In order to better explain the best and safest way to protect ones a$$ets, Worthington Group has put together the following information. We are utilizing Statutes, Regulations, and Court Decisions which govern the entities discussed. Each of the entities discussed are able to work within themselves and in combination with the Domestic Trusts constructed by Worthington Group.

In General: Over one-half of all corporations listed on the New York Stock Exchange are/were incorporated in Delaware. The Delaware Legislature and Supreme Court are the principal sources of modern day Corporate Law. This is explained on the grounds that Delaware has significantly more permissive laws relating to corporations than those Laws which exist in other states. (However, Nevada and Wyoming are rapidly catching up with Delaware).

In addition to Delaware, a major influence on modern corporate law is the Model Business Corporation Act. It was first published in 1950 and then modified in 1984. It is an enabling statute rather than a regulatory statute.

In the early 1930's, Congress enacted two statutes relating to corporate matters. The Securities Act of 1933 and the Securities Exchange Act of 1954. These two ‘acts’ formed the springboard for considerable federal regulation/s of the internal affairs of publicly held corporations.

The term "association" refers to an organization whose characteristics require it to be classified for purposes of taxation as a corporation rather than as another type of organization such as partnership or a trust.

1. Associates,

2. Objective to carry on business and divided the gains there from,

3. Continuity of life,

4. Centralization of management,

5.Liability for corporate debts limited to corporate property, and;

6. Free transferability of interests.

In Morrissey et al. v Commissioner, 1935) 296 U.S. 344 the court stated:

"An organization will be treated as an association if the corporate characteristic are such that the organization more nearly resembles a corporation than a partnership or trust".

Publicly Held: This is a corporation that has outstanding shares held by a large number of people. Corporations with more than $5,000,000.00 of assets and an outstanding *class of securities held by more than 500 shareholders of record are subject to special regulations under the Federal Securities and Exchange Act of 1934, including requirements that the corporation register that *class with the SEC and submit periodic financial information.

There may also be corporations that are considered publicly held that are not large enough or whose securities are not widely enough held to require registration of them with the SEC. A publicly held corporation may also be defined as a corporation that has registered a public distribution of securities in the past.

Closely Held: The closely held corporation is one with relatively few shareholders. There is no definite maximum number, but most agree that a corporation with less than fifteen shareholders is a closely held corporation. And it may still be considered closely held if the number of shareholders is as large as thirty-five. (Seventy-five shareholders effective as of 1/1/97 attached to Small Business Job Protection Act of 1996)

This type of corporation is one where there is no outside market for shares, (if a person wants to sell, in which all or most of the shareholders participate in management, and in which the free transferability of shares may be restricted). By definition a closely held corporation is one that has not had a registered public distribution of securities and is not registered with the SEC under the 1934 Act.

De jure Corporation: A de jure corporation is one which has made either full or substantial compliance with the statutory incorporation requirements. If a court finds that the corporation is de jure, the shareholders will not be personally liable for corporate debts.

De facto Corporation: A de facto corporation exists if there has been a bona fide attempt to incorporate under a valid state incorporation statute (but the attempt was unsuccessful) accompanied by actual use of corporate power, Shareholders are not personally liable for corporate debts. (Unsuccessful attempt - signature of the incorporators were not acknowledged; the name of the place of business was omitted, or the filing fees were not included.)

S-Corporation: To be eligible for sub-chapter S, a corporation must meet the following conditions on the date of election: (effective as of 1/1/97 attached to Small Business Job Protection Act of 1996)

1. It must be a domestic corporation;

2. It can be members of an affiliated group of corporations;

3. It must have no more than 75 shareholders;

4. Stock of qualified S subsidiaries can be owned by other S-Corporations;

5. Stock can be owned by electing small business trusts;

6. Stock can be owned by qualified tax-exempt shareholders;

C-Corporations: C corporations are those business entities which conduct large businesses and are not privately owned. Stockholders are the owners. I.e. corporations such as IBM, GM, etc., have stockholder meetings each year. These meetings lay out for the stockholder how well the corporation has performed for the past 1/4 or year.

