Berkshire Hathaway as an alternative to an ETF?

[Steven Barrett]

Non-compliance is widespread -

Look who's getting away with not paying this estate tax

Foreign holders of U.S. assets who fail to pay estate taxes could be costing the U.S. Treasury billions of dollars.

www.cnbc.com

Yep.

When it comes to their money, people have a fear of dying too young. Retirees much prefer the ARF to the annuity because they think they will die young. This applies to those in defined benefit pensions, not just those subject to buying in the market. Same when it comes to the US inheritance tax on non nationals. They think they will die and owe money to the IRS.

Firstly, unless in bad health, if you are young, it is likely you will live for decades to comes. As you get older, those odds decrease slowly.

Second, non compliance of this tax is rampant. If you hold shares through a EU based broker, I wouldn't even be thinking of this tax. If you think the IRS will be aware of the disposal of shares held in a custodian account for a deceased Irish person, you think the IRS is a lot more efficient than it is. Look up a few articles on the state of the IRS and the recent funding that has been granted to them. They have bigger fish to fry.

 

[AJAM]

What does the AAM brain trust say on these? To me they seem like much better alternatives to Berkshire - no estate tax, no concerns about what happens when Buffet is no longer involved etc. Is Sterling currency risk the only downside compared to buying say an S&P500 ETF?

For the trusts you've listed (which are global) sterling is not a risk. Sterling would only be a currency risk for trusts investing in the UK only (like FGT).
The main risks I think about for Trusts are
1. Possibility in the future that the Irish Tax regime is adjusted to punitively tax them
2. Trusts often use leverage (1-10%) which can juice your returns on the way up but magnify losses on the way down
3. They are actively managed so manager risk
4. Some of them are not particularly well diversified. (SMT only holds 48 stocks, FGT only holds 24).

I personally use BRK and other single stocks for my US exposure and Investment Trusts for my global exposure.
And I avoid ETF's because of the nasty tax situation.

 

[Cyclingmagpie]

That's the approach that I took in April 2021 (serendipitous timing! ) when I invested in BRK.B and MKL (Markel), given that the taxation and administration of ETFs were too complicated and onerous for me. And I had had some money doing nothing for a while such that waiting to find the non-existent "perfect" solution rather than one that was suitable for my needs on many levels would've been dumb (and I've been dumb/distracted for too many years ). I see these investments as a c. 10 year, proxy ETF investment, and supplementary pension fund (having already maxed the actual pension). Obviously there are some caveats, such as them being largely US investments and subject to currency exchange fluctuations (tell me about it lately! ) but they may suit some people's needs. I did look into other similar conglomerate stocks and may still invest in others at some stage. Although, if ETFs generally eventually become subject to the same taxation as regular shares, I will obviously look at them again. Just my tuppence for what it's worth...

What other Conglomerate stocks did you look at?

 

[jrbeire]

Doesn't the Ireland - US double taxation treaty (mostly) eliminate the estate tax issue in any case?

 

[Gordon Gekko]

Doesn't the Ireland - US double taxation treaty (mostly) eliminate the estate tax issue in any case?

Yes, when it’s kids or others inheriting, but not when it’s a spouse…