Latest / Bitcoin for Financial Services Podcast / Your Bitcoin Estate Plan Has a Fatal Flaw (And It's Not Legal)

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Your Bitcoin Estate Plan Has a Fatal Flaw (And It's Not Legal) · Bitcoin for Financial Services Podcast

• 0:00
  I guess if the state agrees with his hypothesis that it's just sitting there not doing anybody any good, if the state's not going to claim it for themselves, which they probably should, then somebody should get the benefit of it.
• 0:10
  I'd have to read up on the case to learn more about what his position is. I've only seen headlines and I'm not fluent in what he's arguing, but that would be what I would argue.
• 0:20
  You have something sitting there. It's just sitting there collecting dust. What are we doing here? Why does nobody get the benefit of that?
• 0:25
  If the state's not going to do anything with it, probably because they don't know how, then why should nobody bank?
• 0:31
  That seems silly.
• 0:32
  Bitcoin is a currency on the internet.
• 0:35
  If you don't trust any other currency, this is where you go.
• 0:38
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• 0:39
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• 0:40
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  Bitcoin reached its highest price to date.
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  Bitcoin hitting a new high.
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  Stupid.
• 0:57
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• 1:00
  It's going up forever, Laura.
• 1:02
  Fix the money.
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  Fix the world.
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• 1:39
  Welcome to Bitcoin for Financial Services Media, the podcast where sound money meets
• 1:43
  professional services. We explore how to build the financial services industry within the principles,
• 1:49
  values, and ethos of Bitcoin. A big part of that is our flagship event coming up in
• 1:54
  in Denver from October 20th through 22nd.
• 1:57
  Legacy finance is being rebuilt in real time
• 2:01
  and Bitcoin is at the center of it.
• 2:03
  The Bitcoin Financial Services Summit
• 2:05
  brings together people actually building the infrastructure,
• 2:07
  RIAs, lenders, CPAs, miners, treasury companies,
• 2:12
  and Bitcoin native operators all in one room.
• 2:15
  If you wanna stand where Bitcoin and finance is going next,
• 2:18
  get your tickets now at bffs.media.com.
• 2:23
  Looking forward to seeing you there. Today, we're joined by special guests, Kyle Lawrence,
• 2:28
  partner at Falcon, Rappaport, and Berkman. Kyle and I and Jordan have been working together for
• 2:34
  a while and we have some exciting updates to share with you. Let's get started.
• 2:43
  All right. Welcome back to another episode of the Bitcoin for Financial Services show,
• 2:49
  podcast, whatever we're calling this these days. Today, we have Kyle Lawrence from Falcon,
• 2:55
  Rappaport, and Berkman, a law firm based out of New York City. We know Kyle very well at this
• 3:01
  point. We did know Kyle, you know, I don't know what, October 1st last year. We did not know each
• 3:08
  other. None of us knew each other. And then we all met in Denver at the summit last year. You
• 3:13
  knew him before that are you serious yes somebody had to invite him wow i did not know that i thought
• 3:20
  kyle just came in cold no we had met we had we had we had done calls and then we had met in person
• 3:28
  at i believe the unconference yeah yeah right before denver about a month before you're doing
• 3:34
  a book signing i was like that's that handsome guy that's why you're like a celebrity there
• 3:39
  he that you were a celebrity why you got to tell him how did you even get those books to
• 3:45
  new york city it's a great great story so brains published it they're out of czech republic
• 3:51
  obviously and you got to give them like four weeks heads up to like ship anything now they
• 3:57
  have a u.s based warehouse which is much nicer but back then they didn't um and so my dear friend
• 4:03
  jordan just staying at a hotel i was uh i was a 24 hour dude yeah i was on red line in
• 4:10
  flight out that night new york city not for me um but uh yeah jordan was kind enough that was
• 4:18
  actually jordan i think that was the first time we met in person that was showed up your hotel
• 4:23
  room was like where's my books bro yeah it's like who lets you up the elevator yeah no that was uh
• 4:29
  that was a very fun, uh, event. And, and then Kyle, dude,
• 4:34
  Kyle showed me all around the city.
• 4:35
  We went to the Waldorf Astoria and had some super expensive cocktails,
• 4:40
  had a really cool dinner. Uh, dude, you missed out wide. I will say, I mean,
• 4:44
  you could have been whining and dining with Matt McClintock at like this
• 4:48
  restaurant where they just kept bringing out shareable dishes. It was,
• 4:51
  it was fun. I'm excited to go back.
• 4:54
  Well, you know what would have been nice about that is, uh, an invite.
• 4:57
  it's an open invite it's a revolving door kind of policy but definitely the waldorf story i don't
• 5:03
  know if we're welcome back because we had to do some heavy negotiating just to get one get the
• 5:07
  table and then our group kept growing and growing by one person every 10 minutes they did not
• 5:13
  appreciate that yeah and they were like it's 75 a person we're like we're just trying to get a
• 5:19
  cocktail or two so martinis that's a is that so wrong come on now
• 5:22
  All right, Kyle. So we've been wanting to have you on the podcast for a while now. And you have
• 5:30
  your own podcast. You're a partner at the law firm. I mean, for anyone who has not stumbled
• 5:35
  upon your all show or has not worked with you all yet, give the audience kind of a quick background
• 5:43
  who you are, what you do, maybe also throw in there, how did you get into Bitcoin,
• 5:48
  especially being in the state of New York, where I feel like, I don't know,
• 5:52
  because Bitcoin's kind of outlawed or was outlawed to a degree, right?
• 5:56
  Yeah, a lot of things are outlawed here in New York.
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  But luckily, Bitcoin is somewhat borderless and boundless.
• 6:02
  So when there's a will, there's a way kind of thing.
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  But very happy to be here.
• 6:06
  Thank you guys so much for having me on.
• 6:09
  Big fan of the show and big fan of both of you personally and professionally.
• 6:13
  And I extend the sentiment for people who have not worked with the two of you.
