Trust Resources
Table of Contents
Trusts
Trust Basics
A trust is a legal document / instrument which is created during a person’s lifetime, and survives after the person has passed away. In its most basic form, this instrument becomes the guide and spells out how assets will be distributed to one’s heirs upon the death of the person who created the trust. Put simply, a trust is a right in property (house, car, bank accounts, business, stocks, bond’s, etc) which is held by one party for the benefit of another.
An example of a Simple Trust is this:
A trust can be created simply by doing a simple thing. An example would be a woman asking a friend to “hold her package” and give it to her husband when he arrives. The woman is essentially “trusting” her friend to deliver the package to her husband.
To state it in the simplest terms, “A trust is a right of property, real or personal, held by one party for the benefit of another.”
A trust then, is a contract in which an individual (variously called the Settlor, Creator, Trustor, or Grantor) transfers property to a trust (or trustee), to be held or managed for one or more beneficiaries. Most trusts feature the same person in control and getting benefits (as without the trust). They typically make the kids beneficiaries (or after life of the creators).
There are many types of trusts designed for a variety of purposes. The Family Living Revocable Trust is generally the trust created by almost all attorneys.
What Is A Family Living Revocable Trust?
- Many similar titles are used to mean the same type of trust. Some of these are:
- Revocable Trust, usually meaning exactly the same as:
- Family Trust… or
- Living Trust… (“intervivos” in Latin) or
- Revocable Trust… or
- Living Revocable Trust… or
- Revocable Living Trust… or
- Living Revocable Family Trust
- (or a combination of the same words in different order)
As we stated above, “A trust is a right of property, real or personal, held by one party for the benefit of another.” or, more exactly, a trust becomes the owner of your property instead of you, but remains under your control (you are the Trustee); for the benefit of you and/or your family. In other words, you still keep control and use, but designate the eventual ownership, after you can’t own it anymore.
A trust is better than a will. A will is basically a guide for a judge to make his determinations. Wills are often disputed and must be expensively supervised by the court. A judge can easily determine results contrary to wishes of the creator, usually at the cost of high unnecessary expense, as well as wasted time.
Fortunately, a trust can eliminate the court supervision, eliminate court costs, provide for uninterrupted management, and operate exactly as you planned it, all while managed by people you selected yourself, without interference, and without delays.
Private Asset Protection
A Private Asset Trust is far better than a typical family trust. It has all the benefits of the simple trust, with additional benefits. The proper design and language of a trust can provide complete asset protection, as well as other options. Certain rules and proper legal language must be contained in the trust to provide management, protection, and privacy. Flexibility can also be included within the trust, although care must be taken to restrict flexibility that could eliminate benefits.
There are ways for a Private Asset Trust to provide privacy and protect seniors, minors, disabled persons, education, structured allowances, pet care, immature individuals, medical care, convalescent care, retirement, lawsuit avoidance, investments, business management, spending, distributions, stock ownership, bank accounts, vehicles, collectables, charities, and most any other conceivable asset.
You can provide for (or protect against) family members, ex-family members, friends, second families, or your favorite charity. A trust can protect assets from divorces, family disputes, and members of the family kept from being a beneficiary.
You can determine your own levels of complete or moderate privacy.
See a chart of what a person with and without Asset Protection looks like here.
Trust Decisions
1. Decide if you need a shared trust. If you are married and you own most of your property together, a shared trust may be the right way to go. Your other simple choice is to create more individual trusts. That would allow you to have different beneficiaries and management people.
2. Decide what items to leave in the trust. You probably don’t want to hold all your property in your trust – just the big-ticket items that are headed for probate unless you act.
3. Decide who will inherit your trust property. For most people, choosing family members, friends, or charities to inherit property is easy. You can choose to keep yourself as a “Lifetime beneficiary”. After you make your first choices, don’t forget to choose alternate (contingent or remainder) beneficiaries, too.
4. Choose someone to be your successor trustee. Your trust should name someone to serve as “successor trustee,” to manage the trust and property after you have died. Once you’ve made your choice, discuss it with the person you have in mind to make sure he or she is willing to take on this possition of responsibility.
5. Choose someone to manage children’s property. If children or young adults might inherit trust property, you should choose an adult to manage whatever they inherit. You can make him/her a guardian to give that person authority over the child’s property. A property custodian is authorized under a law called the Uniform Transfers to Minors Act (UTMA), as a trustee.
6. Prepare the Management Worksheet, the Asset Checklist, and Statement of Wishes. After making your trust (which you can do yourself, or with assistance, you (and your spouse, if you made a trust together) must sign it in front of a Notary Public.
7. Transfer title of property to yourself as “trustee of the trust”. This is a crucial step that, unfortunately, some people never take. A transfer MUST be made to make your trust effective. You must hold title to trust property in your name as trustee – for example, if John Smith wants to hold real estate in his trust, he must prepare and sign a new deed transferring the real estate to John Smith, trustee of the John Smith Trust or it does NOT protect the property.
