Q&A about Trusts

[DaleSVP]

What is a trust?

A trust is, "An obligation arising out of a confidence reposed in the trustee, or person who has the legal title to property conveyed to him, that he will faithfully apply the property according to the confidence reposed; in other words, according to the wishes of the creator of the trust."

Beers v. Lyon, 21 Conn. 604.

THE ESSENCE OF A TRUST IS formed (for instance) when I ask you (or someone else) to hold my coat for me until I ask for it back. The TRUST is formed when POSSESSION of the coat is conveyed to you (the TRUSTEE). Your obligation is to hold and protect the coat as though it were your own and your duty is to hand it back when requested to do so. The coat is the BODY of the trust. You are the TRUSTEE and I am the BENEFICIARY.

The Unincorporated Business Trust
http://ubotrust.com/ubotwiki/tiki-index.php

[DaleSVP]

What are the four essential elements to a valid legal trust of personal property?

There are four essential elements of a valid trust of personal property: (1) A designated beneficiary; (2) a designated trustee, who must not be the beneficiary; (3) a fund or other property sufficiently designated or identified to enable title thereto to pass to the trustee; and (4) the actual delivery of the fund or other property, or of a legal assignment thereof to the trustee, with the intention of passing legal title thereto to him as trustee.

Brown v. Spohr, 180 N. Y. 201.

[DaleSVP]

Is there any form required to create a trust?

A declaration of trust is not confined to any express form of words, but may be indicated by the character of the instrument.

Kekewich Y. Manning 1 De G. M. & G. 176.

[DaleSVP]

What is the one thing absolutely necessary to create a trust?

The one thing necessary to give validity to a declaration of trust-the indispensable thing--I take to be, that the donor, or grantor, or whatever he may be called, should have absolutely parted with that interest which had been his up to the time of the declaration, should have effectually changed his right in that respect, and put the property out of his power, at least in the way of interest.

Bacon, Warrimer v. Rogers, L. R. 16 Eq. 340.

[DaleSVP]

How may a party transfer the title to his property to create a trust?

A man may transfer his property, without valuable consideration, in one of two ways; he may either do such acts as amount in law to a conveyance or assignment of the property, and thus completely divest himself of the legal ownership, in which case the person who by those acts acquires the property takes it beneficially or on trust, as the case may be; or the legal owner of the property may, by one or other of the modes recognized as amounting to a valid declaration of trust, constitute himself a trustee, and, without an actual transfer of the legal title, may so deal with the property as to deprive himself of its beneficial ownership, and declare that he will hold it from that time forward on trust for the other person.

Jessel, Richards v. Delbridge, L. R. 18 Eq. 11.

[DaleSVP]

Must a trust in real property be in writing?

In all cases where a deed or other instrument of conveyance is absolute on its face, and the grantor or his assignee seeks to defeat its operation by showing that the deed, though absolute in form, was, in fact, executed upon certain express trusts, the grantee may invoke the protection of the statute of frauds by requiring proof of these alleged trusts to be made in writing.

Allen v. Woodruff, 96 Ill. 11.

[DaleSVP]

What is the deal with: UBO - Unincorporated Business Organization or The Common Law Business Trust? I have seen similar claims over the years but they all seem to get squashed by the government.

A: There is nothing wrong or illegal with the UBO. The government (or what passes for the government) does not have a problem with UBOs. They do have a problem with people who "abuse" or misuse them for what they were not intended for - like avoiding taxes, etc. We do not advocate any kind of tax scheme and they have left us alone for the past 15 years we've been selling these very legal business organizations. Do not confuse this legal business organization (much like an LLC, partnership or corporation) with so-called "tax havens" or tax avoidance schemes.

The Unincorporated Business Trust
http://ubotrust.com/ubotwiki/tiki-index.php

==========================================

This trust is now available in instant downloadable format. Click on this link to go to the digital download version.
http://ubotrust.com/ubotwiki/tiki-index.php
This instant downloadable trust package is the same as the hardcopy version and includes all instructions and forms to create and manage your UBOT. It is instantly downloadable in .doc format so almost any editing program can open it and allow you to fill in the blanks with your own information. Create your own UBOT in minutes:
1. Purchase the UBOT package.
2. Fill in the blanks with your favorite editing program.
3. Print it out and sign.
4. Notarize the signatures.
You're done and your assets are now protected!

==========================================

[DaleSVP]

In a message dated 10/6/2006 3:44:25 P.M. Pacific Standard Time, vj writes:

A CREATOR must sign TRUST. Who would that be? It seem there would be a conflict if the CREATOR is also the TRUSTEE & the MANAGING DIRECTOR or the TRUST PROTECTOR. So how does someone select the CREATOR & how trustworthy must he be. Also in case of a suit, how is he affected?