• 6:16
  You're missing out if you don't.
• 6:18
  Thanks, man.
• 6:19
  Appreciate that.
• 6:20
  Good vibes all around.
• 6:22
  So Kyle Lawrence, as you mentioned, I'm with Falcon Rattport and Berkman. Monday is my five-year anniversary being there, which is a pretty fun milestone.
• 6:32
  But I have 20 years of experience as a corporate attorney from cradle to the grave, mergers and acquisitions, setting up entities, helping people just with their day-to-day legal needs, anything they have contract-wise, internal governance-wise, problems with employees, problems with leases.
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  I also do an extensive amount of work in the capital raising space.
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  So companies looking to do seed rounds, angel rounds, anything going all the way up to IPOs.
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  And that was really the segue that charted me on the path towards digital assets.
• 7:21
  industry works. Satoshi Pacioli handles bookkeeping, financial reporting, tax compliance,
• 7:26
  and strategic planning for Bitcoin-focused companies and individuals. They speak the
• 7:30
  language of Bitcoiners and help you stay compliant while building for the long term.
• 7:33
  To learn more or book consultation, visit satoshipacioli.com.
• 7:39
  And I'll get to our podcast in a second. But when I first started at the firm five years ago,
• 7:44
  my partners, Ken Falcon, the manager partner and namesake names on the door, and Moish Peltz,
• 7:50
  the other managing partner, they came to me and they said, look, we're getting all these inquiries
• 7:54
  for people wanting to launch NFTs. That was back in the NFT craze. I even got a couple back there
• 7:59
  behind me. I don't know if you can see them. And they said, we don't know if these are compliant
• 8:05
  with the securities laws. We don't know. We don't know. If you're willing to learn about the space,
• 8:09
  then there's an opportunity here to generate some revenue and learn some cool new things and even
• 8:14
  launch a new practice group. And so Moish gave me the, I felt the most salient advice in anybody
• 8:21
  giving me. He said, look, you're not going to figure it all out in day one. It's very confusing.
• 8:24
  Just open a Coinbase account, buy something, and just kind of see where the road takes you.
• 8:29
  Jump down that rabbit hole. And that was what I did and quickly discovered Bitcoin as part of that
• 8:35
  journey, obviously, as anybody would. And in the ensuing years, a lot of things have come and gone.
• 8:41
  NFT boom came and went.
• 8:43
  DeFi kind of came and went.
• 8:44
  It's still around, but it's not what it was a couple of years ago.
• 8:47
  And I can't imagine we'll get back there.
• 8:48
  But Bitcoin, to me, remains eternal.
• 8:51
  It's a really strong asset.
• 8:54
  It provides a lot.
• 8:55
  There's a lot of uses that it offers to people.
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  It's great for businesses.
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  It's great for governments.
• 9:00
  It's great for individuals.
• 9:02
  And I'm really excited to flesh that out.
• 9:04
  And just to put the cherry on top, the podcast is called Block and Order.
• 9:07
  And we focus, Moish and I focus on all the legal issues that surround all things crypto, blockchain, AI, emerging technologies in general, and really proud of it. We really enjoy doing it.
• 9:19
  That's a perfect segue. I was in planning on talking about this when I was preparing for the
• 9:27
  show earlier in the week, but most recent news that I've seen in the Bitcoin legal space is,
• 9:34
  I think this narc is out of New York, but he's filing a petition or something. I don't know how
• 9:40
  this works, but to claim unclaimed property and all these Bitcoin wallets. Have you been paying
• 9:47
  attention to the story at all? Not that specifically, but it's an extension of the
• 9:52
  concept that I'm sure you guys know is called escheet, which is property. When somebody dies,
• 9:57
  if nobody claims their property, whether it's physical property or any of their belongings
• 10:02
  that they have, there's no estate. Nobody has it. It basically just goes into a proverbial vault
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  and it sits there for a period of time and people can claim it as theirs. Otherwise,
• 10:12
  it gets distributed to a fund. I'm not an expert in that, how it works, but same concept here.
• 10:17
  And if you think about it, if you can extrapolate how much Bitcoin is lost on lost wallets, I think the current estimates are three and a half million total Bitcoin are just gone because people lose their wallets or they forget their pass keys or whatever.
• 10:31
  And from what I understand, just from the headlines that I've seen, is that, right, this guy is trying to claim that because no one else is claiming it's just sitting there.
• 10:39
  Well, what do you think the game theory is doing that?
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  It clearly doesn't have the private keys for these accounts.
• 10:45
  What does he stand to benefit from this?
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  I guess if the state agrees with his hypothesis that it's just sitting there not doing anybody any good, if the state's not going to claim it for themselves, which they probably should, then somebody should get the benefit of it.
• 10:58
  I'd have to read up on the case to learn more about what his position is. I've only seen headlines and I'm not fluent in what he's arguing, but that would be what I would argue.
• 11:08
  If something's sitting, it's just sitting there collecting dust. What are we doing here? Why does nobody get the benefit of that?
• 11:13
  If the state's not going to do anything with it, probably because they don't know how, then why should nobody benefit?
• 11:19
  That seems silly to me.
• 11:21
  But I guess how do they even know that that asset is or was potentially domiciled with a human or a business inside the state of New York, right?
• 11:34
  It seems to me like those coins could be scattered all over the globe, right?
• 11:39
  So it just interesting that this guy is like oh well of course this is property of the New York district or whatever this state and we going to try to go after it I think the wide point is like
• 11:53
  if it's sitting there, okay, you don't even have the private keys. And does that,
• 11:58
  from a legal standpoint, is there an argument to say, hey, if you're a Bitcoiner, you should
• 12:03
  actually move your Bitcoin every so often, just to prove, I guess, that the wallet is still active?
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  Is there any argument there? Or do you think that there's a good chance that this all kind of just is a good headline, but doesn't really go anywhere practically?