8. Store your trust document safely. Make copies and tell your successor trustee where each document is, and how to get access when necessary. Do NOT put it in a safety deposit box as it will become frozen and unavailable when it is needed.
9. Deliver an original copy (with original signatures) of the trust to the recorder or trust registry at www.TrustRegistry.net for additional safety and backup.
Trust Privacy
Can I get Personal Privacy with a Private Asset Trust?
It has become increasingly difficult to maintain any sense of privacy. Especially as computers have become the standard with companies and government sharing information and social networking. Trying to undo exposure or remove history is mostly a waste of time.
Changing your name or creating a whole new identity can be done, but may not be effective, or even legal. The correct method that most beginners employ is to create a corporation or similar organization like a Limited Liability Company (LLC). There are many options. Creating a new organization is one way to get some privacy. This could mean starting a corporation, a Limited Liability Company, a partnership, a trust, or a few other variations of new entity.
Creating a new entity usually creates limited privacy, but will not accomplish much overall.
Basically, if you create it, or use your own address, or your phone number, or register it, or pay a fee to make it exist, or use your credit card, it can be easily found.
Some people use international organizations seeking privacy. Until recently, there were “tax haven” countries designed specifically to manipulate taxes, privacy, and sometimes crimes. This is now almost impossible in today’s world simply because of the threats of terrorism. Most governments openly share all information and that now applies to taxes and non-crimes.
Recently, almost all tax haven countries agreed to the elimination of privacy for clients between nations. Using international companies and organizations for personal or small business purposes is now a great way to be labeled a criminal, before any facts are actually known. You are often assumed to be guilty until proven innocent.
The interesting thing is that for most individuals and companies there is not any true advantage to “go offshore”. You can create privacy and operate privately within your own country. The real criminals will still be subject to exposure, yet the private citizen doing their own private business can have real privacy, by just following the rules.
PRIVACY – The Privacy Rules:
LEVEL ONE:
- Never use your personal name to own assets
- Never sign up for contests, newsletters, subscriptions, using your personal name
- Never sign up for utilities, phones, or mail services using your personal name
- Use cash for the small transactions
- Use money orders for larger transactions
- Use private organizations for larger transactions
LEVEL TWO:
- Use a Private Asset Trust to hold title to a valuable asset
- Only hold one valuable asset in each Private Asset Trust
- Title the trust similar to the asset, such as “1111 FLOWER STREET TRUST”
- Never use your full name in the title of the trust
- Only share the trust existence and trust information when necessary
LEVEL THREE:
- Never reuse a trust when the asset is gone, such as putting a new car into an old trust
- Use different managers on different trusts
- Have different purposes for different trusts
- Have different beneficiaries for different trusts
- Have a succession plan within the trust rather than a expiration or termination
There are more things that affect privacy, but it depends on the level that makes you comfortable. For battered ex-spouses, we have helped them with other techniques for total privacy (for free). Keep in mind, we will not assist people that break the law or evade taxes.
Private Organizations such as: A Private Limited Liability Company (LLC), Private Corporation, or Private Asset Trust can be a major tool to attain privacy and protection. The initial costs of each are similar. The ongoing costs are lowest with a Private Asset Trust. After the initial entity is created, additional corporations and LLCs cost the same to create. A Private Asset Trust can be replicated faster, more privately, and at less cost.
History dictates that there are traditional types of entities that are used for certain purposes. For instance, a corporation is normally used to run and own a business, but a trust is usually more passive like using it as the organization to collect royalties or own stock, or manage funds, or hold real estate.
Laws and requirements vary according to local and national laws and governments. Almost all require permission and fees to exist, and annual reporting, and more fees.
Trusts are different. Trusts are exempt from permission to exist, fees, reporting, and annual requirements. Trusts are special because they are created on the basic right to create contracts and agreements. Trusts can make up their own rules almost without limits. Trusts can create special powers, special purposes, provide for special circumstances, change managers, change beneficiaries, change jurisdictions, change assets, and can survive for generations. Trusts can hold and manage stock, partnerships, inventory, funds, vehicles, savings, investments, retirement, collectibles, insurance, inheritances, ventures, real estate, or almost any asset.
That does not give trusts complete exemption. Some jurisdictions have required trusts to register, or pay fees, or do reporting, or fit into other requirements. They usually accomplish this by stating that they withhold a benefit (such as a tax exemption or ability to have a license) if you do not comply with the requirement. Many times this can be easily solved, or you can select a different place to hold the trust. Corporations and LLCs have the same choices and many have selected Nevada, Delaware, or other jurisdictions for their organization.
Trusts do not (in most cases) eliminate taxes, even though you can get privacy (who pays, and tax payments). For instance, a person with tax problems can pay taxes privately through a trust without mixing or identifying his identity. It may also be possible to reduce tax amounts by pointing the taxable income to a person in a low tax bracket. The main rule is that it is wrong to create and use trusts purely for tax purposes.
