The Pomp Podcast - #1118 Joel Nagel On How To Protect Your Wealth During The Bear Market

Starting point is 00:00:00 What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Joel Nagel is a managing partner and founder of the international law firm Nagel & Associates, LLC. In this conversation, we talk about asset protection, estate planning, tax mitigation, and many other topics that many of you are actively thinking about as you build wealth throughout your life. I really enjoyed this conversation with Joel, and I hope you guys enjoy it as well. Once you get done listening, jump on Twitter. Let us know what you liked, what you didn't like, what you agree with, and what you don't agree with. I really enjoy the

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Starting point is 00:02:23 their digital asset data guide at www.amberdata.io slash Pomp. Again, that's amberdata.io slash Pomp. Go check them out today. All right, let's get in the episode with Joel. Hope you guys like this one. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. All right, guys, bang, bang. I'm here with Joel. Very excited about this conversation. I thought a great place to start would just be asset

Starting point is 00:03:05 protection is a concept many people have heard about. They think that only super wealthy people do it, but they have no clue why so many people are focused on asset protection. You spend all day for years and years and years thinking about this, talking to clients. What is asset protection and why is it so important for people to consider? Well, great. And again, thanks for having me on the show. It's a topic near and dear to my heart. I grew up with a family where my father died when I was just a baby.

Starting point is 00:03:36 And I saw my mom, you know, a single mom trying to raise small children, go through a lot of difficult times and be taken advantage of. And it really kind of impressed upon me this notion at an early age about trying to protect your wealth, preserve it, pass it on. And everything that I've really done in my 32-year legal career has been with that in mind. And quite honestly, we have very wealthy clients, but I also have school teachers and secretaries. and they would certainly tell you that protecting their wealth is equally, if not more important to them because they really don't have the ability to go and earn it back. So when I'm talking to a school teacher who's 60 years old and they have a nest egg of a half a million dollars, they

Starting point is 00:04:25 come to me and say, what are the best ways to protect my wealth? I take it very personal, very seriously, and I try to come up with techniques to help them. We issued a position paper many years ago, and I update it all the time, about different concepts based on your wealth. Obviously, you're not going to set up a family office, for example, if your net worth is $500,000. So we want to make sure the solutions that we come up with are consistent with the needs and the net worth. So when you ask the question, what is asset protection? Asset protection, it's simple. It's protecting what's yours. You're not worried about necessarily growing the pie. Although, if you have it protected well and insulated from taxes and

Starting point is 00:05:17 things like that, it will grow. A lot of clients tell me that, if you want to think of it as a sports analogy, we are the defense, right? You have investment advisors and people like that telling you about offense. They're telling you what to invest in. I'm sure you have a lot of people on your show they're talking about crypto or or gold or whatever whatever the the offense is we're the defense we're basically saying we want to help create the right structures and strategies to protect what's yours so you can sleep at night and know that no matter what happens nobody can ever take what you've worked hard to to earn or what you've inherited or you know how your business has grown and become very successful and you've achieved something we

Starting point is 00:06:00 want to help you protect what you already have. So, so that really is asset protection generically protect what's yours. So when you think about this, you've said previously, this idea of protecting the asset, preserving it, and then passing it on to the next generation. I almost think of those as like kind of three different buckets. Explain a little bit the protecting and preserving component before we get to passing on. So protecting and preserving, what exactly does that usually entail? Yeah. So, you know, protecting assets can be done a lot of different ways. Normally, when clients come to see me, it will end up involving different types of legal structures. So the, you know, the main structure that people use to protect wealth is a trust

Starting point is 00:06:41 structure. Now, trusts have been around for over 1000 years. Actually, there are elements of trust law that go back to Roman times, if you go back to, you know, the early BC times, for example, only a roman male could inherit property so what if you didn't have a son what if you had a daughter and you wanted to leave your property to your daughter there were sort of workarounds uh where you would you know you would name an heir legally but that person agreed to you know take care of the asset for your let's say for your daughter and then when your daughter had children that those assets would pass down to her children to bring the asset back into your, you know, into your bloodline. So those are really some of the earliest trusts. But if you fast forward to,

Starting point is 00:07:31 you know, the UK, you know, during the dark ages, during the crusades, people were very concerned about protecting wealth because, you know, they were going off to war. Maybe they were going to come back in 10 years. Maybe they weren't going to come back at all. And so the modern day trust structure was really invented during that era. And it's still the number one way that people protect the asset. And we can spend a lot of time on it and we'll spend as much time as we have. But the very most simple notion of a trust is that unlike a company or a partnership or something that you own, a trust is not something you really own. It's its own juridical person, right? It's separate and distinct from you. So if I take my assets and I put them into a trust structure and

