Estate Planning | The Why, Where, What, & How of Generational Wealth

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This actually might be a

good entry point for us to the conversation today um about how to own

and where to own um which are the first two steps of the bespoke approach to

wealth management. Um but it's funny how the the world works but um over the

holiday weekend I was with um my family and it was just the four of

us. We did a small Thanksgiving um and the for the first time we were starting

to have open difficult conversations about like what

would happen after my parents die. My dad is 70.

So he, you know, I'm he he was always an older father like and then my mom is 60

and so we're starting to you know and now I have this because of my work at bespoke like I've become

literate in a way and um exposed to this kind of thinking

and anyway so I got to really share a lot of that with him and my mom and they

were really blown way um because they've never had access to this

thinking. And I heard my dad say um

we were sitting at the kitchen table and he said, "Wow, you guys, you guys, it sounds like you guys are just doing

things differently." And he said that all by himself. And I know that that's something that I I I kind of love that

that's something that we just say to each other internally as opposed to having some like tacky tagline or or or

slogan, but it's something that keeps coming up. So,

with that being said, I've I now have this we've been having conversations about how to how to own or, you know,

harder conversations of like how to steward or how to, you know, what happens next because he's not they're

not going to be here forever. And whatever that looks like, it doesn't really matter how much money you have, right? Like that that that it whatever

that looks like for you. Yeah. But I thought that was an I'm I'm

kind of Yeah, I was kind of wowed. Yeah, I that's Yeah, I mean, welcome to

the welcome to adulting. I mean, this is you're you're really kind of getting into it now. Um

and you know, at the risk of um saying too much, I mean, your parents are in an

industry that you're just not in. And so, um, you know, you

will not most likely will not step into the family business, as as their family business winds down

in some way or another when they retire or whatever they end up doing. Um, it's not like you're just going to step into

a family operating business. That's a natural extension of your career path or

your interest level. So then um whatever level of wealth they leave behind for

you, it's going to be more of a passive type of wealth. It's going to be a matter of stewarding as you mentioned,

not stewarding it and taking it in your own direction whenever that time comes. And

hopefully that's many, many years, decades into the future. Um but it's inevitable. I'm dealing with this right

now with in my own family. And so um you know the process by which a generation

transfers not just the economic markers of success

but the characteristic markers of success. Hard work, um stewardship,

responsibility, creativity, um you name it. Just pick your pick your

positive adjective. Those are all things that families want to pass on and those

are things that simply cannot be passed on completely in

the form of any type of structure. I mean, we're talking about human issues.

We're talking about qualitative outcomes and different types of estate strategies

can help provide scaffolding around the work that the family does, but they're

ne it can never replace the hard work of actually parenting in a loving way and

and helping helping those values transcend from one generation to the next. And that's not just like a flip

the switch and it's done. It's a it's a gradual walking alongside side by side type of process.

One of the things that you wanted to spend some time talking about today, I think, was going was about structure. Yeah. And about that scaffolding that we

talked about and Yeah. Can we get into some of that? Yeah. Um, I I think this is a really nice intro and ultimately segue to those

conversations. And I mean, one of the things I've loved so much about my relationship with Jonathan and my friendship with him for

the 20 years we've been shackled shackled to each other like brothers in arms on this journey is that he and I

see the world very similarly, but we have got slightly different lenses that through which we view it. Um and um but

we we we often end up with the same if not or or very similar

um answers to or whatever like strategic outcomes just based on different

journeys. You know, you think of a family building its wealth economically and then in its

non-economic terms, values as we've been talking about and what's what's important and things like that. And it's almost like a it's almost like one of

those Jenga games that um you've got all these stacked stacked uh rectangular

bricks that you're sliding in and out and it's building it's building it's building and it becomes increasingly

topheavy. Sometimes it can become increasingly fragile and but but that's basically the

the story of family wealth through the generations as it builds and as it

builds and as it builds and as it continues to build it can become increasingly unstable because there's

not a meaningful amount of support around it. And the way one of the ways I

view the types of different, you know, the different types of trusts and the different types of strategies that we do

is starting to build a form of scaffolding around this wealth so that there's still room to operate. There's

still room to to play the game, if you will, but there's there's an exoskeleton

or there's scaffolding around it that supports it that keeps that prevents, you know, one wrong move from toppling

the entire family structure. And that really is the importance of structured

wealth strategy. And there's there's so many different ways, so many different there there's no one right way. There

are plenty of wrong ways. There's no one right way to build that scaffolding. But you want to build this scaffolding.

