103 | The Secret to Keeping Your Crypto Millions Safe and Tax-Efficient with Jake Claver

Patrick: [00:00:00] Have you ever wondered what happens when someone builds life-changing wealth overnight and suddenly has to figure out how to protect it, grow it, and make it last for generations? Welcome back to another episode of the Vital Wealth Strategies Podcast. I’m your host, Patrick Lonergan, and today’s conversation is going to challenge the way you think about digital wealth family offices in the future of financial planning.
My guest, Jake Klaver, is the managing director, CEO, and founder of Digital Ascension Group, a cutting edge family office that helps high net worth crypto investors turn volatile digital assets into long-term wealth. Jake went from navigating his own crypto success to helping families around the world secure and multiply their fortunes, and what he’s built is absolutely fascinating.
In this episode, we dig into how to protect your digital assets from loss. Lawsuits and even life’s unpredictability. How to borrow against crypto instead of selling it, which triggers huge [00:01:00] tax bills and how to apply family office framework usually reserved for billionaires to your own business, even if you’re still scaling.
If you’re serious about keeping more of what you earn and building a strategy that actually works in today’s economy, you’re going to want to listen all the way to the end. And when you’re ready to start implementing some of the same strategies Jake and I talk about, like asset protection, entity structure, and advanced tax planning.
Go to vital strategies.com/tax. That’s vital strategies.com/tax where you can start building a customized strategy to protect and grow your wealth the smart way. If you find value in today’s episode, do me a favor. Leave a quick review wherever you’re listing. It helps more entrepreneurs and wealth builders find these conversations and apply them to their own lives.
All right, let’s dive in. Here’s my conversation with Jake Claver, a digital ascension group. Welcome to the episode. Today, I’m excited about our conversation. We’ve got Jake Claver. He’s the managing director, CEO, founder of Digital Ascension Group, uh, [00:02:00] innovative family office structure that specializes in crypto focused high net worth individuals and families.
So Jake, thanks so much for joining us here today. Absolutely, brother. Appreciate you having me. Yeah, so I’m, I’m, it’s interesting. We have a, a. A number of, of listeners that, uh, have built tremendous wealth in, in crypto. You know, we, we look at people that got in early and have held on through all that volatility, and they, uh, have, have done really well.
And I think they need help in this, this arena. So I, I think about, you know, digital assets and crypto markets, they’re volatile, they’re confusing, they’re full of risks. Yes. You know, regulations are unclear and it’s, uh, it can be easy to make costly mistakes. So, uh, I also think about entrepreneurs feeling uncertain about.
How to safely integrate crypto into their wealth strategy without jeopardizing, you know, their, their family’s financial future. And then wealth should be secure, right? Should be future oriented, uh, should be adaptable to, you know, what I wanna do with my life. Not, you know, feel, uh, sort of held hostage by my [00:03:00] wealth and not be able to, you know, recognize the value.
And so, uh, also think about the security piece there too, not lost, not losing my wealth to, to hacks, mismanagement, or just lack of planning in general. So. I’m excited to get into all of those things here today. Can you give us a little bit of your background, how you got started with, uh, digital Ascension Group and, uh, created this, this whole structure that you’ve developed?
Jake: Yeah, so, you know, it’s kind of surreal. Made a bunch of money in crypto in 2021. I had, uh, set aside some money from my wife and I to buy another home, which we still haven’t done. But you know, when, when the market fell in 2020, I actually didn’t get into crypto. I got into traditional stocks. I’d gone to school for finance, but I’d really stayed outta the market.
I, I felt like everything was overvalued. All the stuff that I learned in school, sharp ratio PE ratios above a indicator. Like, I was like, okay, well there’s gonna be another pullback and I’m, I’m gonna take advantage. And so, you know, I rolled my, um, my 401k that I had from a previous employer to a self-directed IRA, [00:04:00] bought a bunch of stocks.
Uh, it’s not a bunch, but not a bunch of stocks. Facebook, Amazon, Google, Tesla. I thought, okay, if the world shut down, like these are probably gonna be okay. And they did. They rebounded really quickly and um, they actually got pretty, really quickly and, and so, mm-hmm. I didn’t get the bottom. It was close, but I was looking to de-risk.
I was like, all right, well I’m back. Double my money very quickly. How do I, you know, diversify this and like make sure I’m hedging against, you know, dead cap bounce or I didn’t know it was just gonna keep going up into the right with all the money printing. So I, um, he, he think you’re de-risking and you get into crypto.
I watched, uh, a debate between Peter Schiff, who’s a gold bug and a Bitcoin guy, and, um, I really figured out what Bitcoin was. It’s technology, it’s a protocol. It allows value to move. It’s an immutable ledger. And I’m like, ah, okay. Now I see why everybody was crazy about this. In 2017, my brother had turned like.
Five grand and almost $200,000. And I’m like, pull it out. And he didn’t. And it went to zero, you know, like [00:05:00] I felt vindicated. I thought, ha, you know, it is a Ponzi scheme. And so I just kind of dismissed it after that. And so circling back around, I really started to do research after I watched that interview and I, I took 13 different positions, divested completely from the stock market and rolled it into crypto mid 2020.
And timing worked out. I don’t think I’m that smarter. Mm-hmm. You know, that much smarter than anybody else. Um, but I just happened to get in at the right time and everything took off. Uh, I listened to people on YouTube that had done well in previous cycles, and I just was like, okay, they seem to think these are good.
And I, I did my research and I’m like, they seem legit. And, and really all of it’s still speculation. There’s nothing that’s utility driven. It’s higher asset class yet, yet, yet it’s coming. So, mm-hmm. Um, made a bunch of money and, uh, I hadn’t, I didn’t come for money. Um, my dad was well to do. He was a consultant, but.