There is an element of double taxation in the C-corporation form. If the corporation pays dividends, corporate earnings are taxed to the corporation, and when the diminished earnings are distributed as dividends, they are treated as income to the share holders and taxed again. In contrast, in an S-Corporation, LLC, Partnership, or Trust, the total income is only taxed once. This is via a K-1 to the receiver of the distribution.

Tax Minimization: Under sub-chapter S, only a single tax on corporate income is imposed at individual income tax rates at the shareholder level. The income is taxable to the shareholder whether or not the income is actually distributed. It is possible to reduce substantially the tax at the corporate level through the payment of salaries, rent or interest to the shareholders. If reasonable in amount, such payments are deductible by the corporation as ordinary and necessary business expenses and are not taxable as dividends.

1. Fraud/Illegality - corporation may not circumvent the Law.

2. Estoppel - shareholder represents he will be personally responsible for corporate debts

3. Alter ego - shareholders fail to observe corporate formalities

4. Co-mingling of personal and corporate funds

5. "Deep Rock" subordination shareholders attempt to reduce the amount they have invested in the corporation by loaning money to the corporation rather than investing in stock.

Grounds: Shareholders may not hide behind the corporate form in order to commit fraud or to circumvent the law. The corporate veil will also be pierced if a shareholder makes representations to creditors which lead them to believe that the shareholder will be personally liable for the corporate debts.

If the shareholders fail to treat the corporation as an entity separate and distinct from themselves, a court may be inclined to hold the shareholders personally liable and the corporation will be deemed the "alter ego" of its shareholders. This happens when there is a lack of corporate formalities, ie: holding board meetings, shareholder meetings, issuing stock, or if corporate and personal funds are co-mingled.

If a corporation is undercapitalized in view of the ordinary capital required to operate a business of the sort the corporation is engaged in, the veil will be pierced and shareholders found personally liable.

Shareholders may attempt to reduce the amount of money they have invested in the corporation by loaning money to the corporation rather than purchasing stock. In the event of insolvency, a court may order that third party creditors be paid before repaying the shareholder/of non-shareholder creditors.

Limited Liability Company (LLC): The LLC is a statutory entity which is registered with the State Corporation Commission the same as corporations, and pays similar yearly registration fees to that State. LLC’s are prevalent in all 50 states, each having its own LLC requirements.

An LLC is also similar to a Limited Partnership, in that it has a similar basis on the reporting of income and is taxed in a similar way. However, unlike a Limited Partnership, the LLC member/partner does not assume the liability personally for the acts of an LLC, as do partners of a Limited Partnership.

The LLC combines the function of member/partner and has a requirement of having at least two (2) member/partners. Either can manage and operate the LLC, and is based on the LLC Operating Agreement. An LLC member/partner are seen as distinct and separate entities from the LLC.

Taxes: The fundamental difference in the tax treatment of Partnerships, LLC’s, and/or Corporations, is that Corporations are taxed as separate entities with their own tax rate whereas Partnerships and LLC’s are taxed as an extension of an individual or partner. In a Partnership or LLC, the total income is taxed once to the partner or member.

Partnerships and LLC’s may distribute to member/partner all the taxable income of the entity (after costs are deducted) thereby zeroing out the tax liability of the Partnership or LLC.

Partnerships: A partnership is the simplest form of organization involving more than one person. It is formed merely by agreement of the partners, who share the right to manage and the right to participate in the profits. Each also shares the unlimited obligation to answer personally for all the liabilities of the business.

A limited partnership is a partnership of two or more persons in which there are one or more general partners liable for the debts of the business with general powers of management and one or more limited partners who have no personal liability for the debts of the business, except to the extent of their capital contributions, and virtually no powers of management.

In most states to create a limited partnership a certificate must be filed with appropriate state or county official and a fee paid. Partnership agreements that state certain people are "limited partners" or that specified persons "are not personally liable for the debts of the business" without a certificate being filed are not effective of themselves to limit the personal liability of partners. To ensure limited liability, a certificate of limited partnership must be filed.

Income rules for partnerships appear in Subchapter K, Sections 701 through 761 of the I.R.C..

"A partnership is essentially a conduit for income tax purposes, because it is required to file only an information return reporting its annual income or loss, and the income is taxed to, or the loss deducted by the various partners, individually. I.R.C. Sect. 701".