These again, think of trusts, whether the dynasty trusts or garden variety

revocable trusts that cascade through the generations once they become irrevocable. You can make them so

constrained that you've effectively tied a like a full cladding around the family

wealth so that nobody can move. And then if nobody can move, then we start to see

entropy and things start to decay inside this structure. But if there's if the

scaffolding is somewhat loose and flexible, but is still strong, then

people can continue to play the game and pull out a piece and then move it to a new location and put out a new piece and

do something different with it and express their own values and their own life through this game as the family's

wealth continues to build. But the but the wealth strategies are the scaffolding that keep the whole thing

from falling down. So what are some of those features that allow that are that

you're that are the scaffolding that allow the flexibility that you're talking about and kind of the evolution

that I think you're talking about within a family. One of the expressions that we hear often is controlling from the grave,

whether someone wants to control from the grave or doesn't want to be controlled from the grave. And I think I

think that's an important concept because to use Matt's word shackled. I

think a lot of younger generations feel shackled by what's happened in the fa in

the family in the past. These trusts that have been set up that they don't allow for the flexibility that Matt

described. And so especially as you get further removed from those who created

these, you know, historically a trustee had all the powers and the relationship

was between the the the wealth creator, the ones who established these

structures and that trust company. There isn't the relationship between them and

the kids and certainly not the grandkids and especially not the great grandkids. And so the further removed you get, the

more challenging it becomes or they feel that they're shackled in a structure that someone who maybe they didn't even

know created, you know, decades if not centuries ago. And so understanding that

reality and and understanding that the structure has to have the flexibility no matter what the structure is, it has to

have the flexibility to adopt and adjust as needed over the generations because

we're talking about trust designed to last for upwards of well in some

jurisdictions forever if the assets justify it but a thousand years or 365

years. I mean, that's a very long time. Yeah. And I think that a lot of a lot of

where this comes in is, and if I can if I can, if you'll forgive me for being a

little cynical, um I've I've been an estate planning attorney. I've worked with a lot of estate planning attorneys

and um there's, you know, there are obviously lots and lots of exceptions to this, but

very often an attorney who drafts a family's estate plan kind of has a a way

of doing things. They've got their form where they've got their series of documents that they use and that's, oh,

I have a trust that will do this or I have a will that will do that. And so they just kind of assume that the

creative part of practicing law is now they've solved that, they cross that off, they've got their documents. And so

then every trust that they draft looks the same. And they don't often realize

they don't they of they don't often appreciate that every family well while certain facts lend to patterns. Um,

every family situation is different and as a result, you should at least look with fresh eyes on every on every client

on every and on every family. And that doesn't mean you can't use certain forms and templates that you have. That's

great because they they help reduce errors. They help uh provide consistency

across your planning. But if you, you know, if you simply say, well, I've got a, I've got a, I've got a it for that,

as Jonathan would say, I've got an it, and so I'll sell you my it. Um, then that, I mean, that becomes a real

problem. And especially because the state of the industry continues to evolve. The law continues to evolve

through legislation and through court cases and just through creativity from guys like Jonathan, guys like me who sit

around and and think of new ideas. Um, and so one of the the classic example

that Jonathan mentioned is that very often, you know, if I was a wealth builder and I went to go see my

neighborhood attorney who probably does litigation, they do divorce work, they

do some corporal formation, they would do a will. If I twist their arm really hard, they might do a trust, but my

trust is going to look like every other trust they've ever done. And very often the attorney says,"Well, you know, I

will I've got somebody who can be your trustee or use the local bank as your trust company or whatever because you

just don't, you know, your kids aren't trustworthy enough or these people know what they're doing and whatever." And

they don't even think about things like, "Well, what happens when that bank changes hands? What happens when the

trustee, the the vice president of the trust company at that bank retires or dies or moves on?" It's like, well, how

does the beneficiary get rid of this trustee if this trustee is just now like

an anchor around them? What if you've got a trustee in Washington state where

the family may have built their wealth and now the kids live on the East Coast or they live in Europe or they live somewhere else? Do you really want to

have a a trustee halfway around the country or halfway around the world managing the family's money without any

way to change that? And so things like allowing beneficiaries at certain ages

to either become their own trustees if they can if they've demonstrated that they're economically responsible and

good decision makers, let them become their own trustees. if they're in a high liability field or if they've got so

much going on that they can't really deal with the operations of mana

managing a significant family trust because they've got their own business that somebody else needs to manage the family money. Let them pick a trustee

that meet certain criteria for example and certainly let them remove any trustee who fails to respond to them. Th

this is to my mind this is some of the most basic blocking and tackling towards building flexibility within the family

scaffolding so that it doesn't become so constrained that when the family's circumstances change when somebody needs

to make a a new move on the family's game that the scaffolding allows that to

happen without that move causing the entire structure to collapse. I mean we

can go on and on. I mean, one of the things that Jonathan and I pride ourselves on is finding all kinds of

ways to build flexibility and creativity into trusts and other strategies that by

their nature either will become irrevocable once somebody dies or because of certain

outcomes that a family wants are irrevocable when they're created.

because very often you have to create various types of irrevocable trusts in

order to get certain tax outcomes and certain asset protection outcomes. But even in irrevocable trusts, there's

there's room for flexibility. Well, and I think it's important to tie where to own here because

most lawyers and and Matt and I have unusual experience in that we ran an

organization of thousands of estate planning attorneys and we've had more conversations than we'd like to admit

with estate planners over the years. Most lawyers focus and understandably focus exclusively on their own

jurisdiction and don't look outside of their jurisdiction. Well, that's great if you're in a jurisdiction that has

really good trust law, but what if you're in a jurisdiction that has horrible trust law and you're just

creating a trust in that jurisdiction because that's what you do. Can we take a step back to um I want to

talk about wills and trusts at a very basic level and then I want to talk about tax and

then I think that can get us into more of the where to own as well. Um, but why

I I want to talk about wills and trusts. Like wills seems to be the reflex option

for literally everyone and there is a lack of education or understanding

around the benefits of a trust. Yeah. And which tells me that we've not done a very good job yet in helping

people understand the difference. So let's get really really simple. It's interesting how regional it is because

in some states like California where revocable trusts were more or less created, everyone knows you need a

revocable trust. Some states, particularly in the South, they're still just about 100% will based. Everyone,

all they need is a will because it's simple and it's less expensive. But there are significant

advantages to a trust and disadvantages to a will. Let's talk about those.

