In this episode, Matt McClintock, Partner at Evergreen Legacy Planning joins host Justin Guilder, Co-founder of Lumida Wealth, to discuss strategies for estate planning and legacy building for ultra high net worth families. Matt outlines technical tools like private trust companies and offshore trusts, as well as "softer" considerations like family governance, preparing heirs to receive wealth, and philanthropic planning. He emphasizes the human side of estate planning, beyond just tax mitigation, and shares perspectives from his decades of experience advising wealthy entrepreneurs. Matt provides a refreshing perspective on how to make estate planning not just about technical details, but about crafting a lasting legacy for the people and causes you care about most.
Guest:
Matt McClintock, Founding Partner at Evergreen Legacy Planning
To learn more on legacy and estate planning, visit Lumida's website (http://www.lumida.com/) or reach out at info@lumida.com
Key Topics Discussed:
Key takeaways include:
Time Stamps:
- (01:19) Matt introduces himself and provides background on his law firm, Evergreen Legacy Planning
- (11:50) An anecdote about a client who unexpectedly inherited millions in Bitcoin
- (17:54) The loneliness and isolation that can come with sudden wealth
- (20:40) Estate planning considerations with cryptocurrency
- (27:37) When private trust companies start to make sense based on assets under management
- (33:15) How to maintain privacy when using entities like LLCs
- (37:44) The privacy risks created by new laws like the Corporate Transparency Act
- (42:49) The education required when working with international custodians on complex planning
- (45:20) Using offshore trusts and foundations for jurisdictional diversification
- (52:48) The due diligence required by international custodians, especially with crypto assets
- (56:06) Educating custodians on the origin and provenance of long-held crypto assets
- (59:15) Bringing the next generation into legacy planning conversations
- (01:04:03) Getting children involved in charitable giving
- (01:08:29) When donor-advised funds stop making sense compared to private foundations
- (01:11:11) Starting dialogues with clients about their vision for their legacy
- (01:14:47) How Matt thinks about his own legacy
Justin [00:00:01] Hi, and welcome to the Lumida Legacy Podcast. I'm your host, Justin Gilder. On this podcast, we'll explore how to achieve and plan for a long, healthy life, as well as how to prepare for the inevitable and unforeseen. Through estate planning, insurance and end of life decisions. We'll talk candidly with experts who advise a high end, ultra high net worth clients so you can learn how to apply their strategies and tactics to your own longevity and legacy planning. On this episode of the Lumida Legacy Podcast, I'm joined by Matt McClintock, a trust in the States attorney who helps high and ultra high net worth families plan on an offshore trust vehicles. Matt really focuses on the qualitative, not just the quantitative aspect of estate planning. I've worked with Matt for some of our clients at Lumida Wealth and was impressed by his experience in the digital asset space, which was really important to our clients. I found this conversation very interesting. I think you'll enjoy it as well. Really thrilled to be joined today by Matt McClintock and Matt. Let's just get into it. Why don't you tell us a little bit about yourself and. Where your background in trust in the state law comes from.
Matt [00:01:19] Okay, sure. Yeah. Thanks. And adjust in great honor to to be on the podcast. This has been a lot of fun. I think so. My name is Matt McClintock. I'm founding partner of the law firm in Evergreen, Colorado. It's called Evergreen Legacy Planning. And my background is in structured complex. What we like to say is holistic legacy planning for highly affluent clients. Like I said, we're based in Evergreen, Colorado, which is just west of Denver, up in the foothills a little bit. But we serve clients all across the United States and in a handful of countries outside the U.S.. Our typical client base is large federally taxable estates in the U.S.. So you think 30 million plus and. We really like to focus not just on the tags oriented quality, the quantitative side planning, but also kind of the meaning behind the wealth and helping clients understand that the decisions that they make from a legal structuring perspective to derive the tax number has real effect, not just for them during their lifetimes, but ultimately for the people that they care about the most. And so I know we're going to get into this in greater detail, but I mean, that's the focus of our practice. I've been doing this for 23 years. My law partners been doing it a little bit longer than that. And we've got a team of attorneys kind of spread around the country where we serve clients together in that realm.
Justin [00:02:54] Amazing. Well, really excited to talk to you and dive in deeper before we get into those topics. You mentioned that you help your clients plan for the people most important in their lives. Let's get to know you a little bit. Like, who are the most important people in your lives still in your life? Tell us a little bit about your family.
Matt [00:03:12] Yeah, well, I'm happy to say that I've been married to the same woman for. When I get this wrong. I hope not. 31 years will fact check this year. Yeah, 31 years. We got married in 1992. Very young college sweethearts. We've got two incredible daughters that are both young adults now. And, you know, those are unquestionably the the most important people in my life. I'm fortunate that we all have good health and that my daughters, although they're both grown and out of the house, they're still nearby. So my oldest daughter runs operations for my businesses. So I get to work with her every day. And my youngest daughter also lives nearby. She's married and is a successful professional herself. So, you know. Life is good.
Justin [00:04:06] Very lucky that your children are nearby. So you talked a little bit about college sweethearts, but then obviously, you're a lawyer. You went to law school jumping into trusts in a state law. What led you into that practice area?
Matt [00:04:19] It was kind of by accident, really. When I went to law school. At the time, I had no intention of practicing law. I was a policy guy and I was working in politics. I grew up in Oklahoma. I've been told that I don't have much of an accent, which I relish that. But I did grow up in Oklahoma and out of college. My background was in political science in college, and I signed on to an upstart political campaign. And we were just this ragtag bunch of knuckleheads that ended up getting this really great guy elected governor in the mid-nineties in Oklahoma. Really a brilliant, brilliant guy that I still admire to this day. And my work was in public affairs. And, you know, for a lot of folks, they may even remember all the way back to April 19th of 1995. And at that on that date, at that time, the worst act of domestic terrorism took place in the United States. The Murrah Building in Oklahoma City was bombed by Timothy McVeigh. And, you know, Terry Nichols kind of in a conspiracy. And those guys are, you know, long gone now. But I was working Public Affairs was a 22 year old, bright eyed kid. And all of a sudden, I was kind of thrust into the international spotlight, having to represent the governor's office in the middle of, again, this huge act of domestic terror right in the middle of the country. And that really whetted my appetite for politics on a larger scale, for policy, on a larger scale. And I, I didn't fancy myself as a kind of guy who had become a candidate for office, but I wanted to be a policy guy. I thought I could make a difference. Again, idealistic, young 22 year old. So one of my mentors back then said, Hey, if that's if that's the course you want to go, you need to increase your street cred and go to law school. So that's what I did. I went to law school for the purpose of upping my game for public policy because I want to ultimately be in Washington, D.C., you know, doing things that at the time I thought mattered. And so I went to law school. But during the law school process, I was sort of working a couple of different part time jobs. One was in the district attorney's office in Oklahoma County, and another one was at an estate planning law firm where I was working with families who had very modest the states, but were looking at how do you plan for the end of life? How do you plan for a time when you can't make financial decisions for yourself or medical decisions for yourself? And ultimately, when it comes time to pass on how much or however little you've accumulated or in your lifetime, how do you do that with dignity. And so that really spoke to me. And through the law school process, I did a lot of I took a lot of classes on estate planning, on wealth transfer, tax planning, on income tax planning and things like that. And I kind of lost interest, really in politics and policy and wanted to focus really on where I thought I could make a direct difference in the lives of families who I was helping them kind of get their arms around this reality that, you know, someday this life is going to move on without them. And the most important people that are in their lives going to be left behind. How can you equip those families for success, help them become the best versions of themselves through whatever whatever I can do from a legal structuring perspective. And I'm sure we're going to get into this, but I mean, legal structures on their own don't solve the problem, but they can create an infrastructure framework for private, family controlled decision making. So you can at least take some of the stress out of those really otherwise very difficult times for families.