Starting point is 00:08:27 then somebody comes and sues me, well, even if they're successful in suing me, they can't get the asset because I don't own the asset anymore. And they don't have standing to sue the trust because the trust is a separate legal juridical person. So that in a nutshell is what makes trust so effective. If you've properly created them, properly transferred assets into them, and you can't do it after the lawsuit has already been filed. We get a lot of calls like that, and we're not able to necessarily help people because you get into something called fraudulent conveyances where somebody is running around after they've been sued trying to say, all right, what can I do to stop a plaintiff? And at that point, it's very difficult. You can actually

Starting point is 00:09:16 cross the line into, you know, the criminal lines of what you're really allowed to do and what you're not allowed to do. But if you've set it up properly at the outset, transferred assets there properly legally, then that trust is a separate person. And so if a would-be plaintiff comes after you and they don't have an independent cause of action against the trust, which they almost never would, then the most they're going to get is a judicial award against you, let's say against me, but I don't have any assets anymore because I put them in a trust. So that's how you haven't necessarily protected yourself, but you have protected the assets by transferring them to a third entity like a trust.

Starting point is 00:10:06 So as you think about these trust structures, how much of it is legal liability protection or mitigation versus maybe taxation, which seems to be another thing that people very much focus on when it comes to estate planning and a lot of this asset protection? Yeah, that's a great question. And that's a question that people always ask, you know, in the first five, 10 minutes of a phone conversation. Trusts on the surface are tax neutral, meaning they don't increase your taxes. They don't decrease your taxes, at least from an income tax perspective.

Starting point is 00:10:38 There are some generational wealth and estate benefits. For example, right now we have a lifetime exemption amount on what you can leave to your children or grandchildren. It's about $13 million without federal gift and estate tax. So if I create a trust today, for example, and I put $13 million in that trust, and then over the next 30 years of my life, if God willing, I should live so long, that $13 million grows to $30 million or $50 million. Any kind of appreciation takes place. It's already been transferred out of my estate, so it's never going to be subject to a state tax. So there are some

Starting point is 00:11:24 tax benefits in that sense. But from an income tax perspective, whether I earn the money or the trust earns the money, there's a capital gain, it's going to be taxed exactly the same. There are things you can do. For example, life insurance is one technique. There are some techniques with IRAs and 401ks and SARCEPs and KEOs that you can move offshore to get the same kind of legal tax deferral on the asset. But for the most part, there's no real tax benefit. What it really is, is it's a it opens up benefits that have to do with estate planning. You have much more flexible estate planning, much more protection from creditors if you're sued. And the big one in the last 10 years, honestly, has been to open up the world of investment.

Starting point is 00:12:19 I know I said a minute ago that asset protection, you know, we're the defense, the investment advisors, they're the offense. But what most Americans don't realize is that 75% of the world's investments are closed to them. Why is the world closed to Americans? Well, it has to do with our laws. It has to do with the SEC claiming the ability to regulate foreign companies if they take on U.S. investors. So most of the investments around the world outside the U.S. are closed to Americans. But with these types of structures, a trust, for example, I said it was a separate legal juridical person. It is. And it takes on the nationality of the jurisdiction where it's established. So if I create a trust for you in Belize or the Cook Islands or in Liechtenstein or someplace like that, then that's the nationality of that trust. Now that trust can go make an investment that you or I can't. And really, since the implementation of FATCA, which was passed in 2010 under President Obama, went into full force in 2014, we've seen door after door after door shut to Americans when they want to invest in almost anything outside the country.

Starting point is 00:13:38 And these types of offshore structures are really designed to reopen those doors. And I get more and more people today. They're not worried about lawsuits. They're not worried about taxes. They just want to be able to invest their money the way they want to invest. And getting some global diversification away from the dollar is important. You mentioned a couple of jurisdictions. You mentioned Belize, Liechtenstein, and some of the islands.

Starting point is 00:14:05 Talk a little bit about the various jurisdictions. Are there pros and cons to each one? Is it a 80, 90 percent of the value is derived just by doing it offshore versus onshore? How do you think about jurisdiction when it comes to some of these types of legal entities? Yeah, that's a great question. So you start with the universe of things being either onshore or offshore. Right. So once you go offshore, what you've really done it from a from a litigation perspective is you've changed the dynamics of where future litigation would have to take place. So just the fact that you're offshore anywhere is in itself a an advantage. Somebody suing you. The U.S. is the most pro plaintiff jurisdiction that exists. You know, there's a new lawsuit filed in the US every 17 seconds of every minute of every hour of every day. So and we know that the nuisance value of a lawsuit is around 40 to $50,000. So, you know, it sort of turns into green mail in the US where law firms will actually require young litigation associates to file so many lawsuits per day.

