In this video, we'll be discussing the best options for protecting your crypto wealth. Join us to discuss the differences between LLC and trust structures and which one may be best for you. Don't leave yourself and your digital assets vulnerable - watch and learn the best ways to safeguard your wealth!
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LifestyleTranscript
00:00Have you ever tried to figure out if you need to file an LLC or a trust or how to set yourself
00:04up before price appreciation happens for your digital assets? That's what we're going to talk
00:08about today. So here I have an example. I have the privilege of talking with a lot of people
00:15who want to be proactive and set things up previous to price appreciation. And I do want
00:20to put this disclaimer right up front. I'm not a financial advisor. I don't give financial advice.
00:25Anything said here is for entertainment and educational purposes only. It's how we speak
00:28with your financial advisor before making any investment decisions. These are the considerations
00:33I always look at when having this conversation and you know working through these things with
00:39an individual and helping them look at the options that they have. So their age 65 years old pretty
00:47close to retirement or at retirement. They're still working. They have a W-2 where they earn
00:53$50,000 a year. They are located in Texas. Their relationship, they're currently divorced
01:00unfortunately. But they do have kids and they got grandkids that they want to take care of.
01:05They own their home, which is great. No mortgage. Their objectives are to retire and travel. They
01:12want to have passive income. And they currently have about $80,000 invested in digital assets.
01:16So what would this person need to think through? How could they position themselves to mitigate taxes
01:24and set themselves up previous to price appreciation to make sure, you know, they're going to be taken
01:29care of. In this situation, we're going to have some just thoughts, right? Let's say, you know,
01:40whatever they're invested in, in this next bull run, goes anywhere between 10 and 100x. That's going to
01:47put them somewhere between $800,000 and $8 million that they have from their investments. And they might
01:53also have, you know, a pension or 401k or an IRA. Maybe they've got something else stuck away for
02:00retirement too. But this is kind of their Hail Mary and what they're what they're banking on to make sure
02:06that they have some passive income and they can set themselves up and they really are going to be able
02:09to retire because they're already up there in age. Time horizon short. That's always a consideration.
02:14You know, if they were younger, you know, might be doing some things differently. Do they need an LLC?
02:18Do they need trust? What are the costs associated with those things? An LLC is going to run you somewhere
02:23between $300,000 and $800 to set up depending on what state and what service you use. Trust could be
02:30anywhere from $3,000 to $25,000 depending on all the bells and whistles, what type of trust it is,
02:35where it's established, all those things. If you are interested in working with us to do that,
02:43you can book a time through the site right here. We would love to have a conversation with you.
02:47So, and if these things aren't applicable to you, we are going to make some other videos that should
02:54be listed right here that you can check out. And they may have, you know, your situation that we can
03:00walk through. Here's the considerations. They're single and you get $12.92 million here in the U.S.
03:06that you can move into a trust or an estate or gift into a trust or estate with no tax implications.
03:12If they were married, that threshold would be higher. We get $25.84 million. This is the highest
03:17that the gift tax in the U.S. exemption has ever been. The majority of my lifetime, your lifetime,
03:23everybody else's lifetime, it's been around like less than a million. So with, you know,
03:30political changes coming into office, it's my anticipation that that could be cropped.
03:35You know, after 2025, I think that's when this one ends and there'll be a revision for that.
03:40We'll see where that goes, but up until then, that's what you get. So we're going to play off those
03:46rules. So let's say, you know, hit it big. We get the 100X. Maybe it's an XRP, XLM, Casper,
03:53HBAR, Algorand, Flux, you know, Helium. I don't know what your investment is. This is applicable
03:59for any digital assets. Maybe it's Ethereum. Maybe it's Bitcoin. We'll see. But yeah, so we're
04:07looking at 100X. We got $8 million. But before we get there, how can we make sure that we're set up
04:12to take profits? Because somebody that's looking to retire, let's be realistic. You're not just
04:17going to leave all your money in crypto. You're going to need to take some out to retire. You also want
04:22to deploy that capital in some way. They can produce passive income for you. Maybe you're
04:26going to put it in an annuity or something else that's really stable, hedged, not going to have
04:31volatility like digital assets. And you know that income is going to come every month so that you're
04:35not worried about it. And those opportunities might exist, you know, as digital assets progress.