When he passed away, he might have had a million dollars. And, um, so, and most of that went to my stepmom one, me, um mm-hmm. Which god professor, [00:06:00] she deserved it. Um, yeah. So anyway, I, uh, I just wanna make sure I didn’t mess it up. So I, I kind of leaned on what I went to school for, and I was like, all right, I need, I need CPAs, I need accountants, I need, you know, tax attorneys, I need estate planners to make sure that my stuff’s structured the right way.
I’m mitigating risk. Um, and I couldn’t really find anybody that would do the wealth management the way that I wanted it done. So. We started with custody. We ended up working with Standard Custody, which is, was acquired by Ripple. Um, mm-hmm. At the end of 23, I believe, uh, there was some falling out with the company that previously owned it and they ended up acquiring it.
Uh, it’s a trust bank there in New York, uh, that holds digital assets. And, um, over the last three years, uh, we just, you know, I got on social media in 22 and was talking about what I was doing. Some people were nice enough to make some introductions to some family offices. They needed my services, you know?
Uh, so started working with them. And then over the last three years, we’ve really built out digital ascension group into the MFO than it is today. Um, so we have one of two SEC register RAs [00:07:00] that deals with crypto. Mm-hmm. Um, most of our clients, we actually have a hundred times more clients than any other wealth manager in the world, uh, for digital assets.
Um, close to a billion dollars in a UM today. Mm-hmm. Um, all crypto. We just added traditional assets. So I’d expect that some of our clients will bring those over just so they have a holistic view of their total portfolio. Uh, most of them are very heavily vested in crypto versus other asset classes ’cause they believe in the thesis of, uh, some of the, you know, appreciation that’s going to happen with the adoption of these networks.
And, um, yeah, it’s just been a rollercoaster ride over the last three years, scaling rapidly. Um, yeah. For your audience being entrepreneurs, you, you take a risk and a swing at something and mm-hmm. When you, you find a niche that, that works, you dig in and, um, barrel through it. So we’re, we’re kind of at the point now where we’re building out systems and scaling very rapidly.
Um, you know, we have [00:08:00] multiple, uh, C-suite executives across the, the subsidiaries that we have. Um, building out a lot of the, you know, SOPs and infrastructure to be able to get past that, you know, $30 million a year, mark.
Patrick: Yep. Yeah, this is, this is so good. Thank you. So I’ve got a, I’ve got a few things. So you, you mentioned an acronym, MFO, and that’s, uh, I assume that’s multi-family office, right?
Yep. Like you’re, you’re providing these family office, uh, structures for people. Can you, can you, uh, outline exactly what that is? Sure. I, I think I understand that, but I think it’d be good to know, uh, for our listeners to just, uh. Hear what that
Jake: is. So if, if you’ve seen, there’s about 10,000 family offices globally and scaling.
Uh, before COVID in 2020, there was really only about 2000. So we’re seeing the explosion of people starting to set these up. There’s really no standardized way that people operate a family office. So you kind of have three different models. You got a single family office, most of the time you need at least a hundred million dollars.
Most of the time that’s a founder that’s exited or somebody else that’s had a large liquidity event that’s setting that up. You have multi-family offices. Multi-family offices are where, you [00:09:00] know, multiple family offices will pool resources to be able to get cost benefit. Um, and reduced, you know, some of that drag most of the time to set up a family office and run it correctly, you’re looking at one to 2% of your a UM each year.
Mm-hmm. Uh, in order to be able to operate it at scale and mitigate the risk. But you know, when you’re dealing with that amount of money, if you make a 5% mistake. You could have paid two years worth of people’s salaries. Right, right. Um, to make sure that you didn’t make that mistake. So mm-hmm. That’s why a lot of people set these up at scale, uh, when they get to those numbers.
And then kind of the last model that’s come into Vogue over the last probably two years is a virtual family office. And I would say, you know, we’re kind of on the cutting edge between a virtual family office and a multifamily office. Um mm-hmm. You, you think of the services for private client services that many large investment banks provide, but.
Uh, their, their incentives don’t always align with their clients, right? And, and sometimes they’re charging significant fees. So you think through things you like. Wealth management. Um, the estate planning [00:10:00] insurance, you look at concierge service or lifestyle management, bill pay, accounting, CPAs, um, you know, generational planning.
Uh, you also have family governance is a big piece of family offices, so. You know, if you’re planning for multiple generations, you wanna have annual meetups where you’re discussing things, you’re, you’re changing the board out. You might be changing out people or members of your financial committee. Um, you wanna set up those documents at the beginning.
So you’re gonna set up, you know, a mission statement or North Star for the family, uh, principles, core values that you’re gonna abide by. Um, and, and operate under ethics documents for, you know, when, what people are supposed to be doing in the family and how they’re able to participate in the family wealth.
Then governance, um, who gets access to what, when, for what reasons? Um, so we, we help people, you know, that come into wealth and digital assets, establish all of that. Um, we provide, you know, a full scope of resources. Many people that, you know, have come into wealth through an exit in a company tend to have some [00:11:00] of those people already around them.
Uh, whereas the majority of the people we work with are very similar to lottery winners. Um, they, they made a great investment and it skyrocketed and they didn’t get the 10 to 20 years that it takes to build a corporation and exit to surround themselves with the right professionals to make good decisions.
Um, yeah. And so that’s, you know, kind of the demographic that we work with. Mm-hmm.
Patrick: This is, this is so good. Jake, I would like you to walk us through digital asset custody because I, I think that’s a, we’ve heard too many stories of, of. Issues with, with custody. Uh, we think about, you know, everything from, uh, I’m gonna rewind 30, 40 years to when I had to, when I would own my stock certificates.
Right? Right. And, uh, if I had those stock certificates in a filing cabinet in my office and my office burned down, the stock was gone. Uh, not that different than if I have my crypto on a hard drive and I throw it away, or it burns up in a fire. Mm-hmm. [00:12:00] Uh, it’s gone. Um. So if you could talk to us a little bit about custody and why that’s important, because you know, you, you obviously entered that space for a reason and I think that, uh, is worth the discussion.