Yeah. And I think I think for me the the the fact that a will

guarante probate. There's a misunderstanding that if you have a will, you can avoid probate. And probate

is simply the process by which one's property is transferred to his or her intended beneficiaries at death.

People think that if I don't have any sort of will or trust, I I'll go through probate. But a will actually dictates

probate because that's how that will transfers property through the probate process.

That is a public process. And by that I mean when someone dies

with a will or without a will, their personal representative has to

create an inventory of everything that that deedent owned.

And that becomes a matter of public record. My learning has been like I think for

people who are maybe more public or or more like they already are are needing

more privacy um support like those types of clients. I think it's clear to them, right? Like they hear you say that and

they're like, "Oh my god, of course I don't want to go through a pro a probate process." But I think that there are a lot of wealthers that are like, "Oh,

like okay, isn't that the like why why would I even care about that? I want to take a stab at this um because I think

there there are a lot of issues around this which is probably part of the reason why it's such a confusing issue. Um I think there are some cynical sides

to this. I think that there are some just humanistic sides to this. There are

some economic sides to this. There are some emotional sides to this.

The cynical take, which I mean I think is I mean I think it's true is that um

very many attorneys um perceive that drafting a will is a very simple project

and wills are largely commoditized. You can go online and get a $50 will or get

a free download or use a state statutory form or whatever. And so your everyday

neighborhood attorney who is going to do a car wreck and a DUI and a divorce and

a dog bite will also gladly write your will for you. Um, and because they're

used to going to the courthouse all the time, they will happily go through the courthouse for your probate, too. And so

they get at least two bites at the apple in serving that client, serving air

quotes that client, selling them a will for a couple of hundred bucks in order

to get a trust an an attorney who will do that because they know they're going

to collect thousands on the back end. Um, by having they want to have file cabinets full of wills so that if

they're still alive and practicing, that's their retirement. is they're going to the courthouse every day, doing

the probate docket every day. The will doesn't do anything from a medical perspective. So, they get to do

guardianships as well, and so it becomes a cash machine for the older attorney.

How do I know this? This was my experience as a practicing attorney in Oklahoma before I got into will-based

planning. um you build you know building file cabinets full of wills is a 20 to

30year play to then have a cash machine doing guardianships when people become incapacitated and doing probates when

they die. That's the cynical answer. Um the the the emotional answer to this or

maybe kind of more of the psychological answer to this for the consumer is,

oh, I'm just going to, you know, my my um financial adviser told me I've got to

do my estate planning and or my CPA's been bugging me to do my will all the time because, you know, it's what

grown-ups do. And so I'll just I'll swallow hard. I'll go talk about death.

I'll get my will and I'll check it off the list and thank God I'll never have to think about that again. It's like

it's it becomes this chore, you know, that people do when they grow up and

have enough gray whiskers and they say, "Okay, well, I'm just not going to think about that anymore." But it's because

it's emotional and they don't appreciate the fact that what Jonathan and I know

and what what we at bespoke focus on is the fact that proper wealth strategy and

estate planning is not a task. It's a journey. It's an iterative process that

is never done. You are you're never done building the scaffolding. Why? Because you're never done building the family

wealth. you know the family wealth whether it's material wealth or in the form of human capital it never changes

it and I mean it it constantly changes it never ends new generations come along family wealth continues to grow or

retrace or whatever it does but it's it's it's this dynamic thing and so when

you when you change the mindset from wealth strategy or estate planning as a

task to something that is that is iterative and dynamic it means that this

scaffolding has to continue to change and grow and evolve as a family's core

structure, wealth and human capital continues to evolve as well.

Well, and I think wills sort of feed into that task mentality because they only take effect at death and so you are

planning for your death which is not a pleasant thing to do. And so people, if

they do it at all, I mean, the majority of Americans have zero plan. They have the plan that their state legislature

decided was best for them, which generally is probably not what they would want. Um, so they have a plan.

It's not their own plan. It's the state legislaturator's plan. Why should someone care about a um a

court looking through a list of of assets? It's not it's not the court per

se. Sadly enough, there are people who literally and now you can do it online. You they comb through court records to

find out who died, what assets they owned, what

potential tax liability results from the assets that they owned. And so now they

can go to the family who in essence have to have a fire sale because they have to

sell assets to satisfy these liabilities and so they can pray

on the family because that information is public. I want to go a little bit

deeper on this Claire because I because I want to I want to challenge a premise that I I think I heard you make. I don't

think you were quite explicit in it, but this idea that privacy that the desire

for privacy is only for people who are somewhat public. Um, I think I I don't

think that that narrative is true. I think that privacy I think that we are in an age, especially in this age of

what Shashana Zubof talks about as surveillance capitalism. I think that we I think that people are

