Dynasty CEO explains QSBS trust stacking — how founders can get up to $100M in tax-free gains starting at $1,500/year

Uh it was so fun having I think your lead investor Jerry uh on earlier. He's got so many amazing amazing stories. Uh but uh before we get into Dynasty, what uh why don't you give a quick intro on yourself, background, all that good stuff? Yeah, absolutely.

Uh so, you know, born and raised in the Bay Area, uh worked in financial services for about a decade, wound up at Carta as the first sales hire in 2014. Um ended up becoming VP of sales and owned a lot of revenue for about eight years.

Uh so helped take the company from zero to 300 million in ARR you know hired and managed hundreds of people um and then left to start Dynasty. Uh what was what was the critical inspiration for for Dynasty and and how walk us through kind of the idea maze around it.

So in the beginning of you know in the beginning uh when I joined Carta me and my co-founders who are also early Carta you know we were helping onboard thousands of cap tables and it became very clear that the most successful founders created lots of trusts. They didn't just hold the shares in their own personal name.

They would sometimes have like 10 different trusts that they would split their shares into. And it was really strange. I didn't I didn't understand why at first I thought they were just being super generous.

Uh but we started doing some research on the strategy and we learned that the reason why they did it is because they got a separate QSBS exemption which basically means each trust that they created was eligible for $10 million in tax-free capital gains.

Like literally zero taxes on 10 million for each trust that they create. So you create 10 trusts, you get $100 million in taxfree capital gains. And uh yeah.

So, so from that point like I guess uh what I think the yeah the question the question that you know we we talked off air a while back and and the question I had is like uh obviously you know great businesses often start with like a simple vi you know vision for like a kind of uh narrow customer base but uh where like what's what's kind of the the focus today?

How how big can Dynasty get just serving the kind of like early stage founder uh venture community and then where where do you want to go long term? Yeah, absolutely. So QSPS stacking is very narrow. Um you know it's it's basically have to be a large shareholder of a CC corp.

Um and it's not just venture funded technology companies like we've been signing on portaotty founders. We've been you know people that make pipes for plumbing. like there's all types of um QPS eligible entities.

They just have to be CC corp and they have to not be an excluded industry like any regulated you know financial services or anything like that. So there are a ton of companies like maybe we don't know the exact number but maybe somewhere between 250,000 and 500,000 uh companies in the US could qualify for QPS.

And so we got a lot of green field like each company has sometimes two or three uh co-founders. And so that's a, you know, it's a very narrow market, but we we think we're going to be working on it for quite some time. But the broader vision for this company is like, so we are a licensed Nevada trust company.

We are the only venture-funded licensed Nevada trust company. The only ones that are trying to tackle this space from one of one from a technology standpoint.

And so we think that so the richest people you know Jerry for example the richest people in the US uh they don't create you know they live in California they live in New York they don't create California New York trusts they use Nevada trusts because Nevada has the best laws in the country maybe sometimes even the world when it comes to taxes asset protection privacy control like you can have more control over these Nevada trusts than you can typically over California and New York trusts and So, we think that that goes much further beyond QPS stacking.

Like, you know, why shouldn't the farmer in Oklahoma be able to benefit from a Nevada trust? Why shouldn't the young professional with $50,000 in crypto be able to put benefit from a Nevada trust? Um, and so we want to open it up for everybody. That's our vision to build a mass market AI powered Nevada trust company.

But to your point, we have to start narrow. We have to solve one problem and solve it really well. And so that's why we're we're tackling founders. Uh, amazing. What uh what is what is the most common setup for call it like a YC founder? Four trusts. $1,500 a year gives you up to $40 million in QPS eligibility.

If they have kids, they they make their kids the beneficiary, maybe their wife. Um if they don't, then they're creating trust for their parents and their siblings. Very cool. makes no sense. Uh well, yeah, I I think every founder should be at least taking a look at this for sure.

Um and like Jerry said, there's other ways to do it, but I highly doubt that uh that the the other methods are are nearly as streamlined or or founder friendly as what you guys are building.

So very excited for more founders to be able to optimize for this, not just the second or third time founder that has experienced the gain or the pain of realizing that they, you know, if they have a $50 million liquidity event and and only getting that that u tax-free gain on the first 10 million, uh be quite painful.

So excited that you're building this. That's exactly the problem. The problem is people usually do this later because it costs six figures to set up and by the time they do it later, they're limited by their lifetime gift exemption and so they can't stack that many trusts. And so that's why we exist.

So founders should be doing this from day one. That's when your gift value is zero. You create your corporation, that's the best time to do it because there's no gift tax. The longer you wait, the more gift tax implications you're going to have. Yeah. Uh amazing. Well, thank you so much for joining breaking it down.

Uh and uh I'm jealous that you got Jerry on your cap table. That guy is a that guy's a legend. Uh anyways, great hanging and uh h happy building out there. Thanks for having me. Thanks so much. Talk to you soon. Uh our next guest is in the reream waiting room. But first, let me tell you about public.

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