Justin [00:08:20] So you started out a little bit with families that maybe don't have the same means as some of your current clients who are geared a little bit more towards the ultra high net worth. How does the planning process and ultimate outcomes differ between those two categories of people? Obviously, they're still concerned about the same topics, but they have some different considerations. And how do you think about the differences there?
Matt [00:08:52] Yeah, I mean. And on one hand it's the same. And on the other hand, it's very different in that the stakes are much, much higher economically. The stakes are higher not just from a tax perspective. And when we think about tax, we have to think about it really in all of its forms, whether we're talking about the lifetime gift tax, whether we're talking about the estate tax, whether we're talking about the state level estate tax, if there is one versus the federal the generation skipping tax, the capital gains tax, the ordinary income tax, the entity taxation. So the stakes are really high from a tax perspective, but the stakes are also extremely high. From a human capital perspective, because not to not to diminish the importance of the. Structured planning for more modest estates. You don't have to do the math on those smaller estates, so you can focus on the people side of things. But, you know, at the end of the day, if you have a very modest estate and you pass that on to mature adults, the stakes really aren't that high. But when you're dealing with tens of millions or hundreds of millions of dollars or more, you're talking about wealth that. Ten. And by all means, should spend many generations. So the wealth itself, the money itself should very well. Not just. Sustain those generations but continue to build through those generations. These families are well past escape velocity when it comes to the level of wealth. But now you're dealing with an inheriting class of people who had no hope, had no active role in building that wealth. They have grown up in a family that had virtually unlimited means for all practical purposes, and now you're having to address issues like how do I how do I help my kids not become, you know, terrible people? How do I help? How do I my kids become the best versions of themselves and have a sense of a work ethic and a sense of responsibility and stewardship, whatever that means to the family and a sense of purpose. Because one of the things that I've seen in a lot of the clients that we work with is this concern that when the family has built such a tremendous amount of wealth. You know, usually with my clients, they've built it in the first generation. They're the entrepreneurial class now they're dealing with, okay, well. Well, what happens next? My kids have grown up going to private school, vacationing on a Gulfstream, you know, and my grandkids will never know what it was like to not have this level of wealth. How do I help them become the best versions of themselves? The stakes are just higher. And, of course. As I'm sure we're going to get into the types of strategies, the technical legal strategies that we bring to bear for clients who have such large estates, plus the more qualitative human concerns those are there's a lot more that we have to do in order to at least get the infrastructure right. So then the family can say, look, the framework is in place now. We can focus on the human element of the plan.
Justin [00:12:15] Yeah, we'll definitely get into that. I think before we go into some of those particulars, you know, when money is on the table and we're talking now significant amounts of money, things can change. It's a emotional situation. Behaviors can change, attitudes can change. You know, you've definitely seen the if. You had to be there to believe it kind of moments. So maybe share one or two of those where. A fly on the wall would be shocked to hear what happened and whether you were able to navigate them through that or not. It's important to understand that these things can happen with or without the proper planning.
Matt [00:12:58] Oh, for sure, Yeah. It's a great question and. It's going to seem. Maybe a little bit surprising, but maybe that's why it's meaningful to me. The second Bitcoin client I ever had. She's still a very active client in our for now. This is a woman. She divorced and when she divorced her. So she grew up with very modest means. She still has lived a very modest life. She she grew up in the country on a rural family, just a great, solid salt of the earth kind of human. And, you know, living in California in a very modest home. And she and her husband decided to divorce. And when they divorce, he hands her what looks like a USB stick and says, here's your half. And she says, Here's my half of what Here's half of pretty much everything that we owned. And what looked like a USB drive was actually a Bitcoin hardware wallet that had 10,000 Bitcoin on it. And so for those of you, you know, kind of keeping score at home, the 10,000 Bitcoin at today's spot price is about $300 million.
Justin [00:14:27] And I don't know if 300 million are mine.
Matt [00:14:29] Yeah, but it's that kind of thing. And so it's like, I mean, her jaw just dropped when she realized I mean, she knew she understood bitcoin a little bit. And, you know, they had a lot of video stock that was very low basis. They still have that now. And so she thought, hey, we were just a modest family, just kind of working folks. And turns out that they are some do millionaires a few times over in Iraq, her world completely because they had no planning in place from an estate planning perspective. And this client has a couple of daughters who now one of them has some real challenges, you know, like kind of growing up problems, if you catch my drift. Kid has a hard time making good decisions and has a tendency to surround herself with people who don't really have her best interests at heart. And so this quiet. Needed to do some not just some qualitative, a state to state planning around how do I keep from just dumping all this money in the lap of a couple of kids. One of them makes terrible decision to their life to Well, I'm in California the basis for capital gains tax purposes and my Bitcoin is almost zero. And I'm not only subject to federal capital gains tax, I'm subject to state level capital gains tax at 13.3%. I've got an enormous estate I didn't even know I had. Can you guys help? And by this time, we were already doing it, you know, substantive estate planning with crypto in mind. But this is just get a long story short for this purpose. The client had this surprise level of wealth on a very big scale that she wasn't expecting. And the broader point that I want to make with that that I think is thematic is that when clients find themselves with a significant amount of wealth, either in a surprise, almost lottery winning type of perspective like this, or whether they've just been a very successful entrepreneur, maybe a serial entrepreneur, but didn't come from significant wealth, that wealth can be a very lonely place for them. They realize that they're not like their family, they're not like their friends. They don't their friends don't really understand. And the friends, often the friends and family often either objectify the client because of the wealth or become, to a certain degree, parasitic or predatory, because, hey, they can pay for it. They can do it all. And and even if that's not like right out in front for a lot of the clients, I see they're worried about that in the background. And so what I've seen is first generation. High levels of wealth can be a very lonely place. And. When professionals like us really only focus on the quantitative side. Building more alpha, getting the value out of your estate, meeting your taxes, all that great technical stuff that we do that's important. That's all we're talking about. And we're not really talking about the human side of the honestly, the loneliness, the isolation, the fact that nobody understands. If we forget about that, we're not serving the clients fully.
Justin [00:17:54] Yeah. No matter how many zeros are in the bank account, there's still people at the end of the day with the same emotions. Yeah, it's. It's a challenge.
Matt [00:18:02] Seems kind of and it seems kind of trite to say it, but to a certain degree, more money does mean more problems for a lot of people. You know, it's like that, right? Yeah. You know, it's like. Like a lot of people feel a burden that goes along with this wealth. And there's there's a lot that has to be addressed there.