In general, the tax impact of partnership transactions on each individual partner is determined by the partnership agreement. Such private agreements fix a "partner's distributive share of income, gain, loss, deduction, or credit..." I.R.C., Sec. 704(a).

If the limited partnership agreement provides that a general unlimited partner is not personally liable to creditors for the debts of the partnership, it shall be presumed that personal liability does not exist with respect to that partner unless it is established that the provision is ineffective under local law. Income Tax Regulation, Sec. 301.7701-2.

Sole Proprietor: A proprietorship is a business owned by a single person who has the sole right to manage, is solely entitled to the profits, and is liable for the debts of the business. A proprietorship is essentially a one person partnership.

Trusts and Estates: Trusts and estates are treated as separate entities distinct from their grantors, creators, decedents, and beneficiaries. Gross income attributable to property owned by a trust or an estate may be taxable to the grantor, decedent, the beneficiaries or the trust or the estate itself.

THE HISTORY OF TRUSTS AND THEIR ORIGINATION

Trusts have a very long history of usage. Plato used a non-profit trust to finance his University in Greece approximately 400 B.C.. Trusts were known in Roman law as well. In England trusts were in use as early as the 11th Century, and by the 15th Century were being enforced by English Courts of Chancery. Many burdens and conditions fell upon the holders of English legal title to real estate.

Example: The lord of the land was entitled to relief or money payments when the land passed on to an heir of full age. The lord was given the right to claim hardship fees when the son of a former owner was a minor. The lord was also entitled to aid or tax money to pay for the marriage of the lord's daughter or the knighting of the lord's eldest son. In addition, the owner of the land was usually prohibited from selling the land or dividing it among his children or grandchildren. If the owner of the land was convicted of a crime, he forfeited all he owned to the lord or the king, thereby leaving his family impoverished. These are some of the major restrictions, and there were nearly 100 other taxes and limitations of the ownership of land. It was to avoid these restrictions that trusts were first created in England.

Trusts were also used in English history to allow religious organizations to use property charitably bestowed, which would otherwise be unable to be enjoyed due to certain restrictions against land ownership by churches and religious organizations. The English also used (and still use) trusts to avoid probate of an estate.

WHAT ABOUT IN THE UNITED STATES?

‘Pure Trust’ organizations arrived in America with the colonists. The first ‘pure trust’ of record was drafted in 1765, 24 years before the revolution by the famous attorney and Patriot Patrick Henry, for the Governor of the Virginia Colony, Mr. Robert Morris a prominent financier of the American Revolution. The trust was known as the North American Land Company, and is still in operation today, over 235 PLUS years later.

In 1804 William Bingham reputed to be the richest American at the time the thirteen colonies won independence established a ‘pure trust’ for his vast estate. At one time the’ trust’ owned two million acres of land in Maine, it was sold during the time of the Civil War. Bingham in addition to being a large land owner was also a Senator from Pennsylvania of the Second United States Congress. The ‘trust’ was terminated by the trustees in 1964, after some 160 years of operation. It was terminated because of the multiplication of beneficiaries (total 315) and the sale of the last properties involved.

Throughout the years, the income from property or proceeds from the sale of the land was distributed to the beneficiaries. At the time of liquidation, it had no termination date, and was not affected during its period of existence by the death of its Creator, or Settlor, or by succeeding Trustees, probate procedures, or death taxes.

One of the most outstanding examples of the ‘Pure Trust’ is the Mesabi Trust, which owns the reserves of the famous Mesabi Iron deposits in Minnesota. This Trust receives royalty payments from the iron deposits, then distributes the royalties to the holders of Mesabi's certificates of beneficial interest. Mr. Arnold Hoffman, who at the time was president of the Mesabi Iron Company, transferred the assets of the company to a ‘Pure Trust’.

He then announced in the Wall Street Journal on March 14, 1961, that the Commissioner of the Internal Revenue had ruled that the ‘Trust’ would not constitute an association of persons taxable as a corporation. (Incidentally, the shares of beneficial interest are traded daily on the New York Stock Exchange).