• 12:22
  I think this is a good headline because if we impose those kinds of requirements, you have to move it X number of years or whatever it is.
• 12:29
  Then why don't we do that with our savings accounts or with our stock portfolio or property that I own?
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  And if you people, I mean, I have stocks that I've owned for 20 some odd years.
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  I'm not going to just shuttle them between different platforms.
• 12:44
  And that, if you think about what Bitcoiners and we've been doing this for years, we all have.
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  And no matter how many times you click to approve a transaction from wallet to wallet, there's that fear.
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  There's that split second where you're like, oh God, what did I just do?
• 13:01
  I sent it to the wrong address, even though it's your own wallet.
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  So if you force people to do that, I feel like that's just going to create unnecessary friction and problems for people, not for everyone.
• 13:13
  But if you make a thousand people do that, one of them is going to muck it up somehow, and then you have a greater problem.
• 13:21
  Totally.
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  Kind of funny.
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  I called a friend the other day.
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  He's like, dude, I can't talk right now.
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  I'm in the middle of a cold card transaction.
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  And I was like, I am so sorry.
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  It takes full attention.
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  No more.
• 13:32
  Okay, Kyle. So I know in the whole Bitcoin space right now, everyone has kind of become
• 13:42
  a, ever since the election, it's like, what can our overlords in DC do for us? Right?
• 13:49
  Which I know there's some Bitcoiners who are like, kind of, they just hate the government
• 13:54
  so much. They're like, we don't even want to work with these people. But then you have
• 13:57
  newer folks coming in who are like, you kind of have to, in order for this to be taken more
• 14:01
  seriously. And I know you sit in an interesting seat. So my understanding is there's the Clarity
• 14:09
  Act, right, which is kind of this market structure, correct me if I'm wrong on that, and then we'll
• 14:14
  move to the crypto tax stuff at some point. But I know that midterms are this year as well.
• 14:21
  Seems like in the past week or two, there's been a lot of hubbub about, oh, Clarity Act is about
• 14:27
  to get past. It's moving through. Just kind of curious if you can give the audience,
• 14:33
  I know it's changed a lot over the course of the last eight to 12 months, but to your best
• 14:38
  knowledge, like where are we at currently with that bill and what does that allow for in terms
• 14:45
  of moving the Bitcoin industry forward from a regulatory standpoint? Yeah, it's a great question.
• 14:51
  One that I get asked a lot. And on every episode of Block and Order, Moish and I kind of put our
• 14:56
  predictions on for if the Clarity Act will get passed in 2026. I've been on the no train since
• 15:02
  January 1 for a host of reasons. And for a long time, it looked like I would be right. Past couple
• 15:08
  weeks, maybe not so much. I'm curious as to what the Calci odds are right now. But the latest
• 15:14
  developments are that the Senate Banking Committee has introduced their own version of the bill for
• 15:19
  review, which is a great step in the right direction. That process had been halted earlier
• 15:24
  year in the year, there was a lot of headlines about Coinbase had withdrew its support. And the
• 15:29
  banking industry has been, I don't want to say just completely against this, but they've been
• 15:33
  antagonistic in the process. And the main reason for that is part of what Clarity Act does is that
• 15:39
  it gets kind of tacked on to the Genius Act, which governs stablecoins, which provides for yield and
• 15:45
  permissible yield and who can collect that, what are the rules associated with it. Now, if you're
• 15:51
  an institutional bank, you say, wait a second, that's our thing. You can't do this. If you do
• 15:58
  that, then nobody's going to keep their money in the banks anymore, which is catastrophizing. I
• 16:03
  mean, that's just politics and lobbying. I get all that. But that's been their position. So the
• 16:08
  fact that the Senate Banking Committee has at least introduced their version of the bill is a
• 16:12
  step forward, a very positive step forward. We still have to negotiate on the Hill what those
• 16:19
  rules are going to be vis-a-vis yield. There's also some DeFi rules that need to get implemented,
• 16:24
  and I'll talk more about that in a bit. And then the other main piece is what can the SEC do and
• 16:30
  what can the CFTC do? That's a huge part of this bill is who has the oversight over these assets?
• 16:36
  What are the regulations going to be? What are the rules going to be? If you want to launch one
• 16:40
  of these products here in the United States, what are the rules and who's going to be supervising
• 16:44
  the implementation of those rules. Big, big piece of this. And for me, that's really important. And
• 16:50
  to your point, when you ask the question is, some people are against this and some people
• 16:54
  are approving. The reality is that we need regulation to say, this is how you do this.
• 17:00
  As a securities attorney, when somebody comes to me and they say, I want to raise money here in the
• 17:05
  United States, I say, great. Here is what you have to do to comply with the federal laws. That's it.
• 17:10
  It's that easy. There's a roadmap dictated by the government that shows you what to do.
• 17:14
  We need that here because even now in a friendlier SEC environment with a friendlier administration towards these assets, people come to me and they say, I want to launch a token here in the US.
• 17:25
  How do I do that?
• 17:25
  I'm like, well, you kind of have to fit a square peg into a round hole or just go offshore.
• 17:31
  And why should they go offshore?
• 17:33
  Why shouldn't this be done here in the United States?
• 17:35
  Why shouldn't we hire people in the United States, pay taxes in the US, generate revenues and generate good things made in America should mean something.
• 17:43
  And that's, I don't know.
• 17:44
  I don't want to get on my soapbox, but that's important.
• 17:47
  We're big on soapboxes here.
• 17:50
  So don't be shy.
• 17:51
  And, you know, one of the things I've heard through the grapevine is it's kind of like this bureaucratic, like power jockeying between the CFTC and the SEC.
• 17:59
  You know, they want more revenue, like fee revenues.
• 18:03
  They can hire more people.
• 18:04
  You know, I'm some middle manager with like 100 folks underneath me.
• 18:07
  So I'm like important now.
• 18:09
  Do you think that's really what it is?
• 18:11
  Or do you have like a preference?
