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Derek Sivers and the Art of Enough

brendancahill.io

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Re: Derek Sivers and the Art of Enough

#51

Post by lukego »

marcinzm wrote: post #9
pritovido wrote: post #5

Earlier quoted context omitted.

Derek did not became wealthy. He gave the $22 million dollars he got from selling his company to a fund, and gets over $1000 each month, hardly "wealthy". Derek has worked in a circus and knows how to live cheap enough. He also has lots of friends so he does not need to pay for lots of things. I know people that earn in excess $10.000/month and spend it all or even get into debts.

Wikipedia disagrees: >Derek Sivers transferred ownership of his company to a charitable remainder unitrust for music education, and had the trust sell it to Disc Makers. This agreement requires the trust to pay Sivers 5% of the trust's value annually (hypothetically $1,100,000 pretax, based on a sale price of $22 million as reported by Sivers)[4] until death, while upon death the remainder will ultimately go to chari…

He also acquired a second nationality, renounced US citizenship, and moved to a country that doesn't tax foreign sourced passive income. It's the most extreme example I've seen of planning your whole life around tax optimization.

Understandable though if you've read his book because he's had big problems with the IRS in the past and probably really wanted to show them his "FU money."

Re: Derek Sivers and the Art of Enough

#52

Post by AnIdiotOnTheNet »

antisocial wrote: post #3
chrisblackwell wrote: post #2

Does anyone else find it frustrating when people talk about not working too hard and already having enough, after they have become wealthy?

Wealth is relative, one can be a multimillionaire and still feel inferior to a billionaire. Even in billionaires, there is a ranking game.

Whatever. There's a big difference between feeling inadequate while sitting in your third vacation home and working 40-60 hours a week at a job you hate because if you were doing what you actually wanted to do instead you'd be starving in a ditch somewhere by now.

Re: Derek Sivers and the Art of Enough

#53

Post by [deleted] »

fredsanford wrote: post #37
tw04 wrote: post #23

Earlier quoted context omitted.

So what's the path from living with 4 other people working 40 hours a week at McDonald's to filthy rich? Haven't gone to college, don't have a skill that sets you apart (music/art/etc), and aren't particularly intelligent or scrappy. Seems to me there's literally no path from A to B.

Watch Forrest Gump.

[deleted]

Re: Derek Sivers and the Art of Enough

#54

Post by toast0 »

tkiley wrote: post #20

Derek's writing influenced me quite a bit in the early 2000s. I bootstrapped a software business from zero to near $10m in annualized revenue, and sold it almost half a decade ago. I contributed 100% of my equity into a charitable remainder trust because I learned about that idea from his website. Since then, I've done a lot of "puttering". I'm teaching myself jazz guitar, and I'm currently enrolled in law school. I…

> I would abolish charitable remainder trusts from the tax code.

They've been reducing the scope of new trusts over time. When I looked into it around 2014, a young person couldn't actually make a lifetime income CRUT because the requirement for 5% distribution, and the low interest rates at the time made the actuarial calculations show a zero balance for the charity at the end, but you need to show at least 10% for the charity at the end. A fixed term just doesn't seem as good.

I ended up just paying federal cap gains and CA income on most of it, but I did donate some of the near $0 basis stock to a DAF, and sold a small portion of the equity after moving to WA. Some of that was QSBS which was nice, but having seen the 2001 stock market, leaving it undiversified to save on taxes didn't seem worth it.

Re: Derek Sivers and the Art of Enough

#55

Post by toast0 »

tossmeout wrote: post #45
skrebbel wrote: post #36

Earlier quoted context omitted.

Thanks! I think I get it, but not fully yet: if you'd deplete the entire trust before dying, you'd have paid the same capital gains tax as you would've if you had not made the trust, correct? Just spread out over many years. Why do you feel that it is a loophole if you pay the same, just at different times? (except over what you give to charity, but isn't charity untaxed pretty much across the board in the US?) EDIT:…

I came here to ask the same, @tkiley. It seems the main benefits of your CRUT are (a) deferring your capital gains taxes until later and (b) allowing you to make deductions for charitable giving. But ofc those come at a cost, namely that you don't get paid until later (5% yearly), and that you have to give to charity. Can't anyone just give to charity and get a deduction? And doesn't everyone get taxed later when the…

A is super useful because normally if you sold your stock to diversify, you'd need to pay capital gains then. If you do it in a CRUT, you don't have to pay until later.