This is a different animal. We have used them effectively in CA to avoid the franchise tax fees for corporations and gross receipts tax for LLCs. The trust is classified as a pure trust or a common law trust. My use and recommendations to clients has been to treat is just as you would a corporation with a board of trustees, elected officers, regular minutes and resolutions approved by the trustees. These are taxable entities which is where some of the frustrations exist with IRS who doesn't like trusts AT ALL. Look at the tax table for trusts and you will see that they reach top brackets faster than a corporation. These is where the operational planning comes in. The Creator and the Trustee can be the same but you can also provide for successor trustees and clear beneficiary designations. Trust protector is a new term to me and I have not had time to research the specific document provisions.

William Prouty, CBC CEC CLU RHU MBA PhD, Director
Global Economic & Workforce Development Coalition
California International Business Alliance
Global Education Systems Alliance
Global Insurance Advisory Services
National Alliance of Consumers and Healthcare Professionals
PO Box 989, Sun City, CA 92586-0989
Phone: 951-301-0605 FAX: 951-301-0606
skype: globaleducationsystems
Email: wprouty@aol.com
http://www.GEWDC.org
http://www.maie.org
http://www.caltrade.com
http://www.cashdoctor.com
http://www.nachp.com
http://www.benefitstech.com

[DaleSVP]

Would the answer to the CREATOR’S signature, also apply to appointing a TRUST PROTECTOR. Any advice as to whom, (relative, close reliable friend, Son-in-law, etc), would be the best individuals for their signature. The CREATOR & TRUST PROTECTOR signatures really confuse me, possibly because I have no understanding about either position. I want to be sure I’m not placing those individuals in any position that would make them feel uncomfortable or responsible for anything in the future.

The Creator is the same as the Trustor of an intervivos trust. The protector could be an employee of the trust or could be one of the trustees. You can also establish a corporate fiduciary as a successor trustee or "protector". Both have clear responsibilities as to their responsibilities to protect and serve the interests of the designated beneficiaries. A lot of this comes from the old principles of English Common Law.

William Prouty, CBC CEC CLU RHU MBA PhD, Director
Global Economic & Workforce Development Coalition
California International Business Alliance
Global Education Systems Alliance
Global Insurance Advisory Services
National Alliance of Consumers and Healthcare Professionals
PO Box 989, Sun City, CA 92586-0989
Phone: 951-301-0605 FAX: 951-301-0606
skype: globaleducationsystems
Email: wprouty@aol.com
http://www.GEWDC.org
http://www.maie.org
http://www.caltrade.com
http://www.cashdoctor.com
http://www.nachp.com
http://www.benefitstech.com

[DaleSVP]

Placing a business such as a General Construction Business into the Trust, should it be incorporated? It seems if so it would be defeating the purpose of the trust, because, is not the incorporated business subject to the state it was created in?

The trust could hold the stock of the corporation or could take ownership of the enterprise would vest to beneficiaries but only to the directions.

William Prouty, CBC CEC CLU RHU MBA PhD, Director
Global Economic & Workforce Development Coalition
California International Business Alliance
Global Education Systems Alliance
Global Insurance Advisory Services
National Alliance of Consumers and Healthcare Professionals
PO Box 989, Sun City, CA 92586-0989
Phone: 951-301-0605 FAX: 951-301-0606
skype: globaleducationsystems
Email: wprouty@aol.com
http://www.GEWDC.org
http://www.maie.org
http://www.caltrade.com
http://www.cashdoctor.com
http://www.nachp.com
http://www.benefitstech.com

[DaleSVP]

Transfer to Trust

Posted by: "Jeff Sedgwick" office@freeandclear.us   freenclear22000
Thu Oct 26, 2006 9:22 pm (PST)

I suggest to you that you go to a law school library and start reading "Sears On Trusts" last published in 1929, I think.

It is a rare book, it is definitive on Trusts.

Also, you can go to Iicle in IIlinois and get a copy of Keono on Land Trusts. Cost me about $90, 15 years ago.

Then do a great deal of research on court cases that ultimately will show that in the case of a land trust, not to be mistaken for a Real Estate Trust, the trust is not liable, the trustee is not liable, and the beneficiaries are not liable. A land trust can do NO business.

Just because you record the property as being deeded into a trust, does not mean you record the trust documents or reveal who the beneficiaries are within the deed. The only people who are revealed are the grantor(s) and the trustee(s) and if the deed is returned to the property, no one knows how to reach the trustee(s).

Also, if the trustee is also a beneficiary, that is a failed trust. It is in fact, ownership and the trust can be pierced.

Further, be careful of states with "strict statutes of uses." In those states, if the beneficiaries have any authority over the trustee, it is a failed trust and can be pierced.

Above all, a trust is a contract so be careful how you set things up.

There are a lot of ways to do things, so let your imagination wander.
=======================
posted from Tips and Tricks Forum
http://groups.yahoo.com/subscribe/tips_and_tricks/join

[DaleSVP]

NOTE: You must understand I cannot and do not give so-called "legal advise". What I write in response to your questions is my opinion and does not necessarily mean anything to anyone.

Q: One thing that bothers me after reading the website page again is this quote:

"Properly placing your assets in a private UBO trust under its own Employer Identification Number would help shield assets."