Starting point is 00:15:22 Imagine that. To keep your job, your job is to go file five lawsuits a day. Well, that's sort of the universe that we live in. So now you move to the offshore world where the laws are, for the most part, the opposite. They're very pro-defense. um it's you know many of these jurisdictions don't allow contingency fees for example um there if you're going after let's say a trust structure there has to be a claim against the asset before it's uh transferred into the trust structure so if the claim arises after the trust structure it's statutorily barred uh from you bringing litigation at all and and and so those are the reasons at the macro level why you would consider offshore, onshore. Offshore, it's jurisdiction shopping. You're getting away from a very pro-plaintiff system. Now, once you've made the decision, okay, I'm going to go offshore, now you get into the

Starting point is 00:16:20 specifics of the jurisdictions. And I would divide the world. There's a lot of different places in the world. I think at last count, we'd worked in over 43 countries around the world. But the big groupings tend to be the English common law grouping. So that's where Belize, the Cook Islands, Aruba, Nevis, you could jump over to Great Britain, the Channel Islands, Australia, New Zealand. That's sort of one big universe of English common law. You know, a lot of people like those jurisdictions because the judicial cases and interpretation are very well, you know, the path has been very well trodden. You can get a lot of examples in almost any field in any case where and see which cases the judges were supportive of the legal structures and which cases they weren't. And then you can kind of engineer around that and make sure that you stay in a very safe area. After the sort of British common law, which most people like because they're all English speaking and the laws seem very familiar to us as American, very familiar to Canadians, then the next school would be the Germanic school.

Starting point is 00:17:49 So we're talking about Germany, Switzerland, Austria, Liechtenstein. You have about 100 million Germanic people in the center of Europe. The rules tend to be very, very precise. Less is open to court jurisdiction with judges. It's more laid out and codified in very, very detailed rules. and a lot of people like that. My family came from Germany. I'm a German origin myself. And there's a certain comfort in knowing that if the law says X and you do this, that, and the other, the law is the law and nobody's ever going to be able to change it. Once you get away from the British school being number one,

Starting point is 00:18:37 the Germanic school being number two, you have a lot of little pockets. You know, the French have their little their little, you know, ex colonies, Martinique, you know, places like that where you can where you can get better asset protection, where they generally in these jurisdictions don't add any layer of tax. So, you know, you asked before about the tax, the jurisdiction itself doesn't levy any tax. But as an American person, you're subject to taxation on your worldwide income. So it really doesn't matter whether you, you know, set up a trust in Delaware or in, you know, Nevis or in Liechtenstein. The tax consequences from the IRS's perspective are going to be the same. So that's why when we talk about taxes, if somebody calls me and they think, oh, I'm going to, quote unquote, hide my money offshore, I'm not going to pay any tax, that's where you invite them to contact someone else because they're going to end up in an orange jumpsuit and you don't really want that. But when it comes to the jurisdictions, being offshore is most important anywhere.

Starting point is 00:19:50 And then after that, you get into the specifics of maybe where you want to be, where you want your money to be, how you want your money to be invested, things like the rule against perpetuities. How long do you want to create a trust? Is it just for one generation for your children or two generations for your grandchildren? Or do you want to create a dynasty trust to go on for the next thousand years? All of those types of considerations would impact the specific jurisdiction. But honestly, any of the jurisdictions would be far superior to keeping your money in the

Starting point is 00:20:21 U.S. So what's fascinating about this conversation is when I've heard people talk about this in the past, one of the biggest complaints, which you mentioned, is United States citizens are taxed on their worldwide income, meaning that whether you made the money in the U.S. or anywhere else, you're paying taxes to Uncle Sam. There's proponents that argue that there's a whole bunch of benefits and reasons why that's appropriate. There's a bunch of critics who say that's not appropriate, and here's all the reasons why we shouldn't. That's the rules. It is what it is. Somebody can go debate that elsewhere.

Starting point is 00:20:50 But what it then brings up is like, well, maybe I shouldn't be a U.S. citizen anymore. And when you talk to immigrants, usually they'll be like, I worked so hard to get here. I can't imagine a world where I would renounce my U.S. citizenship. But there's a lot of people in the U.S. who kind of were just born into it, right? And frankly, they may not have the same appreciation for it or they think that the economic gain would be so great that they consider it. But there's this like exit tax. And then also there's the question of like, well, where would they go? And so maybe talk a little bit from a taxation standpoint, being a U.S. citizen, if somebody did renounce the citizenship and then what exactly their other options would be and kind of what that process looks like.

