[The characters, places, organizations, events, and the like appearing in this work have no relation whatsoever to reality, and are fictitious creations born of the author’s imagination.]
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June 13, 1979. Devenger The Manor.
As soon as the meeting ended, Henry returned to his room and threw himself into the office of the master suite. While scribbling down his future course of action in the notebook he always carried, his gaze flicked toward the status window he had left floating in one corner of the air.
‘I really hope my hypothesis is right.’
Every item discussed at the meeting had been important. From establishing the family office to expanding the liquor business, they were all matters on which the future of the family depended. But for Henry personally, what was even more urgent was figuring out how to acquire points.
That was also why, despite receiving looks from Gilberto as if he had gone mad, he had insisted on taking a $100,000 dividend under the absurd excuse of, “New York City is in trouble, so I should contribute at least a small amount!”
This shameless stubbornness was the final piece needed to verify the hypothesis Henry had been agonizing over since the earliest days of his possession: “Points are proportional to taxes actually paid.”
‘The 125 points I had at first. Where on earth did such an awkward number come from?’
Whenever he had time while grasping the state of the family, Henry had combed through old ledgers with a fine-toothed comb. And the number he found there was the inheritance tax on the trust assets passed down from his maternal family.
At the time, the IRS examiners had appraised the total assets of the [Devenger-Sellsberg Trust] with knife-like precision at $5,116,400. Once the brutal progressive tax rates of 1979 were applied, an inheritance tax bill of $2.5 million—enough to make one’s vision go dark—came flying in.
The problem was liquidity. The cash inside the maternal family trust amounted to only $1.25 million, and the cash under Henry’s personal name was pitifully small. At this rate, he would have had to apply for a deferment on paying the inheritance tax or use the trust assets as collateral for a bank loan, cosplaying as a debtor while being tormented by the bank’s interest game.
But the talents within the family resolved it in another way. On the surface it was a loan, but in reality it was a method of absorbing assets. The contract was structured so that the moment the maternal trust failed to repay the loan, ownership of its shares would transfer to the family trust. In the end, Henry borrowed money from the Devenger family trust to pay his personal taxes in full, avoided gift tax, and in the process, the shares of [New York Time] naturally moved from Henry’s left hand to his right hand and into the pocket of the family trust.
‘The result of that complicated inheritance tax matter I handled in a daze before the possession was exactly this.’
Henry wrote the numbers down in his notebook.
[Total inheritance tax: $2.5 million]
-Family trust payment on his behalf (loan): $1.25 million
-Personal cash payment (actual): $1.25 million
This was the crux of it. The money lent by the family was, in the end, no different from debt, but the $1.25 million in cash originally held by the maternal trust had been actual taxes Henry paid entirely under his own name.
‘If the cash in my possession was converted at 1 point per $10,000, then the $1.25 million paid as inheritance tax becomes exactly 125 points. It fits perfectly.’
That was why Henry had stubbornly pushed through the dividend, even under the cold stares of the family elders.
‘Ah, let’s just pay taxes once and see! This is the most important thing to me right now!’
A $100,000 dividend. The core of this gamble was to confirm whether the amount taken from it in taxes would be converted into points.
‘If the real way to gain points is taxes paid under my personal name, then this is one hell of a headache...’
In truth, using trusts to grow assets in America was practically a sanctuary. First of all, trusts had no disclosure obligation. If countless sub-trusts and offshore corporations were woven like a spiderweb beneath a massive family trust, there was no way for outsiders to grasp their true substance. No trust disclosed its assets or accounting books like a listed company, so outsiders could not identify them. If one did not step directly to the forefront of management and only carried out equity investments, anonymity was close to perfect. Devenger A Trust, B Trust. If their names were all made different so they seemed unrelated, and investments were conducted through an uncountable number of sub-trusts, there was no way for anyone outside the people operating them to understand it all at once.
On top of that, the tax benefits a trust enjoyed when using this method were overwhelming. The magic of dispersing income across dozens of trusts, trapping it within low tax brackets*, transferring assets across generations, and leisurely slipping through the net of inheritance tax. That was the official formula by which conglomerate families passed down wealth.
[Low tax bracket = a sweet zone where, until profits exceed a certain line, the taxes taken by the state are applied at a “shocking discount.” It is generally created for the purpose of helping small and medium-sized businesses survive, but if trusts are split up and operated separately, this can apply to them as well.]