increasingly concerned about their privacy as well. they should be. And the

this the desire for privacy is not just for the affluent. It privacy, I think,

is a fundamental human right. And so, and and here's here's what I'm here's where I'm going with this. In the probate context, um well, first of all,

when we're dealing with wills versus trusts, if that's the comparison, we're

only dealing with death. We're not dealing with a period of of physical

incapacity or disability because a will doesn't do anything until you die. Um, as Jonathan mentioned, the the will

serves the singular function to take the property that used to belong to a living person and now give it to that living

person's heirs. That's what that's all the will does. So, if I have a stroke or

if I get injured to the point where I can't take care of my own financial or

healthc care decision-making processes, my will doesn't help me at all. And so I have to go through either a guardianship

process or a conservatorship process or hope that my um powers of attorney that

I executed 15 years ago will still hold so that my family can make financial or

medical decisions for me without having to go through a judicial process.

That's there's um even though those processes are often private in many jurisdictions, those those are the processes that are

reserved for people who don't have a trust, for example, that manages the

financial decision-making processes while they are alive, but for some reason not able to make their own

financial decisions. And then let's go back to the privacy thing for a second. Um because

if I'm a business owner, if I own a successful hardware store in my community or I've got a successful bike

shop or coffee shop or whatever in my little community and now I die, my wife

or my kids have to take my will, hopefully I had one or I didn't have any

planning at all and now they've got to go through the process of trying to make sure that my business that I built

succeeds through a judicial process that they have no control over,

a judicial process that is subject to the availability of the court's

schedule. Meanwhile, we've got payroll, we've got supplies, we've got inventory

needs, we've got accounts receivable, we've got accounts payable. Who's managing this business that I built?

this business relied entirely on me and maybe my wife or my kid or whatever, but

if I'm the owner of this thing, who's going to sign the paychecks for for the

per for the team? Well, so this uncertainty starts to tremendously

undermine the value of that concern. And now when we go to probate, when the

inventory is is had and that the inventory is public, um the that and

that inventory usually comes between 60 and 75 days after the probate is opened

up. Meanwhile, we so now for a couple of months, my business has been dealing

with the uncertainty of the death of the founder. And now I probably don't have the only hardware store or the only bike

store or the only coffee shop in my community. So now if I'm, you know, if

I'm a competitor, if you if I change roles now and a competitor wants to see, you know, I wonder what happened to old

man McClento when he died. I wonder what's going to happen with his business. Oh, there's a probate opened

up. Oh, it looks like there's there's employees that are wondering where their next paycheck is coming from. There are

vendors who wonder how they're going to get paid. I bet you I can come in and scoop that sucker up for pennies on the

dollar. or I can let that thing die on the vine and I can just go I know who these employees are. I can I can just go

say you know what sorry really sorry about Mr. Mcccleintoch but um I I've got

some growth plans and blah blah blah. It's like this this is the this is the predatory nature that probate creates um

that's unavoidable if you have a will or certainly if you've done nothing at all.

And we're not talking about the gazillionaires out there. We're talking about the we were talking about

companies, you know, local businesses that are the backbone of their communities and their founders. This is

what this is the future of those companies when those founders don't use

trustbased planning to build scaffolding to build privacy and to allow the family

to have a mechanism that is automatic so that the right people can make decisions

privately without court intervention without publicity so that the family's

wealth continues to to grow because otherwise we have no scaffolding. I

mean, this is the Jingga this is the Jingga's tower falling down. Well, ultimately a judge has to sign off

on all these things. So, that's why Matt said, you know, the the court's availability, all these things. A judge

who knows nothing about this business, who may know nothing about business at all, a legal schol.

Yeah. You know, they could have been a they could have been a DUI expert. Who

knows? Who knows what their background is? that's the the individual who will decide what happens with this business.

So interesting. Um yeah, I think from the the privacy stuff like maybe I was

coming at it from a from a Thank you. I think I think that that really that really really

articulated well kind of the relationship of all these things and like really why why a trust is is just

going to it's a protective measure, you know? Yeah. because I think because if you're not a public figure, you don't really

have to worry about curiosity seekers as much. Yeah. Although I do want to kind of come back to this to this uh surveillance

capitalism point that I made. But but in this, you know, in this community context,

um you know, I think that I think that's really relevant. But now, it used to be

back back when I was doing estate um probate work as a baby lawyer in the

documents saying now all of that data is available online for predators to

aggregate and now exploit people who have lost the often the core of their

family. That's what I wanted to hear you say. That was the the that was the the

connection because what I was thinking about what was operating in the back of my head behind that question was like we

know that this transfer of like the largest wealth transfers happening right like we talk about how um how inheritors

want to fire their parents uh uh manager because they're just you know it just not they're seeing through it. And what

