Chess Magazine featured him after he beat a chess grandmaster at the age of 13).
He enrolled at Harvard University in 2003 to study economics. That’s where he met Zuckerberg and became the first investor in Facebook.
The rest is history. Facebook has gone on to become the most popular website on the planet. During its rise in popularity, Eduardo watched his own net worth skyrocket into the multi-billion dollar stratosphere.
He’s now one of the top 100 richest people in the world.
So it’s easy to see why people are mad. It seems obvious that Eduardo gave up his U.S. citizenship to avoid paying taxes on his newly acquired Facebook fortune.
That’s not entirely true, though.
He’s been living in Singapore since 2009 and loves it there. It’s the place he’d like to make into his new home.
The Third Flight Was to Protect the Family’s Legacy
And that’s why many tax experts think Eduardo’s strategy has nothing to do with avoiding taxes ... at least not right now.
You see, he’s NOT getting off scot-free. The U.S. requires everyone who renounces his or her citizenship to pay a 15% exit tax.
That means Eduardo will be paying hundreds of millions of dollars in taxes to the U.S. – even if he doesn’t cash in his Facebook stock.
Here’s how Eduardo describes it in his Brazilian interview (translated from the Portuguese):
“The decision [to denounce his U.S. citizenship] was strictly based on my interest in living and working in Singapore. I am obligated and I will pay hundreds of millions of dollars in taxes to the American government. I already paid and I will keep paying whatever taxes I owe based on my time as a U.S. citizen.”
Paying the exit tax now will likely trigger a bigger financial hit on Saverin than if he had kept his U.S. citizenship.
You see, according to United States law, you don’t pay taxes on capital gains until you cash out. Many wealthy people simply borrow against their unrealized capital gains and live tax-free until after their death.
But, once you die, your estate can get hit with a 35% inheritance tax.
Tax experts are guessing that Eduardo would like to pay his exit tax now rather than give away a third of his fortune after his death.
They feel Saverin is using his family history of global mobility to put himself in the best situation to carry on the family legacy.
It’s hard to say, but that seems to be Eduardo’s sentiment. In the Veja interview he said: “I was born in Brazil, I was an American citizen for about 10 years. Now I live in Singapore. I’ve always thought of myself as a global citizen.”
Like him or hate him, you have to admit he’s got a fascinating family history.
And as a mobile, sovereign, global citizen, Eduardo Saverin is simply carrying on a family tradition: he’s taking care of himself, his fortune and his family legacy. All at once.
How This Relates to You
Listen, you don’t have to renounce your citizenship to protect your wealth. And you don’t need to be a billionaire either. Almost anyone can diversify his or her assets overseas.
This is NOT about evading taxes.
Lesson 5 - How and Why I'm Diversifying My Assets Overseas in The Elevation Group member site lists four reasons for investing overseas:
1. Diversification
2. Privacy
3. Asset protection
4. Tax efficiency
You can start small now by protecting just a portion of your assets overseas.
And if you want to protect more, Rob Wolmer can help. He’s the lawyer from Lesson 5 who specializes in protecting your wealth by diversifying you internationally.
He can tailor-fit a plan based on your specific needs. You’ll find his contact info in Lesson 5 ... or in the EVG Rolodex under the Resources tab. Mr. Wolmer's contact info at the bottom of the page under “International Investing.”
Setting up foreign accounts and tax entities can make a huge difference to your bottom line ... if you structure it right. But if you do it wrong, it can cost you a fortune.
Whether you’ve already built your fortune or are just getting started ... this is information you don’t want to miss.
Some of you may have dismissed this strategy thinking you don’t have enough money to make it useful.
Don’t make that mistake.
Even if you can’t use the information now, it’s part of your education that will help you start thinking like the wealthy. It may also become very useful for you down the road.
Click Here to review this strategy as outlined in your member’s area.
This article is reprinted courtesy of The Elevation Group. To find out more, please visit their website at:http://theelevationgroup.com
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