04:40We might have staking. We might have liquidity pools. We might have other options where you could
04:44deploy some of those assets I just mentioned, and they produce passive income for you.
04:48You're still going to have tax implications with those. And so LLC is probably going to be the
04:53best bet for this individual. They are located in Texas. So that was one of the things that I
04:59skipped over a little bit earlier. Location matters. Texas, Florida, some of the other states don't have
05:05state tax, which is great. The only thing that you don't have in Texas if you're going to file an LLC
05:10there, the regulations toward digital assets are progressive. They do have some laws around stable
05:16coins here and money transmitter license that's required for that. Wyoming tends to be, is the
05:23most progressive jurisdiction in the U.S. when it comes to regulations for digital assets.
05:28It also doesn't have state tax and you're going to get attorney-clied privilege. So if anonymity
05:34is important to you, probably the best spot to file it. That's what we help people do. If that's
05:39something you want to do, you check out the link here to be able to file with us and set your LLC up.
05:45Once you have the LLC set up, you move your digital assets in there. Again, that's something we help
05:50people with. And let's say it goes to $8 million. Here in the U.S., depending on how long you held
05:55these assets, there's going to be different tax thresholds. So that's always another consideration
05:59as well. How long have you held the assets? Have they been purchased within the last 12 months?
06:04If they have and you're single, if you're going to be taking over $250K, you're going to be looking at
06:1135% tax because it's going to be short-term capital gains and that's taxes income tax.
06:16If you're over $600,000 around about, you're going to be looking at 37%. And then again,
06:21you know, if you're not in Texas, Florida, Wyoming, South Dakota, one of these other states
06:25that doesn't have state income tax, you got your state income tax on top of that. So that's another
06:30benefit of the LLC if you're not located in one of those states. So, you know, how do you offset
06:37those tax implications? If you have held it longer, let's say you've held it over 12 months,
06:42you're going to be looking at 20% capital gains, over half a million-ish.
06:51And maybe you just want to pay that. Some people do. Some people think it's simpler.
06:55They don't want to worry about doing all the, you know, things that we do. Put yourself into an LLC.
07:00Maybe it's too much of a headache. I've met with people and maybe this is that person. Maybe they
07:05don't understand it. They just want to ride it out. They're going to wait, continue to buy digital
07:10assets, take profits in their personal name, and then they can move those profits into an LLC or
07:15trust later on and use that to offset tax implications. That's always an option, but you
07:22are going to owe, it's going to be a lot more difficult to mitigate those tax implications if they
07:26are in your personal name. And again, if it's short-term capital gains, those can be pretty
07:31significant. So that's where the LLC is going to benefit you and why that might be a good choice
07:38in the short term if you're setting things up and being proactive. If this person had, you know,
07:44north of $300,000 invested, maybe even less than that. Again, you know, you've got $12.92 million that
07:54you can move into a trust. If they have like, they think they're going to be 100x and they've got
07:58$130,000 invested. Might be looking at the trust. That might start to make some sense at that point.
08:07You know, again, could be cost prohibitive. That's always a consideration as well. They do have kids
08:12and grandkids, so probably going to set up a trust anyway. Might make sense. If they didn't have
08:17grandkids and kids that they wanted to take care of, maybe you might look at a charitable remainder
08:22trust, and that's something you can do after. You have the money, you're going to have to take profits
08:26anyway to set that up because of the way that that's orchestrated and you have to make investments
08:30inside that trust. So anyway, lots of considerations here. These are always things that we look at when
08:38we're helping somebody walk through their options in the short term so that they can mitigate tax
08:44implications and set themselves up for success. Hopefully this has been valuable for you. This is
08:49the first in a series of three videos that we're going to do on the topic with three different
08:53avatars and would love to have you in those videos. So like, subscribe, and we'll see you on the next one.