BTC227: Bitcoin, Taxes, and Smart Estate Planning w/ Jessy Gilger (Bitcoin Podcast)
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Hey everyone, welcome to this Wednesday's release of the Bitcoin Fundamentals Podcast. This week I have special guest Jesse Gilger on to talk about current events in Bitcoin, estate planning, and smart tax strategies for investors. As you'll see, Jesse is a wealth of information and someone that makes the topic exciting and accessible for the listeners. So with that, let's jump right into the interview with Jesse.

Celebrating 10 years, you are listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pysh.

Hey, everyone. Welcome to the show. I'm here with Jesse, and we've got a lot to talk about, Jesse. We had a pretty fun experience together out in Jackson. We were skiing, and we just happened to be fortunate enough to be out skiing with a couple of Olympians by chance. And I don't know how you felt after this.

And we'll talk about this quickly and jump right into the content. But this is like too cool of an experience to not talk about. This was nuts to me. So I had skied as a kid and, you know, really haven't skied all that much as an adult. And, you know, we were at a conference. There were some people that were Olympic skiers, and we just happened to be able to spend the day with them on the mountain. And I don't know about you, but like how I felt after I was done, I told my wife, I said, I feel like I played Russian roulette.

and won and like made it out of the day alive and didn't kill myself. I don't know how you felt, but I was pressing my comfort level. Yeah. For the record, I was on the Preston side of the keeping up with the Olympians. I was not, you know, one of the Olympians and the things these guys were doing were just completely humbling, right? Preston and I, I was pushing myself to my max and they were skiing the same mountain backwards, just relaxing. You know, it was...

It's quite an endeavor, try to keep up with them. And yeah, an experience I will remember for years to come. Preston Pysh : Forever. I remember I called my dad afterwards and he's like, "You're not going to believe this experience I just had." But it was miraculous. I mean, we were moving out. How I didn't kill myself that day, wow, it was crazy.

it was great it's a tough mountain right jackson is uh we're talking to one of them they said oh favorite in the whole world yeah essentially everything that was top of the list for him so yeah congratulations you made it out i kept looking over at you because i knew you were kind of at a similar skill level with me but wow that was crazy hey so you went to a traditional finance conference after this ski adventure we had

Talk to us about this. What was your takeaway? What can you share? Yeah. So I had a bit of back-to-back. I did the Ski Conference, and then I got to go to Austin for the South by Southwest Bitcoin Takeover, which is a largely Bitcoin audience, lots of Signal and probably names you've had on the show before. And then right after that, went to one of the more well-known TradFi conferences, and it was the complete opposite from a Signal standpoint. So I got

I got delayed in the flight, but as soon as I landed, got in the conference, I learned that Michael Saylor was speaking at it. I was like, "Oh, I've got to catch this. What does Michael Saylor have to say to a traditional finance audience?" Got to the stage and seats were a third, maybe half-packed. Most people attending other events and Saylor is describing what he's up to with releasing and arbitraging new products for

essentially adding volatility to his stock. And this is breaking the minds of traditional financial advisors. Got to have conversations with them afterwards and they're like, "This is reckless. This is a complete scam. He's going to blow everyone up and we need to steer well clear of this." And I'd say the general consensus amongst traditional financial advisors is eight, nine out of 10, do not go near Bitcoin. Don't touch it. Don't talk about it. So

What was the general take at the conference with the current administration and everything that they're doing from like the strategic Bitcoin reserve?

Is any of that being talked about or is it still just looked at as being this real novelty, weird, he's placating his voters kind of thing? Nick Neuman : If anything, it's the second. I would say most people, it's not even on their radar. You brought up the strategic Bitcoin reserve, it's the what? It didn't make it to their news feeds. And then if it did, it's like, "Oh, that's cute." He's probably placating to some audience and making some voting constituency happy with a promise, but not taking

taking it as a serious asset. And we just maybe rewind a little bit to what I get to do day in and day out. I lead Sound Advisory, which is Unchained's sister company. Unchained does Bitcoin products. Sound Advisory does wealth management, financial planning for Bitcoiners. And so it's very common for me to see someone who has 50% of their net worth, 80, 90% plus of their net worth already in Bitcoin and using multisig

key control before they ever even get to us. And then so hopping from that type of Bitcoiner to the traditional financial advisor, there's just a giant gap in knowledge between the two. And I got to see them back to back, one conference to another, and it made me realize we are still so early. There were many conversations I had with advisors. They could not believe the type of

These are like the niche that we serve, right? Like, oh, that's very interesting. You've got people that are that crazy or off the deep end. And for us, it's a serious market that needs help. So yeah, just the juxtaposition, it got me thinking like, this is still very, very early. We're not even used to say second inning. Like, I don't think we're even in the bleachers yet. Game hasn't even started. Yeah. Well, I'm curious, what are they talking about? So the conference is called Future Proof.

