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

Joel Nagel is a Managing Partner and Founder of the international law firm Nagel & Associates LLC. In this conversation, we discuss asset protection, estate planning, managing your Bitcoin, tax mitigation, and all the ways you can protect your wealth as you go through life. ======================= With a Messari Pro subscription, you gain access to exclusive industry-leading long-form daily research reports, daily crypto news & insights in your inbox, advanced asset screeners, curated sets of charts and metrics and so much more. Try Messari Pro today! Get up to 25% off their Messari Pro membership by visiting www.messari.io/pro and entering promo code "POMP" at checkout. ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp ======================= Amberdata provides the critical data infrastructure enabling financial institutions to participate in the digital asset class. We deliver comprehensive data and insights into blockchain networks, crypto markets, and decentralized finance. Download our Digital Asset Data Guide at https://www.amberdata.io/pomp ======================= Bullish is a digital asset exchange that offers industry-leading order depth, consistently tight spreads, and new ways to earn, with world-class security. Combining innovations of DeFi with the performance of a traditional, centralized order book, Bullish lets you trade with certainty across variable market conditions. All in a regulated environment. Learn more at Bullish.com and follow @Bullish on Twitter today. ======================= Exodus is leading the world out of the traditional financial system by building beautiful and user-friendly blockchain products. With its focus on design and user experience, Exodus has become one of the most popular and loved cryptocurrency apps. It’s supported on both desktop and mobile, allowing you to sync your wallet across multiple devices so you can have access to your funds anywhere. You can instantly exchange around 100 different cryptocurrencies straight from your wallet. Interactive charts let you view an asset’s price history and your portfolio’s performance over time. And maybe the best part, Exodus is integrated with the Trezor hardware wallet - making advanced security easy for everyone. Visit exodus.com/pomp for your free download or search Exodus on the App Store or Playstore. ======================= Arculus is the next generation crypto & NFT cold storage wallet that combines one of the world’s strongest security protocols with the easiest to use form factor and app. Arculus requires 3-Factor Authentication to ensure only you have access to your digital assets – something you know – a PIN, something you have – the Arculus Key Card, and biometrics. Learn more and buy it now on getarculus.com. Use promo code POMP to save 15%. Remember, with Arculus, it’s your keys, your crypto. =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  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 and 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 feedback. This episode is brought to you by Messari. Your days of spending hours scouring the internet for quality crypto insights are over. Messari is your one-stop shop for all your crypto

• 0:46Anthony Pompliano?

  data and research needs. With Messari Pro, you gain access to exclusive, industry-leading, long-form daily research reports, daily crypto news, advanced asset screeners, and curated sets of charts and protocol metrics. You can try Messari Pro today, and listeners of this podcast will get 25% off the Messari Pro membership by visiting www.messari.io/pro and entering promo code POMP. Again, that's messari.io/pro and use promo code POMP. Navigate the market with confidence with Messari Pro. This episode is brought to you by LMAX Digital, the number one institutional crypto exchange. They offer clients the deepest pool of liquidity, and they have 100% uptime track record through all the volatility spikes. LMAX Group's liquidity relationships and

• 1:31Anthony Pompliano?

  ultra-low latency technology means that LMAX Digital is the market-leading solution for institutions across crypto trading and custodial services. LMAX Digital, secure, liquid, and trusted. Go learn more at lmaxdigital.com/pomp. Again, that's lmaxdigital.com/pomp. This episode is brought to you by Amber Data. If you're a financial institution entering the digital asset class, you'll need access to granular on-chain and market data from multiple venues to power research, trading, risk management, and compliance. Amber Data delivers comprehensive data and insights into blockchain networks, crypto markets, and decentralized finance, empowering financial institutions to apply traditional Financial finance methods to digital assets. Amber Data eliminates the infrastructure setup,

• 2:14Anthony Pompliano?

  integrated challenges and maintenance headaches to access digital assets data, reducing cost and time to market to enter the digital asset class. Learn more and download their digital asset data guide at www.amberdata.io/pomp. Again, that's amberdata.io/pomp. Go check them out today. All right, let's get in the episode with Joel. Hope you guys like this one.

• 2:36Speaker 01

  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.

• 2:59Anthony Pompliano?

  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 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?

• 3:23Speaker 02

  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. 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,

• 4:05Speaker 02

  but I also have, you know, 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. Back. So when I'm talking to a school teacher sixty years old and they have a nest egg of a half a million dollars, they come to me and say, you know, what are the best ways to protect my wealth? I, I, I take it very personal, very seriously, and I try to come up with techniques to help them. Um, we, we issued a position paper many years ago and I update it all the time about uh, different concepts based on your wealth.