• 18:12
  Like you think the SEC is better fit to do this kind of work.
• 18:16
  You think the CFTC is better fit to do this kind of work.
• 18:18
  What are your opinions on that?
• 18:20
  I guess it really depends largely on who's running the SEC that could,
• 18:26
  because that's a big factor, obviously, under the prior administration.
• 18:29
  Gary Gensler, you say his name and lightning strikes.
• 18:33
  You can have like the thunder booming in when I say his name, like Voldemort.
• 18:38
  but you know the reality is that when gary gensler was running the show he somewhat famously said
• 18:45
  come on in and talk to us come on in we'll help you register we'll help you figure it out and if
• 18:49
  you walked in there you're not walking out of there not in handcuffs or with a subpoena in
• 18:54
  your pocket it's it was a real problem for people very disingenuous now we don't have that we do
• 18:58
  have a friendlier sec but whether one body is is better than the other i mean the sec has i don't
• 19:06
  know the exact numbers, but 4,500 people that work there. The CFTC has 600. To me, and I'm not an
• 19:13
  accountant, but the SEC is better equipped to handle these kinds of things just because they
• 19:18
  have more bodies and more collective wisdom and experience in their halls. Now, what it comes down
• 19:25
  to is whether what we classify as a security, which would be regulated by the SEC, and what
• 19:30
  is treated as a commodity, which would be obviously regulated by the CFTC. And that's part of what
• 19:36
  what the clarity act does at the end of the day,
• 19:40
  most of these things will be commodities unless there's a expectation of profit.
• 19:46
  If you're launching a, a, a token, let's just say, for example,
• 19:50
  that's there's no monetary associations with it.
• 19:53
  We're just launching a token. And if you like this art,
• 19:55
  just get the token and it's yours and you can enjoy it. That's really a commodity.
• 19:59
  But if it's, Hey, buy this token that's tethered to, to, to this artist.
• 20:03
  And when this artist goes on tour, we're going to give you rewards.
• 20:07
  That's a different story because now the person is buying it with an expectation of getting something in return, more classically considered a security.
• 20:16
  OK, yeah, no, I'm glad you brought that up.
• 20:19
  And I do think we should take a moment, and especially since you kind of got into this through a more crypto lens.
• 20:26
  And I mean, I know you focus very broadly, obviously, the Bitcoin show.
• 20:31
  But I'm curious because there's been so much good opportunity to dunk on the ETH guys.
• 20:39
  I'm just curious if you have any reaction.
• 20:44
  And I'm sure you have clients who are in that space.
• 20:46
  So you can tread as lightly as you'd like to.
• 20:49
  But my main question is about ETH.
• 20:52
  Is it a commodity or security?
• 20:54
  And also, are we seeing just a complete flee away from that asset class?
• 21:00
  I'm sure you saw the bankless guys retreating out of Ethereum.
• 21:06
  And as Bitcoiners, you know, it's a little bit funny.
• 21:10
  So I just wanted to make sure we brought it up and just talked through anything.
• 21:13
  But the main question on a serious note is, what is that?
• 21:17
  I know there's the whole like Howey test, right?
• 21:19
  Between what is a commodity, what's a security?
• 21:21
  And I've always kind of thought more of Ethereum or any of these other coins as securities
• 21:28
  and governed by SEC.
• 21:30
  But it seems like that might be up in the air based on what you just said, right, where they're trying to figure out based on the Howey test or maybe other tests, what actually does come under the commodity umbrella.
• 21:42
  Yeah, it's interesting. And it is somewhat of a blurred line in a gray area.
• 21:47
  And to throw a real monkey wrench, I don't know if you can see it, but I have a buy Solana sign, a handwritten buy Solana sign over there.
• 21:54
  in honor of the Buy Bitcoin guy who showed up to Congress with just a piece of loose leaf paper
• 21:59
  that said, Buy Bitcoin. I forget the guy's name. So let me talk about Solana if you want.
• 22:05
  The Howey test that you brought up is a four-pronged test, which says,
• 22:10
  in order for something to be considered a, quote, investment contract,
• 22:14
  thus making it a security regulated by the SEC, you have to have an investment of money in a
• 22:19
  common enterprise with an expectation of profit generated by the efforts of others. So classic
• 22:24
  example is you guys own a piece of property. You want to raise money for it. You say, Kyle,
• 22:30
  can you throw in half a million bucks? We'll give you a return and you just sit back and enjoy your
• 22:36
  money. That's a security. I'm putting in money in a common enterprise with you guys. I expect to get
• 22:40
  paid back and I expect to get paid back because you guys are doing all the work. Classic investment
• 22:45
  contract, that's security. Ethereum and Bitcoin and Solana and a lot of these other ones are
• 22:51
  somewhat amorphous assets. I mean, I know there's the Ethereum Foundation and there are
• 22:57
  governing bodies. There was the Ethereum Foundation.
• 23:01
  There was the Ethereum, whatever. The remnants of the Ethereum.
• 23:04
  The remnants.
• 23:06
  It doesn't have that common enterprise aspect to it. And it doesn't necessarily have price
• 23:13
  appreciation due to the efforts of others. It's market forces that are difficult to quantify
• 23:18
  regardless of what the SEC may say. So things like Ethereum and Solana and Bitcoin are more
• 23:23
  classic commodities. Where it gets really weird is when you start looking at XRP, because
• 23:30
  XRP is largely most of it I think is owned by Ripple and they have a board a governing body that does a lot of stuff in connection with Ripple So XRP is kind of on the fence I don really know
• 23:42
  where that would land at the end of the day, if that would even be considered.