It prides itself on being innovative, right? We're headed to the future. All of these new things are happening. And I think the most innovative thing that they talked about was maybe adding AI to record their meeting notes, which is the Bitcoin content. I mean, Saylor was poking at it. He was very explicit, like, hey, we are adding volatility to this situation. That makes a traditional 60-40 stock bond advisor just cringe. Like, you're doing what? Their phones were ringing off the hook because of a 10% correction in the S&P 500. And so-

an average investor can't stomach a lot of volatility, and it's something that a lot of advisors shy away from. And so the most common question I got was, I hear all this talk from Bitcoin believers that it's a store of value. Not for me, not for my clients, and they're nervous in a 10% correction, and that's a Tuesday in Bitcoin. And so I'm trying to help reframe some of those conversations, educate advisors, like, "Okay, we store value, but it's over 20 years. It's not a tomorrow store of value." And I think

Often as Bitcoiners, we're so deep down the rabbit hole that we've carved ourself into a rut with our language and things that we say that are just common to us. Most recent one I've been hearing is the Overton window. No, like a regular person doesn't know what kind of window you're talking about. Is that like a style or brand? We've got a lot of bridging to do to educate that. I mean, there's over a trillion dollars represented amongst those advisors and what they're managing, right? Billions and billions of dollars, one shop.

and 1500 people at the conference. And they're thinking they're on the cutting edge of innovation, yet avoiding Bitcoin, taking it seriously. Or I did see a lot of this too. There's so much ego that goes into being an advisor. You have to be right, have a good knowledge and understanding about money. And if you change something fundamental, like, "Oh, well, I think money is something different now." You're not only wrong to yourself, you have to go explain yourself to 100 plus clients. And so it's a hard

it's an ego death, right? If you're going to be an advisor who starts to take Bitcoin seriously, you have to not only change how you approach finance, but you're doing that on behalf of your clients as well. And so I think we've got a long way to go. It's an industry that I think sits on the cutting edge of innovation, yet they're ignoring something that's often a cornerstone asset for at least my client's financial life. Robert Leonard :

Preston Pysh : Yeah. And you know what? If you go to business school or let's say you majored in finance or whatever, they truly define risk as volatility. So when you'd have a guy like Saylor on stage saying, "Well, I'm basically taking Bitcoin's volatility and I'm bottling it up and turning it into a product for fast money on Wall Street," I'm sure they're just looking at this and be like, "This is a madman. What in the world is he doing? What's he talking about?"

To even begin to understand it, you first have to understand the core thesis of Bitcoin, which I don't think any, I hate using the word any, but very few even understand that, let alone the building financialization on top of it. Yeah. On top of, I think is a great word because the way I've tried to create a metaphor out of this is like they have a financial belief structure, right? The way they view creating plans and talking about allocations and

And the base of that is the what is money question, right? It's like a Jenga tower. And if you start pulling for those low blocks, like I'm going to change what is money in your mind and what it could be and how it might be broken, it just makes the whole structure crumbly. There's an instinctual reaction that, "No, don't touch that question." And you can tell them, "Look, Fed printed 3 trillion one night. There's the bottom, March 2020." Watch it go straight up. Everything, gas, beef, groceries, Bitcoin, gold,

Did all those assets get better March 21st? No. A Bitcoiner is very intuitive. Money's broken, money is better now with Bitcoin. And a traditional financial advisor just struggles with that low Jenga piece. There's a cringe when you go for pulling at it, but not that one. Yeah. It's so commonplace in our community, the Bitcoin community, to talk about how the real hurdle rate is basically like global M2.

that you should be trying to outperform. But I think in traditional finance, I don't even think that that idea or that concept is something that they would, first of all, agree with. Second of all, they'd be like, "Where's this number, this M2 number? What are you talking about?" It's not even- Robert Leonard : I would agree with that. I'd say inflation to a Bitcoiner is the expansion of the money supply. More currency units, inflation to

traditional financial advice is CPI. Trey Lockerbie : Whatever the government tells you. Yeah. So that becomes their hurdle rate. They quote it at three, we got to outperform three, S&P does a good job. It's like they're monetized. It's like a token, right? Like, okay, you're going to S&P as a baseline to outperform CPI over the long term. Trey Lockerbie : Yeah. It's wild to me how far, like you said it, we're still in the bleachers, national anthem hasn't even played yet kind of level of the ball game. And

what helps people start figuring it out? Is it just pure price action? Is it Bitcoin going to 500,000 and more people just questioning the narrative or what? Yeah. I've seen a lot of people start and continue their Bitcoin journeys over the years and you can't replace curiosity. And so sometimes, and price does a very good job of instigating curiosity. You have a

a 10X on anything. It's like, well, why did that happen? And that can start the digging for some people and they land at different conclusions or they start like an altcoin phase early in the journey, but it's got to be curiosity. And I've started to communicate with advisors that are curious. I can't make you a believer in this or I can't make you understand it. I can give you the information, but you have to, if it's going to be something that you believe, do the proof of work and get there yourself.