Justin [00:18:18] So you touched a little bit on crypto, too. Let's dive a little deeper there. How did crypto an asset class that, you know, 20 years ago doesn't exist? What will change estate planning, if at all? Are there some complications in there that are unforeseen that you've seen as a result of, you know, the nature of the asset class? Or perhaps it's an up in to the right? Growth in the past decade plus.
Matt [00:18:48] Yeah. I mean, there's there's several things that that are really challenging when we're dealing with digital assets and and kind of use that as shorthand in, you know, kind of synonymously with crypto. But what I mean, by the way, I'm kind of defining that is an asset that doesn't really exist in the physical realm, in the tangible realm, but something that really only exists on a ledger somewhere. So there are a couple of things that immediately come to mind. One is that intangible nature of this asset. It's complicated and understanding how private keys work, how wallets work, how the movement of this asset. With, you know, along the blockchain or within these various transactions. How those things work, at least at a basic level, is critical to understanding How do you then substantiate the ownership of. A digital asset like Bitcoin or ether or anything else. How do you substantiate the ownership of that within a structure that's designed for estate planning purposes or legacy purposes? So that's that's really hard because if you've got a brokerage account or a bank account or a piece of real estate, you've got to account ownership form, you've got a deed, you've got a title that you can say, Hey, just put this on, you know, just an Guilders trust. That's easy. How do you do that with a digital asset like this? And so getting.
Justin [00:20:24] Your head or that played out at all. Have there been any disputes that have been resolved in court or in some type of forum related to that?
Matt [00:20:35] You know, not that I'm aware of. I'm sure they I'm sure there have been.
Justin [00:20:39] Or they're coming.
Matt [00:20:40] Yeah, there's without without a question. They're coming. This kind of gets this is a little bit of a preview perhaps, but this is why when we're planning on this stuff, we will only work with qualified custodians who can have a title held account on behalf of the client. So that way we can know is it in Justin's individual name or it isn't some entity that Justin owns or Justin as a beneficiary of? So yeah, that's maybe a little bit of a teaser to a deeper conversation around various structures. But yes, I'm quite certain that those disputes are coming. I'm quite certain those disputes are being had right now. I've just been fortunate enough to not have a front row seat at those because of the nature of how we we plan.
Justin [00:21:27] But other things. Let's talk there about planning. Let's talk a little bit about planning and structure. So you're dealing with ultra high net worth families who not only have significant assets and estates to manage and plan, for some of whom will have digital assets which introduce other nuances and wrinkles. You also have families that are thinking about privacy. And maybe could you talk a little bit about whether it's the role of private trust companies or some other type of structure that you employ as the as you called it, kind of the framework for helping make these decisions?
Matt [00:22:10] Yeah, I'm making a couple of notes. I want to make sure that we circle back to, um, because some of this, some of what I'm going to say applies regardless of. The level of crypto asset wealth within any given client's estate, and the sum of it is going to be focused more on clients who have very heavy concentrations of assets. Anytime you're dealing with digital assets that have. Consequential economic value. And I think consequential is really in the eye of the beholder. But we're dealing with a client. We're dealing with a very complicated asset that probably your garden variety trustee is not going to be able to get their head around, because very often what we've seen in our practice at least is more often than not, one of the two. If we're dealing with a married couple, one of the two of those spouses is heavily involved in crypto and the other one it really isn't. They might have some awareness of it or they may be completely in the dark, but odds are they're not always on an even footing. And so if the crypto. You know, like the crypto expert client is the one who dies or becomes incapacitated, dealing with not just the mechanical transfer of the digital asset to or for the benefit of that survivor or for their children, but also helping them understand how do you liquidate this? How do you borrow against this? How do you hold this long term inside of a trust? Have we navigated pesky things like the prudent investor rule that allows the to hold digital assets that so highly volatile? And then when when we're dealing with large concentrated positions in digital assets, which is really where most of our clients are now, we really have to think through things like, again, the prudent investor rule. We have a heavily concentrated position in a highly volatile, often thinly liquid asset. How can we otherwise justify holding that? You know, within a fiduciary structure, like a trust, without violating state law, without compromising our fiduciary obligation to administer the trust for the benefit beneficiaries. So we have to really think through how do we waive the proven investor rule? How do we create instructions for the fiduciary to manage this asset long term? We have to think through all that stuff. But then. From with it. Now we've got these irrevocable trusts that have high concentrated positions with digital assets, or it's private equity or venture or concealed company. It doesn't have to be crypto. Any heavily concentrated position that's a maybe an outsized portion of the client's estate is going to serve as a trustee for that. You know, if you if you name your golfing buddy or your brother in law, well, they're probably not competent enough to do it and they're not immortal. So they're going to have to be some transition at some point. So naming a human doesn't usually work. Finding a trust company to serve as the trustee without diversifying those assets and while understanding and managing complex digital assets specifically. Good luck. I mean, that's really hard to find a trustee who's going to do that. And and a trustee is going to have the flexibility to adapt to your family's needs. Well, that's where the private trust company that, you know, becomes a very attractive solution for a lot of clients, because now the role of the private trust company, which is available in probably 20 different states, maybe more by now, you can actually create an entity that holds trust powers in one of our target jurisdictions, whether it's South Dakota, Nevada, Tennessee, Ohio, Wyoming, you know, New Hampshire, whatever. But we create a private trust company that's owned by the family, controlled by the family, but administered by a third party in that state that has trust powers. Now, that creates enough of an arm's length for tax purposes to separate the trustees function from the ownership of the assets inside these trusts. So now we can have things like highly concentrated positions on venture P crypto. Now we can say, well, let's borrow against the crypto instead of maybe liquidate it. Maybe we can stake that or stake some of the proof of stake asset within, you know, various staking services, whether it's in Defi or whether that's in qualified custodians. We can do that within the private trust company structure where we ordinarily cannot do that within a conventional trust structure. There are other layers we can add that create some different levels of flexibility. But really, we're talking at this level of family control. And the family control does then lead into some of the privacy, which is part of why we part of how we also make decisions between what jurisdictions do we use, what types of entities do we use in order to create higher levels of privacy? What's the.
Justin [00:27:23] Cutoff? Before we go into the privacy aspect, you've raised a couple of really, really interesting topics. What's like the mental model for when a private trust company begins to make sense for a family from a wealth perspective?
Matt [00:27:37] Yeah, I'd say there's probably not a true bright line on that. But and it's also going to depend on what jurisdictions we choose, because some some jurisdictions have higher levels of compliance necessary for private trust companies. So then, you know.
Justin [00:27:51] Cost structure increases.