Edward H. Hines a multimillionaire building supplier, established a $12 million trust in 1914, which he oversaw and operated until his death in 1931. His two sons, Ralph J. and Charles succeeded their father as Trustees. They retained trusteeship even after a court fight instituted by two nieces, a sister, and a nephew, all who sought to break the trust by claiming that the administration of the family estate had been erroneous.

The court ruled:

"the ‘Pure Trust’ was not an erroneous method of managing the assets, and in fact was a valid and legal arrangement for the estate".

Former United States President Ronald Reagan established a trust in 1966, the "Ronald Reagan Trust". This enabled him to receive sizable tax advantages. In some years since it was established, Mr. Reagan paid no taxes at all, while maintaining a magnificent living standard.

 These are but a few of the many family estates that are preserved generation after generation through the use of the ‘Pure Trust’.

DOES THE IRS ATTACK TRUSTS?

The Internal Revenue Service is a tax collection agency, and as a tax collection agency it attempts to collect the largest sums possible. To that end, the IRS is constantly trying to discourage people from doing anything that might have the effect of saving them tax dollars, as the more you pay, the better it is for the IRS. However, there is nothing sinister, evil, immoral, or illegal about paying as little as the law allows you to pay in taxes.

A Supreme Court Judge highly respected for his legal opinions and often quoted, Judge Learned Hand, had this to say on the subject of Tax Avoidance, in the case of Helvering v. Gregory, 60 F.2d 809.

The IRS uses every technique available to collect as much as possible, they do not give out information which would help people reduce their tax burdens. Former IRS Commissioner T. Coleman Andrews wrote his expose on why the IRS should be dissolved. It was carried in April 22, 1956 edition of American Weekly, the article was entitled "Let's Abolish The Income Tax!" Because trusts do have a potential for tax savings, they could become targets of these techniques as well.

WHY MUST THE TRUST BE IRREVOCABLE INSTEAD OF REVOCABLE?

A revocable trust is one in which the Settlor can change their mind cancel the whole deal, and then take back all assets conveyed into the trust. Additionally, if the trust were to be revoked and you took back the assets conveyed, you have gained nothing in avoiding probate. Even if you were to die before the trust expires, in some jurisdictions the value of the revocable trust assets can be placed in your estate for probate and tax considerations. Under federal statutes, the value of a revocable trust is placed in your estate for federal tax purposes. A revocable trust provides no protection to the estate or the person from future claims of liabilities.

Example: Someone sued you for no reason at all, but due to inexperience, lack of knowledge on your part, or perhaps even incompetent legal advice, they obtain a judgment against you personally. If you had set up a revocable trust, the judgment creditor could force you to revoke the trust allowing those trust assets to be seized to satisfy the judgment. The purpose of a trust is to preserve and protect your estate, a revocable trust will not do this. To maximize the benefits of a trust, it should be irrevocable.

An irrevocable trust is recommended because of several valid reasons. The main reason being, an irrevocable trust requires the conveyance of legal title of all assets to the trustee/s. Without ownership by title the conveyer surrendered control. This is VERY important because without control of ones assets, the assets cannot be seized or judgements cannot be collected against you personally. Additionally, IRS Codes and Treasury Regulations are structured to benefit irrevocable trust/s, or as they are identified by IRS §7701-2(a)(3); 4(b) as 'Unincorporated Organizations'.

To obtain the maximum benefits from a trust, it should last for at least ten years and a day. In almost all jurisdictions, there is no limit on the maximum life of a ‘Pure Trust’. However, to avoid possible conflicts with the rule against perpetuities in certain jurisdictions, and IRS Rulings, it is mandatory that the trust be renewed every twenty years. If renewed, the life of the trust will be extended for a specified length of time, up to the original term of the trust. There is no limit on the number of times it can be renewed, in effect giving it perpetual life, if desired.

A trust may own all types of property, real or personal, legal or equitable, which is in existence and which has value. This means there is no limit as to what a trust may own, it is only limited by what is conveyed to it. Life Insurance is one type of property commonly owned by individuals which can be included in their estate for probate and estate tax purposes. Most people are unaware that regardless who is named as the beneficiary of the insurance, that this face value is placed in the estate of the person who owns it.