• 4:45Speaker 02

  Obviously, you're not going to, you know, set up a, a family office, for example, if, if your net worth is five hundred thousand dollars. So we want to make sure the solutions that we come up with are uh, consistent with uh, the, the needs and the, and the net worth. So when you, when you ask the question, you know, what is asset protection? Asset protection is, it's simple. It's, it's protecting what's yours. Um, you know, you're not worried about necessarily growing your, the pie, although, you know, if you have it protected well and insulated from taxes and things like that, it, it will grow. Uh, a lot of clients tell me that, that, you know, if you want to think of it as a sports analogy, we are the defense, right?

• 5:27Speaker 02

  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 want to help you protect what you already have. So, so that really is asset protection, generically, protect what's yours.

• 6:06Anthony Pompliano?

  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?

• 6:24Speaker 02

  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 structure. Now, trusts have been around for over a thousand years. Actually, there are elements of trust law that go back to Roman times. If you go back to, you know, the early B.C. 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?

• 7:05Speaker 02

  There were sort of workarounds 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, 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.

• 7:47Speaker 02

  And, and so, the modern-day trust structure was really invented during that, that era. And it's still the number-one way that people protect the asset. And we could spend a lot of time on it, and, you know, 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, if I take my assets and I put them into a trust structure, and then somebody comes and sues me, well, even if they're successful in suing me,

• 8:32Speaker 02

  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 nutshell is, you know, what makes trust so effective. If you've properly created them, properly transferred assets into them. And, you know, you can't do it after the lawsuit has already been filed. That's, we get a lot of calls like that and, you know, we're not able to necessarily help people. Because you get into something called fraudulent conveyances where, you know, somebody is running around after they've been sued. Trying to say, all right, what, what can I do to stop a plaintiff? And at that point, it's, it's very difficult.

• 9:16Speaker 02

  You, you can actually cross the line into, um, 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, and so if, if, if a would be plaintiff comes after you. Uh, and they don't have an independent cause of action against the trust, which they almost never would. Then, um, you know, the, the most they're going to get is a, um, uh, you know, a, a judicial award against you. Let's say against me, uh, but I don't have any assets anymore because I put them in a trust. So, so that's how, you haven't necessarily protected yourself.

• 10:00Speaker 02

  But you have protected the assets by transferring them to, you know, a third entity like a trust.

• 10:06Anthony Pompliano?

  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, and a lot of this asset protection.

• 10:21Speaker 02

  Yeah, that's a great question and, and that's a question that people always ask, you know, in the first five, 10 minutes of a, of a phone conversation. Trusts on the surface are tax neutral, meaning they don't, they don't increase your taxes. They don't decrease your taxes, at least from an income tax perspective. 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 thirteen million dollars without federal gift and estate tax. So if I create a trust today, for example, and I put thirteen million dollars in that that trust.

• 11:03Speaker 02

  And then over the next, you know, thirty years of my life, if if God willing, I should live so long. That thirteen million grows to thirty million or fifty million. You know, any kind of appreciation takes place. It's already been transferred out of my estate, so it's never going to be subject to estate tax. So there are some, there are some tax benefits in that sense. But from an income tax perspective, whether I earn the money or the trust earns the money. You know, the, there's a capital gain, it it's going to be taxed exactly the the same. There are things you can do, for example, you know, life insurance is one technique. There are some techniques with IRAs and 401Ks and

• 11:48Speaker 02

  SARSPS and Kios 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 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 and the big one in the last ten years, honestly, has been to open up the world of investment. I I know I said a minute ago that asset protection, you know, were the defense. The investment advisors, they're the offense.

• 12:26Speaker 02

  But what most Americans don't realize is that seventy-five percent of the world's investments are closed to them. Why, why is the world closed to Americans? Well, it has to do with our laws, it has to do with the SEC, you know, claiming the ability to regulate foreign companies if they take on US investors. So most of the investments around the world outside the US are closed to Americans. So 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.

• 13:05Speaker 02

  So if I create a trust for you in in Belize or the Cook Islands, or, you know, 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 and really, since the implementation of FATCA, uh, which came in, which was passed in two thousand and ten under President Obama, went into full force in two thousand and fourteen. Uh, we've seen door after door after door shut to Americans when they want to invest in almost anything uh outside the country. 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.