Yeah,
Jake: for sure. So, uh, my wife thinks I’m crazy, uh, and many other people that are in this did, you know, digital assets. Their spouse, uh, doesn’t quite understand it and they really don’t have any interest in learning all of the mechanics behind how to execute, you know, a trade or move it from one wallet to another.
It’s cumbersome, right? And it does take some time to be able to understand all that. So, um, what we provide people is effectively a Schwab account for their crypto. Uh, they bring us their digital assets that they purchased on an exchange, oftentimes in their personal name. We, we restructure that and make sure it’s under an entity or a trust for them.
And we, we set that account up at Anchorage, which is our, uh, institutional partner for custody. Yeah. Uh, you may have heard just recently that BlackRock has migrated their holdings for their ETFs from Coinbase to Anchorage. Because of the security and the insurance and all of the assurances that they bring.
So they’re, [00:13:00] they’re the only federally chartered bank that currently provides these services for enterprises. And so again, that’s kinda the reason we don’t do any, any individual accounts. It’s only if you’re holding your assets in a an LLC or C corp or mm-hmm. You know, we will do IRAs. Uh, but anyway, back to the custody component.
So. To your point, you know, there’s a significant risk of loss for these digital assets. Even if you have it on like a metal template and you’ve got the keys etched in there. The fires in California, were effectively taking a blowtorch to those. There’s many people that lost millions, if not hundreds of millions of dollars in crypto, in those fires, right?
And nobody wants that. It’s a horrible thing to discuss or think about, but those, that’s the reality of the world right there. There are gonna be situations that could transpire, that could really. Put you at a disadvantage if, if you’re holding these bureau assets yourself. And so what we try to do is bridge that gap.
We provide you an institutional grade custody account in your name. It’s an FBO account. Segregated bankruptcy remote insured up to a hundred million [00:14:00] dollars. And you own the assets still, but you get all the assurances that you would get from working with a custodian. Mm-hmm. Um, and so again, you get your spouse on there, she doesn’t have to know, or he doesn’t have to know anything about this.
They have access to the account. You get your kiddos on there or whoever else is your beneficiaries to make sure that they end up with the assets if God forbid something happened to you. And, um, you don’t have to think about it, you don’t have to worry about it. You don’t have to think somebody’s gonna break into your house and steal your cold wallet.
I, I know people that carry millions of dollars around with them in their cold wallet on their person at all times, and I’m like, Hey, cool. If you wanna be sovereign and free and travel and do what you wanna do, I get it man. But for me, I would rather just know that it’s taken care of, like you mentioned with the stock certificates.
I don’t have to worry about it, my house burning down or have redundancies or deal with all of the other constraints that you have to have if, if you’re owning it personally.
Patrick: Yeah. And I think that, uh, is, is so important and, and I I’m curious [00:15:00] if there’s any, I, I don’t see it, but I’m, I’m curious your point of view.
You highlighted a little bit of it there. The, the sovereignty piece of it. Like, no, I control it. Nobody can take control of this thing. You know? Um, ’cause we, we think about some of the things that happened in, in Canada, I’ll say during COVID, where they were like, you know, shutting down bank accounts for certain people and it’s like, whew, this makes me uncomfortable.
Right? Uh, and so I think about it in, in this capacity too. It’s like, okay, maybe the government gets involved in like, you know, starts seizing my assets. But they can really do that, you know, at any time in any place if they really, really decide to do that. Uh, not that, uh. Any of us are gonna condone that, especially here in the states.
Like we, right. We have, uh, you know, the second amendment, bit different culture here, right? Yeah. So there, especially in the middle of the country, right? Um, so I’m thinking about, uh, that piece and is there any, uh, risk, because I don’t concern about, I, I don’t get worried about my, uh, my Tesla stock custody to [00:16:00] Schwab, right?
Like, even think about it, Schwab is just holding onto it in a safe spot. They don’t have any. Uh, they can’t actually affect any transaction on my behalf. You know, the, the assets are, are there and I have to give them all the instruction before they go ahead and do things. So, um, same. And this is very similar to that, right?
And I, I don’t think people are worried about their stock, so they probably shouldn’t be worried about the crypto. Well, I think it’s worth discussing.
Jake: There’s just been, that’s been the whole promise of this technology, right? You’re completely sovereign, you’re separate from the banking system, all these things.
But again, with radical responsibility comes radical risk. Um, so you’re, you’re going to be giving up some of that control, right? Mm-hmm. If you want some of the assurances, you have to give up some of that control. Um, we still do everything on our client’s behalf, right? So they call us and say, Hey, I wanna make a trade.
We verify that it’s them. Uh, if you’re removing assets, we have to sign alongside you. Uh, and we just give that extra layer of authentication and, and verification before things happen, uh, which I think a lot of people would appreciate. If you ever have lost money in [00:17:00] crypto. Or sent it to the wrong place or sent it to the wrong destination, or been phished, like any of the things that happened with cold wallets, there’s a lot of malicious people out here because this is a very, um, unregulated profitable.
Yeah, it’s very profitable. It’s an unregulated space. And so for them, you know, they’re willing to fish that and go after people. This, this, again, just, and that’s why we, you know, we tend to deal with higher net worth individuals, people that have more than half a million, uh, currently invested in crypto that want that additional protection.
Around those assets from creditors and from, you know, uh, people that could take it.
Patrick: Yeah, I, I, you also mentioned sort of quickly, uh, having a, a digital asset, LLC, and I’m gonna highlight a few benefits that I see to that, and you can correct anything I say and point us in a different direct. I also wanna highlight that we’re not giving legal advice here.
