Esteemed estate planners Matt McClintock and Abbie M.B. Everist have penned an insightful piece for Bloomberg, underscoring the critical need for addressing digital asset issues in the realm of estate planning. As the digital asset landscape remains in its early stages, McClintock and Everist emphasize the complexity and uncertainty that comes with the novel nature of these assets, the industries that govern them, and the technology utilized to administer them.
In their article, McClintock and Everist caution that the lack of standardization and understanding surrounding digital assets poses a significant challenge for estate fiduciaries, who may be ill-equipped to navigate the complexities of these assets in the event of an individual’s passing. The authors argue that a proactive approach to digital asset planning is essential to ensure the seamless transfer of these assets and to protect the interests of beneficiaries.
“Given the rapidly evolving nature of digital assets and the potential legal and technological hurdles that may arise, it’s imperative that estate planners and their clients take a proactive approach to addressing these issues,” said Matt McClintock. “Our article aims to shed light on the importance of this often-overlooked aspect of estate planning and equip professionals with the knowledge they need to effectively navigate this complex landscape.”
Matt McClintock, JD, Founder and Executive Managing Director at The Bespoke Group a wealth strategies advisory firm that is significantly invested in the digital world.
Abbie M.B. Everist, JD, LLM, MBA, MA, Managing Director, National Tax Office, Private Client Services in Sioux Falls, S.D., and Vice Chair of the ABA Generation-Skipping Transfer Tax Committee.
As digital currencies like Bitcoin gain prominence, attorneys, financial advisors, and trustees must adeptly navigate the complexities of structured planning to manage, protect, and optimize these unconventional assets.
Bespoke’s Co-founder, Matt McClintock, demystifies estate planning for digital assets in this talk with BitDevs.
Here’s what the discussion covered…
The Benefits of Using Creative or Personal Names for Trusts
Using creative or personal names for trusts enhances privacy and security while adding a meaningful touch. By choosing a unique name—like a favorite landmark or character—you obscure your identity, protecting personal details from public records and reducing the risk of identity theft. This approach ensures confidentiality, making it harder for outsiders to connect the trust with your personal affairs. Additionally, a personal name adds significance to the trust, making the estate planning process more engaging and reflective of your values.
Understanding Revocable Living Trusts: Asset Protection and Tax Implications
A revocable living trust doesn’t offer asset protection from creditors or tax benefits. During your lifetime, creditors can access the trust’s assets since you control and can revoke it. Tax-wise, there are no advantages or detriments; assets remain part of your estate for tax purposes, and income or gains are reported on your personal tax return. The main benefitof a revocable living trust is efficient estate management. It helps avoid probate and allows for private, streamlined asset distribution and management in case of incapacity or death, ensuring a smoother transition of your estate.
Revocable Trust Structure: Protecting Assets for Spouse and Children
A revocable trust structure designed to protect assetsfor both your spouse and children allows your spouse to benefit from and manage the assets without full ownership, safeguarding against misuse. It also ensures that the assets remain in the trust and are available for your children if your spouse passes away first, avoiding disinheritance. Your spouse acts as trustee, balancing control with asset protection. This approach protects assets, supports your spouse, avoids probate, and simplifies transfer, with clear terms and effective family communication being key considerations.
Legal Limits on Trust Provisions
Drafting effective trust provisionsrequires balancing detailed instructions with legal and practical considerations. Legal limits include public policy restrictions that invalidate provisions based on religion, race, or illegal incentives, and adherence to the rule against perpetuities, which limits how long a trust can last.Practically, granting trustees broad discretion within clear guidelines helps them manage assets flexibly and adapt to unforeseen changes. Avoid overly complex provisions to prevent administrative difficulties and disputes. Collaborate with legal experts to ensure enforceability, communicate your intentions clearly to trustees and beneficiaries, and regularly review and update the trust to reflect evolving needs and circumstances.
Mechanical Transfer vs. Intentional Transfer
The key difference between mechanical and intentional asset transfers lies in the clarity and structure of the transfer process. Mechanical transfers, like handing over a vault combination without further instructions, can lead to uncertainty and unintended consequences. In contrast, intentional transfers involve detailed planning and legal structures, such as trusts, which ensure assets are managed, protected, and distributed according to the original owner’s wishes. Using trusts, clear instructions, and professional advice ensures assets are safeguarded, privacy is maintained, and tax implications are optimized, effectively achieving your estate planning goals.