Starting point is 00:21:30 Great. Well, you know, you asked a lot of questions in that question. will do my best. Let's start at the end and work backwards. Before you can even contemplate giving up U.S. citizenship, the law says that you must have another citizenship because you can't renounce your U.S. citizenship and thereby become a stateless person. So if you start from, okay, if I would ever give up my U.S. citizenship, I better have a second citizenship. Now, most people view a second citizenship the way they view, you know, life insurance. It's a planning tool. You know, they're going to get a passport somewhere. They're going to stick it in the safety

Starting point is 00:22:11 deposit box. They hope they never need it. But if they need it, they have it. If you're really seriously considering giving up your U.S. citizenship, then you would want to think long and hard about the kind of citizenship that you would want. The countries, for example, that offer what's called economic citizenship, where you're basically just writing a check and buying a passport. Most of the Caribbean islands, for example, have those types of programs. The lowest ones start at about $100,000. You write a check. Two to three months later, you're a citizen. You have your passport, your certificate of naturalization. And there's nothing wrong with those. I have lots of clients that would have those types of passports. But the US passport

Starting point is 00:22:56 is one of the best passports in the world. And so you would be making a major trade down to replace a US passport with an island passport. So most people will get those types of passports maybe as an interim measure while they work through a longer process. Most other countries, it takes anywhere from three to six years. The average is about five years where you make an investment, you set up residency, and then over time, you can become a citizen. There are a number of programs in Europe, you know, as well as some of the other common law countries we talked about, Australia, New Zealand, they all have their advantages, disadvantages. Canada, for example, you know, Canada is an interesting country for second citizenship because under the North

Starting point is 00:23:47 American Free Trade Agreement, NAFTA, Canadians are the only people in the world that are guaranteed the legal right of access to the United States. Anyone else, you know, that's, it's executive orders, it's, you know, things that can be easily changed by law. European citizenship, for example, many people seek to try to get citizenship in countries like Malta that have an economic citizenship program bulgaria either golden visa programs in the southern tier countries portugal spain italy greece and those programs can lead to citizenship but again you know even a european passport is really sought after because it's generally just as good as as a u.s passport but canada is the only one that is guaranteed by treaty under nafta that that canadians have the

Starting point is 00:24:45 free right of access so if you're going to give up your u.s citizenship but you want to make sure that you can always come back to the u.s you know canada's number one the the european countries probably collectively number two and you know then after that it's um you know it's a diverse group of countries mostly where you have to get visas to come to the united states so that's the that's the the backdrop um for your question um if you live outside the united states but you don't expatriate you can qualify for something called the foreign earned income exclusion and the foreign earned income exclusion or feie for short allows you to exempt the first it's about 110 000 this year the tax that's per person so it would be double that per married couple if

Starting point is 00:25:37 If you're living abroad, you could be exempt from taxes on that amount. So I'm seeing more and more people want to take advantage of that. Young people, digital nomads that want to live abroad, they're not really thinking about expatriation. They very much like their US passport. They might get a second residence or citizenship over time, but they want to take advantage of the foreign earned income exclusion. working back even more now let's talk about a wealthy person that just says okay i i either

Starting point is 00:26:09 quickly or slowly the other way is what's called ancestral citizenship so if it turns out your parent or grandparent came from a lot of countries you can go back and claim citizenship rather than applying for citizenship like economic citizenship or going through residency the economic or excuse me the ancestral citizenship is basically saying look my father my mother my grandparents they came from wherever let's say germany and i am really german and i would like to that to be recognized and that's a different process but if you can qualify for ancestral um citizenship uh that's what a lot of people are interested in doing um the number one countries that that honor that going back multiple generations the uk ireland italy those are probably the three most um common

Starting point is 00:27:03 um so anyway whichever of those ways you go the the fast cheap the fast expensive way the slow cheap way the ancestral way those are all three ways to get your your citizenship now you have it and now you come to me and say joel i'm thinking about x-pay trading and giving up my u.s citizenship? What does that look like from a tax perspective? Well, there's special forms that you have to fill out. One is with the IRS. And you mentioned the word exit tax. It's not technically an exit tax. I think of exit taxes as like, for example, the Jews that were leaving Russia during the Cold War. The Russian government would say, OK, you have assets and we're going to take some big percentage of them. If you want to leave, you have to fork it over or else you can't leave.