So, um, that’s, uh, I’ll just give my whole
Jake: disclaimer for you brother. Uh, everything here is for entertainment and educational purposes only. I’m [00:18:00] not a financial advisor, lawyer or CPA before making any financial, tax or legal decisions. You should speak with your professionals. Uh, and if you need those professionals, you can always work with our firm and we can provide them for you when it comes to digital assets.
So thank you. That
Patrick: was beautiful. Well done. Well done. Let’s talk about digital assets for a sec or LLCs for a second. Um, ’cause I, I think about, um, oftentimes people, we will put assets into an LLC to, um, especially like real estate. Mm-hmm. You know, if somebody gets hurt on that piece of real estate, now the liabilities segregated to that, that LLC.
Right. It, they can’t come after my personal assets. We think about Bitcoin, right? Nobody’s gonna get hurt on my Bitcoin. But what could happen is if I’m out there, uh, driving my car and uh, you know, I get a text message, I look at it and I get into a car accident right now, now I’m personally liable and I might have an umbrella [00:19:00] policy, but if I’m worth a few million dollars, especially in Bitcoin, and that shows up in discovery, you know, in the lawsuit, um.
All of that could be at risk, right? For sure. Uh, because it’s not, not segregated from me. So, uh, I generally look at, you know, we, we think about Wyoming assets and Nevada assets or, uh
Jake: mm-hmm
Patrick: Wyoming entities, uh, Nevada entities that have, uh, great charging order protection. You know, it’s, it’s harder to sort of break through that, uh, prevail, prevail in those, those scenarios.
Is that the, is that the, the reason why we would put our digital assets into an LLC to, to protect in that type of scenario? Or is there other reasons that also make sense?
Jake: You, you ran it down for me. I really don’t have a whole lot to add there. Um, you know, we, we do use Wyoming because it’s the most progressive when it comes to the regulatory environment for digital assets.
You get that charging order protection. You also get attorney-client privilege there in Wyoming. So any government, you know, public documentation associated with that entity. They’re not gonna be able to find your name, uh, they’re not gonna be able to find your address. Uh, so there, there’s a lot of [00:20:00] benefits and, you know, many people don’t think they can establish an entity outside of the state where they reside.
You use a registered agent. Uh, there are many people that are very affluent that use these structures on a regular basis. Um, and it just costs you a little bit extra money, right? In order to be able to afford that registered agent on an annual basis. It’s not overly expensive. So, no. Yeah, to your point, you know, the, the situation where you were in somebody, um, you might also have liability with your job.
Uh, many people are doctors. There’s something that they do where they could get sued. And, and to your point, most of the time they’re gonna have some type of malpractice insurance or an umbrella policy. Uh, but if it’s bad enough, you know? Mm-hmm. People can continue to come after you. Especially if they find out, look, you’re worth a lot more.
Let’s really get after it here. We’ll also do asset protection trusts for people. Those take a little longer to season in, right? So we work with people to set up an LLC first gives you that charging order protection and creditor protection in the short term. Oftentimes we’ll use their living trust, uh, in their state.
That’s [00:21:00] revocable or, or irrevocable, however you wanna set it up on the cap table, it’s gonna get you like 80 or 85% of an asset protection trust. In the meantime, what you season that trust in over two years to get that, that creditor protection. Yeah, so, um, try to provide a full scope on, on this stuff and work with the best professionals in the industry.
Uh, but yeah, an LLCI think is a very, it’s a great tool to have in your toolbox if you get somewhere north of 50 to $80,000 in investment in really any asset class.
Patrick: Mm-hmm. Yeah. This is, this is good. So. Thank you for that, that walk down the, the protection, you know, digital asset, LLC, uh, conversation. I think that, uh, is worthwhile.
If today’s episode has you thinking about how to protect your wealth, reduce your taxes, and actually keep more of what you earn. This is your next step@vitalstrategies.com slash tax. We’ll help you uncover the strategies, the wealthy you’re already using, things like entity structure, [00:22:00] family office frameworks, and advanced tax planning, so you can start putting those same tools to work in your own business.
Whether you’re earning seven or eight figures, it is time to make your money as efficient as you are. Visit vital strategies.com/tax. That’s vital strategies.com/tax and start building your custom strategy today so you can minimize taxes, master cash flow, and focus on building lasting wealth.
You brought up the fact that, uh, oftentimes, you know, the, the entrepreneurs had. 10, 15, 20 years of, of runway to sort of build their, their team around them as their wealth has grown. Uh, a lot of the crypto millionaires, it’s very much like winning the lottery. You know, they, they made some smart bets, uh, those bets paid off, and now it’s like, okay, I’ve got a bunch of money.
Uh, one thing that I’m curious about is how you see, and if this is even worthwhile, like I, I see crypto, like large crypto positions that [00:23:00] have appreciated drastically. People want to hang onto those, but it’s awfully illiquid, right? Like, man, it’s hard to sell off. Some of this should work with us. Right?
Right. So I, I am, I’m looking for how do we, how do we think about this in the context of our, you know, we’ve got goals in life, we’ve got this wealth, we want our wealth to support our goals, but sometimes that can be tricky when we’ve got all this, this gain built up in there. So can you walk us through, uh.
Some of the, the, the ideas on how we can, we can do that. And, uh, you know, pulling those levers, I’m sure, uh, yeah, you need professionals to help you get there, but, uh, yeah. Well
Jake: we, we’ve
Patrick: got ’em for you. Right. So how did Elon buy Twitter? Um, let’s see. I think he leveraged his. Current positions with Tesla, SpaceX.
Boring company, maybe.
Jake: Yeah. Yeah. Borrowed against that stock, right? So that on paper he’s worth hundreds of billions of dollars. His bank account may say something very different, right? Uh, and many [00:24:00] people get really wealthy on paper and, and it becomes a problem because your cost basis for where you invested or got that stock or whatever it was, is very low.