Ownership is determined, among other things, by whoever pays the premiums. To avoid this large amount of money being subject to probate, life insurance ownership of the policies should be transferred to a trust. If a trust owns the life insurance, it pay the premiums. It is wise to change the beneficiary of the policy so that the trust becomes the beneficiary.

Ownership by the trust of certain property can change its nature. For example, if shares in a corporation were to be transferred to the trust, the trust could be named as having a beneficiary interest in the shares.

 WHO RECEIVES INCOME FROM A TRUST?

Beneficiaries: The beneficiaries of a trust are those individuals or entities named as such and are entitled to receive distributions of income and/or corpus from the trust. The corpus of a trust is simply the property conveyed to it originally, or any new property conveyed to or obtained by it through the liquidation of old property after trust origination. (Agents appointed by trustees as Manager/Secretary, etc., are also able to receive income from a trust)

With the ‘Pure Trust’ the ‘trust’ holds Capital Units ’Certificates’ (CU's) for the beneficiary. The trust corpus is divided into 100 Units. Each Unit represents 1% of the distributable income of the trust and they also represent 1% of the actual trust corpus upon termination of the trust. If the trust is a Simple Trust, the trustees must distribute annually the net profit/s of the trust to the beneficiaries.

If the trust is a Complex Trust, the trustees are given the power to determine if, when, and how much can be distributed to the named or un-named beneficiaries. Each year the Board of Trustees determines the net income of the trust, and decides either to retain it in the trust and pay taxes on it, or distribute it to the beneficiaries in proportion to the percentage of CU's that are held for them, or some combination of those options. (Worthington Group recommends using Complex Trust definition when filing the 1041 Fiduciary Return)

Taxes and Assignments: United States v Mason, 93 S.Ct. 2202 (1973), 412 U.S. 391, L.Ed. 2d. 22.

"Trustees have been given broad discretion to pay taxes claimed by a State so long as the Trustee's judgment that taxes are valid, or that the costs and risks of litigation outweigh the advantage is not wholly unreasonable."

and; Legge v County, 4 A 2d. 465, 176.

"Ordinarily, it is the duty of a Trustee to pay all taxes assessed on the trust estate, provided means of payment are at his command. However, Trustee is not required to pay taxes on property where the Trust Instrument provides no funds for payment of such."

Any distribution made to a beneficiary is declared by the beneficiary on his or her personal income tax return and taxes due are paid. However, one advantage of a trust is that the income does lose its character. What this means is, whatever the percentage of the trust income is long-term capital gains, non-taxable income and the like, the holder gets the same percentage treatment on what is distributed to them, i.e., if the trust had 50% of its total income from tax-free sources, then 50% of the amounts distributed to the holder would also be tax-free.

Whether it is a Simple or a Complex Trust, when and if the trust finally terminates, (trustees would have resigned) the total assets remaining in the trust would then be returned to the original conveyor, or distributed to the beneficiaries in proportion to the percentage held by ‘trust’ for them. Anyone or any entity can be a beneficiary. Typically beneficiaries include children, friends, relatives, churches, or favorite charity.

WHO HANDLES TRUST AFFAIRS?

Under a ‘Pure Trust’, the Trust Organization is a separate legal entity which is run by the Board of Trustees. Typically, the Board of Trustees consists of one to three members. The Board holds full legal title to all trust assets, and has the power to do whatever it determines is in the best interests of the Trust Organization with those assets. The Board can contract for assistance in running the day-to-day business of the Trust by appointing anyone as a Trust Manager, Secretary, Co-Manager, etc.

Obviously care must be taken in choosing Trustees, for you must rely upon them to adequately preserve and expand the trust corpus in the directions deemed best. Any legally competent adult or legal entity can be a Trustee, although some states require that a trust domiciled in that state must have at least one Trustee who also is a resident of that state.

 CAN A$$ETS BE CONVEYED TO TRUST AFTER ORIGINAL TRUST IS STRUCTURED ?

Trust Organization By-Laws provide and allow that anyone may add to the original corpus (trust) by conveyance, gift, will, or deed, with the acceptance and consent of the Board of Trustees. The original transfer of property title to a trust takes it out of the gift tax provision because there has been an equal exchange for consideration.