And so there are, unfortunately, some advisors are sitting on a golden goose of a 60/40 stock bond practice, have hundreds of millions of AUM, and they're just not interested in doing much more work. They're going to continue to ride that easy cruise control type of practice. And that's unfortunate. I think if I had a message to clients is, "You got an advisor like that? What are you paying them for? What's going on there?" So

Yeah. I think curiosity is something you can't replace, can't teach, and it starts everyone's journey. Preston Pysh : Let's take a quick break and hear from today's sponsors. Have you ever been interested in mining Bitcoin? As a miner myself, I've been using simple mining for the past few months and the experience has been nothing short of seamless. I mine with the pool of my choice and the Bitcoin is sent directly to my wallet.

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All right, back to the show. The thing that continues to just boggle my mind, and it's boggled my mind for years and years, is everybody that's gone to business school, everybody that's a financial manager, they know that you control the volatility, quote unquote, risk with position size. And so, right? But it seems like when you look at Bitcoin and you look at its performance and you say, well, why don't you own one or 2%? You even have BlackRock, Nucleus,

now coming out and saying they think it's appropriate for a 2% position. This was literally in Bloomberg probably two months ago, or I think before Christmas, that there was a Bloomberg article that came out and BlackRock thinks that a 2% position size in Bitcoin is responsible.

has large cap financial companies like BlackRock saying these types of things, do you think that that's slowly starting to make an impact or is it still just kind of like- Yeah. A few words slowly, right? Out of the 50, 60 advisors I talked to, I'd say like three are curious and starting to open the door in a reasonable way. Let's put another 10 in

"Okay, I could consider that, but if I'm going to buy Bitcoin, which Bitcoin?" They still got the blockchain, altcoin, lack of understanding there and not... Most advisors don't want to have to apologize for something. And so if they stick their neck out for anything, even a 1%, 2% idea, and they got to explain to the client why they're putting it in portfolio, and then it goes down by half or to zero, they'd just rather not do it at all.

What I'm doing works well enough to keep the client happy and not calling, and I have to meet with them two times a year, continue to collect my 1%. That's the apathy that I think exists in too big of a chunk of the tribe. Preston Pyshenko One other current event topic that I would love to cover before we get into some of the top questions you get as a retirement planning expert. Did you see this stuff with NVIDIA that came out this week with all the robots and the AI and

Oh, you haven't seen this? Oh my God. Oh my God. What is it doing? Well, so NVIDIA just comes out and I mean, they are just going to town on providing GPUs and software interface for basically pushing robotics at a pace that's like humanoid robots at a pace that I think is way faster than anybody's anticipating to the point where I'm hearing trials in factories this year, maybe even...

home testing, developmental testing this year, and then maybe even by next year, some initial prototypes going into homes. They're able to accelerate the learning through simulated environments that 10X the speed at which the robots can learn, the way that they're moving, the battery technology, all of this stuff. And I'm just looking at it and I'm saying to myself, I can't even imagine how deflationary this is going to be from a technology standpoint

in the coming five years and the amount of fiat printing that's going to have to be conducted to offset the technological deflation that this is causing and the dislocation and all these other things. And I'm just like, I'm watching all this Nvidia. Maybe it's because I put a lot of this into my Twitter feed that I'm seeing a lot of it may be more prevalent. Preston Pysh : That makes sense and breaks my mind at the same time, right? Because if you imagine where we were at with chat GPT two years ago, it's like, okay, well,

this is kind of cute and a tool and look what it can do. And now I'm seeing regular people use it as a necessary tool in their workflows now. Like, oh, you can't get rid of Chatubativa. I'm reliant on it. And that was the software side. And now you're talking about hardware and mechanical engineering and like, okay, well, if you take the growth of what's happening in software and you showed me Lynn Jackson, like watch me speak Korean. I don't know how to speak Korean.

Korean at all, but here I'm going to have some Michael Saylor commentary and it's going to take all of that content, change how my lips move. And then you gave it to your friend who was fluent in Korean. He said, it's perfect. Right. Yeah. And the software combining with the hardware, I can't even imagine how much the world's going to change. And he said five,

I've got to live 10, 20, hopefully 30 more years. Where does it all go? And it touches on that Jeff Booth idea. It's going to create so much productivity, which is going to cause deflation. And that's the kryptonite to the fiat system, right? And so- This is what the trade fight, if I had a big gripe, this is the thing that I don't think all those people in the room that you were there at this conference understand is that the technological deflation is an exponential curve.

And it builds, and this goes to Jeff Booth's thesis that so many Bitcoiners talk about is like the 50th fold of the piece of paper gets you from the Earth's surface to the sun because it's exponential. And when I'm just looking around at AI and I'm looking at robotics and I'm looking at, I'm saying the amount of printing that they have to do to offset this is just miraculous. It's out of our comprehension just within five years. And I

I just want to be able to scream it to the rooftops of traditional finance, like, "Wake up. You have to see this." There's no way they're going to be able to mask this any other way than just printing tons of more monetary units. Preston Pysh : And that was really when I started taking Bitcoin seriously in clients' financial lives. When they, in March 2020, created those new currency units to expand the system, you had something to point to.