• 23:47
  What's funny, though, you mentioned Ethereum and we joke about it at the Bitcoin conference a
• 23:51
  couple of weeks ago. There was this really nice guy and I talked to him for a while. He was from
• 23:55
  Japan and he was selling a Japanese stablecoin. I think I have his shirt upstairs. And we were
• 24:00
  talking to him and asking him about about the token and he goes oh it's an erc20 and this guy
• 24:05
  who was over there he's like it's an erc20 he's ethereum like all right and he literally just took
• 24:09
  his left his shirt took his stuff and just walked away he's like get out of here what are you doing
• 24:13
  here it's funny the first thing that popped into my mind i thought you like beat the guy up and you
• 24:19
  and you took his shirt and you have it upstairs it's like uh a trophy or something right
• 24:24
  I definitely have a shirt on there.
• 24:27
  Right.
• 24:28
  At that point in the conference, to be honest,
• 24:30
  I wasn't feeling physically superior to anybody.
• 24:33
  It was the last day and I had a pretty long night the night before.
• 24:36
  So I was not operating at full speed.
• 24:43
  Your wealth deserves intention.
• 24:46
  Basilic Financial is a Bitcoin-focused wealth management firm
• 24:48
  built to help our clients find balance between money and meaning.
• 24:51
  We integrate sound money strategies across four distinct personalized services, financial planning, individual wealth management, retirement services for SMBs, and Bitcoin financial services.
• 25:01
  Your prosperity, your purpose, intentionally guided at Bacillic Financial.
• 25:06
  Visit our website at bacillic.io to schedule free consultation.
• 25:12
  Yeah, that's really interesting.
• 25:14
  I want to transition to some asset protection stuff.
• 25:17
  I don't know if anybody has, do you have any other questions on like the legality of all
• 25:21
  this stuff, Jordan?
• 25:23
  No, I think that's a great transition.
• 25:24
  Let's do that.
• 25:25
  Cool.
• 25:26
  So Kyle, like one of the things like when I'm working with clients and, you know, I'm
• 25:30
  sympathetic to this, like besides the fact that I think we do a really good job, like
• 25:34
  I'm sympathetic to, you know, a financial plan could seem like a chore, you know, it's
• 25:40
  like something you know you should do, you don't really want to, but you do it like out
• 25:43
  of necessity a lot of times.
• 25:44
  And the thing I get like most stuck with my clients, obviously, I'm a financial professional or for folks to, you know, largely you or, you know, whatever, when it comes to estate planning, you know, we generally recommend, you know, from our point of view, looking at some sort of revocable trust so we can at least maintain some privacy when it comes to, you know, end of life.
• 26:06
  But I'm constantly ragging on clients like, did you do this?
• 26:12
  Did you do this?
• 26:12
  I sent you the email.
• 26:14
  Do you want me to follow up?
• 26:15
  You know, it's like this song and dance of like getting people to do their will or, you
• 26:19
  know, whatever.
• 26:20
  So let's walk through and maybe we can keep it pretty high level to start and then get
• 26:25
  into the weeds.
• 26:25
  And like, you know, what's most important when we're talking about end of life asset
• 26:29
  protection?
• 26:30
  Obviously, Bitcoin's a unique asset when it comes to, you know, inheritance and how you're
• 26:34
  working with clients in this aspect.
• 26:36
  Sure. It's a great question. And a lot of it obviously depends on the specifics of the person you're talking to. How old are they? Are they married? Do they have kids? Where do they live? Depending on what state they're in, what U.S. state, not mental state, obviously has an impact on all that kind too.
• 26:54
  So for me, the first thing I look at is where are they keeping it?
• 27:01
  We talked about the Bitcoin conference.
• 27:03
  I can't tell you how many people walk up to me.
• 27:05
  I'm sure you guys have this too.
• 27:07
  Oh, you're a lawyer?
• 27:08
  I have $40 million in Bitcoin.
• 27:10
  Okay, great.
• 27:11
  Where are you keeping it?
• 27:12
  Oh, right on Gemini.
• 27:14
  Just sitting there.
• 27:15
  I'm like, okay, what happens do you think if you try to move $40 million off of Gemini?
• 27:19
  Do you think they're going to be okay with that?
• 27:20
  And they're going to let you do that?
• 27:21
  Oh, I don't know.
• 27:22
  I've never tried.
• 27:23
  What happens if they get hacked?
• 27:24
  can they get hacked? Of course. So that's, that's the first thing. And then I lose sleep and I,
• 27:30
  and I throw up in my mouth a little bit. And then I say, okay, let's, let's talk about your options
• 27:33
  and what you can and cannot do. And that usually then begets a further discussion with folks like
• 27:40
  you, because that, because once they see that immediate, oh, there's a problem, this person
• 27:45
  can help me fix it. It's okay. Now, what do you want to do with it? Do you want to protect it from
• 27:50
  taxes? Do you want to have future generations enjoy the price appreciation and the value of
• 27:56
  that asset maybe as collateral for something else? Are you worried about third-party creditors?
• 28:02
  And it just opens up this treasure trove of services that the three of us can provide and
• 28:07
  some of our colleagues can provide as well. But that's always where I start because that
• 28:10
  seems to be the universal one. A lot of people, usually when they, usually you probably disagree
• 28:16
  with this, when they have that level of wealth, they at least understand that they have to do
• 28:21
  some estate planning, whether they have or not, they at least know that's there. But the idea of
• 28:24
  custody and where do they actually store it is just such a foreign thing. It doesn't even occur
• 28:29
  to people that that's an issue. Yeah. Well, I should start with, I can't believe Wyatt told
• 28:35
  you how much Bitcoin he has on July. That's crazy. You should never, Wyatt, you should not tell anyone
• 28:43
  how much Bitcoin you have. Okay. So you should keep that to yourself.
• 28:46
  I did think I was saying that in confidence, like some sort of like,
• 28:49
  client lawyers, confidentially.
• 28:53
  Call the ethics point.
• 28:55
  Yeah. So, okay. So we get into the weeds a little bit,
• 28:58
  because I'm glad you brought up the custody.