• 13:49Speaker 02

  You know, they just want to be able to invest their money the way they they want to invest. And, you know, getting some global diversification away from the dollar uh is important.

• 13:59Anthony Pompliano?

  You mentioned a couple of jurisdictions. You mentioned Belize, Liechtenstein, and uh some of the islands. Uh, talk a little bit about the various jurisdictions. Are there pros and cons to each one? Is it a eighty, ninety 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?

• 14:19Speaker 02

  Yeah, that's a great question. So you start with the universe of things being being either onshore or offshore, right? So once you go offshore, what you've really done it from a um 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 a an advantage. Somebody suing you, the US is the most pro plaintiff jurisdiction that exists. The, you know, there's a new lawsuit filed in the US every seventeen seconds of every minute of every hour of every day. So and and we know that.

• 15:04Speaker 02

  The nuisance value of a lawsuit is around forty to fifty thousand dollars. 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. Imagine that, to keep your job, you know, your job is to go file five lawsuits a day. Well, that's the, 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. It's, you know, many of these jurisdictions don't allow contingency fees, for example. There, if you're going after, let's say, a trust structure,

• 15:50Speaker 02

  there has to be a claim against the asset before it's transferred into the trust structure. So if the claim arises after the trust structure, it's statutorily barred 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, you know, 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 specifics of the jurisdictions. And I would divide the world, there's a lot of different

• 16:28Speaker 02

  places in the world, you know, I think at last count, we'd worked in over forty-three countries around the world. But the big groupings tend to be the, the, um, the English common law grouping. So that's, that's where Belize, the Cook Islands, Aruba, Nevis. You know, you could jump over to Great Britain, the, um, you know, 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, uh, the, the judicial cases and interpretation are very well,

• 17:12Speaker 02

  you know, the path has been very well trodden. You can get a lot of examples in almost any field and 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, after the sort of British common law, which most people like because they're all English speaking and the law seemed very familiar to us as Americans, very familiar to Canadians. Then the next school would be the Germanic school. So we're talking about Germany, Switzerland, Austria, Liechtenstein.

• 17:54Speaker 02

  You know, 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, you know, if the, if the law says X and you do this, that and the other, you know, the law is the law and nobody's ever going to be able to change it. Once you get away from the, you know, the, the British school being number one, the

• 18:37Speaker 02

  Germanic school being number two, you have a lot of little pockets. You know, the French have their little, their little, you know, X 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

• 19:22Speaker 02

  the same. So that's why, you know, when we were When we talk about taxes, if if somebody calls me and they think, oh, I'm gonna like, quote unquote, hide my money offshore, I'm not gonna pay any tax. You know, that's where you invite them to, you know, contact someone else because, you know, they they're they're gonna 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. And then after that, you 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?

• 20:06Speaker 02

  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, you know, honestly, any of the jurisdictions would be far superior to keeping your money in the US.

• 20:22Anthony Pompliano?

  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 US 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. But what it then brings up is like, well, maybe I shouldn't be a US 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 US citizenship. But there's a lot of people in the US who kind of were just born into it, right? And frankly, they may not have the same appreciation for it,

• 21:07Anthony Pompliano?

  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 US citizen, if somebody did renounce the citizenship, and then what exactly their other options would be and kind of what that process looks like.

• 21:30Speaker 02

  Great. Well, you know, you asked a lot of questions in that question. Well, do my best. You know, let's start at the end and work backwards. Before you can even contemplate giving up US citizenship, the law says that you must have another citizenship, because you can't renounce your US citizenship and thereby become a stateless person. So, you know, if you start from, okay, if I would ever give up my US 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 deposit box. They hope they never need it. But if they need it, they have it.

• 22:16Speaker 02

  If you're really seriously considering giving up your US 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 know, 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, you know, the US passport is one of the best passports in the world.

• 22:58Speaker 02

  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, you know, 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.

• 23:41Speaker 02

  You know, Canada is an interesting country for second citizenship because under the North 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 that's it's executive orders. It's 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 a an economic citizenship program, Bulgaria. There are golden visa programs in the southern tier countries, Portugal,

• 24:22Speaker 02

  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 US passport. But Canada is the only one that is guaranteed by treaty under NAFTA that that Canadians have the free right of access. So if you're going to give up your US citizenship, but you want to make sure that you can always come back to the US, you know, Canada is number one. The European country is probably collectively number two. And, you know, then after that, it's, you know, it's a diverse group of countries, mostly where you have to get visas to come to the United States.

