Exactly how would this transaction work?

Rex Tillerson was a former oil executive who was confirmed to be Donald Trump's first Secretary of State.I read somewhere that before taking office,he liquidated all of his business assets and investments in order to avoid any appearance of conflict.Assuming that's true,exactly how does that process work?Where would the money be placed?Would he be unable to access it during his time in office?And when would he be able to reclaim it?

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Northwest · M

Rex Tillerson had $225M worth of Exxon Mobil stock, either directly held or owed by Exon Mobil as part of his decades long contract.

Pursuant to federal laws, he could not continue holding on to these assets directly, but Federal law, allowed him to put these assets, through Exxon Mobil in a blind investment fund (bonds, stocks, etc).

He did not owe taxes on the capital gain (about $75M), instead taxes would be deferred until such time as to when he cashes out funds from the blind trust.

DavidT8899 · 22-25, M

@Northwest I suppose that's one option.Wouldnt another be to liquidate and then put the money in a high interest gathering, overseas bank account that he wouldn't be able to access untill he stepped down from his position?

Northwest · M

@DavidT8899 Do you understand how a blind trust works?

DavidT8899 · 22-25, M

@Northwest I believe I do.

DavidT8899 · 22-25, M

@Northwest I'm just pointing out the overseas bank account as a viable alternative.

Northwest · M

@DavidT8899

overseas bank account

You're saying that an overseas bank account, would guarantee that future proceeds would be adequately taxed in the USA? Or that this an overseas bank account, would mean that Rex Tillerson cannot be involved in running it?

DavidT8899 · 22-25, M

@Northwest Well,I'm assuming that even foreign accounts are subject to American tax if they originate in the country,so yes,a certain amount of tax would have to be paid upon reclaiming the account after office.As long as it's worked out beforehand and everythings legitimate,I don't see the issue.And yes,if he did deposit his money in a Swiss or Cayman Island account,a condition could be set where he can't access the account untill after he's no longer in office.

Northwest · M

@DavidT8899 Sigh! you understand that a trust fund is designed to allow a company to invest in the wider market, as opposed to a bank account, earning the lowest possible returns, right?

You're further demonstrating that you don't understand how the banking system works. No, if you transfer funds to an overseas bank, it does not mean that the overseas bank is subject to US taxes, because it originated in the US. It's not about the bank, it's about the individual's nationality. As in, the US has no visibility into an account operating in the Caymans. That's why some people open accounts in the Caymans.

redredred · M

@DavidT8899 A bank,any bank or even banks would be a hideously risky place to hold $225 million. A better and safer choice would be diversified fund of stocks, bonds, hard assets and some banked holding in a blind trust.

DavidT8899 · 22-25, M

@redredred Ill take your word for it that a blind trust would be the better choice;however,I suspect that a Swiss bank ,many of which safely hold BILLIONS of dollars,would not be a "hideously risky"place to hold $225 million.

redredred · M

@DavidT8899 Banks fail. Know the adage about eggs and a basket? Diversified investments are a lot safer as Swiss accounts don’t pay much interest if any.