• 28:59
  And I was just actually out in Portland, Oregon at a conference and was
• 29:02
  listening to Becca from AnchorWatch talk through the inheritance plan that
• 29:07
  they have with, with Miniscript and how there's some of these like time
• 29:11
  delays or you just, I talked to another guy actually in Vegas that he, you know, he's just
• 29:17
  a client. He, each of his daughters has a BitKey and he said every Christmas he gives them some
• 29:23
  Bitcoin and then they go through the process. If he watches his daughters who are like,
• 29:27
  you know, in their twenties, go into the BitKey app and say, my dad's passed and I want to initiate
• 29:33
  the, you know, the transfer. And then he gets the email. He said, you know, he denies it or whatever,
• 29:38
  but it's just as a test to make sure that they know how to do it. I'm just curious,
• 29:42
  what are some different examples you've seen on the custody side? And one of the big questions is,
• 29:48
  we run into a lot of clients that they've already gotten a state plan set up for their other assets,
• 29:54
  maybe another business, real estate portfolio. How do you normally slot in there as just
• 29:59
  handling the digital asset side? And maybe mechanically, how does that fit into the overall
• 30:05
  estate plan? That's a phenomenal question. A lot of times in that scenario, what I,
• 30:12
  good job. A lot of the, usually what I focus on at that point is if they have the estate plan,
• 30:20
  everything is in order. A very key component that gets glossed over a lot is the mechanics of
• 30:28
  transferring it from point A to point B or just accessing it. A lot of people don't want to use
• 30:33
  a third party custodian, the anchorages, the BitGo's of the world. They can be expensive for
• 30:38
  an individual. You can negotiate rates, but that can be a lot of money. So, okay, instead of keeping
• 30:43
  it on Kraken or Gemini, you keep it on a cold wallet. How many people out there? I mean, my wife
• 30:49
  knows enough about this stuff just through osmosis and hearing me talk about it over the past five
• 30:55
  years, but all things being equal, could she just access my cold wallet if push came to shove? I
• 30:59
  don't know if that's true. That's a really important thing that it's not even a legal
• 31:04
  question. That's just something that people gloss over. And to highlight how important that is,
• 31:10
  think about the Palisades fires and how many people had their pass keys written down somewhere
• 31:15
  in their house and it's just gone and now they can't access their accounts anywhere.
• 31:20
  That happens to people all the time when they pass and they have a lot of crypto
• 31:23
  and their families have no ability to access it, even if the estate planning documents are done
• 31:29
  correctly, they still need to have the access to it. So again, it's not legal. It's not an accounting,
• 31:35
  it's not a wealth management. It's just a basic thing that we as service providers just like to
• 31:41
  help people with. So that's usually where I go in that scenario.
• 31:47
  No, that makes a ton of sense. And we're big advocates for multi-signature custody as well.
• 31:54
  So, you know, you can have, you know, state plan attorney, CPA, financial advisor, hold a key on your behalf, you know, work with somebody like Unchained.
• 32:01
  It's a little bit more similar to, you know, traditional assets when it comes to the, you know, end of life inheritance.
• 32:09
  But Kyle, maybe you could kind of walk us through then like how a will, an estate plan, an inheritance plan, you know, I frequently use like Unchained's, you know, out of the box inheritance plan.
• 32:21
  and we maybe like tweak it a little bit and then like a trust,
• 32:24
  like all tied together.
• 32:25
  What are the specific responsibilities of each of those documents,
• 32:27
  how they play off each other?
• 32:29
  Sure.
• 32:30
  Well, the will, you know, is basically I'm Kyle and here's what I want to have.
• 32:35
  Here's where I want all my assets to go when I, you know, ultimately,
• 32:39
  ultimately die.
• 32:40
  I have a house.
• 32:41
  I wanted to go, you know, to either divide it.
• 32:43
  I mean, I don't have kids, but I would want it divided by my kids,
• 32:46
  or I would want it to go to my wife.
• 32:47
  I mean, this is a bad example because we don't have kids.
• 32:49
  It's not necessary, but,
• 32:50
  But that's what the will does. It's everything I own and this is where it goes. Then when you have a trust, it's a little different and it becomes a bit more complicated. And there's just for people listening out there, there are so many different versions of trusts and it is hundreds, if not thousands of them. And again, it depends upon where you live and what you want to accomplish.
• 33:11
  But when you have a trust, instead of holding the asset personally, and then when you die, it goes to your kids, you can put it into trust for the benefit of your kids or your spouse or whomever right now. And doing that creates all sorts of tax advantages.
• 33:27
  If you, so let's just say you have an income producing asset and you want to transfer it to your kids, you can move it to the trust effectively tax free. And as it grows in price, the kids get the benefit of that price appreciation and they don't have a huge tax bill when you die and that becomes theirs.
• 33:44
  And you have a trustee in place who can manage the asset. They have fiduciary responsibilities to the beneficiaries who, in this example, would be your kids. So they can't just sell the property to themselves. There are legal guardrails around that. And your trustee can be either another family member that you trust, your attorney or accountant, or there are professional trustee services. They charge your fee, obviously. But that's the main difference between a will and the trust.