• 25:07Speaker 02

  So that's the that's the backdrop for your question.

• 25:13Speaker 02

  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 you're living abroad, you could 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. You know, they're not really thinking about expatriation. They very much like their US passport. They might get a second residence or citizenship over time,

• 25:59Speaker 02

  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 either 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 that to be recognized.

• 26:43Speaker 02

  And that's a different process, but if you can qualify for ancestral citizenship, that's what a lot of people are interested in doing. The number one countries that honor that going back multiple generations, the UK, Ireland, Italy, those are probably the three most common. So, anyway, whichever of those ways you go, the fast, cheap, the fast expensive way, the slow cheap way, the ancestral way, those are all three ways to get your citizenship. Now you have it, and now you come to me and say, Joel, I'm thinking about expatriating and giving up my US citizenship. What does that look like from a tax perspective?

• 27:28Speaker 02

  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. You know, I think of exit taxes as like, for example, the Jews that were leaving, you know, Russia during the Cold War, you know, the Russian government would say, okay, you know, you have assets and we're going to take, you know, some big percentage of them. If you want to leave, you have to fork it over, or else you can't leave. What the US taxes on expatriation is they treat you as if you sold all of your assets the day before you expatriated.

• 28:12Speaker 02

  It's basically a deemed capital gains tax and a deemed income tax. So let's imagine that, you know, I, you know, 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 a, that is an exit tax. And I would, and I would say, I wouldn't argue with you.

• 28:54Speaker 02

  I would say that you're, you're being forced to 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 US person anymore. And you wouldn't owe one cent of tax. Why? Because the, the cash itself is already after tax dollars. There's no, you know, inherent capital gain associated with it.

• 29:35Speaker 02

  So, you know, it's a, it's, it's way more complicated than what I just explained. But, you know, I think your, your viewers get the, they understand in a nutshell. You know, if, if you have appreciated 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, uh, uh, would they pay a tax if they left? No, they, they wouldn't owe any tax. If, if anything, they would maybe be trying to recapture, you know, losses. So that, that's the way that quote unquote exit tax works.

• 30:19Speaker 02

  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 2 million illegal immigrants coming in the US every year. You know, we're not going to run out of people, you know, with that formula. But the 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.

• 31:00Speaker 02

  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.

• 31:09Anthony Pompliano?

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• 31:52Anthony Pompliano?

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• 32:33Anthony Pompliano?

  This episode is brought to you by Arculus. Arculus is the next generation crypto and NFT cold storage wallet that combines one of the world's strongest security protocols with the easiest to use form factor and app. They have three factor authentication and you can use your PIN and Arculus key card along with biometrics. They don't compromise your holdings by requiring a USB port, charging or browser connections. With Arculus, you're protected from hackers and institutions freezing your access. Learn more today and buy it now at getarculus.com. You can use promo code POMP to save 15%. Getarculus.com. Use promo code POMP. And remember, with Arculus, it's your keys, your crypto. What's fascinating about what you're talking about is basically they're using this taxation

• 33:16Anthony Pompliano?

  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 lying around, then obviously that's post tax dollars. So it's interesting, kind of the intricacies, if you will.

• 33:47Speaker 02

  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 owe nothing. But the opposite is also true, where people have said, well, I'd like to expatriate, but honestly, it's not worth, you know, paying an immediate capital gain stacks of 30, 40, 50 million dollars. And then it influences, as you said, it's the stick that kind of keeps them in line.

• 34:15Anthony Pompliano?

  Yeah, I'm not planning on that. I've even got the flag behind me. So I'll leave it to the experts to figure that one out. In terms of earlier, you mentioned a school teacher or a secretary, right? Now, 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?

• 34:53Speaker 02

  Yeah, that's a, that's a very good question. I, I would say that first and foremost, a, a lot of people that have modest wealth, you know, a few hundred thousand dollars, let's say, uh, they might not even want to create a structure because, you know, even if the structure costs ten or twenty thousand dollars, it's a disproportionately large amount based on the wealth they have. So a lot of times they, they'll use the asset mix as the, a, a, as the form of protection, maybe the titling, how you title something. Um, if you're really worried about, um, being sued, but starting with the asset mix, they tend to want to move away from cash, um, traditional stocks and bonds and mutual funds. So

• 35:38Speaker 02

  they, 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. Um, you know, you can throw it in your suitcase and get on a plane and leave if, if you, um, if you need to leave. Um, some people that have a lot of gold maybe store it in a, in a vault somewhere like Switzerland. Uh, Switzerland, uh, houses two thirds of all the world's private, uh, gold reserves. So, you know, and it's, it's very common to have safe deposit box type, you know, structures in, uh, in a bank in Switzerland where you have a little drawer with your, you have the lock and you know, your gold sitting in a drawer somewhere. That's a simple example.