Matt [00:27:52] Yeah, cost structure increases. And so therefore it doesn't make sense for like, for example, South Dakota has a great I mean, South Dakota is probably my favorite jurisdiction for U.S. domestic trusts. However, it's not my favorite jurisdiction for U.S.. Private trust companies, because you have to have a heavy, heavier oversight by the state banking authority and you have to post I want to say it's like a half million dollar bond or otherwise pledge assets to the state for oversight. You've got audit requirements, you've got a higher level of bureaucratic compliant, which is appropriate for a lot of families. But for a lot of clients, I see this whole thing is new to them. We want to start with maybe like the training wheels version of the private trust company. And so that's when I often use Wyoming. And it's I don't mean to denigrate Wyoming by any means. I'm probably more bullish on Wyoming than any other state. But Wyoming has an unregulated private trust company model that has no oversight by the banking commissioner. It's a very light touch. And so I would say that if we're dealing with something like a South Dakota company, we'll probably look into the 75 to 100 million plus range before it starts to make sense. But then the clients are going to have to be willing to swallow a higher level of administrative compliance requirements versus in Wyoming, that can kind of scale down to maybe 40 ish to 50 million of the value of the assets inside these various trusts. And just a much lighter touch from a administrative load perspective. All of these things have administrative loads because you've got to what you build, the strategies, the strategies have to continue to operate. And so that's a lot of what we do. But for clients who are highly affluent but fairly new to the complex planning realm for the trust company does make sense because they've got 40 or $50 million of fairly concentrated assets. Held in trusts, and especially when they now want to create a framework where this wealth will cascade in trust for the benefit of multiple generations. Then a private trust company makes a lot of sense because it then creates kind of institutionalizes the family controlled decision making process for children someday, for siblings, perhaps for other trusted family members and trusted advisers to all play a role in helping to manage this family's wealth long term instead of just, oh, yeah, I've got a trustee that I use out in Cheyenne or in Sioux Falls or wherever it is.
Justin [00:30:33] How about the privacy aspect of it now kind of jumping back in? So you've got some different jurisdictions, depending on the complexity of the estate and familiarity with the client themselves, with the regulatory burden that may be implicated by the choice of jurisdiction. Mm hmm. How do you maintain privacy in this case? I mean, you're talking about people who are, as you've mentioned, perhaps into millionaires. Now they're registering a entity with the state banking commission and making decisions about assets that are, you know, significant. Well.
Matt [00:31:12] Yeah. Me again in the. On the one hand, I think that argues more in favor of a Wyoming based private trust company because again, you don't have the regulatory oversight from the state. And you know, it's no coincidence that the best jurisdictions for trust planning you know by which I mean the most protective from an asset protection perspective, the ones that have the longest rule against perpetuity is that allow these trusts to continue for as long as possible. It's no accident that those most desirable trust jurisdictions also have these private trust company statutes. But in Wyoming, again, you don't have bank regulatory oversight unless and until it becomes appropriate for you to seek a charter. In some cases that might make sense. That gets a bit granular, but, you know. Part of this whole privacy conversation is, okay, well, if I'm a family worth hundreds of millions of dollars, maybe I've just had a successful exit. Maybe I'm an influencer in the web3 space and people know me. Probably want to keep a low profile. So maybe I've got some real estate in Malibu or I've got some real estate in Miami, or I've got some real estate in Seattle. But maybe I've wrapped that within a limited liability company, either in South Dakota or in Wyoming or someplace like that. And that asset is wrapped up inside one of these trusts, and that that asset is wrapped up and overseen by a private trust company that is not subject to oversight by the banking regulator. Now, we've got a higher level of privacy, at least at the state level, and at least insofar as reducing curiosity seekers access to information. So if Justin is a, you know, super successful founder of a company that just explodes in value and now you have this great exit, you want to go buy that beachfront home in Southern California. Well, if I go to Malibu.
Justin [00:33:15] Like we talked about.
Matt [00:33:17] Yeah, there you go to Malibu. So we just Googled. Justin is from limited wealth. And Oh, he just bought this home on the Palisade in Malibu. Okay, well, now we've got a problem because curiosity seekers often don't have your best interests at heart. But on the other hand, if they Google that address, who owner who lives in that beautiful house up there? Well, it's some limited liability company that limited liability companies filed in the name of the trust. Well, those are all private, so you can't even find that. So then just it's a personal security thing. It's also a privacy thing. But I'll tell you that one one of the things I'm really are you're kind of wrapped around the axle about is this privacy thing. I'm really kind of focused on this. Privacy occurs in in degrees. And one of the things I always advocate for clients is they don't don't name it the Justin Gilder irrevocable gazillionaire trust, you know, come up with some name that is meaningful to you and your family. Maybe it's the name of a favorite vacation spot or the name of a favorite beverage or whatever. And so it's like owned by the, you know, whiskey Sour trust. What the hell is that? So it's not like just can't.
Justin [00:34:37] Be your favorite drink.
Matt [00:34:38] It's not. It's got a lot more a smoke smell, dirt fashion guy these days.
Justin [00:34:43] That makes sense. Especially out in Colorado.
Matt [00:34:46] Yeah, right. But then so there's there's privacy from curiosity seekers which is fairly. Straightforward. You know, just so long as you think about it, you understand the strategies involved. You know, you can create privacy and curiosity seekers for a lot of clients, especially in the crypto three space and or clients who have international contacts. There is this law that was enacted a couple of years ago that now goes into effect January one of 2024, called the Corporate Transparency Act. And this Corporate Transparency Act is part of this effort by the federal government to collect all this information. You know, they say it's too. Curtail money laundering and funding terrorism and that kind of stuff, all these kind of noble goals. The problem is it's so far reaching that it's going to gather up information of every single limited liability company that was established purely for family personal wealth. So if you have your LLC and let's say let's say that you create a Wyoming Limited liability company, which is a highly private LLC statute, you've got to file in order to establish that. You got to file that with the Wyoming secretary of state. That filing is now going to trigger a compliance requirement for you effective January one of 2024, to now register that limited liability company with the Financial Crimes Enforcement Network inside the Treasury Department to disclose the name, address, date of birth, and Social Security number, or special FinCEN registration number of the beneficial owner and the control persons of that limited liability company. Even if you are not doing commerce, even if it's just family wealth. The fact that you had to register that with the Secretary of State is now going to trigger a disclosure requirement to the Financial Crimes Enforcement Network. And that what gets me so agitated about this is the insinuation that just because I've got a limited liability company for managing my family's wealth. Now I am. It is assumed that I am committing financial crimes and therefore have to disclose to the Financial Crimes Enforcement Network in the Treasury Department. It's this assumption of culpability or guilt just by virtue of having this LLC. So there are some potential. Opportunities within that. But for clients who are really client, for clients who are not concerned about disclosure to the United States government, fine, maybe it's not that big of a deal, but for a lot of the clients that we see, they say, wait a second, why am I being? Why do I have to disclose all this to the Financial Crimes Enforcement Network just because I created a Wyoming LLC or my real estate?
Justin [00:37:44] So I assume some of the clients that have that perspective aren't really concerned necessarily with the government per say, having the information. It's more where does that information ultimately become accessible? I mean, we've seen government leaks of highly classified OMB data and here we're giving over this data to FinCEN for KYC processes and beneficial ownership. But there's no guarantee that this information will stay secure. And we're talking about families who are doing this for privacy reasons.
Matt [00:38:21] That's that's exactly right. Because the under the law, this is supposed to be a private, secure database. It's not supposed to be searchable by the general public. But to your point, the problem is it is until it's not. And then once you know, once that genie's out of the bottle, you're not putting it back in. And so the law creating honeypot.
Justin [00:38:42] Well, exactly right.