I think is interesting is that I think that with this surveillance capitalism that you're talking about, I think that

that is something that um either inheritors or younger builders are more

clued into because of just purely by they were born in the internet age. They're they're they're fluent in this

space. They they're natives, right? Native to this space. And then but with

the boomer generation or the transfer like as you just said like I don't even know that that connection is being made

that like their data is going to be able to be like this. So so it's just an interesting dynamic right because I

wonder if the concern or um emphasis on privacy might even be coming from from

either you know younger founders and or inheritors. I think it probably is. Um,

and I I think that we are probably at the beginning of an age where people are increasingly acutely aware

that we have that we have sacrificed our privacy for trinkets like for free

access to movies or for free access to somebody's stupid mailing list or for a

15% discount off of something that you want to buy off of Instagram. And so now now we just, you know, we just

prostitute our data to these massive aggregators that we don't even know

about. And then it's it's not long before we see that our social security

numbers are on the dark web or that our account numbers and our passwords have been leaked and there all these data

breaches. And it's like I think that hopefully consumers are wising up to

this. And I think that younger generations, this rising generation into wealth, younger in inheritors and

younger entrepreneurs are more aware of this. And that is a huge huge privacy

gap that probate leaves wide open. Um, how do you or or do do you help

clients um kind of tighten up their um emails, passwords? I mean is that

yeah it's something that we actively support clients doing. Um this is also

an emphasis for us in the new year. Um this is part of what we do under the family office side of bespoke's

offering. Um you we work with some of the most reputable data cyber security

firms in the country to to help them. These are these are companies that are based in the United States but have a

global footprint that can help people understand how you know how far their

digital footprint extends and then how do you start to kind of tighten that up

but there's some you know so we do that from a family office perspective but there's really basic stuff people can do

um that one of the things I think Jonathan uses it I use it service called cloaked we have no affiliation with them

whatever but um you know using I mean if like on your iPhone you can use hide my

email and you can use um you cloaked allows you to create alias user

passwords alias account numbers alias phone numbers alias emails for for every

new thing that you log into. So that way if let's say let's say you bought something

from Etsy and uh just to pick on somebody. Well, if you if you use the

same email all the time and god forbid you use the same password all the time

and then Etsy has a data breach, well then now your email and that password

which is probably your master password is all over the dark web as people buy up data from from data brokers.

Something like Cloaked allows you to create a a dedicated email, a dedicated

password, a dedicated phone number, and a dedicated username for Etsy and for

every other website that you visit and log into. So that if that website has a breach, the only thing that gets exposed

is these alias things, these these aliases that you've come up with. And then the service

cloaked in this case screens against that constantly to say okay if if there was a breach it was the fallout is

limited to one account it doesn't reach the entire thing. And so there's there's really basic stuff that everybody can do

and then when you're really affluent and you've got generational wealth it takes

a it's a bigger lift and that's when you've got to call in the big guns. Yeah. You need more support. Let's get

into the where to own. Well, I want to plant a seed with one and let Jonathan kind of riff on this for a second, but um we talked a little

bit about how um we talked about home bias and how most attorneys um are used

to doing things their way. They understand they they're usually deep experts in their home body of law and

they don't really think about any other jurisdiction. They just know what Colorado law says or what California law

says or what New York's law says or whatever it is. And so, um, that's just what they know and they don't think that

they don't even, it just never even it just never even enters their consciousness that they might want to

use a different jurisdiction for a different type of outcome. That's the seed I want to plant with Jonathan. But

before we get to there, this goes back to again this idea of flexibility inside

in existing documents. We talked earlier about, you know, a beneficiary who might

end up kind of, you know, shackled to a a crusty old

trust company that's no longer responsiveness. And there's no ability to change the trustee relationship

within the document. That's that's one bit of flexibility that every document ought to have because if you don't have

that then the beneficiary has to go to court and show cause which means they

have to demonstrate to the judge that the trustee is acting inappropriately in order to justify removing that trustee

and that's a pretty high bar. Same thing if the beneficiary wants to relocate.

The legal term is recitus but relocate a family's structure from one jurisdiction

to another. Back in my example, we said assume a family had wealth in Washington and now the kids are on the east coast

or maybe one is in Spain or whatever. Well, if if we hadn't thought about that

possibility, the family migrating to different parts of the world, you we might not have thought about what

happens when Washington is no longer relevant to this family's wealth. What happens if we've got a kid in New York

and a kid in Florida? Can we allow the kids to separate their respective trusts

and then say, "Well, I want my Florida trust to be governed by Florida law. I

want my New York trust to be governed by New York law. And so just building in

some flexibility so that the jurisdiction that governs the family's

wealth can change as the circumstances change. That's that's imperative and it's it's something that's often

overlooked. Yeah. So to Matt's question or softball if you

will, there are several states who really have made it a point to make their states

attractive from a trust law perspective.

And most people don't realize that they can cherrypick the jurisdiction that they use for their structures. So if I

live in Colorado, I don't have to use Colorado law. I can pick Wyoming or

Delaware or South Dakota or whatever jurisdiction is best for my circumstances. And the example I usually

use with clients is for decades if you were creating a

corporation, you created that corporation in Delaware because everyone knew Delaware had hands down the best

corporate law in the country. And you didn't have to be a resident of Delaware. Delaware is a small state, but

because their law was so robust, if you created a corporation, you created in Delaware. Well, the same is true for

selecting your trust jurisdiction. If if your circumstances suggest that your trust should be cited

in South Dakota, for example, why wouldn't you use South Dakota for that

situs? Or perhaps your circumstances dictate that perhaps some of your wealth

should be offshore in a jurisdiction that is outside the reach of US courts and US judges.