• 34:10
  And again, there's so many different kinds of trust. You mentioned asset protection trusts,
• 34:15
  which is I want my assets protected from creditors. And so there's grantor trusts and
• 34:21
  revocable grantor trusts and irrevocable grantor trusts, which I don't know how much in the weeds
• 34:25
  you want to get to on that stuff. But the whole point of it is this is mine and I'm not that
• 34:31
  person who doesn't like me. I don't want them to sue me and get it. So if I put it in trust,
• 34:36
  it's shielded from that if the trust is set up correctly. So that's the, when you think trust,
• 34:41
  think about just the protection of what's yours. You keep it in yourself, you get sued,
• 34:46
  it's fair game. If it's in trust for the benefit of somebody else, as long as it's done right,
• 34:50
  it's protected from that. Yeah. And it's very interesting too, because there's a lot of
• 34:59
  Bitcoiners out there, I think that have, how Becca described it in her presentation was like this
• 35:04
  this treasure map, right? Where it's like, okay, I'm going to leave these breadcrumbs for you to
• 35:09
  find the Bitcoin. But you run into an issue, right, where you want to make it easy enough
• 35:14
  for your next of kin to access the Bitcoin when the time is right But that time is not today right And I think and that something that I thought a lot about is yeah you could give keys to the people that need to have the keys for when you go but then do you set yourself up where
• 35:32
  hey, just had a big family meltdown over something silly, right? And you're like,
• 35:39
  man, are they going to try to collude together to get the Bitcoin before they're supposed to
• 35:44
  get their hands on it. So I guess is that, that all leads to, I guess, who you're trusting with
• 35:51
  your keys and how they ultimately get their hands on that information. Do you have any thoughts on,
• 35:57
  on any good, any good setups that you've seen in that realm to make sure that you don't run
• 36:03
  into those problems in the here and now or in the future? Yeah. Well, Wyatt mentioned the,
• 36:08
  a great solution, which is Unchained or one of those third-party service providers. That's,
• 36:12
  That is exactly why you would go to someone like that as opposed to trusting your family.
• 36:17
  I mean, look, I'm a business lawyer.
• 36:20
  I've been doing it for years.
• 36:21
  And people, I can't tell you all the time, oh, I'm going into business with my best friend.
• 36:24
  Oh, my brother and I are starting a, you know, we're going to do a real estate syndication.
• 36:28
  Like, okay, let's do a partnership agreement.
• 36:30
  Ah, we're friends.
• 36:31
  We don't need it.
• 36:32
  And it's just all the road to hell is paid with good intentions.
• 36:35
  Same concept applies here.
• 36:37
  Everything is great now.
• 36:38
  So what you're kind of talking about the treasure map, I've seen versions of it where if I have a 12 word passkey, six of it goes to my cousin in Boston and the other six goes to my cousin in Seattle.
• 36:49
  When something happens to me, they get together and share the passkey, but they don't know it.
• 36:53
  But they can collude, they can figure it out and they can steal your coins.
• 36:56
  I mean, things happen and things happen in families all the time.
• 37:00
  I have a whole litigation department that can tell war stories without naming the guilty about that.
• 37:06
  So if that's a concern of yours, you have either on one side, you have a company like Unchained or one of those other providers, they charge a fee.
• 37:14
  So if it's, do I not want to pay the fee and I'm going to trust my cousins or I don't trust my cousins and I'd rather pay the fee.
• 37:20
  Largely depends on who you are, who it is you trust.
• 37:24
  And for my money, not because I'm a service provider myself, but using the service provider gives you that comfort of knowing that they're not going to have a vendetta against you.
• 37:34
  They're not just going to steal your Bitcoin or any other assets that you may have, whereas your family, they could.
• 37:43
  Yeah. Well, Colton, I'm curious how you kind of address this topic and a similar topic with Bitcoiners, you know, specifically, as we know, they're a little bit of a different bunch.
• 37:54
  Very principled, stick to their guns.
• 37:57
  I was on a Twitter Spaces with Casa and we were kind of talking about some estate planning stuff.
• 38:05
  And, you know, Jameson Lopp, you know, kind of being like your Bitcoin archetype, you know, cryptography, computer science background.
• 38:14
  I thought this was hilarious, but he kept referring it to like the law of man.
• 38:18
  You know, it's like Bitcoin doesn't care about the law of man.
• 38:20
  But then you have your mutual friend, Matt McClintock.
• 38:24
  I think he does a really good job bridging the gap between the Bitcoin archetype and reality.
• 38:32
  It's like, look, he may not like the law of man, but the law of man governs us.
• 38:37
  And so I think he finds a good middle ground.
• 38:39
  Do you have a lot of objections from Bitcoiners where they're like, I want to do X, Y, Z, but F the state sort of thing, like Jordan was saying?
• 38:48
  And like, how do you kind of bring them back to your reality?
• 38:51
  I'm like, what we really can like actually work with today.
• 38:56
  Sure.
• 38:57
  I don't encounter a ton of that specific to the Bitcoin space.
• 39:01
  I encounter that across all industries.
• 39:04
  I mean, it's not just Bitcoiners.
• 39:07
  I mean, I, you know, as part of my mergers and acquisitions practice, when we're closing
• 39:11
  a deal and the client's going to walk away with $25 million in their pocket, we say,
• 39:15
  okay, here's the tax consequences.
• 39:17
  And they look at you like you just stabbed them.
• 39:20
  You're kidding their child.
• 39:21
  And I say, I'm not – it's not me taxing you.
• 39:24
  I'm just a messenger.
• 39:26
  These are just the rules.
• 39:28
  So that happens a lot.
• 39:29
  With the Bitcoiners, I definitely agree with you, and you still get a lot of that sort of – it appeals to the libertarian mind, and I totally see that.
• 39:38
  And it's like I'm not bothering anybody.
• 39:41
  Leave me alone.
• 39:42
  But to me, it's the – if I'm not bothering anybody, there's a spectrum there as to what that means.
• 39:47
  And that to me is the hardest thing to kind of break through with anybody, not just Bitcoiners.
• 39:54
  But it's these laws are stupid.
• 39:55
  I'm like, maybe the laws are stupid, but they're the laws.
• 39:58
  And walking into court saying this law is stupid, I don't agree with it, is unfortunately not a defense.
• 40:04
  And that usually ends the argument pretty quickly to the extent there even is one.
• 40:09
  I have to bring up, I saw a fun booth in Vegas about you don't have to file your tax returns.
• 40:15
  Do you have any comments on that on just Bitcoin?
• 40:20
  I mean, it was a very busy booth, but they're essentially saying if you didn't live in the, I guess, in Washington, D.C., you aren't required to file tax returns.
• 40:30
  And I'm just curious, what are the attorney's thoughts on that?
• 40:35
  I know Matt McClintock has pretty strong opinions, but I'm curious.
• 40:38
  He does.
• 40:39
  You know, this show is not legal advice or financial advice.