Matt [00:38:43] And so it's it's it can be a honeypot for some of the worst actors out there. And for a lot of our clients, it's not just a matter of privacy. It's a matter of personal safety. So let's say that you're a successful family in Latin America or in Eastern Europe, and and you pass OFAC checks. There's no there's nothing spooky about you at all. But, you know, you're a very wealthy person in parts of the world where if the level of your wealth and the location of your wealth is known, then you've got, I mean, truly dire personal security problems. And now if we disclose that to the database and the database somehow gets breached. You know, you can have a real problem on your hands. And, you know, so again, for, you know, this disclosure rule is not voluntary and the cost of noncompliance is severe. Up to a quarter million dollars worth of fines up to a decade in federal prison. And it's not really the family necessarily who has to make the disclosure. It's people like us who actually establish these these entities. It goes to the people who formed these entities for the clients. And so, you know, it's it's just really I perceive this as a very overreaching invasion of privacy for a lot of clients. And so we work on strategies that hopefully kind of. Find the opportunities within the and within the law to obviously within the law to correct find ways to not have to do this disclosure.
Justin [00:40:19] So if we have the smoked old fashioned trust, creating this LLC does the requirement. Roll all the way up to the ultimate maybe it settlor or beneficiary of that trust to report or does it stop at that kind of trust level?
Matt [00:40:38] It rolls all the way out. Rolls all the way up. It looks they looked through to the individuals. And so, you know, things like if you have a direct trust ownership of the asset, okay the trust so that the trigger the you know, my best understanding of the law as it exists now and I've actually read the actual the Federal Register that shows the statute. Um, it appears that the trigger is registration with the Secretary of State. So if you don't have to register with the Secretary of State, then I believe you are not required to disclose. So things like trusts don't have to register with the Secretary of State. So that's one option. There are other structures perhaps that. Are within the exceptions to this new disclosure rule. You know.
Justin [00:41:34] If you need the answers, you're going to have to come to McClintock and Evergreen legacy planning, right?
Matt [00:41:39] That. Well, that's right. Because, I mean, quite frankly, I'm not going to render direct legal advice on a podcast. And secondly, I don't want to speak to publicly about what we think the opportunities are because we don't want those opportunities to go away through subsequent legislation. Because, again, I feel so strongly about the fundamental human right to privacy and that if. If the government wants to allege that I'm violating the law, then the government has to prove that they don't need to just. They can't just say, well, hey, because you have this entity, we don't care why you created this entity, but because you have that entity, you have to register with FinCEN. So we can then know every single LLC that's filed or registered in the United States so we can know who's doing what. That that just seems like profound overreach and a violation of our constitutional rights to privacy.
Justin [00:42:34] Yeah, absolutely. We could get into some constitutional issues, too. That would be kind of interesting, but we'll save those for another conversation, perhaps. You know, and I'm not in the schedule either.
Matt [00:42:44] I'm not a constitutional law lawyer, but I do get really wrapped around the tax law on privacy.
Justin [00:42:49] I totally understand. Let's change gears a little bit. You know, we've talked a little bit about the role of private trust companies and we've talked about some of the domestic jurisdictions. How about international jurisdictions and estate planning? You know, are there some that come into play for your clients? And how do you think about balancing what needs to be hot something domestic? Comverse International, and both for a U.S. citizen as well as perhaps an international. So.
Matt [00:43:21] Yeah, that's that's a huge question. Well, I'll try to kind of focus maybe first on the U.S. client. When we're dealing with clients with significant wealth in the. Again, the clients that we're seeing, 50 million plus typically. They often. Are concerned. And if they're not concerned, they should be concerned about jurisdictional risk being fully concentrated in a given jurisdiction. Any jurisdiction in the U.S. is still a great jurisdiction. It is worldwide is one of the more private jurisdictions, although we just talked about how it's being eroded a bit. It's a solid rule of law versus rule of man type of jurisdiction. So the U.S. has a great jurisdiction, which is why a lot of international families want to bring capital here. That's a heck of a lot safer than their home jurisdiction. But even for a U.S. client who's highly affluent, a lot of what we're seeing is concern about perhaps the devaluation of the United States dollar in the wake of the really unabated quantitative easing that we saw for the last decade plus with low to zero interest rates. And they say, hey, wait a second, the dollar is still a strong global currency, but it is being eroded now. And how can I hedge against that maybe with assets that are either not denominated in the U.S. dollar, maybe it's foreign currencies like the Swiss franc, maybe it's the Singapore dollar or other things like that. Or maybe it's a matter of having wealth actually physically outside of the United States because they're concerned about, you know, really on the extreme level how collaborations with people that are concerned about actually confiscation of private wealth. I'm not in that camp really, but some clients.
Justin [00:45:17] Are by the U.S. or by another jurisdiction.
Matt [00:45:20] From the U.S. I mean, some of them are so doomsday about the United States, which I don't personally share this opinion, but some of them are so concerned about the direction they perceive the economy and society going in the United States. They're concerned about confiscation of wealth. Like I said, I don't share that concern, but they do. And so they want to then say, well, how can I physically remove some of my assets from the United States? So that confiscation is not a concern or at least less of a concern, but more slowly, more realistically, clients are concerned about getting part of their wealth exposed to non dollar activity, non direct correlation to the U.S. dollar. So whether that's, you know, physical precious metals held in Switzerland or in Liechtenstein, whether that be in Bitcoin, held in cold storage in Singapore, whether that's ether that is held in cold storage and or staked through a private bank in Liechtenstein, there are a lot of clients for whom they're looking for some jurisdictional hedging, which I think is just smart. I mean, if all of your wealth is tied most directly to the economy of any given jurisdiction, no matter how good that jurisdiction is, at a minimum, you're missing direct opportunities in other rising markets. And you can buy exposure to those markets through ETFs and stuff like that. But those investments are still denominated in U.S. dollar terms. But if you instead have direct physical ownership, physical custody of non-U.S. dollar assets in reliable foreign countries, then they have created a bit of a jurisdictional hedge. So if if you're right and the dollar does go down precipitously, well, now you've hedged that position with some non U.S. dollar denominated assets. And if you're wrong in, the dollar continues to climb. Well, as we historically seen as good as the dollar, so go other established currencies, you're probably going to win either way. It's just either, you know, did you lose on one end and you hedged? Or do you end up taking advantage of the rise in multiple jurisdictions? So what are some of.
Justin [00:47:34] Those other jurisdictions that you look at? You mentioned a few Liechtenstein, Singapore. What are the let's say, just top three jurisdictions if you're in an international planning situation? Yeah, I'd.
