Bitcoin Plan - April 1, 2021
Creditors and Bitcoin IRAs, Burritos and Bitcoin, and Talking Bitcoin with Loved Ones.
Dear Bitcoiner:
This week we cover some exciting topics in bitcoin. As always, if you have any bitcoin planning questions or concerns feel free to shoot me a DM on twitter - @BitcoinPlanner
Creditors and Bitcoin IRAs
The goal of most people going through the process of setting up a Self-Directed Bitcoin IRA (Bitcoin IRA) is to plan for retirement by leveraging the law to mitigate taxes. This is an admirable goal and Bitcoin IRAs can often accomplish this goal. Despite the many advantages of Bitcoin IRAs, one of the most notable advantages that few people discuss is the legal protection afforded to IRA accounts from creditor claims.
However, in a 2014 U.S. Supreme Court holding, the court issued a surprising analysis regarding inherited IRAs. An inherited IRA is an IRA that you inherit after your loved one dies. The Supreme Court has ruled that assets held in an inherited IRA for a non-spouse beneficiary no longer constitutes retirement funds and therefore is not protected from creditor’s claims.
This case has very far-reaching implications for Bitcoiners using Bitcoin IRAs that plan to pass wealth intergenerationally through a Self-Directed Bitcoin IRA. This means that if your child or children inherit your Bitcoin IRA after your death, those assets will not receive the same level of protection as you did during your lifetime.
If you are interested in reading the U.S. Supreme Court opinion regarding this matter check out Clark v. Rameker, 134 S.Ct. 2242 (2014) or if you wish to discuss this legal opinion, feel free to schedule a free, no-obligation, consultation.
Burritos or Bitcoin
Yesterday, Chipotle announced an online contest involving an interactive game called “Burritos or Bitcoin.” Chipotle will permit each player will have “ten tries to guess a six-digit code for a limited chance to win a free burrito, or up to $25,000 in bitcoin.” No purchase is necessary! If you are wondering whether to play, here are the odds
However, there is more to this story than just some a restaurant trying really hard to reach Gen Z. So, let’s dive right in…
Chipotle seems to really get bitcoin or at least their lawyers do. After reviewing this announcement and the website, I conducted a review the Terms and Conditions. Here is the first nugget I uncovered – Chipotle will purchase the bitcoin for the winners at the “Cut Off Time” which is described as “9:00 AM PT on 4/1/21.” Moreover, the T&C’s go into incredible detail regarding how each winner is required to tacitly agree and understand that the bitcoin prize may be higher or lower than the advertised USD price for the contest. However, the T&C’s do not go into detail or even attempt to describe how they would determine the market value of bitcoin to be purchased at the “Cut Off Time,” which I believe would create some minor liability for them. Here is the language for your review:
“Bitcoin will be purchased at the market value as of approximately 9:00 AM PT on 4/1/21 (the “Cut Off Time”). All Bitcoin prizes will be awarded in fractional Bitcoin amounts that correspond to the USD-Bitcoin exchange rate as of the Cut Off Time. The USD-Bitcoin exchange rate may fluctuate between the Cut Off Time and the time the Bitcoin Prize is successfully transferred to winner. Each winner acknowledges and agrees that the USD value of the Bitcoin Prize may be higher or lower than the advertised USD equivalent value of the Bitcoin Prize. Bitcoin Prize winners will not be entitled to a check, cash, or other form of payment for any difference between the USD value of the Bitcoin Prize as of the Cut Off Time and the actual USD value of the Bitcoin Prize at the time that the Bitcoin Prize is transferred to winner.”
Another interesting item from Chipotle’s legal department is very unexpected. It appears that someone at Legal may be a Bitcoiner or at least has spent the time understand the nature of bitcoin forks. Here is the text from the T&C’s:
“You understand that if bitcoin undergoes a hard or soft blockchain fork, sponsor may choose, in its sole discretion, whether or not bitcoin prize will also include such forked chain.”
While it only seems natural for this language to be included in such a contest, it is still remarkable, at least to this lawyer, to see how bitcoin is penetrating the legal community and affecting everything from fiat to contracts.
Talking to Mom and Dad About Bitcoin
There has been a lot of noise on Bitcoin Clubhouse recently about individuals bring their parents onto clubhouse to speak to passionate and knowledgeable Bitcoiners about the value of buying and holding bitcoin. All this talk caused me to make a list of the process I went through converting my parents into Bitcoiners. I hope you find value in this approach…
Conversations about sound money are difficult. Until I found bitcoin, I hadn’t really thought about what good money or bad money was… I just knew I want to make more money. Frankly, most people avoid talking about money because it oftentimes feels taboo or invokes negative feelings. However, broaching this subject with your parents or loved one’s is, as we both know, critically important and should not be avoided.
It is worth noting that if your intention is to share knowledge openly I don’t think there is a correct or incorrect way to speak to people about bitcoin. There are however consequences for how you speak to them about bitcoin. Without further ado, here was my approach:
Be prepared – You can have all the conviction in the world but without knowledge and understanding, you will not be able to explain what it is, how it works, or why it is sound money. Make sure you are the best Bitcoiner you can be and then speak to others about bitcoin.
“I don’t know the answer to that, yet”– Be comfortable telling your parents and loved one’s that you don’t know something rather than making some kind of emotional plea or worse yet, guessing. There are thousands of passionate Bitcoiners who are willing to help as well as volumes of content online to help navigate the most complicated questions that your family will throw at you.
Don’t force it – I know you are passionate about bitcoin. Your family may not want it forced down their throats every time they are around you. Knowing how to strike is as important as knowing when to strike…
More listening, less talking – I have been to more bitcoin meetups than I can recall. The meetups that go off the rails are always those that involve a Newcoiner coming into the meetup and asking a simple question then having to listen to four people explain “everything” for 45 minutes. If your family starts showing some interest, consider asking them, “So, tell me what got you interested in bitcoin?’ or “Do you have any particular questions about bitcoin or how it works?” But either way, make sure it’s a conversation and not a lecture series…
Avoid arguing – Do you very best to avoid arguing or getting lost in semantics.
Understand their concerns – Spend time defining exactly what they understand about money and the economy. Spend time understanding their concerns or what has attracted them to bitcoin in the first place. It is much easier to share knowledge by building bridges as opposed to arguing and burning them.
Go slow – Bitcoiners are not minted in a day. Spend time and energy with your family speaking about their concerns and questions but give them time to digest the information before reengaging.
Don’t talk price – The goal of speaking to your family about bitcoin should not be to create bitcoin investors but rather to create long-term Bitcoiners. Hold off talking about the price for as long as possible.
If you approach your parents about bitcoin and you can all have clear conversations about the topics addressed above, you will be establishing the right foundation for creating Bitcoiners. Additionally, it is important that you do not have to do this alone. If you feel overwhelmed by the steps discussed above and you would like a neutral party to help facilitate the conversation and provide guidance regarding bitcoin, consider scheduling an in-person or virtual meeting with us to explore the value of allowing us to tackle some of the complicated aspects.
Hope you found value in this week’s issue. If you have any friends that are looking to find out more about Bitcoin or Bitcoin Planning have them sign up for this newsletter here:
Thanks for reading! @BitcoinPlanner