There are really good jurisdictions offshore um that allow you to protect

your wealth from creditors and get it outside the reach of the US court

system. Is it worth kind of getting into listing these like the purposes of the different

jurisdictions that you know we focus on and and why? Sure. And

yeah, I mean I think um Jonathan mentioned South Dakota specifically, so I'll touch on that one

first, but South Dakota is one of the jurisdictions that literally la allows

trusts to last forever. So, um, under the old-fashioned law that the the

United States built its law around was called English common law. And under English common law, there was this rule

that said that trusts cannot last forever. It's called the rule against perpetual trusts, the rule against

perpetuities, which means that you cannot hold property indefinitely. uh it

ultimately has to be divested from a structure so that property gets put back into the chain of commerce. That's the

idea is that you know we can't just we're not just going to hoard and hoard and hoard and hoard. We will you know we

will require that at some point wealth be put back into commerce. And so that's

the rule against perpetu that's the rule against perpetuities, the rule against perpetual trusts. South Dakota never

enacted that. South Dakota um said, you know, from it's in it in its

constitution that that there is no applicable rule against perpetuities in

the state of South Dakota. So, you can lock up family wealth into a trust

structure that literally lasts forever so long as the trust remains economically viable. If you've got

hundreds of millions or billions of dollars that you want to have in a scaffolding that lasts forever, then

South Dakota is a great choice for that. South Dakota is also highly private. By

law in South Dakota, every matter, every judicial matter concerning a trust is

sealed from the public record immediately. So, from the very beginning. So, um, it's the most private

jurisdiction in the country in a jurisdiction that allows trusts to last forever. South Dakota also, like Wyoming

and a few other states, allows for what's called a quiet trust. So that if you have a beneficiary who is a

a proflegate spender or is just irresponsible with money um and you want to set aside money for them into a trust

but you don't want them to know that that exists then a place like uh Wyoming

or South Dakota that has a quiet trust statute starts to make some sense now

will tell you that if you're relying on the quiet trust provisions to help that

beneficiary be better with money, you're you're kind of fighting a losing battle.

Um, but you know, that's one of the features of South Dakota and and Wyoming. Wyoming is also another highly

private jurisdiction. Wyoming allows trusts to last for a thousand years, so it might as well be

forever. Um, Wyoming has a lot of

digital asset friendly laws on the books. Um, so that from a when digital

assets are going to be owned directly inside of a trust, Wyoming is usually a

very good option for that. But Wyoming uh is kind of um I would say probably

top third of quality jurisdictions when it comes to trusts generally as far as

their level of resilience under pressure. Um Nevada is a highly

protective jurisdiction. its privacy and asset protection is on par with South

Dakota. Um, a trust in Nevada can only

last 365 years. Still pretty long time, but it's not forever. And so, within the

United States, these are three of the jurisdictions that we look at a lot that we often will recommend for people uh

when we're talking about the trust structure inside a family. Now, one other thing I want to touch on and then

maybe kick it over to Jonathan to talk about offshore and maybe some layering with limited liability companies. But

the one thing I want to touch on is when families have tremendous amounts of wealth, um the kinds of clients that we

see that have tens of millions or maybe hundreds of millions of dollars in in family wealth, um the question behind

who is going to be the trustee is often very much in in play here. And so very

often they don't want to work with some huge trust company and just become, you

know, one of a handful of clients that that trust company cares about. They

want to create their own trust company. And so very often we will look at jurisdictions that have a private trust

company statute that allows the family to create a trust company that the

family owns and the family can control. And so South Dakota has this, Florida

has this, Colorado has this, Nevada has this, Wyoming has this, Tennessee has

this, a lot of other jurisdictions have this, but we usually end up in either Nevada or Wyoming from these

perspectives because both of those states have private trust company

statutes that allow the family to create a trust company that is not subject to

regulatory oversight by the state banking commissioner. Again, when we're dealing with family privacy, um we we

want to keep regulators usually at arms length. And South Dakota, as great as it is, by all other measures, it does not

have an unregulated family trust company statute. So, um that means that if your

family has tremendous amount of wealth in South Dakota trust and you create a South Dakota private trust company,

you've made the state banking commissioner of South Dakota a party to your family's operations. You can avoid

that in Nevada and you can avoid that in Wyoming. And private trust companies, the private

family trust company is critical to the family maintaining the highest degree of

control because we talked earlier about how if you have a third party trustee, especially as you get further removed

from the wealth creator, that relationship probably doesn't exist. And so now the family feels shackled by this

structure. But if the family is the ones making the decisions

now those trusts actually work to protect them rather than serve as a

shackle against when when does someone need at what level of wealth does someone need to start thinking about a private trust

company range? I would say it's less I'd say it's less a matter of the level of wealth and more the intent of the wealth.

What will the wealth be doing? Um, and how actively involved does the wealth

builder want future generations to be in the administration of that wealth? Those

those are really the questions. I would say though there is an economic component to it. Um, I would say it probably doesn't make a whole lot of

sense. Less than about below about 50 million and in family trusts. Yeah, I was like to somebody with with 5

million or 10 million or even 20. Yeah, it would not make any sense. I mean, it would be it would be administratively

and economically burdensome for a family. It starts to make sense around the $50 million mark, I think.