I was in a situation where I got a stimulus check at that time, jumbled that puppy straight into Bitcoin, encouraged clients to do something. Which by the way is what amount now? It's like 20,000. Oh, geez. I haven't checked on it. It's like, I'll look it up while you're talking, but it was a $1,200 check. And I want to say it. Yeah. I know mine was 1,400. So I don't know. 14. Okay. All right. And maybe the point I was getting to within that is when they inject, they have to choose how and who.

And that's inherently an unfair process. In that month, they were buying Apple corporate bonds, there was the PPP loans for business owners, and then there were stimulus checks for, let's call them the plums, right? The common folk. And it was just a whole set of rules that was created and then injected. And I think for the first time you saw when the new money units are injected into the lower socioeconomic ends of the population, that's where you're getting the grocery store inflation, right? If you just inject it into banks and

Apple bonds, you're not going to see beef be affected as much as capital assets. And so I was paying attention to injection site. Like, okay, they got to print new money. Where's it going to go? And that cancel on effect is not a straight line. It filters and flows through the cut over years and it has ripple effects. And so the printing that got done was still under a Trump one administration. But then all this price inflation is trickling through

through into the Biden administration and people are like, "Oh, it's Biden's inflation." It's just not intuitive to people that, okay, money gets injected 3 trillion one night. People didn't change the list price on their house the next morning. It takes years to trickle through and it's not fair. You can't choose how it happens and it is going to happen again. And so I guess the question I want to ask you, how big do you think the next Federal Reserve balance sheet expansion is going to be? Robert Leonard : Yeah.

Your point on the frequency or the lag factor of the input versus the output is so on point and so important and so lost on so many. By the way, the stimulus, if you got a $1,200 stimulus, it's now worth $12,000. It's 10x in value since they mailed those out if you would have taken all of it and put it into Bitcoin. My answer to that, I'm sorry, help me. Oh, it was a cheap shot question.

How big is the next print? Oh, yeah, yeah. The way I would go about answering this would just be, look at the growth rate of the global M2 and the US is printing at about 8% to 10% annualized and it's been very flat for three or four years.

This is another point on how much do they got to print. It depends on how much of that deflation of the credit, how much of that credit do they allow to be soaked up or to go poof, all the promises, how much of that do they allow to go poof and for how deep do they allow that to go also plays into how much they've got to print in the immediate term to get it back on track with that 8% to 10% growth rate.

So if they don't ever allow that impairment to really kind of play out in the credit markets and they just continue to like juice it, then the print is just going to continue to take, you know, whatever eight to 10% of the current nominal growth rate is and just figure that out. But if it contracts, like what we saw in 2020,

That was really a sharp reaction to COVID. And so the amount that they put into the system was, I would say, a little bit extra than what they probably needed to. But I think that if you're looking at it from that, the speed at which- Preston Pysh : Yeah, the speed, their responses become quicker. So TARP was what, wait, and TARP was three months.

COVID was like three weeks. And then the bank's breaking. I think they did that over a weekend, right? Like Silicon Valley Bank and Oprah was broke on Friday and made whole on Monday. That's a perfect example of why it's so hard to predict the next amount that's going to be printed is because look at Silicon Valley Bank, perfect example. Died on a Friday, was reinvigorated before the market opened on Monday. And

everything just kept chugging along. Yeah, it's like nothing to see that weekend. Nothing to see. But if they would have let that play out for, let's say they didn't do anything and they took their hands off the controls for two weeks, could you imagine the amount of- The dominoes would just start. The impairment would have just cascaded through the entire global economy, and then they would have had to have printed a lot more to offset that versus how they responded to it. So it's a little bit of a fool's errand to answer a question like that because you just don't know how long they're going to allow the impairment to play out. But-

But I think that if you're looking at it on a net long-term basis, like over how much are they going to print in the next five years, I think you can actually figure that out pretty closely by just looking at the chart and just doing the math of that growth rate. Now, whether this robotic stuff will accelerate the technology deflation, I don't know. But AI, I don't know. Preston Pysh : Yeah. And it's feedback too, right? The more they do, the more they have to do. Trey Lockerbie : Yeah. Big time. Preston Pysh : Yeah.

All right. So here's my question for you. Okay. What's the number one question that you hear? Because, you know, with like ego death, we, when I'm talking to a LP, I can tell you the number one question I hear like- How do you outperform Bitcoin?

That is the question. That is the question. So what's your number one question you hear? You nailed that, by the way. It's a twofold set of problems. So typically, I'll just tell you the tip was a husband and wife coming in. This isn't always, but the husband is more the technical Bitcoiner and very curious on if there's tax savings to be had.

So tax is number one, that one's typically the primary technical Bitcoiner in the family wants to save money so they can buy more Bitcoin. The less technical spouse is looking at that guy and saying, "Well, what if I do if he smokes out?" I'm on board with the Bitcoin, I'm not involved in the finance, but if something happens to him, health or otherwise, God forbid, I'm not confident that I know what to do or if I have someone to talk to. So it's twofold. It's like a tax and inheritance one-two punch.