Matt [00:47:47] Say it's it's kind of like when you're establishing investment portfolios for clients just and I think that, you know, we look at from a legal perspective and from a jurisdictional perspective, we look at helping to have a strategic legal portfolio as well as a strategic jurisdictional portfolio, just as you look at strategic wealth portfolios. So we look at what is it you're wanting to achieve. If you're looking for alpha, then maybe you're going to put at least some of your wealth in these very bright, rising jurisdictions like the UAE. You know, so we're kind of generally bullish on where the UAE is going. However, as we see as goes, as goes returns, so goes risk very often. And the UAE is a bright star. It's an up and coming jurisdiction, but it's not as fully established as some other jurisdictions, perhaps like Singapore, which are also generally bullish on the Singapore is maybe not as established as a place like Liechtenstein or Switzerland. And so from a custodial security perspective, very often we want to have custody in those jurisdictions that have a very long standing rule of law with a very strong personal property rights and a very clear regulatory environment. And then we're looking maybe for investment opportunities in those more emerging markets, both where maybe we have some a little bit of capital risk there. But we've got the most important part of our capital secured in reliable markets like the United States through states like Wyoming or South Dakota. And Switzerland and Liechtenstein and Singapore. Now, that's kind of how we we look at that. And our our focus is really working only with qualified custodians all across the stack in those reliable jurisdictions. So if and when something terrible happens, like a market collapse that takes people like FDX and Celsius and others with it. Our clients assets are not part of the risk stack.
Justin [00:49:50] And are you establishing trust vehicles in those jurisdictions or is this ultimately still running through, let's say, the Wyoming Private Trust Company with a hub of a custodian in that international jurisdiction.
Matt [00:50:05] It trusts or not, generally is well known and widely respected in other countries as they are here in the U.S. and in places like the U.K.. So when we're dealing.
Justin [00:50:16] With common law.
Matt [00:50:17] Right, Common law versus civil law. So when we're doing offshore trusts, I would say that probably not. Probably. I'd say our favorite jurisdiction is the Cook Islands. They've got a great rule of law. We've got a very reliable trust code and they've built their. They build much of their economy around the secure trust economy. And the Cook Islands is not a black listed or gray listed country, but it's also not part of the common reporting standard that has this bilateral information sharing across the globe. Like a lot of other countries now do. So I would say that from when we're using trusts, more likely than not, we're using a U.S. domestic jurisdiction like the usual suspects. I've been kind of naming some of those or the Cook Islands when a trust is involved. But there are other entities that we often bring to bear, either within the trust wrapper or independent of the trust wrapper. So, for example, we might use a limited liability company, establish the neighbors in a neighborhood in Saint Kitts or one of the Caribbean countries. The U.S. has a great LLC statute that often works nicely with the Cook Islands. Trustee of the Nevis, LLC, owned by the Cook Islands Trust. That Neighbors LLC might have Bitcoin, might have gold, might have equities, might have fiat currencies all within that wrapper. And so it's now all offshore. But then we've got to figure out, okay, who's the custodian for that? Maybe the custodian. There's a Swiss bank, the Liechtenstein, a Singapore custodian, something like that. The other thing that we're looking at as well, increasingly is using a fairly new concept called foundation companies, using something like a Swiss foundation, a Liechtenstein foundation, Cayman Foundation, things like that. And a foundation company is not a I mean, it can be a charitable type of thing, but it's really that's not the definition of it. It's a foundation company is basically a company structure that operates for all the world like a trust. But it's much more common in civil law jurisdictions and throughout Europe. So if we're establishing, you know, Singapore or Liechtenstein or Swiss custody for a client here in the U.S., that may often run through one of those foundation companies, simply because the banking institutions throughout Europe and into the Middle East and the Far East are much more familiar with and less comfortable with that company type structure than a trust.
Justin [00:52:48] Very interesting. Very interesting. How about any unexpected twists? Have you had any unexpected twists when dealing with some of these international jurisdictions? Again, maybe an anonymized story here for us to kind of get a flavor of what could go wrong in this setting, presumably that some other attorney planned for incorrectly and then you cleaned up the mess. You know.
Matt [00:53:11] I would say that maybe that. How much of an unexpected twist it is other than just kind of a challenge that we run into, is like so much of what we're doing. I mean, we're we really are, you know, at the vanguard of a lot of this type of planning, not just for crypto, but kind of writ large. It's kind of multi-jurisdictional cross strategy structuring. So a lot of what we have to do is educate the financial institutions that we're working with. So the banks in Switzerland or the banks in Liechtenstein, the custodians in Singapore, helping them understand how these structures work. And I would say that probably one of the biggest. Surprises, maybe disappointments, is that all those financial institutions rightly have their KYC or know your client, know your customer requirements of gold. And that's that's great. They should. But it seems like the ball or the goalposts move a lot. It's like you onboard one client, everything buttoned up and you can only go going back and forth and they say, okay, great, we've done that with this one client. Now we have the very same structure with the very same custodian. And they say, Oh, wait a second, now we know we onboarded this client, but now we've got some different questions. So that slows down the process and we have to kind of do some back and forth with the client, the custodians, to keep everybody happy. And then the other thing I think, especially with crypto, is because it is such a new asset, clients who have had significant amounts of crypto for a long period of time, the provenance of the crypto that they have can be a little bit murky. Maybe it's gone through some tumblers. Maybe they don't have the compelling story for how they came across that Bitcoin in the first place. We have literally had clients who said, Well, when I got into Bitcoin in 2012, the only way you could buy it was by sending 20 bucks cash in an eyeball up to some dude in Canada and he'd give you private key and that's your bitcoin. How are you going to tell that story to a bank that's 300 years old in Zurich? It's like, good luck. And so, you know, helping create the narrative around, no, this client's not a terrorist. You know, everything is above board. And yes, this, you know, helping them kind of get used to applying their conventional banking trade to this new asset class has been one of the biggest challenges that we encountered. But it's it's just like what we've done from a legal perspective, applying these legal strategies to this new asset class is very similar. But now we're dealing with custodians. I have to say, wait a second. This client got $600 million in Bitcoin and they were mining it back in 2014. Okay. That's helping them understand that well enough. There's a lot of education that has to go in when we're dealing with these international structures.
Justin [00:56:06] It seems quite complicated. We see how complicated is here to have like the traditional finance and regulators cannot get up to speed on what this asset class means. So the complications abound, for sure. Let's let's kind of go back a little bit to an earlier part of the conversation. We talked a little bit about family planning and, you know, getting the qualitative aspects right, not just the quantitative aspects. And I know we have talked about how private trust companies can help institutionalize family decision making, maybe dive in a little bit deeper there. And like, what does that mean for a family that has young children or children who haven't yet kind of made their own life yet and so are still part of kind of like the family unit that is dealing with this legacy planning.
Matt [00:57:06] Well, I guess I would say that it all argues in favor of a relationship and an iterative approach to this whole thing. And that's that's why, you know, family offices like yours and the kind of work that we do is so important because it's not just it's not just transactional. Hey, set up this thing and call me when you've got a problem. It's a matter of. You know, adapting over time. So I think just a very. But really from the very first conversations we want to have with people, it isn't helping them understand. This is necessarily a gradual, iterative process. And there are some there's some big lifts that we need to do on the front end to get these structures in place. And we're probably going to put the sum of not all, but some of those qualitative, more human kind of conversations really kind of put those on the back burner for just a little bit. We're going to forget about them, but we've got some mechanical heavy lifting we got to do in choosing the right jurisdiction, though, either tax all this stuff. But then part of again, the fact that this is we're dealing with your wealth and we're dealing with the economic measurement of your success, that's going to change. You're going to change. You're going to be used to these structures, some of these structures. You're not going to like how we're going to adapt them over time and then how do we get the right people in the right seats at the table helping you make the decisions concerning your wealth. And so it just becomes a dialog. And then as you know, as we start to bring in more voices from the family to the table, we then help the family identify whether it's counselors, psychologists, there's a whole there's a whole body of science around the psychology of wealth. We're going to help them. We're not those guys, but we can bring in people like that to help facilitate that. It just becomes this gradual, iterative process, which I think cries out for family office type solution, which is why we've kind of built things the way we've built them to kind of shepherd the strategies long term.