As long as the trust is active i.e., it has not been terminated, the trust property belongs to the Board of Trustees. Therefore it cannot be included in anyone's estate for probate purposes. The death of the settlor, a trustee, or holder of CU's does not affect the ownership of the trust property, therefore it cannot be included in their estate.

Under present tax law, some gifts made within three years of the donor's death are included in the donor's estate for federal estate tax purposes. However, this does no apply to transfers made for full consideration or for transfers which do not require the filing of a gift tax return. Therefore, even if the settlor were to die within three years of setting up a trust, the trust property could not be included in his or her estate, as the original transfer was made for full consideration. The value of the CU's transferred by the settlor would not be included in the settlor's estate, as no gift tax return is due on their transfer.

 WHO IS REQUIRED TO PAY TAXES ON TRUST INCOME?

Since all assets are owned by the Board of Trustee, and the trust is being operated as a business, the trust is responsible for the net income retained. The trust pays tax on what expenses have been properly accounted for. (includes distributions)

CAN CREDITORS SEIZE TRUST PROPERTY TO SATISFY PERSONAL DEBT?

All jurisdictions have laws concerning transfers or conveyance to defraud creditors. If one transfers/conveys assets into a trust and such transfer/conveyance leaves one insolvent or with no means of satisfying personal debts. Or if such transfer/conveyance leaves one without means to meet personal debts which reasonably can be expected to be owed in the future, a court can rule that the transfer to the trust was 'Fraudulent Conveyance' made to defraud creditors, and set the transaction aside. This would place the trust assets back in conveyors hands and subject them to the claims of creditors.

Example: If you were in the middle of a court case which you have a better than 50% chance of losing, and you set up a trust which leaves you without the means to pay the judgment of the court when and if you lose, that would probably be considered a defrauding of your creditors. (Worthington Group will not establish trusts if they know this situation exists)

If a doctor were to set up a trust and at the same time cancel his malpractice insurance, a court could decide that these two acts done at the same time defrauded future patients of their claims. However, if the doctor first

sets up a trust, and then in the future found it financially impossible to continue malpractice insurance, that would be completely different, no problem.

Further, if the trust is not administered according to the dictates of the Trust Indenture and Trust Organization By-Laws, and trust funds are used to pay personal expenses, then trust funds are considered as commingled with personal funds. A court could rule that the trust was merely the alter-ego of the individual, and the transfer/conveyance of assets to the trust was a "sham", and set the trust aside. 

CAN CREDITORS OF THE TRUSTEES OR BENEFICIARIES SEIZE TRUST PROPERTY?

Trust assets are never liable for the personal debts of the Trustees. As long as the Board of Trustees has the discretion of distributing or not distributing income to the beneficiaries, the trust assets cannot be attacked by creditors, whether or not that discretion is exercised. Specific "spendthrift" provisions in the Indenture adds more protection.

Trustees and beneficiaries are not personally liable for trust debts if there is a provision to that effect in the trust indenture.

 CAN THE TRUST OPERATE A BUSINESS?

The simplest way for a trust to generate income is for the trust to operate as a business, or several businesses for that matter. In operating a business with a trust structure, any type of business is applicable. There is no limit to where a trust can conduct its business. It can do business in any and all states regardless of its domicile.

Note: There is a difference between a trust which operates a business and a "business trust." The term "business trust" is a legal term used by most states in their taxing statutes and by the IRS to denote a special kind of trust that is taxed exactly like a corporation..

First, these trusts are distinguished by having "associates," i.e.:, the beneficiaries get together in an association to plan and promote a joint enterprise for profit. Secondly, a business trust is set up primarily for the purpose of operating a business for profit. Thirdly, a business trust has at least three of the following four attributes:

(1) centralized management,

(2) continuity of life,

(3) limited personal liability of trustees, and

(4) easy transferability of beneficial interest in the trust.

Personal bankruptcy has no effect on the trust assets. John King placed roughly $240 million into a trust for his family, and later went bankrupt owing over $40 million in creditors claims. The court ruled that his trust did not have to pay any of the claims, and it kept the entire $240 million intact for his family. John King maintained his standard of living throughout his bankruptcy.