Um, but I'd say again, more more important than the value of the dollars is how much scaffolding does the family

want in place? Because if it's just a matter of look, we we're just going to give all this money out to our kids,

we're going to give it all the way to charity, and we're just going to be done with it, then you don't need a family trust company for something like that.

But if you if you take this idea of the family wealth is now the family

enterprise and you know whether we built it through a family company like we've been talking about or we've built it

through really intelligent successful investments. Now, if if the if our idea

is we as a family believe in a long-term stewardship of this wealth and and how

this wealth can impact our communities and how this impact how this wealth will

evolve through future generations, then the family trust company makes a ton of sense because it creates a natural um it

creates a very fertile ground for rising generations to start being involved in

the decision-m process whether that's around philanthropy, whether that's around investments, whether that's about

you know the family business that that you know if we've got our if if again if we're our um if we've got a successful

family company, how does that company run inside this structure? Because ultimately the company and all the

family wealth is going to be owned by a whole bunch of different types of trust structures. Well, sitting at the top of

that trust stack is the trust company. And the family trust company becomes the

central operating system of everything that touches the family wealth. And it becomes a natural ground for for

allowing the new generations to kind of rise up into decision-m power.

How do you think about the and this is this might be getting us into the offshore jurisdictions. I think it's

going to be related, but I couldn't help but think about how the dollar is is

losing purchasing power. Um and and when you're talking about, you know, assets

that are sitting within the trust structure, my mind went to

dollars, h how how is that thought about? And then maybe also title ownership is is part of my question.

Yeah. So we believe strongly in title held assets, meaning you own the particular asset, not a fund or

something else that owns the underlying asset. And that's important from a couple different perspectives. One, so

here it's interesting when you deposit your funds in a bank in the US, you

don't have title held assets. You have the equivalent of those assets, but if

if something happens to the bank, you're not guaranteed to get your your

assets back. Whereas in certain jurisdictions outside the US like Switzerland and Singapore, which we

really like, you always have title held assets. You deposit funds or gold for

example into a bank that those funds that gold is yours. And if something

happens, even if the bank goes under, which has never happened in Switzerland's history, but if it did,

those assets would be yours. They would be returned to you. they're not subject to the general claims of the bank.

So, historically, offshore was um used

primarily for asset protection purposes. Clients would say if something happens

here in the US, I'm concerned maybe I'm in a high-risisk occupation. if something were to happen, I want to

make sure that I have some funds set aside that I know that I can have access to in time of need.

And that still exists for for clients who are concerned about maybe

um they're in a a field that has a lot of government activity. Um, you know, we

we refer to government agencies as super creditors because they have the unlimited resources to continue to go

after you. And unfortunately, if your assets are here in the US, what what

these government agencies frequently do is they freeze those assets and they make it very difficult for you to defend

yourself and then they can exert a fairly favorable to the government uh

unfavorable to the defendant settlement to resolve that claim. And so if you

have assets offshore, that allows you to defend yourself um and have money to

live off as needed. And when you say assets like that could it's any type of asset.

Yeah. So it could be it could be any type of asset. It could be uh cash. It could be gold to but to your question

about the the dollar. It could be investments in

um stocks outside the US, stocks that that pay perhaps dividends in a currency

that has done phenomenally well against the dollar. And the Swiss Frank and the Singapore dollar are two such

currencies. But if somebody's made Go ahead. No, I was going to say, so if you take your some some of your wealth,

you invest in Swiss stocks. Um, those stocks pay a dividend in Swiss

Franks. So, not only are you receiving a dividend, but you're now receiving a dividend in a currency that has

performed very well against the dollar. So, you're getting that delta against the dollar as well. What was the cost of

transferring your dollars to to Franks to invest in the Swiss?

Depends on the currency exchange at the time and the broker through which you're doing the ex the currency exchange. I

mean there's not like like a fixed price. It's like we try to we try to be opportunistic and

take advantage of opportunistic pairings, you know. We we try to we try to buy franks when the frank is lower

against the dollar. But, you know, it's it's a moving target. It's like we you can't just say,

"Well, just you want to do it every Tuesday." It's like you can't. It's like, but that's a great question because a lot of what people often do is they will

say, "I want to invest in Franks and so they'll take a million dollars hypothetically and then they'll just

invest in some Swiss companies." That's not how we approach it. We look to Matt's point, we look at, okay, when's

the dollar strong against the Frank or at least relatively and maybe do small

tanches over a prolonged period of time so that we're maximizing the investment

in Franks rather than just going 100% in regardless of what where the dollar is

against the Frank at that time. Yeah, it's just it's about being strategic um and opportunistic.

Um, and but be kind of the broader question I want to to touch on in this in this conversation about generational

family wealth and structure and how to own and where to own. Um,

this this such a nuanced type of conversation, but ownership is critical.

