42_trust.html

<title>Why I gave away my company to charity </title>







<p>
Two friends were at a party held at the mansion of a billionaire.  One said, “Wow! Look at this place! This guy has everything!”  The other said, “Yes, but <strong>I have something he'll never have: enough.</strong>”
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When I <a href="http://sivers.org/done">decided to sell my company</a> in 2008, I already had enough.
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I live simply.  I hate waste and excess.  I have a good apartment, a good laptop, and a few other basics.  But the less I own, the happier I am.  The lack of possessions gives me the priceless freedom to live anywhere anytime.
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Having too much money can be harmful.  It throws off perspective.  It makes people do stupid things like buy “extra” cars or houses they don't use - or upgrade to first class for “only” $10,000 so they can be a little more comfortable for a few hours.
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So <strong>I didn't need or even want the money from the sale of the company</strong>.  I just wanted to make sure I had enough for a simple comfortable life.  <strong>The rest should go to music education</strong>, since that's what made <a href="http://sivers.org/kimo">such a difference</a> in my life.
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So I found a great way to do this.  <strong>I created a <a href="http://en.wikipedia.org/wiki/Charitable_remainder_unitrust">charitable trust</a></strong> called the “Independent Musicians Charitable Remainder Unitrust.”  When I die, <strong>all of its assets will go to music education</strong>.  But while I'm alive, it pays out 5% of its value per year to me.
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<em>(Note: 5% is the <a href="http://en.wikipedia.org/wiki/Charitable_remainder_unitrust">minimum allowed</a> by law. It's still too much. I would have preferred 1%, but oh well. I'm free to use it to start new businesses to help people, or whatever.)</em>
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A few months before the sale, <strong>I transferred the ownership of CD Baby and HostBaby, all the intellectual property like trademarks and software, into the trust</strong>.
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It was irreversibly and irrevokably gone. It was no longer mine. It all belonged to the charitable trust.
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Then, <strong>when <a href="http://sivers.org/bye-bye-baby">Disc Makers bought it</a>, they bought it not from me but from the trust, turning it into $22 million cash to benefit music education</strong>.
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So instead of me selling the company - (getting taxed on the income, and giving what's left to charity) - that move of giving away the company to charity then having the charity sell it saved about $5 million in taxes.  (That means $5 million more going to music education.)
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Also, the move of giving it away into a trust now - instead of holding on to it until I die - means its investments get to grow and compound tax-free for life, which again means more goes to musicians in the end.
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I'm only writing this article because many people have asked why I gave it away, so I thought I'd write my long explanation once and for all.
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It's not that I'm altruistic.  I'm sacrificing nothing.  I've just learned what makes me happy.  And doing it this way made me the happiest.
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I get the <strong>deeper happiness</strong> of knowing the lucky streak I've had in my life will benefit tons of people - not just me.
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I get the <strong>pride</strong> of knowing I did something irreversibly smart before I could change my mind.
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I get the <strong>safety</strong> of knowing I won't be the target of a frivolous lawsuit, since I have very little net worth.
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I get the unburdened <strong>freedom</strong> of having it out of my hands so I can't do something stupid.
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But most of all, I get the constant priceless reminder that I have <strong>enough</strong>.
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<img src="http://sivers.org/images/bestthings.jpg" width="500" height="375" alt="best things in life aren't things" />