You also get an upfront deduction, which could be bigger (or smaller) than what the charity eventually gets.

Re: Derek Sivers and the Art of Enough

#56

Post by toast0 »

antisocial wrote: post #3
chrisblackwell wrote: post #2

Does anyone else find it frustrating when people talk about not working too hard and already having enough, after they have become wealthy?

Wealth is relative, one can be a multimillionaire and still feel inferior to a billionaire. Even in billionaires, there is a ranking game.

Probably the best predictor of if you're going to be upset about people having more than you if you've got $10M is if you're upset about people having more than you when you have $100k.

There will always be people who have cooler stuff than you. If you get upset about it when the cool stuff isn't like stable housing, food security, and decent transportation, the problem isn't lack of funds, it's your attitude.

Re: Derek Sivers and the Art of Enough

#57

Post by chrischattin »

tkiley wrote: post #26
skrebbel wrote: post #24

Earlier quoted context omitted.

Wow cool! For those of us who don't regularly create charitable remainder trusts, what are the tax consequences and why are they unfair?

I had a bunch of equity in a startup that had a cost basis of, essentially, $0. Under normal circumstances, I would have sold this for $millions, and would have paid nearly 20% in capital gains taxes immediately. Instead, I contributed my equity to a CRUT. I paid zero capital gains taxes at that moment, and the CRUT pays zero capital gains taxes ever. Also, because a contribution to the trust is a contribution in par…

I think a big donation like your's to where you think it'll do the most good is far better for society than giving that money to the government.

Re: Derek Sivers and the Art of Enough

#58

Post by tkiley »

tossmeout wrote: post #45
skrebbel wrote: post #36

Earlier quoted context omitted.

Thanks! I think I get it, but not fully yet: if you'd deplete the entire trust before dying, you'd have paid the same capital gains tax as you would've if you had not made the trust, correct? Just spread out over many years. Why do you feel that it is a loophole if you pay the same, just at different times? (except over what you give to charity, but isn't charity untaxed pretty much across the board in the US?) EDIT:…

I came here to ask the same, @tkiley. It seems the main benefits of your CRUT are (a) deferring your capital gains taxes until later and (b) allowing you to make deductions for charitable giving. But ofc those come at a cost, namely that you don't get paid until later (5% yearly), and that you have to give to charity. Can't anyone just give to charity and get a deduction? And doesn't everyone get taxed later when the…

You're right, a lot of the benefit is in deferring taxes to a later date. This deferral is quite valuable when you consider the time value of money and the fact that by spreading out $millions of gains over many decades, I get to put a lot more of the gains in a lower tax bracket, where if it all came in one year, it would basically all be taxed at 20%.

When you combine decades of deferral with the sizeable charitable deduction, it feels like double dipping. If putting equity in the crut only gave me one or the other (deferred taxation or a big deduction) that would seem intuitively fair. But both together? That feels absurd.

Re: Derek Sivers and the Art of Enough

#59

Post by simonebrunozzi »

tkiley wrote: post #26
skrebbel wrote: post #24

Earlier quoted context omitted.

Wow cool! For those of us who don't regularly create charitable remainder trusts, what are the tax consequences and why are they unfair?

I had a bunch of equity in a startup that had a cost basis of, essentially, $0. Under normal circumstances, I would have sold this for $millions, and would have paid nearly 20% in capital gains taxes immediately. Instead, I contributed my equity to a CRUT. I paid zero capital gains taxes at that moment, and the CRUT pays zero capital gains taxes ever. Also, because a contribution to the trust is a contribution in par…

Thanks for this detailed explanation - it matches the conclusions I had after some research into the matter (stimulated by Derek's sharing his experience!).

I don't think you should ever feel guilty or depressed for... not dying! Really. Think that, unlike most cases, when you will eventually die, instead of passing your large fortune to your heirs, it will all go to charity. That's beautiful, and nice, and better than what most people do. Feel proud of it.

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