Justin [00:59:15] So when the children are in this kind of second generation, they were not the wealth creator, but they're now experiencing tremendous wealth, as you mentioned, kind of vacations on a Gulfstream, right? Real first world problems, 1% problems are happens, 1% of 1%. How does a family begin to bring that child into the process of understanding, you know what this kind of legacy planning process means and the fact that, you know, unfortunately, we're having to solve this and we're going to die. And so you're the parent in this case, the entrepreneurial class is going to pass and there's going to be obligations of the next generation and presumably to take care of wealth for multiple generations to come. Like how do you deal with that psychologically and how do you bring them into that first set of conversations?
Matt [01:00:18] Well, I mean, to a certain degree, I mean, it's got to be age appropriate, so. And really the client is probably best. In the best perspective to know when to bring the kids in. They know the kids play better than anybody else does. People like you and people like me who are adviser to these families. They part of it is making it part of our dialog with them. We're not just talking about their financial returns, not just with the legal structures, but helping remind them of the broader meaning behind these strategies and then prompting them every 6 to 12 months or so. Hey, is it time to have a conversation? Expand that, expand the conversation. And for very many of these families, philanthropy plays an important part in their strategies. From a more cynical perspective, of course, it generates tax deductions, which helps from a financial perspective. But on a human level, what we what we hope to elicit from a lot of our clients is this perspective that we are well past escape velocity here. We've set up our kids for tremendous amount of success if we get it right, failure if we get it wrong. But then is there a way that we can dedicate our money, at least a part of our money, to helping make this world a better place, whatever that means?
Justin [01:01:39] Very high.
Matt [01:01:40] Yeah. The stakes are really high. And so that in the family, so that longer family governance arc, the philanthropy conversation is usually a very low risk way of getting kids involved early on, even, you know, in their adolescence to say, hey, you know, we've been very fortunate, we've been very lucky, we've been very blessed. We've been what whatever the families languages we're going to give away. X dollars and it's not like a gazillion dollars, you know. You don't want to blow. The kids might be say, hey, you know, if you if you had to give away $5,000 to some organization, what would it be for and why? And just let the kids kind of start to awaken to the notion that, hey, all this great stuff that we have every Xbox game we ever want, whatever we want, whenever we want it. Wait a second. Maybe there is some value in me listening to what my teacher said about Africa or whatever it is, you know about the adults. What are the kids care about? Helping them kind of say, Wait, it's not. It's not for me. I've got to give it away that I give it to and why? So starting the conversation to let the kids see the world bigger than themselves is a great place to start. And then as the kids grow, usually into high school and college and beyond, the family often starts to see okay. Or the kids more interested in the arts. Are the kids more interested in the sciences? Are the kids more interested in finance and economics? Then maybe the kid starts to get a junior seat on the investment committee within the within the family's private trust company. And we say, okay, well, now you've got $100,000 to invest. Where are you going to invest it? Why? What's the use case? Make the case for it. Stress test the kids decisions. You got to do something in the arts. Okay, great. How do you make the decisions on where you're going to invest your time? And so it's just part of those dialogs. And then ultimately, someday, as these kids grow up, one of them or a committee of them are going to be the ones making all the investment decisions, all the philanthropy decisions, all the family activity decisions. And so you've given them these guardrails along the way to help them mature into the decision making process over time.
Justin [01:04:03] And so some examples of where this kind of like mental model of how to think about to whom to give money or into what investment. That's worked really well with children, perhaps at an age younger than you expected them to make a great decision.
Matt [01:04:22] I would I'd have to say probably not at an age younger than I would expect them to make a good decision. But I mean, I've worked with families who have had kids that are, you know, 20 years old who are so focused on themselves. You know, it's just that stage of life, you know. Frontal lobe isn't fully formed, so they're not making great decisions, but. Say, okay, well, look, we as a family are going to give away $30,000 this year. The money is already given away. Maybe it's sitting in the family foundation. Maybe it's just sitting a donor advised fund. But the money's already given away. So you can't you can't keep it. You can't give it away together as a family. So we have to give this money away. And I want you to be responsible for giving away 20% of this money. First of all, calculate 20%, and then. Do you want to give it all to one organization? Do you want to spread it around? Where do you think you're going to have the most impact and just make a case for it? And what what we've seen works really well is when you have that conversation and then you really give the kids room to run and then, you know, now you've got this pool of money that you're going to give away already. Then you have a family conversation about what did you find? Why do you decide to give it that way? Unless there's something just really harebrained or, you know, violates everything the family believes in. Then you just cut the check and it's done. Yeah, that's. That seems to be a very healthy way to get kids involved in the family financial decision making. They have a they start to understand that as this family has more money than they really need. And there are some needs beyond our family that we can actually play a role in impacting in a positive way.
Justin [01:06:16] That's a it's a very lofty goal and it sounds like you've got a lot of frameworks to help families think through that. You mentioned something that I think we can dive a little deeper on donor advised funds. How does a DAF work into the process that you typically employ for clients? Maybe a little background of what those are as well.
Matt [01:06:39] Sure. I mean, donor advised fund is simply a charitable fund set up inside of a financial organization like, you know, a lot of large financial institutions are, if you want to name names, not but there are a lot of financial institutions out there that sponsor donor advised funds.
Justin [01:06:53] Until they sponsor the podcast, we won't name any names.
Matt [01:06:55] There you go. There you go. But basically, it's like a very conservative brokerage type of account. So you basically at least retain economic value inside there. You're not going to do a ton of alpha. But the idea is you can basically set money aside for current year charitable deduction because it's already given away to a not for profit or nonprofit type of vehicle inside of a broader financial institution. And so you basically say, well, we need to give this money away often because we need to generate a deduction. But then it's like, but I don't know who to give it to yet. So then you'll make a gift this year to the donor advised fund. You get a deduction this year for that gift. We say, well, you know, maybe we have to give away so much. Maybe we wanted to give away so much. We don't know who to give it to yet. It kind of creates this family endowment, charitable endowment of a sort. The family says, okay, well, now we've already given away X hundreds of thousands or tens of thousand or whatever it is. So we've already give it away. Now, where do we distribute it? So it's a it's a really great low touch, zero cost way of generating charitable deductions and earmarking money for these future family philanthropic conversations. They're often referred to as a poor man's foundation. But I think that's a little bit of a I think that is unnecessarily negative sounding. Are they donor advised? Funds are great. I have one myself. And I you know, I think they're fabulous.
Justin [01:08:29] How long can the money stay in a donor advised fund and how can that money be invested in an interim? So if you were to make a, say, $10 million little gift for tax purposes into a donor advise fund, you know. You have to distribute it the next year. You have to you.