• 36:23Speaker 02

  Um, 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, I worked my whole life, you know, for my little nest egg and, you know, I don't want to find out, you know, that the dollar all of a sudden has become worth, if not worth less, worthless. Um, you know, I mean, the, the, the famous French philosopher Voltaire 200 years ago,

• 37:05Speaker 02

  said that every paper currency will eventually reach its intrinsic value, and that value is zero. It's just, how long does it take to get there? Well, if, and, and by the way, I'm not a, I'm not necessarily a gold bug, but I think gold, we can, we can, um, all agree that something governments can't, you know, flip a switch and easily produce. So, you know, it's been a store of value for 5,000 years. If you go back 100 years ago, um, one ounce of gold would get, cost $20. And with that one ounce of gold, you could get a finely tailored man's suit. And you fast forward to today, you know, an ounce of gold is $1,800. And with $1,800, you can go get a finely made man's suit.

• 37:49Speaker 02

  So as a, as a purchasing power, it's gold stayed the same. It's the dollar's gone down. So gold, Bitcoin, real estate is another, uh, asset class that I see people, um, that are worried about, uh, losing the purchasing power of their currency tend to put their money in. When it comes to structures, you know, you can have simple structures. You can have a, a little company, maybe where the shares transfer over to your children, family little limited partnerships. Um, sometimes the, the people will simply buy, uh, an asset, whether it's, you know, gold or, or real estate, and put it in their children's name. That's a quick way to, you know, get it out of your own name if you're worried about, you know, future litigation.

• 38:35Speaker 02

  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, and, uh, reverse the, the transaction. But, you know, if you do it today and something happens five or 10 years from now, um, they're, they're not going to be able to go after that asset. So, so that, 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 really it makes more sense. You know, you 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.

• 39:19Speaker 02

  And trusts are a great way to do that as well. They're private. You know, it's it's not going to go through probate where, you know, 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. You know, it it the if you were the primary beneficiary of that trust, you know, you you you're 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 and that's why people like it from that perspective as well. It's private and it's a way to transition wealth from a one generation to the next.

• 39:59Anthony Pompliano?

  Yeah, it's fascinating. One of the things that people love hearing are wild tax strategies. And across very, you know, I've done 1100, 1200 of these shows and had all kinds of people on and learned a ton from them. But we've heard some crazy ones. There there's like simple crazy ones like, hey, if you have a vehicle that's more 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. 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. You can then go ahead and all of your mortgage payments are write offs on your taxes because it's an investment loan and the whole thing. Right. So there's literally the entire gambit.

• 40:42Anthony Pompliano?

  What's the craziest thing you've seen someone do from a tax mitigation standpoint?

• 40:48Speaker 02

  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 pitched 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.

• 41:32Speaker 02

  But there are plenty of things that you can do in the offshore space that are perfectly legal, taking advantage of, you know, like some of the clauses that you're talking about. You know, for example, there's nothing that says you can't move your IRA offshore. And, you know, you're not inventing a new wheel to say that an IRA is tax-deferred. No, it is tax-deferred, right? 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.

• 42:15Speaker 02

  Or, you know, things like life insurance. Again, most people think, okay, I can deal with Snoopy or New York Life or one of those companies. But you don't have to. There's nothing that says 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, you know, a lot of different things because you don't have the state. You know, I live in Pennsylvania or, you know, Maryland or Virginia, 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.

• 42:59Speaker 02

  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 that people tried to do. I don't view them as really wacky. They're they're actually quite conservative. 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.

• 43:40Speaker 02

  Um, if 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 nineteen eighty four. So, you know, that hasn't been the norm in, you know, forty years, so thirty 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. 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 thirty two years. I sleep very well at night. I I don't plan to ever wear an orange jumpsuit with a serial number across the back.

• 44:24Speaker 02

  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 to help clients do things correctly, legally, uh, take advantage of the the rules that are already 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. Um, to to, you know, I I get people that even come to me and say, look, the the US tax code is illegal. It's it's unconstitutional.