Starting point is 00:28:00 What the US taxes on expatriation is they treat you as if you sold all of your assets the day before you expatriated. And it's basically a deemed capital gains tax and a deemed income tax. So let's imagine that for your group, let's say I picked up a bunch of Bitcoin at the beginning. And now I'm sitting on, you know, $300 million of Bitcoin, and it was never taxed. And now I want to give up my US citizenship. Would I pay a tax on that? Yes, I would. I would pay a large capital gains tax, it would be, you know, 20% capital gain plus the Obama healthcare tax 3.8%. I would pay 23.8% tax on that number. And then you're going to say, well, Joel, that that is an exit tax. And I would say, I wouldn't argue with you. I would say that you're being forced to

Starting point is 00:28:57 pay the tax that you would have to pay when you sell that asset. But it's not truly an exit tax because let's imagine instead of having a couple hundred million dollars of Bitcoin, let's say you had a couple hundred million dollars of cash sitting in your bank account and these were all after tax dollars. You could get on a plane tomorrow, expatriate, fill out the paperwork and not be a U.S. person anymore, and you wouldn't owe one cent of tax. Why? Because the cash itself is already after tax dollars. There's no inherent capital gain associated with it. So, you know, it's way more complicated than what I just explained. But, you know, I think your viewers get the, they understand in a nutshell, you know, if you have appreciated

Starting point is 00:29:47 stocks, bonds, mutual funds, currencies, crypto, whatever, gold, you're going to pay a deemed capital gains tax. If everything you own is, you know, like I have clients that bought Bitcoin, you know, last year when it was $60,000 and now it's $20,000. So would they pay a tax if they left? No, they wouldn't owe any tax. If anything, they would maybe be trying to recapture, you know, losses. So that that's the way that quote unquote exit tax works. But it's a great question. You know, we we see about the official published numbers are about 10,000 people per year are expatriating. And so, you know, there's what, two million illegal immigrants coming in the U.S. every year. You know, we're not going to run out of people, you know, with that formula. But the

Starting point is 00:30:38 10,000 people that are leaving are, you know, they're not only wealthy people generally, but they tend to be entrepreneurs. They tend to be job creators. So it's a concerning phenomenon. I mean, if you go back 10 years, it was in the hundreds of people per year. It was 600, 800. It ran up into the thousands. And now, you know, we're over 10,000. And that's only the numbers that the government, you know, publishes and acknowledges. I actually suspect that the numbers are a good bit higher this episode is brought to you by bullish the bullish exchange leverages innovations of defy and a regulated framework so you can execute fast reliable trades with tight spreads even in volatile markets bullish's total trading volumes have now exceeded 100

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Starting point is 00:33:12 What's fascinating about what you're talking about is basically they're using this taxation as a way to disincentivize people from trying to avoid the capital gains. Right. And I always think of taxation as there's incentives and there's kind of like the stick as well. And this feels like the stick component of taxation where they say, look, if you have appreciated assets and then you try to leave, we're not going to let you do that without paying the tax. But I did not know the point about if you just have a bunch of cash laying around,

Starting point is 00:33:39 then obviously that's post-tax dollars. So it's interesting kind of the intricacies, if you will. Yeah, no, it's very interesting. And some clients are very pleasantly surprised when they come and they thought they were going to have to write a multimillion dollar check and they find out they nothing. Uh, but the opposite is also true where people have said, well, I'd like to expatriate, but honestly, it's not worth, um, you know, paying, uh, an immediate capital gain stacks of 30, 40, $50 million. And then they, it influences, as you said, it's, it's the, it's the stick that kind of keeps them in line. Yeah. It, uh, I don't, I'm not planning on that. I've even got the flag behind me. So, uh, I'll, uh, I'll leave it to the experts to figure that one out. Uh, in terms of,

Starting point is 00:34:24 earlier, you mentioned a school teacher or a secretary, right? And you're just picking two occupations, but people who they're not multimillionaires, right? And most people would think, oh, asset protection isn't for me. What do you see with what I will call your average kind of citizen, right? What are they doing when it comes to asset protection? Is it simply just a trust structure? Or are there other things that may be worth the audience understanding that, you know, kind of the everyday person is also doing this, not just the ultra wealthy? Yeah, that's a very good question. I would say that first and foremost, a lot of people that have modest wealth, a few hundred thousand dollars, let's say, they might not even want to create a structure because even if the structure costs $10,000 or $20,000, it's a disproportionately large amount based on the wealth they have. So a lot of times they'll use the asset mix as the as the form of protection, maybe the titling, how you title something if you're really worried about being sued.