Matt [01:08:48] Know, you have to distribute the next year. But, you know, honestly, I don't know if there's a technical answer, if that depends on custodian, the custodians. I'm not an expert on this stuff. I'm good at other stuff. But that's one's a little bit beyond my skill set. I will tell you that if you're making a $10 million contribution, you probably should be doing that to a dollar advice fund because now you're talking about institutional level giving. As a family, it might start to make sense to create a supporting organization, maybe a family foundation. If you're going to do this over time, or maybe you're going to work with one or more community foundations in your local area or some faith based organization. If you if you got a synagogue or if you've got a church or got a, you know, a mosque or something that you're really close to or some cause more broadly a university of some sort, but then you're really talking about much more strategic type of giving. I usually I.
Justin [01:09:43] Mean.
Matt [01:09:44] There's not a bright line that I, I kind of start to think of if you're going to start giving away millions of dollars, donor advised fund is probably not where you want to give it because also as I mentioned, the the investment portfolio available in the donor advised funds, at least that I'm familiar with, are pretty conservative. And so the idea is it's not to lose value. You want to preserve that value. So it's going to be in very conservative type of investments, usually an equity mix or something like that. So. Abroad doesn't make sense for for big gifts like we're.
Justin [01:10:19] Assuming now that we're talking a little bit about philanthropic giving foundation or giving, we're starting to touch into this kind of legacy concept, right? Like somebody has created intergenerational wealth, they created a private trust company structure with your help. They got all their jurisdictions mapped out properly and they start to turn their mind to legacy in the sense of they will be gone. And yes, they've taken care of their children. How did you help them Think through what it means from a broader sense? And, you know, do you ask them particular questions? Do you do they come often with their own viewpoint and you don't mean to help them through that? What do you what do you bring to bear in that legacy conversation?
Matt [01:11:11] I'd say it's a mix. I mean, some some clients are already having those thoughts. I would say. I would say that more often than not, the ultra affluent client is is driven largely by tax savings. And so that's, you know, that's top of mind. That's easy to measure. They know how big a check they've got to write each year. They want that check to be smaller. And so that's often what motivates them to have initial conversations. This, I'd say that's probably. You know, in the 70% range, maybe a bit higher than that, the 30%, you know. Yeah, they're aware of that. But then they have this realization that we're talking about dumping a ton of money on our kids lap. How do we keep them from becoming a holy terror that's just, you know, privileged and silver spoon and all this kind of stuff. So it's a mix. I will tell you that. We start from the very first conversation. Ask them what this is all about. You know. Yeah. The tax stuff is important. Tax stuff? To a certain degree, it's it's complicated, but you kind of know when you got it and kind of don't know when you don't have it. So you can fix that almost mechanically or almost by formula. But then you have to ask, what does this money mean to you? And. And if you're thinking about. Giving this money to your children or to your siblings or to other people inside your family, how much is enough? How much is too much? Is there such a thing as too much? How? If you look at the qualities that you want your money to enforce or reinforce in the lives of the people that you're going to leave behind. What does that look like? And so just to kind of tease those questions out, because what we've seen a lot is that the clients that we're talking to have never really been asked those questions by a guy like me. You know, they've been kind of sold a strategy or they've they've sold to the tax problem and then going on down the road, they don't really have this broader conversation. Well, wait a second. Yeah, you're right. It's like my kids don't need half a billion dollars. Maybe your kids do. That's fine. But a lot of our families that we're dealing with, like, you know, enough is enough. And especially in the crypto space, at least, what we've seen is that this money. Kind of has this self acceleration. You know, it's like it's easier to make you know, it's hard to make your first million. Once you buy that first million, the second one comes faster and the next ten even faster and the next 20 can come faster. And that's even amplified and more so in crypto. So a lot of these clients, they realize this this thing can get out of control if we're not careful. So we help them at least explore what that what that looks like to them.
Justin [01:14:14] And let me explore what it looks like for you, right? You're in the business of legacy planning. You've guided many clients and families through the challenging process of planning for their inevitable death. You've led them through this process to help them articulate their values, how those values would be expressed it intergenerational and philanthropic wealth transfer. So you think often about legacy giving names, your business evergreen legacy planning. So how do you want to be remembered by those who you love the most, and what do you want to be your legacy?
Matt [01:14:47] That's a great question. I think that. Most broadly, you know, it all kind of get to the family sitting here the second. But I think most broadly, I would like to be remembered as a guy who helped pioneer maybe a new way of thinking about this industry. I believe that the quality of the work that we produce, if you're just looking like a strategy, the strategy, I'd put our work up against literally anybody. What I think we probably excel at is this human side, because. No. We think that's really what matters. We think that the relationship matters more than anything else. So, you know, I'd like to be remembered as a pioneer who. Connected well with the technical and the human side of. Wealth strategy planning structuring the. And part of the reason why I named it legacy planning instead of estate planning is that when you think of estate planning, you think, Well, I'm going to die. Well, yeah, that's right. But there's a lot that you're going to do before you die. Hopefully we're planning from now and we're planning for ten years from now. And we're planning for, yes, that ultimate eventuality where you've had a stroke, you've been hit by a car or you've died. Yeah, that that's going to happen to all of us. There's a lot that's going to happen between now and then. And so part of your legacy is being intentional about your wealth, whether it's whatever that means to you, whether that's around privacy, whether that's around asset protection or that's around philanthropy, whether that's around tax mitigation, whether that's around creating a family governance structure to help your kids grow into this wealth and intelligent ways. That's what I mean by legacy planning. You know. So that's that's the way I see the world. And I want to be part of the legacy I personally want to have is to create an organization of professionals who who see our clients as humans first and who see our collaborative partners and even see our competition as humans first. And. Really not objectify a client because of the size of their balance sheet or because of their celebrity, but really get to know them as a human first. And if we get a chance to work with them, that's even better. But if even if we don't, hopefully we've had a chance to communicate with them on a personal basis and make a positive impact in the conversations that we've had, that's that's what matters the most to me and making it even more personal for me. That's what I want to be known for with with my family. You know, whatever level of economic success I, I may end up with. I don't want to be known as the dad or someday the grandpa who, you know, spent all these hours building something crazy and cool and lucrative and, you know, missed opportunities with his kids, missed opportunities with his grandkids and was was basically a jerk to the people that he they interacted with. Sure. Yeah. Sometimes you got to have tough conversations. But if you have tough conversations in. You know, in respectful ways that honor the human. On the other side of the conversation. That's about the best we can hope for, because ultimately, the way I see my role in this world and the success I will have in this world is only through the ripple effects of the people that I touch in my life. And I have a choice to either touch them in positive ways where I'm highly engaged with them, bring them my form, bring the fullness of who I am to them, or in negative ways where I'm, you know, at best disconnected and at worst, you know. A jerk. So that's what I'm that's what I'm striving for in my life. And I try to have that echo in my business.
Justin [01:19:19] Matt, this has been tremendous. Such a great little conversation, enlightening in many ways. And also, you know, the human connection came through and I really, really appreciate the time today. Can't wait to get out to Colorado again and have some smoke the old fashioneds together and talk a little bit more about some of these things. So thank you again so much for joining me today and really appreciate it. Look forward to talking again soon.
Matt [01:19:45] Yeah. Thanks a bunch. Thanks.