• 45:07Speaker 02

  And I say, sure, if you want to fight that fight, go ahead. But you know, I'm my life's too short for, you know, taking on that that battle. There are legitimate arguments as to the, you know, the the constitutional amendment that authorized the IRS and the and federal taxation was in fact incorrect. But again, I 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 that.

• 45:44Anthony Pompliano?

  I tend to agree. The last thing I want to talk about is Bitcoin and cryptocurrencies. A lot of people in the audience either hold them or 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 kind of intersection of crypto and whether it's estate planning, tax planning, anything like that?

• 46:10Speaker 02

  Well, yeah, I've seen a lot of developments in the last particularly two or three years. You know, I know crypto has been around longer than that. But the people that had crypto five and 10 years ago, they weren't necessarily wealthy, and the banks didn't really care about them. Now, all of a sudden, you know, you have this whole new class of people that are, you know, multimillionaires 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, Deltech in the Bahamas, you

• 46:51Speaker 02

  have Bank Frick in Liechtenstein that really led the way in what they called crossover finance. These were some of the banks that were really out there. Now, you know, even some of the you read almost every day in the news about, you know, the traditional, the Merrill Lynch's or the Bank Americas and and they're trying to figure out ways to cater to the crypto community. We've seen trust companies come up with new ways to be able to properly hold crypto. That's something they never had to do. They, you know, they work with companies like Fireblocks You know, other companies that can provide the the kind of security that that clients want,

• 47:36Speaker 02

  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, you know, 2,000, 3,000, 4,000 Bitcoin. And, you know, I'm just going to fork it over to whoever, you know, is nice to me. They want proof that the that the 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 another, you know, bull run and becomes a lot more valuable again. Uh, you know, you'll have the financial institutions that figure out how to keep up and and cater and serve the crypto community. And and those who don't and the ones who don't, you know, I think a lot of them will

• 48:20Speaker 02

  will go out of business or or or or become sort of the the second tier. You know, probably local community banks maybe won't. Uh, but the big banks that want to cater to wealthy people, they're they're basically being forced to learn quickly, uh, hire people from those sectors to come in and help them organize their affairs. Um, and as you said, there's there's sort of two groups. You've got wealthy people from some other industry. They made their money in real estate or, you know, their their their business or whatever. And now they want to sort of dabble in the in the crypto space. They're sort of the latecomers. They've come along in the last one or two or three years.

• 49:02Speaker 02

  Uh, 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 $10, 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 if I engage in traditional asset protection, estate planning, you know, can the structures keep up? Structures first and foremost, but then the the financial institutions, you know,

• 49:44Speaker 02

  how can I be certain? How can I sleep at night knowing that, you know, my my Bitcoin's safe? And and a lot of them come from the crowd where, you know, it's 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, you know, the guy who threw away his computer in New York and he had a hundred million dollars of of Bitcoin on it. So so that's a bit of a wake up call as well. And, you know, they they they do want traditional asset protection and state planning. You know, if they get hit by a bus tomorrow and die, they want to make sure that their kids and, you know, their family can and charities, whomever, can access their

• 50:23Speaker 02

  their wealth. So it's a balancing act. We have to, you know, convince folks that the the right kind of systems and structures are in place. It is new. These, you know, like I said, if I if I 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 to really put the the best system structures, protocols in place to serve the crypto community. And, you know, I think crypto is sitting right now about two two trillion, all of the crypto industry. But, you know, as as Bitcoin as

• 51:06Speaker 02

  the leader and Ethereum takes off again, you know, that number is only going to increase. So I think more and more financial institutions will be wanting to cater to to that clientele. And it's really, it's really pretty exciting. I mean, you know, I'm sort of in the twilight of my career, but, you know, it's it's the old dogs learning new tricks and try to adapt things that I've been working with, you know, my whole career to the the crypto community. And it's it's been, you know, very exciting.

• 51:36Anthony Pompliano?

  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 that 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?

• 52:13Speaker 02

  Well, sure. I mean, I'm on there nagelaw.com, [email protected]. You can call my office, area code 412-749-0500, you know, and I'm pretty, pretty easy to find if you Google me Joel Nagel.

• 52:31Anthony Pompliano?

  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?

• 52:41Speaker 02

  I might, I might get an earful from my secretary for giving out that number.

• 52:47Speaker 02

  Hopefully it's all right.

• 52:47Anthony Pompliano?

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

• 53:09Speaker 02

  Thanks again. I really appreciate it. It was fun.

• 53:12Anthony Pompliano?

  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, 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, 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.