Starting point is 00:35:30 But starting with the asset mix, they tend to want to move away from cash, traditional stocks and bonds and mutual funds. So, you know, I'm seeing historically the number one investment from an asset protection perspective was gold. Why? I mean, you know, gold pretty much always holds its value. You know, you can throw it in your suitcase and get on a plane and leave if you if you need to leave. Some people have a lot of gold, maybe store it in a in a vault somewhere like Switzerland. Switzerland houses two thirds of all the world's private gold reserves. So, you know, and it's very common to have safe deposit box type, you know, structures in a bank in Switzerland where you have a little drawer with you have the lock and, you know, your gold sitting in a drawer somewhere. That's a simple example.

Starting point is 00:36:23 you know cryptocurrency and bitcoin has certainly moved into that space as well because you know bitcoin in some ways functions much like gold because it's not anything that a government can produce uh they can't just push a button and and and uh inflate away the value and and i think that's what you know more and more people view that as asset protection these days they're saying I work my whole life for my little nest egg, and I don't want to find out that the dollar all of a sudden has become worth, if not worth less, worthless. I mean, the famous French philosopher Voltaire 200 years ago said that every paper currency will eventually reach its intrinsic value, and that value is zero.

Starting point is 00:37:11 It's just how long does it take to get there? Well, if and by the way, I'm not I'm not necessarily a gold bug, but I think gold we can we can all agree is something governments can't, you know, flip a switch and easily produce. So, you know, it's been a store of value for 5000 years. If you go back 100 years ago, one ounce of gold would get cost $20. And with that one ounce of gold, you could get a finely tailored man suit. And you fast forward to today, you know, an ounce of gold is eighteen hundred dollars and with eighteen hundred dollars, you can go get a finely made man suit. So as a as a purchasing power, it's gold stayed the same as the dollar's gone down. So gold, Bitcoin, real estate is another asset class that I see people that are worried about losing the purchasing power of their currency tend to put their money in.

Starting point is 00:38:08 When it comes to structures, you can have simple structures. You can have a little company, maybe where the shares transfer over to your children, family limited partnerships. Sometimes people will simply buy an asset, whether it's gold or real estate, and put it in their children's name. That's a quick way to get it out of your own name if you're worried about future litigation. Again, if you're in the middle of litigation and you do that, probably some clever plaintiff's attorney is going to track you down and reverse the transaction. But if you do it today and something happens five or 10 years from now, they're not going to be able to go after that asset. So those are ways that people can do things without setting up complex structures. Once you move from the couple hundred thousand to the couple million, that's where it really makes more sense.

Starting point is 00:39:02 you want to preserve and protect the asset for yourself. First of all, you want to be able to maybe invest it the way you want it to be invested. But then eventually you want that estate planning component, which is what happens to the money at my death. And trusts are a great way to do that as well. They're private. It's not going to go through probate where people are going to see what you have. Because again, the trust is a separate legal juridical person. So when you die, your trust doesn't die. If you were the primary beneficiary of that trust, you kind of get swapped out for whoever's next in line. Maybe it's your spouse, your children, your grandchildren, whomever. The beneficiary has changed, but the legal entity known as the trust, that has not changed. And that's why people like it from that perspective as well. It's private, and it's a way to transition wealth from one generation to the next. Yeah, it's fascinating. One of the things that people love hearing are wild tax strategies. I've done 1,100, 1,200 of these shows and had all kinds of people on and learned a ton from them, but we've heard some crazy ones. Uh, there, there's like simple, crazy ones like, Hey, if you have a vehicle that's more

Starting point is 00:40:17 than, I think it's 6,000 pounds or whatever, you can write it off. And, you know, that's available to anyone and everyone, uh, all the way to literally if you buy a house in cash and then you take out a mortgage against it and then invest that money rather than use it for mortgage payments, uh, you can then go ahead and, uh, all of your mortgage payments are, uh, uh, right off some of your taxes cause it's an investment loan and the whole thing, right? So there's literally the entire, uh, gambit. what's the craziest thing you've seen someone do from a tax mitigation standpoint?

Starting point is 00:40:48 Well, you know, I think sometimes people spend more time and energy and money trying to save taxes. My focus with my clients is always first and foremost, you know, how do we make money? How are you holding your assets? How are you protecting them? But yeah, I do see crazy things, the tax shelters. And, you know, the IRS has really tried to crack down on them and even made the professionals, the lawyers and the accountants who pitch them and promote them can be personally liable for penalties. So I'm really a pretty conservative guy. I know sometimes people think, well, geez, you're in the offshore space. But there are plenty of things that you can do the offshore space that are perfectly legal taking advantage of you know uh you know like some of the