• 40:43
  however here's a free one is yes you do have to file your tax returns unfortunately everybody out
• 40:47
  there i spoke to it's funny because i spoke to those guys last year and this year and they had
• 40:53
  a different approach this year i don't fully remember what the difference was because i was
• 40:57
  just so shocked and appalled at what they were telling me but it was something along the lines of
• 41:02
  oh yeah just just ignore it because they have no way of tracing it like you file your tax return
• 41:08
  but don't declare any of your crypto because they're not going to trace it that's also that's
• 41:13
  wrong. The tools that hackers have and that real crypto native people have and the AI tools,
• 41:21
  the government has those now too. I mean, the IRS is in the business of collecting tax revenue.
• 41:26
  They don't take that lightly. And if you just ignore and don't file anything, that's criminal
• 41:32
  tax evasion. And there's no statute of limitations for that. If you declare it, but it's incorrect,
• 41:38
  there is a statute of limitations and the penalties are nowhere near as severe. But if you
• 41:41
  just go hands off and say YOLO, maybe they'll never catch me. If they do, it's going to be a
• 41:47
  real problem and a really dark day for you. Anybody. Yeah. Yeah. Okay. Well, first,
• 41:55
  it was funny because, um, like the, that, that boot specifically, they were a little bit more
• 42:02
  aggressive on their sales tactics, you know, trying to pull people in. And, um, I was walking
• 42:07
  by and they flagged me down and it's like i'll bite you know see what they have to say and it
• 42:12
  happened to be next to the cpa's booth i know and i was like well he makes people file tax returns
• 42:17
  like is he full of it like what are we doing here but it was my understanding like those guys are
• 42:23
  actually lawyers right like their whole pitch is don't file it if you you know get investigated by
• 42:30
  the irs or something we'll just take 30 of our winnings or something like they're not actually
• 42:34
  accountants. Oh, that I don't know. Yeah. Is that true? Yeah. No, they represent, I think that's
• 42:39
  their whole thing is they represent you in front of tax court, uh, to defend you for not, uh, for
• 42:44
  not doing it. So I'd be curious to see the analytics on their success rate and defending
• 42:50
  those things. Yeah. Well, I was going to say we run across enough, uh, Bitcoiners. I won't name
• 42:57
  many names that are woefully behind on filing taxes when they come to us. And so, and I think
• 43:06
  part of that is because they just don't know, they don't have a good view on what their basis is. And
• 43:11
  so they're kind of just paralyzed by, I don't know what to report, so I'm just going to ignore it.
• 43:16
  So, but it's a good call out that you should work with professionals from the get-go and
• 43:21
  stay in compliance and be able to be there for your family to, to enjoy them and not rotting
• 43:27
  in a cell somewhere. So yeah, or they should, or they should use your, your program to help them
• 43:33
  figure out what their cost basis is. Man, I was hoping somebody would jump in. I knew why I
• 43:38
  wouldn't plug it. Just plug it. Yeah, please. If you're a financial professional working with
• 43:48
  Bitcoin, you know the pain of messy CSVs, broken cost basis, and accounting tools that were never
• 43:54
  built for this asset. Bitment fixes that. Bitment is the Bitcoin native accounting platform built
• 44:00
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• 44:06
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• 44:12
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• 44:17
  create a free account or book a demo at bitment.co today.
• 44:23
  All right. Well, I know why I know we've got to jump, right?
• 44:26
  We've got a hard stop, but this has been super fun.
• 44:29
  Unless why are you going to cancel your, your next call?
• 44:32
  Dude, I wish, but that actually makes me some money.
• 44:35
  This is a freaking hobby.
• 44:38
  This is, this is just fun.
• 44:39
  Is that what we're telling the IRS?
• 44:41
  We're going to say this is a, this is a hobby where no taxation on this activity.
• 44:45
  I've left that up to you.
• 44:47
  Maybe we can like,
• 44:48
  tax on law.
• 44:50
  So Kyle,
• 44:52
  you're coming,
• 44:53
  you're coming out to Denver in October.
• 44:56
  Beautiful.
• 44:57
  And we'll have you up on stage.
• 44:58
  Well,
• 44:59
  I really appreciate you coming on.
• 45:00
  Tell everybody how they can find the podcast,
• 45:03
  how they can get in contact with,
• 45:04
  with the law firm to get help from,
• 45:07
  from you all.
• 45:08
  Sure.
• 45:08
  And thank you guys again for having me.
• 45:10
  The podcast is called block and order.
• 45:11
  You can find us on all streaming platforms as well,
• 45:15
  podcast platforms as well as on YouTube. And you can find me professionally at frblaw.com.
• 45:21
  That's our firm's website. You can find my profile with my handsome suit on and I'm like
• 45:27
  well-groomed and everything. And it's a rarity these days. But thank you guys for having me.
• 45:33
  It's always a pleasure seeing you and look forward to just greater things ahead.
• 45:37
  Kyle, the pleasure is ours. And for the audience, you know, Jordan and I have talked about the
• 45:40
  Bitcoin Family Office group before here. Kyle was involved with that. He's our legal arm. So
• 45:45
  So we'll be seeing more of them here soon.
• 45:47
  Love it.
• 45:48
  Absolutely.
• 45:49
  All right.
• 45:49
  Thanks y'all for tuning in and we'll talk to you next time.
• 45:53
  See y'all.
• 45:58
  We appreciate you joining us.
• 46:00
  If you want to help build the future of Bitcoin and financial services, hit subscribe, leave a review and sign up for a newsletter.
• 46:06
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• 46:11
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• 46:27
  We're bringing together some of the smartest operators in the industry for practical conversations focused on what's actually working today.
• 46:34
  Register now at bffs.media.com.
• 46:38
  The more professionals we reach, the stronger this ecosystem becomes and our clients are better served.
• 46:45
  Stay sharp, stay sovereign, and keep believing from the front.
• 47:08
  you