The right type of scaffolding around which you support the family wealth

different types of trusts that you use, different entities within trusts. Limited liability companies, for

example, that might be owned by a trust. Those limited liability companies or trusts can hold whatever assets that you

want to hold. It can be real estate, it can be gold, it can be Bitcoin, it can be Swiss Frank, it can be equities, it

can be um bonds, it can be whatever you want to be. And families really families

with significant wealth must be thinking beyond the United States border. They we

we've got to get out of our our own home bias, not just about the state that we live in, but the country that we live

in, and realize that we're in a globally interconnected world. We're in a rapidly

changing geopolitical order. There are new opportunities opening up all the

time around the world. And if we if we have a constrained home bias through

which we view the totality of our family wealth, then we're going to miss out on

the flexibility. We're going to miss out on the privacy. We're going to miss out on the protection, and we're going to

miss out on the ability to preserve and hopefully grow generational wealth in a

meaningful way. Yeah. And it's important to to to realize that families are becoming more

and more global. So, it's not just that um the dollars had a great run, maybe

that run's going to come to an end soon, but if the kids are dispersed around the

globe, we need to be thinking globally. And there's a lot of things that are

happening that impact uh wealth that impact what investments

you should be thinking about given those ge geopolitical events.

Yeah, I'm kind of excited about how um Americans are being challenged to see

ourselves within like a greater context. I know that we have this, you know,

Americans have this have had this reputation like abroad that we're really

in our own bubble and I mean, but it's not even necessarily our fault like we haven't really been given the incentive

or a reason to look outside, you know? And so yeah, I think you know hearing friends too like I have friends in

Germany or I have friends in in France and like they've always said you know like oh you you didn't know about this thing happening in this other part of

the world and and now I even see myself in those conversations with my friends just being more you know more aware of

like what's happening outside of our borders. So I think that it's exciting. Yeah. And I think it it's I think we need to look at it from from a

perspective of opportunity not from a not from a perspective of the house is

burning type of thing. I mean the the United States has been and is um and I

think for I think will for a very long time continue to be the

most important economy in the world. But there are other economies that are rising and we have to be and we are you

know politically we are we have taken steps to be less relevant on the global

stage. I mean that's just that's just the reality of where we are right now. I mean there are policy shifts that are

intentionally driving down the value of the US dollar and it's just part of the cyclicality of politics. Um and again as

we are in as we are increasingly interconnected um we have the ability to now learn

about what's going on in China and what's going on in Europe and what's going on in Africa and what's going on in Russia and in Latin America. Uh the

world has become a whole lot smaller because we because information travels so quickly and opportunity travels so

freely and and now in an age of digital

wealth um wealth can borders are increasingly irrelevant. One

of the books I want you to read Claire which I think you'd find fascinating is I think I've mentioned it before but

Davidson and uh Walter Reese Moog I think were these two authors written in

1997. Um so this is before the dotcom bubble. This is before Y2K.

Um but they as they were writing they were predicting an era that's kind of

like the era that we're in right now. I mean they it's not don't read it like it's forecasting like Nostradamus

Nostradamus or something like that but it's like they were even predicting things like cyber currencies and the

idea that political borders geographical borders will become increasingly irrelevant in a

rising information age. This was the dawn of the internet. And so as the information age took off, which is quite

clearly what we're living in now, um things like tribalism around um systems of belief or

values would become more important than the people that we happen to share a community, a physical community with. I

know more people spread around the world than I know in my own small town. And

that's, you know, that's just an example of um the increased interconnectedness,

the decreasing relevance of geographical borders and as a result the decreasing

relevance of any particular given fiat economy. Yeah, I was I was talking to Jacob about

this about, you know, on our geopolitics conversation and how I had I had heard

from a there was a story from someone in the bespoke community or somebody was

frustrated because they had brought up to their banker like a while ago that they they kind of were seeing this

change and what can they do and and um and this is just one of many stories of

kind of the wealth manager or the banker being like, "Oh, you know, you know, get, you know, get some municipal bonds.

Like it's, you know, and um I think it's important to um have space for like,

okay, no, like things are changing and and that's okay and like yeah, it's there's going to be growing pains and

we're going to feel it maybe in some uncomfortable ways, but like also there is an opportunity to kind of like do things differently and and grow and and

just adapt like adapt and this is this is bespoke's mandate. I mean this is our mandate is to help

families navigate these changes. I mean these na these changes will

demand that you iterate. It demands flexibility. It demands that you be

mindful about how do you own your assets and where those assets are owned as well as what they are and the overriding

purpose behind the family wealth. That's why we talk about how to own, where to own, what to own, and why. That that's

that is the mandate for bespoke. Yeah. And it and it requires I'm

thinking on kind of the client side, but it requires like a stepping into a

I don't know the right way to put it like you know really hand it you become

inc like with this you you have to become incredibly hands-on I think is what I'm trying to get at. like it's

moving away from this like oh this person knows x y and z and like I'm not you know it's like oh this is an institution and they know how it goes

and it's always going to be this way and so like I you know we talk about checking the box I'm like moving on but now we're being forced to to really peel

the peel like wealth holders are being forced to get more in the weeds and more

hands-on than I think ever before and well yeah I mean the world is as we

mentioned the world is increasingly interconnected the world is moving faster and faster and faster as time goes on which means that families with

wealth will have to adapt. I mean not just families with wealth, people have to adapt and um and we just happen to

have the privilege of working with some of the most affluent people but these these are realities that everybody has

to face. I mean no we're all this affects changing. I mean this affects every single person and

human on the face of the earth regardless of your bank account. Like we all actually have that in common. Yeah,

that's right. It's people who have significant wealth, you know, have the means to do something about it.

Yeah. You know, and that's it's the reality. Yeah. Okay. Well, this was enlightening.

Thank you.