And there was one decisive blow still remaining. In 1986, the State of Delaware was scheduled to abolish the “Rule Against Perpetuities (RAP),” which limited the valid duration of trusts.
The “Rule Against Perpetuities.” Put simply, it was a legal expiration date stating, “You cannot keep money locked in a trust forever.” Under American common law, a trust had to be dissolved 21 years after the death of the last beneficiary. At that point, the assets poured into the market, generating enormous taxes, and there were countless cases of prestigious families going bankrupt because they could not endure it. That was also how numerous old-money families vanished and were forgotten.
In other words, it was a shackle imposed by the state to prevent an eternal monopoly of wealth. No matter how great a family was, after roughly a hundred years, it had to stand before the judgment seat of taxation.
But offshore trust hubs like the Bahamas—tax havens—permitted perpetual trusts first, sucking in the capital of the world’s wealthy like a black hole. When even funds from the American mainland began flowing out like an ebbing tide, a flustered Delaware hurriedly cut off the old shackles that had bound the lifespan of trusts and jumped into the competition for “Perpetual Trusts.” From then on, the story changed. A trust would no longer be a hundred-year contract, but a truly immortal vault that would continue multiplying until America itself collapsed!
The empire built now would not be divided or torn apart even as generations passed; under the name Devenger alone, it would remain an invincible monster that grew forever.
Henry knew this well through his knowledge from his previous life, and to Henry, who had the possibility of enjoying eternal life through his clones, property free from inheritance tax was nothing less than a killing move.
‘The reason no inheritance tax came out when I inherited the paternal trust was also this principle. Later, once the law changes, if I simply move all my assets into a perpetual trust under the family name, I’ll never pay even a single cent of inheritance tax again. Of course, I’ll need to make some charitable donations tactfully.’
Henry had already planned out in his head the legal technique of pouring the assets of existing trusts into new trusts with more favorable terms—the so-called “Decanting*.”
[Decanting = a legal technique of pouring assets tied up in an existing trust (First Trust) into a new trust (Second Trust) with more favorable or modern terms, like transferring wine into a decanter.]
‘As long as I don’t omit GST settings for generation-skipping transfers like my mother’s trust did, or manage it sloppily mixed together with personal assets, there’s no reason to get hit by a tax bomb. If it’s designed properly from the beginning, denying legal ownership is nothing difficult.’
The decisive reason such trusts were exempt from inheritance tax was that ownership of the assets belonged not to Henry, but to the trust itself. Henry received distributions as a beneficiary and manipulated the assets as chairman of the investment committee and as Protector, but legally, he was not the owner. The logic was that only management rights and control rights had been inherited and passed down, not the property itself.
‘I inherited no property. It’s just that a managerial title was transferred to me, you see?’
It sounded like wordplay, but this was the magic incantation by which America’s conglomerate families neutralized inheritance tax. A perpetual trust took this one step further. It went beyond a generation-skipping trust (GST) that said, “The property will go to a grandson I believe will be born in the future, and the son should just act as manager. We’re skipping that bastard.” It justified the claim, “This is simply family property; my descendants only manage it,” and accordingly, there was no inheritance tax. It was nothing less than a dynasty trust.
Knowing this, Henry’s original goal had been clear. Use the robust family trust as a shield and expose only assets far smaller than the reality. Outwardly, he would be the head of a venerable conglomerate family, but behind the scenes, he would become the hidden mastermind manipulating the American economy. But if the only way to gain points was paying taxes under his personal name, then all those designs would become tangled before they even began. No, he would have to revise the plans he had painstakingly built up until now from the ground up.
‘But I can’t just throw living cash into extra taxes as if I’m making a donation. My assets are all tied up in trusts, so paying taxes under my personal name would be sheer madness.’
America was a country where even the public regarded tax avoidance as a virtue. For the rich, tax avoidance was a passive skill as natural as breathing. People around them who failed at it were liable to be treated like illiterate fools.
If Henry stepped forward saying he would pay more taxes, the IRS might dance for joy, but in society, the backbiting would certainly explode: “The young head of Devenger must have lost his mind.” Of course, before that, the elites of the family office and the think tank would foam at the mouth opposing him.
‘In the end, if I want to naturally pay taxes under my personal name without arousing suspicion from those around me, are there only two methods?’