And now it’s appreciated substantially. And if you did liquidate that position, sell it. You might have some pretty substantial capital gains. And then you gotta do the song and dance of do I set up a foundation? Do I put it in this type of trust? Do I try to evade taxes and end up, you know, getting in a bad situation in jail.
Exactly. So, and look, we all went the IRS to go away. I do too, but I gotta play by the rules that exist today. Okay. So, and we, we are all hopeful that, you know, Trump comes true and he removes capital gains hacks on some of these cryptos. Till that happens. Um, we have unique solutions that we brought to market to be able to provide people liquidity, uh, while maintaining exposure alongside of the asset.
So, uh, if you had Bitcoin, if you had XRP, if you got Doge, whatever it is that doesn’t have a native defi mechanism to be able to earn yield like Solana and e uh, [00:25:00] then you know, what we do is we, we can borrow against it. We have people that are underwrite the risk on that. Normally somewhere between 45 and 60%.
LTV is kind of the high side. We don’t normally recommend people do that. Most of the time we see people do like 20 or 30% because of the volatility in the market. Uh, if you did have a capital call, you have to shore that up. Um mm-hmm. Especially if, you know the value of the assets drops below the amount that was loaned to you.
Um, but you do get first read refusal with us, which you’re not gonna get with a smart contract. Um, so we work with tri-party agreements with counterparties that we trust and they have a human element to make sure people don’t lose their stuff immediately, which I think is a huge benefit. But secondary to that, uh, we have a hedge fund that’s got a little north of a quarter billion dollars in it currently, uh, of these stagnant assets, right?
So you’re able to put this up as a capital asset with no tax implications. ’cause that’s a hard part. If you’re gonna contribute to something as that’s a partnership, most of the time it would be taxable. Uh, but the way we’ve structured this, you don’t. And [00:26:00] then we’re able to aggregate those assets, reflect it with a counterparty, so the assets stay inside institutional custody.
Then they get a line of margin against that. Most of the time it’s somewhere between 60 and 80%. And then they trade that line of margin in a market neutral strategy. And so we’re able to produce cash flow and cash returns or in kind returns if you wanna double down on the asset, uh, through this hedge fund that we have.
It’s, it’s the largest, well, majority of that’s XRP, um, is five times the largest magnitude of any other even defi product that’s on the market. Because of the assurances and benefits and the way we’ve structured it to be able to provide people, you know, the warm and fuzzy that they need Yeah. In order to participate.
Absolutely. Um, but yeah, there’s, you know, as this asset class matures, there’s gonna be more structured products. We’ve already got debts coming onto the scene, which are digital asset treasury companies. If you are an ap, you can, you know, contribute in kind to those most people. Are not a Schwab or a [00:27:00] JP Morgan.
Uh, so kind of limited on that. Um, but I do think that there will be other funds and other structures that people can contribute stuff to. Mm-hmm. But you’re gonna have to give over that ownership to somebody else, which is also concerning, right? Because, and you’re have to do that in Defi. If there’s a, there’s a hack on that smart contract, call it.
Bye-bye. Um, if that counterparty that you put it with goes under, uh, you got another Celsius or Voyager or you know, another situation like that. We’ve mitigated all those counterparty risks for the way that we’ve structured it. Uh, and I think that’s why we’ve seen a lot of the success that we have.
Patrick: Yeah.
This is, this is so cool. I love what you’re doing because I, I think just to highlight a few things there, you know, we, just to keep it very simple, we have this appreciated asset that, uh, is a better term tax bomb if we start selling it. Right. Um. You know, because now we sell off some, we use it, and now we’re gonna have a tax bill, which could require us to sell more assets to pay the tax bill.
And it just sort of keeps itself going. Yeah. Which is no fun. [00:28:00] Uh, but the cool thing, and just to, just to highlight this, when I borrow money that is not taxable, tax free in any way, shape or form debt, it’s tax. It’s like I can, I can take a loan and recognize that those dollars and spend ’em any way I want and not have to pay a tax bill.
Now we’ve also seen. Um, you know, in certain situations, if I am, you know, borrowing dollars, uh, from a business context, right, those could be tax deductible, uh, that the interest on that could be tax deductible as well. So it’s like, all right, hey, this is, uh, got some, uh, benefits. Benefits as well. Right. You know, so it’s like, all right, this is fun.
Not that I don’t have to pay the interest, you know, you do. That’s, that’s also something to be mindful of. It’s like there is an interest payment here that we have to be. Aware of. But uh, yeah, that is a fantastic way to get, uh, uh, some of our dollars. And the interest is, it’s always cheaper than the tax, you know?
Uh, I don’t know if, if we look at a scenario where interest gets above 20%, we’ve got a problem. But, uh, I don’t, I don’t see that go back to the eighties with Paul Voler. [00:29:00] Right, right, exactly. I don’t see that coming anytime soon. No. Uh, it seems like we’re heading the opposite direction, so, um, very good. So I, I’m gonna outline a little bit of the, the, um.
The steps that we, we’ve talked through and see if there’s anything else to, to explore with you. Sure. So first, I think it’s, it’s really important to just understand, you know, the, somebody comes to you, Jake, and says, Hey, I’ve got, I’ve got this wealth. Uh, I think understanding the opportunities and the risks, uh, of the wealth that has been generated.
’cause sometimes we, uh, we’ll see clients holding concentrated positions and we think if you wanna get on the Forbes list, the best way to do that is a concentrated position with leverage. Right? Like. The, it’s the way to become a billionaire. Now, we also think that concentrated positions with leverage is a good way to go to zero, right?
For sure. Um, so you can have tremendous growth and tremendous, like, downside. Downside. And so there’s, there’s a, there’s an understanding. The risks associated with the wealth that we hold, I think is a, is an important part of the [00:30:00] conversation. Uh, so I don’t know if there’s anything to talk about there, but I feel like that’s step one.