Mastering Unconventional Asset Management
Structured planning for unconventional assets, like Bitcoin, requires a thoughtful and adaptive approach that integrates security, legal compliance, and asset management. By leveraging creative strategies—such as using personal names for trusts to enhance privacy or crafting intentional asset transfers through detailed estate planning—individuals can protect their assets while ensuring smooth transitions for future generations.
Whether dealing with digital currencies or more traditional assets, Bespoke is committed to help optimize estate planning and safeguarding your legacy.
Finding the right Private Wealth Manager or Multi Family Office can be a daunting task. At Bespoke, we help our clients understand all the nuances of wealth management and how to plan for a legacy that endures.
A Partnership Built on Trust
The value of a Private Wealth Manager is not just the returns they can provide through investment strategies, but it is the relationship and planning process which secures your confidence, the confidence that your time, energy, wealth, and values will persist into the future. The relationship that you build with your Private Wealth Manager should have a foundation of respect, trust and alignment, which can only be garnered through a deep understanding of the things in life that are most important to you and ensuring that your vision is protected within and beyond your lifetime.
Large institutions often promote services like specialized advisors who can provide unique and focused planning support and access to exclusive investment opportunities. The reality is that many of these services fall short of expectations. Attempting to meet the needs of thousands of clients often comes at the cost of personalized wealth planning support. At Bespoke, we are able to prioritize a client-first approach, where we can truly understand the needs of each client and work together to create the most optimal wealth management strategy.
Taking a Generational Perspective
Strategic investing is often front and center of the conversation for many PWMs, but at Bespoke, we help our clients understand that, while strategic investing is an essential part of a family office’s role, it’s probably the 4th most important part. Generational wealth requires a generational perspective, and Bespoke is an expert at mapping out your wealth management strategy by going beyond strategic investing. In his article Navigating the Maze, Matt McClintock describes why it’s important to fully understand all of the intricacies of this process.
At Bespoke we work with our clients to focus on four key areas, including 1) HOW you own your assets, 2) WHERE you own your assets, 3) WHY inheritance planning is so important, and 4) WHAT you own.
The Core Questions behind Proper Wealth Planning
1) HOW you own your assets is crucial to the overall success of your wealth management strategy and protecting your legacy. All the portfolio performance in the world is useless if you haven’t planned to mitigate litigation risk, regulatory risk, tax erosion, or failed inheritances (assuming there are people you care about). Growing your wealth strategically is an additional layer that is only possible once your wealth is firmly protected. How have you ensured that your existing wealth persists into the future? The best way to do this is by understanding all the risks associated with wealth preservation.
Your wealth management partner should be acutely aware of all these factors, and if you’re having these conversations with your partner, then you’re on the right track.
2) WHERE you own your assets is the second most important consideration. Opportunistically leveraging the laws of favorable jurisdictions is an area that even most law firms overlook. Bespoke works diligently with our clients to fully understand their investment needs and desired outcomes and to identify jurisdictions that best serve these goals. In conversations on theStephan Livera Podcast (9:40 & 14:05), as well asThe Last Trade(39:55), Matt McClintock explores the concept of favorable jurisdictions and how to use them as an advantage. These same themes are outlined in his article Choosing Favorable Trust Jurisdictions for Maximum Benefit.
3) The “WHY” – What’s it all about, anyway? (This may actually be #1). What does wealth mean to you? What do you want your legacy to be after you’re gone? How do you want to impact/inspire/motivate the people you leave behind? Is there anything about you other than your balance sheet? (Of course there is.) How do you reflect that through your investments and your broader planning.
The time, energy and value that you provide to the world today has the potential to persist and positively impact future generations. This is only possible with intentional planning, and Bespoke helps encourage deep consideration and thought to the long-term impact of your wealth on family, friends, and community.
4) WHAT you own (your investments) should be a manifestation of your WHY and must be established in context of #1 and #2. It’s about smart investments in public or private markets, domestic and/or international, that deliver alpha, are consistent with your worldview, don’t put essential capital at risk, provide adequate liquidity if markets turn on you, and are fee efficient for you.
These four questions provide the foundation for a robust wealth management framework, which is why we emphasize this approach. Working through and finding the solutions to these questions will help you build confidence in your strategy and ensure your wealth is properly secured for your life and future generations.
If you’re interested in learning more about Bespoke’s approach to private wealth management and how we can help you build a secure financial future,we invite you to reach out to us directly. We’d be happy to set up a confidential consultation at your convenience.
Thank you for considering Bespoke as your partner in wealth management. We look forward to the opportunity to work with you.
The following information is intended for general educational purposes only and should not be construed as legal or investment advice.
