The same instincts that drive people to seek maximum control and maximum simplicity over their wealth can blind them to the hard truths of preserving wealth and enjoying it peacefully. Whether you’re aiming for asset protection, tax efficiency, or meaningful privacy, deliberately separating yourself from direct control over your assets is not a barrier to overcome. That “friction” is the path to true strategic advantage. Architecting your structures is the fullness of wealth sovereignty.

Low Friction Ownership: The Illusion of Control

Owning assets outright–either in your personal name or in a simple revocable living trust–feels frictionless. You feel like you have 100% control. Transfers are easy. Access is immediate. There’s no complex structuring or heavy compliance burden. But what you gain in short-term convenience, you often pay for dearly in long-term vulnerability–especially as wealth builds.

Low-friction ownership leaves your assets exposed. Beyond local “homestead exemptions” and narrow statutory protections, assets are completely vulnerable to potential creditors. (With roughly half of all marriages ending in divorce, a large percentage of creditors share the same roof–and bed–with the defendant!) The value of these assets remains inside the owner’s taxable estate for both federal and state purposes, and all income streams remain subject to personal income tax.

For most individuals, estate tax is immaterial–either because their wealth is well below applicable estate tax exemptions or because they think death is a long way off. But many individuals are well above the most generous federal exemptions, and many live in states with much lower state estate tax exemptions. And while life expectancy is higher for ultra-affluent individuals than for the general population, humanity has not yet overcome mortality. It’s a sobering truth that life can end anytime, anyplace. “Life’s final auditor” doesn’t discriminate based on the strength of one’s balance sheet.

In sum: low friction equals low protection, low privacy, and zero tax leverage.

Moderate Friction Ownership: The Middle Way

Moderate friction is where many intelligent wealth strategies operate. These often include limited liability companies, family limited partnerships, irrevocable trusts with retained rights, grantor trusts, and other structures where the owner gives up some direct control while still keeping significant access.

Protection improves along this middle way–at least somewhat. Properly designed (and carefully operated) LLCs can shield against outside creditors’ claims. Certain irrevocable trusts can offer partial privacy. In some cases, tax strategies like S-Corp LLCs can lower self-employment taxes or shave income tax burdens at the margins.

Moderate friction strategies fall short when meaningful asset protection or significant tax planning is needed. Retained powers and interests are usually available to creditors and generally keep the value of the assets in your gross estate when you die. Above the estate tax exemption, federal tax hits at 40%. Some states add state-level tax on top. Moderate friction strategies have an important role to play, but they leave meaningful wealth exposed.

High Friction Ownership: Where Real Strategy Begins

“High-friction” strategies are where meaningful wealth preservation and structured sovereignty starts. This is the realm of independently-managed LLCs, bifurcated ownership structures, and irrevocable trusts specifically engineered to break the owner’s “dominion and control” for tax, asset protection, and privacy purposes. These strategies exchange unilateral, low-friction control for much higher levels of:

• Asset Protection: Wealth is shielded behind strong legal barriers, often governed by laws of much more private and robust jurisdictions. Family wealth remains beyond the reach of future creditors because the wealth is legally out of your hands—managed by people you choose for your benefit or for the benefit of your loved ones.
• Tax Planning: Irrevocable non-grantor trusts can shift some income out of high-tax states, reduce or eliminate state-level estate taxes, and remove wealth from your taxable estate – for generations.
• Privacy: Layered ownership provides cascading privacy. Intelligent, carefully-managed structures minimize your public footprint while maintaining legal integrity.

The central idea is simple: in order to preserve meaningful wealth, you must be willing to give up some direct, unilateral control over it.

Dominion and Control: The Critical Break

In estate and income tax law, “dominion and control” is the defining measurement. If you maintain full control over your assets–or the structures that hold your assets–the law will treat the assets as still yours. That’s true no matter how many fancy documents you’ve signed. This means the assets are still taxable to you and subject to the claims of creditors.

High-friction strategies often sever or sufficiently dilute your dominion and control to achieve:

• Income tax planning: shifting income to lower-tax jurisdictions, or into other tax-optimized strategies.
• Estate tax planning: removing value (and future growth) from your taxable estate.
• Asset protection: building a moat between creditors and your wealth.

Without legally severing your “dominion and control,” none of these benefits materialize. 

Designing the Right Balance: Friction vs. Access

Structured planning requires a blended, thoughtful approach. Overplanning can suffocate flexibility, unnecessarily constrain cash flow, and create more administrative burden than is appropriate. Thoughtful wealth strategy seeks to balance friction across layers:

• Low/No Friction: Use this sparingly. Maintain free access for personal liquidity and consumption/enjoyment, operating businesses, and other assets where access and flexibility outweigh the need for protection. Only apply “no friction” solutions to wealth you’re willing to lose.
• Moderate Friction: This level is best for wealth that requires active management, investment flexibility, or eventual transition to higher-friction structures. For many individuals and families, most wealth should be in “moderate friction” strategies.
• High Friction: Reserved for wealth intended for legacy, multi-generational family wealth, protection from major risks, and shielding from taxation over generations. Highest friction equals the highest protection but the lowest level of direct access for you.

In every case, the level of friction should match your planning priorities. Assets intended for long-term family prosperity deserve the strongest defenses. Assets reserved for consumption, opportunistic investment, or unstructured philanthropy can remain more freely available.

Embracing Friction to Build Real Resilience

The dream of seamless, instant, unrestricted ownership is alluring. Many people think this is “sovereignty.” But when wealth is designed to span lifetimes, friction isn’t a bug; it’s a feature. Sovereignty is intelligently designing the structures to manage your wealth.

If you’re serious about preserving wealth, maintaining privacy, and mitigating tax exposure, the question isn’t how to eliminate friction. It’s how much friction you’re willing to architect into your plan today–to buy resilience, protection, and autonomy for the future.

This information is intended for general educational purposes only and should not be construed as legal or investment advice.