Like, let’s, let’s understand our asset. Let’s understand the risks and, uh. Analyze those in my plain language and then, uh, go there.
Jake: Yeah. Um, so I, I look at wealth growth and wealth preservation kinda like a tree. Mm-hmm. Um, so you, you plant a seed, you focus all your atten energy and attention on it for five, 10 years and you grow this massive trunk.
Right. And that’s the core. Of your wealth. Sometimes that’s a business. Sometimes it’s investments. There’s a lot of different ways to get there. There’s a lot of different vehicles, but it tends to be very siloed in the beginning in order to be able to get to up a large amount and then it spreads out.
Right Now you have branches where if one part of the tree dies, the whole tree doesn’t die. Right? Right. Yep. So that tends to illustrate people pretty, and you’d think about the life of a tree some, most of the time it’s gonna take you 10, 20 years to get a reasonable sized tree. Crypto’s like bamboo, right?
You plan it. [00:31:00] Yeah. And it doesn’t do anything for a long time. And then it shoots up, you know, randomly. Um, and you may wanna take profits, right? Mm-hmm. If you believe in the project over the long term, um, then you probably don’t. Right? And the wealthy people, the wealthiest people all around the world, um, they don’t sell assets.
Mm-hmm. They continue to leverage those assets to diversify their portfolio, and that’s what we’re working with our clients to do. Um, but I would say this, you know. Warren Buffet says, uh, diversification is a hedge against ignorance. Mm-hmm. So if, if you’re ignorant about an asset class, it makes perfect sense to diversify across multiple, you know, pieces of that.
Mm-hmm. If you look at, um, you know, Kevin O’Leary, Mr. Wonderful, he’s, he’s never more than 20% of his total portfolio in one asset class. Never more than 5% of his total portfolio in one investment. And he’s a billionaire. Right. Makes sense. It works that you’d be able to diversify that way. But for the average person, you know, I think once you get north of probably 10 million is the magic number.[00:32:00]
Mm-hmm. Um, and if that’s in your business, like you own stock in your business, that’s worth more than 10 million. It’s a very siloed risk. It could go down very quickly like you’re talking about. If just one thing goes wrong and you, and some you get put outta business, a competitor comes in, um, you lose a key employee, you lose a key client.
And that’s why many people de-risk and take the VC money and like take multiple bites of the apple on the way up. Mm-hmm. Um, which I think makes a lot of sense. You know, if you have spent 5, 10, 20 years building a practice of some kind and you get the VC that comes in and wants to roll you up and you get multiple fights on the way out, I think it’s a great way to go to preserve your wealth and kind of de-risk yourself from, you know, potentially losing it all.
So. Mm-hmm. I, I think diversification makes sense. Once you’ve attained a certain amount of wealth, is what I would say. Yeah,
Patrick: yeah, yeah. No, I, I think that’s fantastic. And so I, I think about that and step one is like, eight, let’s grow our wealth. Maybe, you know, concentrating [00:33:00] on, you know, one particular thing that’s, that’s working now, now that we’ve grown some wealth.
I think step, step two is let’s apply the family office framework, right? Let’s, let’s utilize the protection tools we were talking about earlier with. Wyoming, LLC, uh, let’s utilize the tools around, um,
Jake: insurance policies. There’s Yes. Yep. You know, there’s a ton of different tools in the box, right? Mm-hmm. Um, and I, I don’t ever like, prescribe one as the ultimate tool for people.
Mm-hmm. Uh, we actually just launched our insurance division. Uh, we have many people that, um, you know, uh. Want to be able to hedge, you know, the risk of their loss of their life. Uh, the other great thing about an LLC is you can do, uh, split dollar life insurance mm-hmm. Where you know it’s right off for the corporation ensuring you, ’cause you’re a key, uh, employee of the business.
And you can structure that in a whole life policy that you can a line of credit in the business for. Um, there’s a lot of [00:34:00] interesting, like we do a lot of the traditional stuff, right? Mm-hmm. We’re just applying that to crypto. Um. Yeah. Yeah, I would, I’d highly recommend, you know, there’s a, there’s a couple books, uh, the Family Office book that was written by Richard C.
Wilson. Mm-hmm. Great read for anybody that’s looking to figure out some of these strategies and, and learn about, uh, what the wealthy do to protect and grow their wealth of the long term, um, borrowed from your grandchildren is a really good book. Um, I don’t know if you give book recommendations on here or not, but I, I like ’em.
Yeah.
Patrick: Yep. Yep. I love this. We’ll have, uh, links to those in the show notes ’cause, uh. I’m always consuming another book. My, my Audible account, uh, is, is keep scrolling. Yeah, it does. And uh, I love listening to things while I’m driving or doing whatever. Uh, so Yep. That, that is, that is good.
Jake: I call that drinking my books.
Patrick: Yeah. Yeah. Absolutely. And my, my kids make fun of me ’cause I listen to ’em somewhere between two and three x speed. [00:35:00] And, uh, they’re like, what is, what is wrong with you? Do I do one and a quarter, one and a half?
Jake: I’m like, I can get through it at a good clip that way. But yeah, if I go much faster than that, I miss stuff.
So,
Patrick: yeah. Yep. It, uh, I, not to derail us, but, uh, I, I was reading an Anthony Robbins book and I was actually reading it a long time ago. And, uh. Uh, he was talking about speed reading. So I took a speed reading course and I, I found that my comprehension went up with speed reading because you had to focus, you wouldn’t get done with the page and go, man, what did I just, right, what did I just read?
Right. Uh, ’cause we were, you had to be dialed in. And so I, I found I can apply the same thing to speed listening is, uh, you have to be listening to it, otherwise you are gonna be missing it. I have to, otherwise I’m just, it’s just That’s awesome. Um, yeah. So then, then I think about, okay, now we’ve a applied this family office structure to our crypto, and I really like that you highlight, look, we have a number of tools available to us.