And then maybe a third as a backup is like, well, if we're right about Bitcoin, then I'm going to have a new set of opportunities or choices. So how do I dial back maybe the work I'm doing or pivot it to something else? So can you save me money on taxes? Probably the number one question. And that's a deep end question.

customized question. Inheritance is pretty standard, especially in couples. I believe in my spouse and I'm on board with Bitcoin, but I'm not as technically confident or I don't know I'm going to be okay if something happens. And then once those two are solved, we start looking at the future and what transition scenarios might look like. So I'd say that's the most classic. Preston Pysh : Let's talk the tax piece because, and I know that you said this gets very nuanced to the individual, but if you would take

let's say you have a person, their net worth is $500,000. How would you walk them through the tax implications and how to think about it? Yeah. So there's a couple of different components to tax. And I'd say that the two big ones that are just highly dependent on who you are in your financial situation is going to be income tax. I make money every year and have to pay taxes on it. And

and then estate tax, which is the net worth one that you were poking at. I've got this much money, and the way the tax law is currently structured, if you die with too much, that's the death tax. Government comes in and takes a quick… It kicks into 40% really quickly. And so

So if death tax is in play, that's a huge needle mover. We're often, we're looking at hundreds of thousands, if not millions of dollars taxed. Bitcoiners are unique because even the person that's at a $500,000 net worth thinks they might be in some measure of time, like, "Oh yeah, well, I'm going to the moon and so I might have the death tax as a problem." So it's something we're always paying attention to regardless of net worth. Right now, those numbers are about $14 million per person.

So $28 million net worth for a couple. That's part of the Trump tax bill that sunsets this year. If they don't change any rules, it gets cut in half to 7 million per person.

So coming down from 28 for a couple down to 14. And just depending on the uniqueness of your situation, if you see a net worth and like those two, that perfect storm collides, like, well, I might be over 14. And if this sun sets, it's nuanced. It's a little bit complicated. And we're talking about two different structures that we can move the needle in. So when you present net worth, that makes me think, which tax are we talking about? Right. Is it I pass away and I had too much money. So now I'm 10%.

tax and pay half to the government. That's a big one to avoid. The more common one I think that applies to everyone is income tax. I've got rental properties or W2 or I sold a business, and that tax is experienced every year. You're not having the death tax every year, hopefully. And the income tax, it's a different one, a little more unique. I would say, if I could answer the question quickly for you and then kick it back to any follow-up, the three biggest needle movers we have as a

Bitcoiners within the income tax are going to be good understanding of your basis to do both gains and loss harvesting. In a pullback, you can do loss harvesting, but there's also gains harvesting. There's a 0% capital gains tax bracket. Some people live in 0% tax states. So if you can go get and sell a Bitcoin and pay no tax, sometimes you can do that and just buy it right back and give yourself a higher basis. Robert Leonard : Help us understand where that would apply. Nick Huber : So we'll take

Someone who is at $100,000 a year of income as a couple, right? Husband and wife make $100,000 a year, and they don't have any other complexity in their tax situation.

The 0% capital gains rate goes up to about $130,000 for this year, 2025. I'm using round numbers here, it's a little more specific. But there is a situation if that couple lives in one of the nine states that have 0% tax, they can sell $30,000 worth of gain in Bitcoin and then buy that Bitcoin right back in the very next second. That is a capital gain.

capital gains harvest. And they're not going to pick up any tax for doing that. They're still within the 0% federal window, 0% state. What they can do is sell, where are we at today? $85,000. So let's pick, they bought Bitcoin at $55,000, $85,000 today. I'm going to sell the $55,000 Bitcoin, buy it back for $85,000. And I've just improved my basis and future tax situation by that much for free. So-

That's one to pay attention to. And then I'd say just quickly the other- Robert Leonard : That's outstanding. That's outstanding. Oh, sorry. No, I love that. That's outstanding. Robert Leonard : The other two are going to be donor advised funds. So we have a lot of clients who are charitable. It's kind of this fix the money, fix the world idea. And we're often identifying their lowest basis Bitcoin and

using that within their tax situation to get write-offs, right? You can front load that and they can continue to hold the Bitcoin. It doesn't have to go straight to charity. They just leave it in a structure where they can continue to hold it, let it grow, give it charity one day. We've saved hundreds of thousands, if not millions of dollars by doing that for folks. And then the third one is going to be Roth conversions. Roth IRAs being tax-free, Bitcoin

Bitcoiners love the idea of tax-free. And so if we can get Bitcoin into a structure that without tax law changes, by the time they want to use it, they can do it without having to pay taxes, that's a big one. So that is pretty nuanced in looking at the current bracket and how much can we get from traditional to Roth IRAs, or we build a Roth IRA from scratch. But in general, those are the three quick answers of real needle movers. There's other more peripheral ones, but tax gain, tax loss, donor advised funds,

and charitable gifting, and then Roth conversion. Let's take a quick break and hear from today's sponsors.