Q: If it's a common-law trust, why does it need a EIN? Seems like that would notify any and every government agency. Can I skip the EIN?

A: The statement does not say the trust needs an EIN. So far as I am aware there is no law requiring anyone to have an EIN. However, I understand the banks contracted with The System do insist you have such a number.

Q: Does this Trust need to be recorded at the County Recorders Office?

A: Not that I'm aware of.

Q: I have several older cars. They are not worth much but I just want them registered in something other than my "name." This is the main reason for me wanting to create a trust. Hopefully the "Legalized Car Theft Ring" aka Municipal Police will be less likely to steal my car if it is registered in some other entity. Do you agree?

A: It's not your car. "They" have dominion. You have a certain right of use and conditional possession. They can take it from anyone they chose to take it from. Nowadays they do not need a reason either. Ordinarily, a court order does not reach other person's property such as that owned by a trust.

Q: Can I put 6 or 7 cars in the same trust?

A: You could. What about "all the eggs in one basket" thingie?

Q: Is the trust you offer considered "Irrevocable?"

A: It is and can be more so if stated implicitly within the minutes of the trust. Make your intent clear.

Q: In essence, building a business is not my main concern. Do you think I could just type up in my own words a document listing the cars with VINs, bring that document along with the certificates of title to a Notary Public to be stamped and then take that to the DMV for transfer of ownership into whatever.......XYZ LEASING for example. Or would the cars be then easily traceable to me?

A: If you are trying to hide YOUR property yet still control it you are headed for big trouble. The whole idea is ARM'S LENGTH where you are 1) not the owner and 2) not the beneficiary.

NOTE: You must understand I cannot and do not give so-called "legal advise". What I write in response to your questions is my opinion and does not necessarily mean anything to anyone.

[DaleSVP]

1) On pg 34 (pg 8 of 9 of the Trust Declaration) under the signature line it states "TRUST NAME". Shouldn't this be "TRUSTEE NAME"?

Yes, our OOPS!, it should read TRUSTEE NAME.

2) On pg 43 (Minutes of Trustee Meeting - Banking Resolution), the section after the Tax EIN Line, "The following persons are authorized... with ______ being required:" -- What should be put in this blank?

With "one", "two" or "Three" of the signatures being required.

3) If using the UBO for a business, what name would you put on your business card. If, for example, the name of the business is "ABC Company"? Would you put ABC Company or should it be ABC Company Trust (or UBO)?

It is believed some of the bureaucrats like to see the word "trust" somewhere in the company's name. I do not know if that is a requirement by law....

4) Specifically with the UBO, If I am the Creator (or Grantor or Trustor), can I also be the Trustee. I do not have to have any TCUs, as I would ideally like another trust or entity to hold the TCUs (beneficial interest.) I ask because I've read conflicting sources that state that you can be the Beneficiary, Trustee and Creator (Grantor.) I understand that they are probably talking about statutory trusts... but I haven't found much about the UBO and whether one can be the Creator and Trustee without holding any TCUs.

Some UBO questions and answers are here:

http://svpvril.com/phpbb2/viewforum.php?f=11

Some people set up trusts then manage them for the benefit of their children. So a creator/grantor can be a trustee but I do not think they can be beneficiary AND trustee of the same trust. See attached document for more clarifications. Also find a copy of "Bogert on Trusts" or "Trusts" by Bogert. BookFinder is a good source: http://www.bookfinder.com/ There are other book services.

5) Also, can one person be the Trustee, Managing Director and Secretary? If the Trustee is also the Managing Director, can you just not have the position of Managing Director since the Trustee already has all the authority (and more) that the MD would have?

Sure, why not?

[DaleSVP]

CALIFORNIA PROBATE CODE

Section 15200. Subject to other provisions of this chapter, a trust may be created by any of the following methods:

(a) A declaration by the owner of property that the owner holds the property as trustee.
(b) A transfer of property by the owner during the owner's lifetime to another person as trustee.
(c) A transfer of property by the owner, by will or by other instrument taking effect upon the death of the owner, to another person as trustee.
(d) An exercise of a power of appointment to another person as trustee.
(e) An enforceable promise to create a trust.

CALIFORNIA PROBATE CODE

Section 15209. If a trust provides for one or more successor beneficiaries after the death of the settlor, the trust is not invalid, merged, or terminated in either of the following circumstances:

(a) Where there is one settlor who is the sole trustee and the sole beneficiary during the settlor's lifetime.
(b) Where there are two or more settlors, one or more of whom are trustees, and the beneficial interest in the trust is in one or more of the settlors during the lifetime of the settlors.

[DaleSVP]

Q: On Apr 22, 2009, at 10:08 PM, F. S. wrote:

I read your page on U.B.Os. I have a question, can the dividends paid out by a UBO be taxed as long term captial gains? (If so, how would that work out)

A: Such a question requires knowledge of the particular activities of specific trusts. In other words the question is too general for a quick answer.
It is believed trusts are taxed similarly to everyone else. You should address your question to a qualified tax attorney or other expert - which I am not.