One was to grow assets within the trust, receive dividends, and gradually build personal assets while paying taxes. The other was to directly operate personal property from the beginning and honestly(?) get beaten down by taxes.
If the source of points was not taxes, Henry would naturally have chosen the first option. He had intended to set his personal dividends at only the minimum needed to maintain his dignity—meal expenses, living costs, and the like—and bury everything else in the darkness of the trust.
Americans might point fingers for now at the extravagance of a self-made entrepreneur who had built the American Dream, and only applaud it in the future, but they wore particularly cold tinted glasses when looking at the extravagance of inherited wealth born with a silver spoon in its mouth. Legendary families like Rockefeller, Carnegie, and Morgan had not hidden behind trusts and foundations for nothing. The envy of the public became votes for politicians, and soon enough it was liable to return as the IRS’s microscope and the guillotine called regulation.
‘But if I have to keep taking dividends because of points? Then there’s no meaning in hiding behind the scenes.’
If his personal assets steadily swelled every year through dividend income, there was no way to avoid the public’s cold stare. It would be perfect for drawing arrows of public opinion: “Just how much has that family piled up in its trust for the dividends alone to look like that?” or “If he can rank among the world’s richest from dividends alone, he needs to be investigated immediately!”
In the end, there remained the atrocious condition of having to use the poor(?) personal assets under his name—only a single One Times Square building and $10,000 in cash—solely for “tax payment purposes” in order to accumulate points. Half of Henry wanted the identity of points to be taxes, and half of him wanted it not to be.
‘If taxes paid under the trust’s name were recognized as points too, I’d pay them with a smile...’
His mind grew complicated. If his hypothesis was correct, he would have to establish a separate investment company under his personal name, starting with an investment team. Fundraising was also a problem. If he pulled money from the trust as a loan, his neck would be sent flying by the IRS for violating self-dealing*, and even if he formed a fund, it would be difficult to avoid the trap of self-dealing.
[Self-Dealing = “embezzlement disguised as legality,” where a manager pretends to manage someone else’s money, but as it turns out, contracts with himself or his own company and pockets money under the table.]
‘If the family office, which is operated with trust money, gives even the slightest help to my personally owned company, that’ll also mean a bomb of fines right away. This is seriously troublesome.’
Just then, as he kept glancing at the status window while contemplating various detours just in case, Henry’s eyes flew wide open. The point number had finally begun to fluctuate.
“It changed! Uh, wait a second... Surely, no way!?”
Henry immediately snatched up the receiver.
“Gilberto! Put Gilberto on right now!”
A moment later, Gilberto’s bewildered voice came through the receiver, unable to understand what was going on. Henry asked for confirmation in a trembling voice.
“Boss, what urgent matter is there at this hour?”
“Gilberto, that $100,000 dividend we talked about earlier. Was it carried out?”
“Ah, yes. We just paid this quarter’s estimated taxes and completed all of your tax filings, Boss.”
Henry swallowed dryly and asked the main question.
“The taxes... Exactly how much went out in taxes on my dividend?”
“As you requested, we did not implement any separate tax-saving structure, so the highest tax rate was applied. Including federal and state taxes, it was exactly $51,000. After that, the amount remaining in your Chait Bank account is—”
“Ah, that’s enough. I understand for now. I have something to think about, so I’ll hang up. Good work.”
Henry set the receiver down as if cutting off Gilberto mid-sentence. Then he stared with trembling eyes at the status window floating in the air.
The money the family trust had to pay in taxes for this quarter was a staggering $3.8 million. But the status window did not so much as blink at that enormous sum. Only the “$51,000” withdrawn from Henry’s personal account had been converted into numbers.
[Remaining Points: 5]
‘...It really was true. 1 point per $10,000. And the system casually throws away the decimal point.’
Henry let out a hollow laugh. He had become the head of a conglomerate family who handled the family’s enormous wealth, yet the fact that he had to have living cash torn from his own pocket as taxes in order to obtain system points was absurd.
‘Even if the family trust pays millions of dollars, my points are zero, and when $50,000 goes out of my allowance, I get a measly 5 points? Isn’t this practically a poison pill?’
A huge crack had formed in his plan to hide behind the invincible shield called a trust and increase his wealth. In order to earn points, raise his stats, and create clones, he ironically had no choice but to become the world’s most “honest taxpayer” and grow his personal fortune.