Note: setting up the trust cannot leave you insolvent, or without the means to pay you present bills or expected future bills, or contribute to your personal bankruptcy. If so, then again the transfer to the trust could be set aside as a fraudulent transfer. 

Legally, a divorce has no effect upon the trust organization. Once a transfer has been made to the trust, neither spouse has a marital rights to trust property, and cannot make claims upon trust assets in the divorce. Trust property cannot properly be a part of property settlement. To treat it in that manner would be to say that the original transfer was a fraud and a sham.

This type of trust is best utilized by those persons who have a strong family commitment. If you feel that there is a strong likelihood of divorce in your future, it would be best for you to work out your family problems first before considering a trust.

Trusts have been in use for centuries. The super-rich have used them to preserve their assets, but have been selfish with the information about such trust/s. They do not advertise their secrets for retaining wealth, we assume they take pleasure in considering themselves "exclusive". Most attorneys are not going to inform you about trusts because one they really do not have the knowledge, and two their desire to retain their lucrative probate business.

Attorney Leo Kornfield of New York in the January 1973 issue of Money Magazine made these points relating to Probate:

1. Lawyers make money handling estates not planning them.

2. Fees for handling estates often bear no relationship to time spent by them.

3. It is easier to extract an enormous fee from a dead person’s estate than a living client. (Sounds like robbery to me)

4. The handling of moderate estates is a cut-and-dried affair with much of the work performed by a secretary. Most problems are solved free by clerks at Probate Courts.

5. Seldom does an attorney spend more than 18-20 hours of his time handling a $100,000.00 estate.

6. Legal fees for simple work average $1000.00 per hour.

 Law Governing Trusts: Corpus Juris Secundum; 90 Section 160, What Laws Govern Trusts; Robinson v Chance, C.A. Pa., 213 F.2d 834.

"a) Ordinarily, in constructing a trust in personalty the law of the creator's, domicile controls; the effect of a trust instrument in realty is determined by the laws of the State in which the property is located. With respect to determination of what law governs the construction of a trust, the question is not the meaning of words as used, rather their legal effect".

Beneficiaries: Brigham v United States, Dict. Ct. Mass., F.Supp. 625, 626.

"A trust is a separate and distinct entity from its beneficiaries for income tax purposes".

and; Ind-Groninger v Fletcher Trust Co, 41 N.E.2d 220 Ind. 202.

"A trust company authorized by law to act as a 'trustee', may execute such trusts in the same manner and through the same agencies that may be resorted to by a natural person, except that a natural person may not act pro se while corporation must act through a natural person".

 Removal of Trust To Another State: Del-Wilmington Trust Co. v Wilmington Trust Co. supra, 186 A 903, 21 Del Ch 188.

"After a trust has been set up in one State, the mere removal of the Trustee to another State, even though Trustee takes the assets with him, will not alter the original location of the trust, or the law governing it's interpretation and administration". 

1. Every aspect of a Pure Trust is lawful and is guaranteed by the U.S. Constitution, U. S. Supreme Court, and District Courts.

2. A trust is inexpensive to establish, and is easily maintained.

3. A trust is lawful in every state, and if established in one state it can be moved to a different state.

4. A trust is a lawful person in the eyes of law. It has the power to own, buy and sell, sue and be sued.

5. A trust holds and changes title to assets it’s name.

6. A trust being irrevocable avoids the question of ownership.

7. A trust provides privacy relating to assets conveyed becoming public knowledge.

8. A trust is not subject to probate or estate taxes.

9. A trust can be beneficial in the area of taxes.

10. A trust can operate a lawful business anywhere in the world. It has limited liability with most corporate advantages and none of the corporate disadvantages.

11. A trust has no periodic reports or accounting to ant state agencies.

12. A trust has the same Constitutional rights as an individual. The right to privacy, freedom from unwarranted searches, of self incrimination, and all other rights, i. e. 1^st, 4^th, 14^th, and 5^th Amendments.

The aforementioned information is for the readers enlightenment and education and is NOT in any sense offered as legal advice. If there are questions of a legal nature that the reader needs answered, we suggest they consult legal counsel.

Write Protected, 93, Worthington Group, updated 2000