Monday, April 4, 2011

Billionaire Fidelity Chief Moves Family Trusts Out of Taxachusetts

The Boston Herald reports:
A clandestine company that manages billions for Fidelity Investments chief Ned Johnson and his family has quietly pulled up stakes from Boston’s Financial District, leaving the Bay State behind for New Hampshire and its beneficial trust and tax laws, the Herald has learned.

Crosby Advisors’ relocation of more than 100 workers to new offices in Salem, N.H., last fall — marking a major migration of Boston wealth over the border — went virtually unnoticed except among informed company insiders....

The Crosby operation — which a source said shipped out in October from Fidelity headquarters at 82 Devonshire St. — includes a core group of investment professionals who represent the Johnson “family office.” Ned, whose middle name is Crosby, and daughter Abigail Johnson, a Fidelity president, control assets worth a combined $18.4 billion, according to Forbes’ latest estimate.

“They moved everything except a few people,” said a former Crosby worker who requested anonymity, citing the Johnsons’ private nature.

The Crosby outfit resettled anonymously in a three-story office building with tinted windows on Salem’s Keewaydin Drive, next to a pair of budget motels off Interstate 93, three miles into the Granite State.

Such a move by a family office can save on taxes. For example, New Hampshire doesn’t tax trust income for out-of-state beneficiaries. Family office moves are mainly aimed at gaining flexibility and improving privacy for assets in a business-friendly haven, according to trust law experts interviewed by the Herald.

“The principal reason that families move their trusts to New Hampshire is that the state has the most progressive trust laws in the country,” said Scott Baker, a principal at wealth-strategy firm Perspecta Trust in Hampton, N.H., and head of the New Hampshire Trust Council. “It is possible to set it up where the trust does not have to pay state taxes.”

Crosby’s managing director, Geoffrey von Kuhn, had little to say when asked, through a Fidelity spokeswoman, to explain the New Hampshire move.

“Crosby Company is a small family office handling private matters for the extended Johnson family. It has nothing to do with Fidelity’s business. Since it manages family matters, we would not comment further,” von Kuhn said in a statement.

Sources contacted by the Herald were hesitant to discuss the super-private Johnsons and how they manage their wealth. Others who keep tabs on Fidelity or worked near Crosby had little to offer about its inner workings....

All I know is it’s a financial services tenant that wants to be very discreet,” said Roger Dieker, a CB Richard Ellis broker who signed the building’s third-floor tenant, Standex International, last year. “There are no signs anywhere.”

Indeed, the tenant directory inside the building’s lobby lists only Standex and Dannon below a blank space where the first-floor tenant’s name should appear, as if the space were unoccupied. According to town records, Crosby occupies the entire first floor and about two-thirds of the second floor...

Another former Crosby employee said the company includes portfolio managers, analysts, accountants, lawyers and bill payers who handle the Johnsons’ personal riches — including curator services for Ned Johnson’s Asian art collection — along with the philanthropic Fidelity Foundation and the endowments of nonprofit organizations.

“I think most family offices are relatively secretive because they’re not really looking for outside clients,” said Denis Sean McDade, a former Fidelity and Crosby employee who’s now at Tugboat Capital Management in Marblehead. “There’s quite a bit of sensitivity about what they do (at Crosby). The Johnsons are a very private family and rightly so, as are many billionaires.”
Good for the Johnsons. I might be corrected on this, but as far as I know, they don't play much footsie with government and pretty much tend to serving their clients at Fidelity.

They should be able to do whatever they want with their money.


1 comment:

  1. I'm guessing they didn't move as part of the Free State Project.

    Thanks for this example Mr. Wenzel. I'm sure it won't be the last business to seek a less oppressive tax/regulatory climate.