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All right, back to the show. If a person was, a lot of people hear about having their own trust, at what point would you start recommending this for somebody, a self-directed trust or self-directed IRA through a trust? Help us understand how you think through some of these mechanics. So there's a couple of nuances within there. I want to be clear on what you're asking. Are you talking about trusts, which are typically more for asset protection?

protection and don't necessarily need to be IRAs. And then there's IRAs, a subcategory of IRAs is like the self-directed where a lot of early Bitcoiners had to use that structure to hold Bitcoin in an IRA. So which one do you prefer? Both of those. Sorry. Okay. Yeah. Yeah. Okay. So I think we'll do the IRAs one first because early on in Bitcoin, there wasn't a great way to like

hold your own keys for a Bitcoin and have it be tax advantaged. And so what happened is you'd set up what's called a checkbook IRA. It ends up being IRA owns this LLC, and then the LLC is a business and they can go hold Bitcoin on its balance sheet. And so people or Bitcoiners to have key control, they do this checkbook IRA structure where, "Hey,

I'm going to have the IRA. It's going to own the LLC. The LLC is going to go buy Bitcoin and I'll hold my keys in that." And I would say that's probably one of the earliest ways you saw Bitcoin in IRAs. Now there's far more products and options, right? Whether you would just want to be the ETF on Schwab or Fidelity. I helped develop when I was at Unchained for a few years, they have a two of three multi-sig IRA.

right? Where a client is still holding two keys, Unchained holds the third. They use their third to keep you compliant from a reporting perspective. So because they have a key in the setup, they can watch if the Bitcoin ever leaves. That's the mechanism they use to keep you compliant as an IRA. And so there's far more options now. And I think

It's rare for me to see a checkbook IRA, but they still do exist. Like anything, there's trade-offs to each structure. So I don't want to rabbit trail too much on that. And then how about just the trust in general? Yeah. This is more of an estate planning and inheritance question. Trusts can hold assets, wills cannot, right? So when you look at doing your estate planning, you say, hey, I want my kids to be taken care of

by Grandma Susie, and I want the dog to be taken care of by someone else because she does... You can do everything you want within a will, but a will can't hold Bitcoin for you. When assets are transferring to inheritors, you often want to trust, and this is a 50 statewide question. I'm

I'm not an attorney. Attorneys have to write trusts. But I'll brainstorm this with clients because the three big things that Bitcoiners don't like when they hear what I'm about to say is the state can be involved with how your assets are transferring to your heirs. You don't have that set up.

So if you've got Bitcoin and you bought it in Preston's name, right? I'm Preston. I bought Bitcoin. Something happens to Preston and that Bitcoin is supposed to go to your wife. Depending on how you're set up, the state you live in could be involved. That is a process called probate. It's often very slow, can be expensive. And the big one that Bitcoiners don't like is it's public record. Hey, Preston's wife got this many Bitcoin on this day. That's...

an avoidable situation. And so a trust is that mechanism that can hold assets. I'm Preston, I'm going to set up a trust. My wife is going to be a co-trustee to that trust, and we are going to put the Bitcoin from my Preston name into the trust. That is a non-taxable event by going left pocket to right pocket. Now the trust

owns the Bitcoin, and there are still key control structures available to do that. Then if something happens to you, your wife is just the co-trustee the next day. Not going through the state, no one needs to know, it's next day access. And it really keeps her above board. She doesn't have to document, well, how'd you get this Bitcoin? She's able to find your keys in a single signature setup. Hey, that's unfortunate.

Preston passed, but I got the keys. She's going to bring that into a financial service at one point to sell it or take a loan against it. And they might ask, well, how did you get this? And you can save a lot of that pain upfront by just, hey, let's title this correctly. We don't have to make sacrifices in our key control setup. We just need a good legal wrapper around us to avoid really the state getting involved in having their say. Yeah. And what net worth or what would be the metrics that you would tell

tell somebody that that's common i don't think that one's tied to net worth at all so that situation we described is called like revocable living trust yeah revocable meaning i can take it back as long as i'm living right and so revocable living trust often called a family trust you can put assets into it take it back out that is something that everyone should consider

Currently, regardless of net worth. I would say some of the more automated legal Zoom type options can be a few hundred bucks, meeting with an attorney is probably between three grand and 10 grand to get it done. And you're getting your basic set of documents taken care of that you can still make changes to. And so that one, in my opinion, doesn't have a net worth trigger.

like some of the more advanced trusts do. The more advanced trusts are called irrevocable, which means no take backs. And the big reason you're doing that is for asset protection or to avoid that death tax that we talked about earlier. Okay, I'm over that 14 or 28 million. Let me use that number now and get the Bitcoin out of my estate into this trust that I no longer control. And so you set up that type of trust with a lot more

intentionality and due diligence. And you're usually not exploring that until you're on the bubble, right? The 14 or 28 or whatever it decides to be next year. Preston Pysh : Yeah. Let's talk the technical risks that you say come up in these initial meet and greets that you have that one of the two bring up that they have concerns if the other one passes to be able to manage the keys. How do you go through this? I mean,

When I'm thinking about this, I think about on one extreme you have like my grandmother. There's no way she could ever do anything with Bitcoin keys without having somebody do all of it on her behalf.