Starting point is 00:41:40 clauses that you're talking about um you know for example there's nothing that says you can't move your ira offshore um and um you know you're not inventing a new wheel uh to say that an ira is tax deferred no it's it is tax deferred right i i don't have to convince you of that you already know that but a lot of people don't know that they can take their existing ira and move it offshore and then invest in it offshore they don't have to be invested in dollars they could be invested in traditional investments or they could be invested in non-traditional investments um or you know things like life insurance again most people think okay i you know i can uh deal with you know Snoopy or New York Life or one of those companies, but you don't have to. There's nothing that says

Starting point is 00:42:30 you can't buy life insurance in a foreign country, even though you're an American and you live in the US. And now all of a sudden, the cash value of that policy can be invested in a lot of different things because you don't have the state. I live in Pennsylvania or Maryland or Virginia or wherever you're from, you know, it's the states that control what can be in an insurance policy. So when you take that life insurance policy offshore, you get rid of the states. You still have to abide by all the federal rules concerning insurance, but there are no state rules. And what that means is you can invest in almost anything you want. So those are the things that people tried to do. I don't view them as really wacky. They're actually quite conservative.

Starting point is 00:43:16 they're taking advantage of the rules that are already in existence the the the thing that concerns me where where you know is people still have these outdated views that well if i put money offshore nobody's going to know about it or if i put money offshore i i don't have to pay tax until i bring the money back to the states those are all wrong those are all misnomers some of those principles like you only pay tax when you bring the money back to the states you know that used to be in the tax code but that was changed under ronald reagan in like 1984. so you know that hasn't been the norm in you know 40 years so 30 years um you know so part of my job is just educating people and i say look if if we can help you we're we're very happy to do that

Starting point is 00:44:04 um if you want to do something that's goes across the line you know if it's if it's illegal immoral unethical um you'll have to do it on your own because it's not you know it's not something again i've been in this business 32 years i sleep very well at night i i don't plan to ever wear an orange jumpsuit with the serial number across the back and you know people that get too aggressive in this space uh they they do risk that you know i i remember reading about leona helmsley and she made the comment about only little people pay taxes and you know next thing you know she was uh you know she spent the the latter years of her life in a federal penitentiary so you know i want want to help clients do things correctly, legally, take advantage of the rules that are already

Starting point is 00:44:49 there. I'm not, you know, coming up with something new and wacky that that I just thought up or tried to string things together in a in a in a new way to to, you know, I get people that even come to me and say, look, the U.S. tax code is illegal. It's it's unconstitutional. And I say, sure, if you want to fight that fight, go ahead. But, you know, my life's too short for, you know, taking on that battle. There are legitimate arguments as to the, you know, the constitutional amendment that authorized the IRS and federal taxation was, in fact, incorrect. But again, I'm not prepared to go up against, you know, one of the largest bureaucracies in the world trying to fight that and you're almost certainly going to lose. So I think life's too short for

Starting point is 00:45:44 that. I tend to agree. Last thing I want to talk about is Bitcoin and cryptocurrencies. A lot of people in the audience either hold them or are interested in them, learning about them. You've mentioned a couple of times that many of your clients are at least now becoming interested, have become interested. What are you seeing there? Is there anything specifically at the uh kind of intersection of crypto and whether it's estate planning tax planning anything like that well yeah i i've seen a lot of developments in the last particularly two or three years you know i know crypto's been around longer than that but the people that had crypto five and ten years ago they weren't necessarily wealthy and the banks didn't really care about them um now all of

Starting point is 00:46:24 a sudden you know you have this whole new um class of people that are you know multi-millionaires and even billionaires. And I think a lot of the traditional financial institutions, banks, trust companies, insurance companies, they're all starting to take notice. So you have some of the early movers in the space, you know, Dell Tech in the Bahamas, you have Bank Frick in Lichtenstein that really led the way and what they called crossover finance. These were some of the banks were really out there now you know even some of the i you read almost every day in the news about you know the traditional the merrill lynches or the bank americas and and and they're trying to figure out ways to cater to uh the crypto community uh we've we've seen uh trust companies

Starting point is 00:47:19 come up with new ways to be able to properly hold uh crypto that that's something they never had to do they you know they work with companies like fireblocks and you know other companies that can provide the the kind of security that that clients want you know i mean somebody's not going to walk in off the street and say you know here's a here's a flash drive with uh you know two thousand three thousand four thousand bitcoin and you know i'm just gonna fork it over to whoever you know is nice to me they want proof that the that the um security you know is at the very highest level and and and i think that as we go forward the next three four five years as bitcoin makes uh another you know bull run and becomes a lot more valuable again uh you know you'll have

Starting point is 00:48:09 the financial institutions that figure out how to keep up and and cater and serve uh the crypto community and and those who don't and the ones who don't you know i think a lot of them will will go out of business or or or become sort of the the second tier you know probably local community banks maybe won't uh but the big banks uh that want to cater to wealthy people they're they're basically being forced to uh learn quickly uh hire people from those sectors to come in and help them organize their affairs. And as you said, there's sort of two groups. You've got wealthy people from some other industry. They made their money in real estate or their business or whatever. And now they want to sort of dabble in the crypto space. They're sort of the latecomers.