They’re the same tools available to everybody, but we’re gonna, we’re gonna apply those tools, whether it’s insurance, legal structures, uh, tax [00:36:00] strategy to our, our wealth, and just be as efficient and effective as possible. So, you know, I think about the third step. We, we’ve now. I love what you were talking about with we’ve, we’ve identified our North star, right?
Like, what’s gonna drive our decision making? We’ve got a plan for that. And now our, our wealth is going to support that, uh, uh, we’ll say directive for our, our, our family and our, our legacy. So I think that’s wonderful. Anything to add to that plan, uh, that we, we just walked through? I think that is, uh.
Kind of a, a beautiful structure that you’ve got going on. Yeah.
Jake: You went through it pretty quickly for people, uh, especially if you’re new to this type of information, it’s probably a bit overwhelming. I, I find that. Mm-hmm. You know, a lot of my conversations end up like drinking from a fire hose Yeah. For most people.
Um, but if, if you can really kind of dig in here and use a lot of these, you know, nuggets that, that we’ve kind of gone through, um, it can be really effective for a business owner. Um, again. If you are a business owner, [00:37:00] you’re the majority of your wealth and attention are gonna be focused on that. Um, I’ll give you a story.
So I, I flew private the first time four years ago, uh, paid more than I was comfortable with to get on this flight with people that were way, uh, further along than myself mm-hmm. At the time. And, um, you know, I thought that they were gonna be like bigot and anyway, some of the coolest people I ever hung out with.
And that’s when I realized like. To be wealthy. You don’t have to be evil or mean or like any of that stuff. Mm-hmm. I think that’s a paradigm that is just kind of perpetuated for some reason. Yeah. Most people are really cool and they provide a lot of value for a lot of people and that’s how they generate their wealth.
So I get on the flight, I’m talking to this gentleman, um, and he’s like, well, I’ve got like $9 million in a checking account. And I’m like, what do you mean you have $9 million in a checking account? He was like, well, that’s a year’s worth of my income. So it’s like my safety net, you know, in case something goes bad.
And I’m like, so that’s when it clicked for me that people that are so [00:38:00] focused on their business, they don’t have time to go research all these other opportunities. Mm-hmm. Right. And especially if you are actually executing on your business, that is where all your focus and attention goes. Mm-hmm. So you wanna align yourself with professionals that are the best in at their game, whatever that is.
And it’s interesting to me too, you know, we’ve talked with so many fund managers and, and different people over the years, they’ll have a portion of their wealth with the fund, right. That they’re managing or actively managing. But do you know where they put like 80% of the money that they make s and p 500?
Patrick: Yeah, I was gonna say like in some boring stock portfolio, some more where they don’t
Jake: have to think about it. Right. Yeah. So I, I would say, you know, if you’re early on and you can’t afford professionals, ’cause I know that’s a circumstance for some people. Mm-hmm. Yeah. You probably do just wanna be dollar cost averaging into the stock market if you have a longer time horizon.
Mm-hmm. You know, I think there may be a significant pullback in stocks in the short term here mm-hmm. With the reverse carry trade and everything, you know, kind of [00:39:00] culminating for the perfect storm here at the end of 25. Uh, but aside from that, you know, it’s kind of a set it and forget it and just know that it’s gonna be successful over the long term.
Um. I think that that’s a good play as long until you can afford the, the right people.
Patrick: Yeah. Yeah. This is, this is great. And, and I think you, you’ve also created some assets out there for people to, uh, I think get plugged into and, and we’re, I think we see this with, we’ll call it, uh, multi-millionaires and billionaires.
They’re not trying to figure out how to do it on their own. They, they understand leveraging Well, it’s, it’s who not how a hundred percent. I love that book, by the way. I’m a Dan Sullivan fan. You know, who not how. Um, like find somebody, find a who in your life to do it. Don’t figure out how to do it yourself.
Uh, I think that’s, that’s fantastic. And our clients see that. They, they go, Hey, uh, I’m gonna need somebody like Jake in my life to, to run my, my family office structure because I don’t, I don’t have the time or energy to create, uh, you know. All of those pieces and try to [00:40:00] figure it all out. Not that I couldn’t figure it out, I just, that’s, that’s not where my, my attention goes.
And you, you highlighted that
Jake: earlier.
Patrick: You, you
Jake: have this, this passion or, or whatever you get fulfillment from what, whatever your legacy that you wanna leave is, or whatever your value you’re creating in society, if you are one of the best in that field, you just keep doing what you’re good at. Like, I think there’s this, again, fallacy that you can be a jack of all trades and be good at everything.
Um. The more I have focused the richest in is in the niches. That’s what people say. Right? Right. Like, just, just continue to double down on what you’re good at and then be able, you’ll be able to afford to find the people that are good at whatever else you need. Uh, yeah. Love would love to be one of those people, uh, if that’s of interest to people.
And I think you were kind of agreeing to some of the other resources we have. So we, we do have a substack, um mm-hmm. You know, like 550,000 subscribers. We talk about a lot of the stuff we mentioned here, family office, um. Different investments, digital assets, how to structure things, insurance. Mm-hmm. [00:41:00] Uh, and then separate of that, we have a mastermind community that’s close to 8,000 people at this point.
Uh, it’s called Beyond Broke. Uh, it’s beyond broke.com. I love it.
Patrick: I love it. And if people want to disconnect with you, they’re like, Hey, I’m, I’m beyond all that Digital Family office.io. Uh, you can schedule a time to, uh, connect with, uh, Jake and his team to just figure out what it looks like to install this in, uh.
So, um, Jake, this has been, this has been great. Is there anything else we should be talking about before we wrap up?