So buying something like an ETF for somebody of that technical competence seems to make more sense. And I know that that's not a popular thing to say in the space. How do you go about- It might not be popular, but I think it's right. Take everyone for where they're at and try to get them the best thing that fits them. So unfortunately, we had a client pass last year in his 80s and surviving spouses in her 70s. He was holding his own keys. She doesn't want to have anything to do with that. Yeah.

And so in some ways we have to ask the question like is going backwards the rest of the right. We were holding keys and now but she's very nervous and it's tough for her to feel comfortable with. She likes Bitcoin. Her husband believed in it. She feels this almost this urge to carry on in his name with the asset. But maybe the ETF is a better fit for now, or at least we can choose a little bit of each. Right. And we just have those discussions and figure out what

what might be right. As far as ETFs go, it's common for us to divide amongst the custodians. Coinbase, Honeypot, I think they're helping out eight or nine of the ETFs. Spidoity runs their own custody and then Gemini runs BANEC. So if we use ETFs, like, hey, let's maybe spread across these custodians to diversify against the hack a little bit. Preston Pysh : What are your thoughts on the Coinbase, quote unquote, Honeypot? Nick Neuman : They hold a lot of ETF coins. Preston Pysh : Yeah.

I think there are a lot of micro strategies coins. I don't know where America is going to hold its coins. Within that summit that we went to in Jackson, I heard them called the gold standard for Bitcoin custody. And what I see with, we'll just call them Bitcoiners on the street, it's not the gold standard of how many Bitcoin maximalists would trust Brian Armstrong with their private keys. I don't know. Not a high percentage.

That looks like a big risk to me. And I have Bitcoiners, don't say that, don't jinx it. We saw Mt. Gox, we've seen FTX. We're looking at what a honeypot could be. Between those three entities, it's over a million and a half Bitcoin, somewhere around there. The ETFs, MicroStrategy, and potentially America. I don't know. And so I'd like to see coins leave Coinbase slowly rather than all at once, right? Yeah.

If a million Bitcoin leave in a night, that's a bad year, potentially decade for Bitcoin. If we can have better custody options develop and be adopted over 10 years and Coinbase doesn't have to have a catastrophic event, that would be a preferable outcome. Preston Pysh : I think the SAB 121 and this request for in-kind redemption is all a positive direction to remedy some of this, what you're talking about.

I just don't know the pace at which it would play out. Yeah, because that would allow banks to be like, "Hey, we're going to redeem the ETF at Coinbase." But then they still have to come up with their key control model. What does Chase Bank running cold storage multisig look like? I don't know. How much work have they done?

from that perspective to make sure that that's secure. So yeah, I'd like to see maturity in the industry. Competitors develop SAB 121 or in-kind redemptions would help make it easy to transfer some of the ETF coins elsewhere. Yeah, no doubt. You had mentioned that the third thing that sometimes comes up is this discussion around like, well, what do we do if we're right? I don't know. No, it seems more like a philosophical discussion with personalities

purpose. And I'm just kind of curious to hear your thoughts on some of that. Like, hey, we're 10, 15, 20 years into the future. Let's say you're very right about all of this and it changes your life. Like, yeah.

For some people that- I get to see it. I've worked with clients who started in 2012, 2013, and exactly that happened. This used to be a nominal amount and now it's grown into a- Life-changing amount. Yeah, life-changing amount. And what if that happens again? So what I've already seen, if it compounds, and we're folding the paper in it, you're going to be presented with opportunities that you've never seen before.

and simultaneously problems that you've never encountered before. For a lot of people, I didn't know a death tax kicks in at $28 million. So I encourage them, hey, do your moon math and figure out when this matters to you. I've seen some Bitcoiners like, well, my answer is to just go underground. I'm going to do the no KYC thing and I'll make my family go dark for generations. Okay. Or-

With some planning and intentionality, you can choose to stay above board and just have good structures and a strategy in place. So it being exponential, and if you're right, in 10, 15, 20 years, you're presented all this new

opportunity from a time and energy perspective, like how you make work optional and what you focus on, what matters to you. I do see a trend of, "Let's fix the money, fix the world." As Bitcoin has happened to people, it unlocks that fix the world side of them, and they start caring about causes and want to use their Bitcoin for that. So that's exciting to partner with. And then, yeah, just

the problems that wealth brings i've got to meet in my opinion some very very wealthy people on this journey and they are not problem free they just have different money problems yeah so it's a fun job getting to see the whole spectrum right yeah those early in the journey and ones that it's already happened to what would be the strokes for different folks what would you say is the one bit of advice you'd like to leave with the listener as they think through some of these things

I think the biggest piece of advice is your situation is not like anybody else's. And I'll bring Saylor back into this because another common question, I guess, I'm told to never sell my Bitcoin. Michael Saylor said to never sell my Bitcoin. Well, Michael Saylor is getting 0% debt and arbitraging at a convertible bond market that we have no access to. And so he's playing a different game and his needs are going to be met incidentally. They're a rounding error of his life. He's operating in a different threshold