Starting point is 00:48:59 They've come along in the last one or two or three years. But then the other group are the people that were the the early adopters you know they were they were getting you know bitcoin when it was under ten dollars you know ethereum at you know pennies and and those people are you know that's a very very interesting crowd you know a lot of them never thought that they were wealthy they still don't think of themselves as wealthy um you know and they are just slowly coming out of the woodwork and we we talk to those folks every day and that's what they want to know they want to know, okay, if I engage in traditional asset protection and estate planning, you know, can the structures keep up, the legal structures first and foremost, but then the financial

Starting point is 00:49:43 institutions, you know, how can I be certain? How can I sleep at night knowing that, you know, my Bitcoin's safe? And a lot of them come from the crowd where, you know, it's sitting on a flash drive somewhere and they're the only ones that know about it. But we've all read about the stories of the guy who threw away his computer in New York, and he had $100 million of Bitcoin on it. So that's a bit of a wake-up call as well. And they do want traditional asset protection estate planning. If they get hit by a bus tomorrow and die, they want to make sure that their kids and their family and charities, whomever, can access their wealth. So it's a balancing act. We have to convince folks that the right kind of systems and structures are in place.

Starting point is 00:50:34 It is new. Like I said, I've been doing this 32 years, but in the crypto space, only probably less than five. So all of the banks and trust companies, they're all scurrying around, some faster than others, to really put the best system structures, protocols in place to serve the crypto community. And I think crypto is sitting right now about $2 trillion, all of the crypto industry. But as Bitcoin, as the leader, and Ethereum takes off again, that number is only going to increase.

Starting point is 00:51:10 So I think more and more financial institutions will be wanting to cater to that clientele. And it's really pretty exciting. I mean, I'm sort of in the twilight of my career, but it's the old dogs learning new tricks and try to adapt things that I've been working with my whole career to the crypto community. And it's been very exciting. I think that you're doing a fantastic job. And what's unique about this is while you think that you're learning about all the new stuff, I think there's a lot of people from this new digital world that are learning from people who have been doing quite well and understanding kind of the legacy infrastructure and different rules and regulations and entities and things like that. So I really appreciate you taking so much of your time today to help people kind of get a quick taste and really just the high level concepts of asset protection. If there are people who want to learn more or need help with certain things, where can we send people to reach you on the Internet? Is there an email, Twitter? Where would you like us to send them? Well, sure. I mean, I'm on there. Nagelaw.com. Nagelaw at ProtonMail.com. You can call my office, area code 412-749-0500, you know, and I'm pretty, pretty easy to find

Starting point is 00:52:28 if you Google me, Joel Nagel. Awesome. I don't think anyone's ever given out a phone number before, so we're going to see how that goes. Hopefully everyone is nice and they don't just start calling nonstop asking, hey, how do I get rich? I might, I might get an earful from my secretary for giving out that number. Hopefully it's all right.

Starting point is 00:52:47 Yeah, just go to Twitter. Don't go to the phone number. That's all good. All right, Joel, listen, thank you so much for doing this. Every time that you and I talk, I learned a ton. And it's a topic that I hear

Starting point is 00:52:59 more and more from people. So I appreciate you taking the time to come on and help everyone learn a little bit. And anyone who wants to reach out, reach out to Joel and we'll go from there. But thanks so much. And we'll definitely do this again in the future. Thanks again.

Starting point is 00:53:09 I really appreciate it. It was fun. Thanks so much for listening to today's episode. I really hope you enjoyed this one. Make sure you're subscribed on Apple, Spotify, or your favorite podcast player. And if you're looking to transition into a brand new job in the Bitcoin or crypto industry,

Starting point is 00:53:23 we've got you covered. Head over to thecryptoacademy.io. My team and I have been working with the top HR teams in the industry to develop an intensive three-week training program with over 50 live events. We teach you exactly what you need to know to break into the industry,

Starting point is 00:53:37 including live interview prep and resume review. Our students have been hired at over 75 of the world's best Bitcoin and crypto companies. Go to thecryptoacademy.io to learn more. Again, that's thecryptoacademy.io. If you enjoyed today's episode, make sure you share it with your friends and I'll see you all for the next episode.

The Pomp Podcast - #1118 Joel Nagel On How To Protect Your Wealth During The Bear Market

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