Jake: Yeah know, um, appreciate all the links and the shout out and everything and having me on the channel. Um, I’d, I’d like to leave people with this. If you haven’t read the book, the future is faster than you think.
Uh, I would encourage you to do so. Uh, and it talks about the culmination of all these progressive technologies that are going to happen in the very near future. Here you got ai, blockchain, 3D printing and, and many others that are all. Going to be a huge deflationary, um, movement in the very near future.
Um, [00:42:00] and the iterative process for how fast technology progresses from here is going to be exponentially faster than what we’ve seen over the past couple decades. So if you are not disrupting yourself, you will be disrupted. Mm-hmm. So I would encourage people that are managing a business, uh, to always be think, you know, it’s hard to get yourself out of the business.
But if you can spend time doing that and figure out how to disrupt yourself before somebody else does, that’s where the money is. That’s, that’s fantastic.
Patrick: And Jake, I, I wanted to sort of go back to where we started. You, you talked about North Star and sort of guiding philosophy. I, I’m just curious, do you have a philosophy for life that you, you like to live by?
How you sort of manage your, uh, your personal life, your, your family, your business, that type of thing? I’m, I’m just generally curious about that.
Jake: Yeah. So we have,
Patrick: um.
Jake: Multiple core values and principles. I’m patient patiently aggressive. Uh, so I’m taking aggressive daily action. But being patient, the long term s of those, um, you know, we, [00:43:00] uh, loyalty is a big deal to me.
So we take care of people that take care of us. Um, I’m always trying to give back to the people that have been with me, you know, over the long term. My objective over the long term, really, I’ll give you a, a story. So my dad passed away four years ago and he was upset about the world, understandably so. Um, and he was telling me, you need to get off Facebook.
You need to call your congressman. And I’m like, dad, like, none of that matters. They don’t care about your one account on Facebook, your con, you’re not lobbying for your congressman. He, he doesn’t care about your vote. One, one voice isn’t gonna make a difference unless you do have the clout. You have the connections, you have the capital, you have a seat at the table to actually affect change and make a difference.
So I want to be in a position where I’m at that table. Mm-hmm. And, and we’re well on our way at that point, at this point. And, and one of the main pieces for me over the next decade is to sit on the board of the top [00:44:00] 10 most progressive companies in the world. Hmm. Um, because that’s really where you can affect change.
When you are on the board of companies that direct how things are gonna move through the economy. You look at these politicians. They’re really subject to the corporations at the end of the day. Mm-hmm. And the people that are in the right positions. And you’re gonna be lobbying, you know, for certain things.
You see Microsoft, Amazon, Google a lot of what they want for tax breaks and many other things happen because they have the tax dollars that they’re gonna put toward that politician or whatever’s going. And look, I think the system’s broken. I don’t like the system, but here’s the deal. I have to play by the rules as they exist today, so I can get a seat at the table.
To actually change those rules. So,
Patrick: uh, yeah. Amen. That’s, I love it. That’s fantastic. I, I so appreciate that. And I agree with you a hundred percent. I’m awfully frustrated by the way things are going, but it’s like, well, let’s just play by the rules. Let’s go get involved and, uh, uh, [00:45:00] start changing things from the inside out.
So I think that’s, uh, that’s beautiful. Jake, this has been, uh, a fantastic conversation. I, I do appreciate it. I think about the stakes that are out there, you know, entrepreneurs, uh, investors that have built wealth in crypto. You know, there, there’s a lot of risk. You know, we, we talked about all of the, the opportunities where the wealth you’ve built, uh, if I’m carrying it around with me, if it gets lost in a fire, that can all happen.
And so, uh, you know, having. Structures in place that protect that wealth is, is critical. And then I, I also think about not just protecting it, but optimizing it. You know, being able to, uh, really be efficient and, and accelerate the, the growth. Uh, just ultimately not, not so I can have more money, but, uh, uh, we’ll say live a great life.
You know, that’s, that’s the whole whole point. I love that you’re, you’re guiding people along that, that path, and that’s what success looks like, right? You’ve got clarity, you’ve got confidence, you’ve got a competitive edge. The direction that your family’s going and the long-term success is, uh, [00:46:00] uh, we’re more likely to get there when we’ve got a guide that’s, um, you know, got experience in that arena.
So, uh, thank you for, for all of this. I appreciate all of the, the wisdom and insight and the just content you’ve created. And we’ll, we’ll make sure, again, we have show notes, uh, links to all of that in the show notes. Send if, uh. You wanna learn more, digital Family office.io is the place to go to, uh, connect with, with Jake and his team.
Absolutely. Thanks so much for joining us. Thanks for giving me. Yep, my pleasure. Thanks so much for tuning into today’s episode of the Vital Wealth Strategies Podcast. I hope you found real value in this conversation with Jake Klaver. And that you’re walking away with new ideas to protect, grow, and simplify your wealth.
If you did, please share this episode with another entrepreneur who could benefit from it. You never know how one idea might completely change someone’s financial future, and while you’re at it, take a second to leave a quick review wherever you listen. It really helps more business owners discover these strategies and start applying them.
And don’t forget. If you’re ready to start building your own customized wealth and tax strategy, [00:47:00] head over to vital strategies.com/tax. That’s vital strategies.com/tax where you can take the first step toward keeping more of what you earn and putting your money to work with intention. And remember, you’re a vital entrepreneur.
Your vital, because you’re the backbone of our economy, creating opportunities. Driving growth and making an impact. You’re vital to your family creating abundance in every aspect of life, and you’re vital to me because you’re committed to growing your wealth, leading with purpose, and creating something truly great.
Thank you for being a part of this incredible community of vital entrepreneurs. I appreciate you. I look forward to having you back here next week on the Vital Wall Strategies Podcast, where we help entrepreneurs minimize their taxes, master their wealth, and optimize their lives.