So don't play somebody else's game. You go on Twitter and you see all this advice, do this, this, and this. Often someone's speaking from like, hey, here's the game I'm playing and how I want... I'm a revolutionary. I'm going to die on the hill and I'm never selling my Bitcoin. Talk to a 62-year-old couple, they're retiring, and are they in that same spot? Are they a revolutionary? No, they're not going to work. They want to have a calmer experience than what Bitcoin volatility has traditionally brought most folks. So it

So it can be tough, especially if we are in an echo chamber, right? And we're saying those words to ourselves, you can get caught up playing somebody else's game. And you think you're making good financial decisions because that's what a community or a signal could be telling you, but they're not playing your game. They don't know who you are. They don't know if you have a wife or kids or what your job looks like, or that you just sold your business and you've got to pay a bunch of taxes. They don't know any of that.

Only you are in your shoes. You can reach out to people that work on this. That's why we built Sound Advisory. I got the question. Before Sound Advisory launched, I got that question all the time at Unchained. People said, what should I do? I can't say should, right? You hear it all the time in every podcast. Not financial advice. Go talk to your guy. There weren't many good guys or people in the space that could answer that question for folks. And so that's what we look to do is just be a sounding board, understand Bitcoin deeply and try to give

advice that makes sense for Bitcoiners and like be a partner with them in the game that they're playing. Preston Pysh : Love this advice. Love this advice. Cause you do, you see it on Twitter X all the time where people were actually like getting in fights and arguments over, no, that's not how. And it's like, no, everybody has a different like life circumstance that they're dealing with. And I just really liked that point a lot. You mined a little bit for three years and

I'm curious what your takeaway, like looking back at the experience, what was your takeaway with mining for three years on your own? So I mine out of my garage and heat my house. So in the winter, or I think we kick it on around October and I just above the fridge, pop the vent through the garage and then just pump it out into the entryway. I live in Idaho, so it's cold, right? Often be like single digits or the teens. And so we just keep it on all winter. It's not

Not an advanced setup, but it was heating the house for about eight bucks a day in electricity, and at the time maybe making six to seven bucks a day in Bitcoin. So more of a nerd hobby, but fun. And I see the conversation starting around heat reuse, right? For so many of these mega scale miners, they're

looking for cheap electricity costs and then doing just massive scale. And a lot of heat is the output and it's valuable. And I saw that just personally, I'm like, I could either run the heat pump, which is really expensive and doesn't make Bitcoin, or I can run the miner and get some Bitcoin alongside. And so it's just completely on grid. We weren't getting any sort of special rate or anything, but I'm very encouraged to see

you've seen the prototypes of the hot tub, right? We're going to heat the hot tub with Bitcoin. And talking to another Idahoan locally, he's like, "I want to heat my driveway and I want to heat my pool. And if it makes Bitcoin, all the better." And I just think that energy that's changed from electricity into heat is often being wasted by miners and it could be injected into so many homes, right? Water heaters, there's just a deep need for heat.

I was chatting with someone on a plane who did get, got Bitcoin a little bit. I'm very curious to see miners migrate in winter. They go from North America to South America for the winter, just because that's where the heat is needed. I don't know if that'll happen, but yeah, there was a joke there with chickens and egg six, and it was a good joke, right? Maybe we'll see miner migration if he becomes more valuable. Preston Pysh : If you could look at it objectively from the typical person that's

wanting to do this at their house and the technical competence required and the operational and maintenance. Like you just told me before we started recording that you were on quite a few trips in the past three weeks and being away from that. How likely do you think something like this coming into the home is? And what kind of timeline do you think something like that might occur? Oh, goodness. So I've seen the heat bits and there's an industry that's poking at

the user interface of it all, like making that easier. It wasn't too difficult. Like I am not an electrician or an engineer. I don't know how to code at all. And I just opened up my panel, ran a wire over, plugged it in and

I was able to jerry-rig it. I'm confident that others could, but I think the industry making it plug and play is just a very, that's a curiosity. I think I have that. Okay. Well, what if you could just buy a water heater at Home Depot that has ASICs using to heat the water? Have it all point to an address or a wallet and it's not too difficult and your water heater goes out. It's like, are you going to buy the one that mines Bitcoin or doesn't? They cost the same. You're going to choose the one. And I think that'll just start to infect the

the need for heat market. Yeah. It's exciting to just see the potential. Jesse, if people want to learn more about you or Sound Advisory, give them a handoff. Yep. So we can be found at thesoundadvisory.com. That's T-H-E, Sound Advisory. You can book an intro with our team. We're three advisors, two CPAs doing taxes in-house for folks. I'm at IdahoHodl on Twitter. And then

other folks on the team. So Vaughn, Kellerman, Malcolm, I'm sure any of them would be happy to have a follow. So reach out, say hi. If you've got questions, that's what we're here for. Preston Pysh : All right. We'll have links to all this in the show notes. And until next time, hopefully we can be as lucky as we were this past time in Jackson, not killing ourselves on the slowest bit. Boy, I had a blast with you, sir. So thank you for making time and coming on the show. And yeah, it's a real pleasure.

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