Today, you must create your own privacy. You can accomplish massive privacy with the use of most organizations, but the easiest, fastest, least costly and ultimately most flexible is the use of Private Asset Trusts.
See chart comparing benefits of LLCs, Coporations, Trusts, and Wills.
Trust For Pets
Perhaps, your pet is as important as having your own child. You need to plan a bit more for babies, seniors, and pets. Who will be the caretakers? Who will provide home, food, medical care, and personal attention? Where will the money come from to provide these items? Constructing Trusts for Pets is a great way to prevent your furry loved one from ending up in a shelter. Can your pet wait in a shelter for someone to step forward?
Trusts for pets are valid in all states and can last for the pet’s lifetime. A trust for more than one pet is permitted. You can provide for the relatives of the pet, the breed, your friends pets, the shelter pets, and certainly the caretakers.
Who enforces a trust for beneficiaries who cannot speak? The laws and provisions in the trust can provide that the trust may be enforced by a person designated by anyone in the trust agreement. If there is no such person, anyone interested in the welfare of the pet may request the court to appoint a person to enforce the trust. Ideally, the trust should provide for a succession of caretakers in the trust agreement. A trustee has all the rights of a normal trustee or beneficiary in enforcing the trust on behalf of the pet.
The trust can determine that a pet trust has been funded in any amount (even exceeding requirements) that is required for the trusts purposes. What is reasonably required to care for the grantors pets varies from case to case. A trust for a parrot is likely to last much longer, and require more funds to accomplish its intended purpose, than a trust for a cat or a dog. If the trust has been over funded then the excess assets would pass to the secondary beneficiaries designated in the trust agreement. This suggests selecting remainder beneficiaries who share the grantors vision as to the care of the grantors pets or organizations.
Drafting the best pet trust is not as simple as following standards. The presence of special beneficiaries raises a host of issues not present in trusts created for people. For example, the trust will need to consider, and draft for, beginning- and end-life issues. Are the pets’ unexpected offspring also covered? If this is what the trust intends, the trust agreement should say so, and should contain authorization for the trustee to make the appropriate tests. End-life issues are more likely to present trouble in the real world. Remainder beneficiaries must be considered. What is the view of the humaneness of euthanizing an old or sick pet? To eliminate the possibility of trouble, the trust should designate a veterinarian familiar with the pet whose decisions on end-life issues are to be final.
The trust should be as specific as possible as to the care expected by the trustee to provide for the pets. The pets dietary, health care and exercise requirements should be clearly spelled out. If the beneficiary is a horse, is the trust to acquire a trailer to transport the horse? Should the trust provide for pet shows? What about friends for the pet? What about maintaining exercise? What about potential surgery? What about visitation from relatives? There is no substitute for an in-depth discussion about these types of issues. The trustee will thank you, even if the remainder beneficiaries may not.
The trustee does not have to be the person having actual custody of the pets. Many times, the trust will segregate the trustees money responsibilities from a caretakers animal care responsibilities. If someone other than the trustee has custody of the pets, the trustee should be given authorization to take one or more steps set forth in the document (i.e., implantation of a microchip) to enable the trustee to make positive identification of the pet. Everyone has seen at least one movie where the pet dies under the care of a panic-stricken teenager who then tries, always unsuccessfully, to pass off an imposter as the real pet. Most trustees would not see the humor in this sort of thing.
If the person having custody of the pet is not the trustee, the trust agreement should provide for a succession of individual caregivers. The initially appointed caregiver may die, move away, or just plain get tired of working for a pet. The trustee should have the power to hire and fire custodians if certain conditions set forth in the trust agreement have been met. The trust should give the trustee the power to make an independent determination as to whether the caregiver is adequately providing for the pets welfare. Here again, the trust might leave that decision to a veterinarian appointed in the trust agreement, removing liability from the trustee for the veterinarians decisions.
Trust Review
Typical Existing Family Living Trust
Most trusts created by multi-purpose law firms are a generic “one size fits all” boilerplate estate plan. They act in a manner that mimics the expectations of creating a personal will. Sometimes they create a joint trust for husband and wife, or a single trust for each, depending on the acceptance of the costs involved.
They can upgrade to a linked “A-B” pair of trusts that can maximize tax effects and timed transfer of multiple assets. Difficult assets can be placed on one of the trusts, and a better group of assets can be in the other trust. This is a major improvement to the simple trust, but still offers no protection or benefits during their lifetimes.
Review the Existing Trust
Most trusts are a version known as a “Living Trust”. There are variations that include one or more words like “revocable” and “family”, but they are the typical low cost version that becomes very worthwhile upon death (but not before). A review of the existing trust can quickly determine and explain options of each method.
Upgrade the Existing Trust
The next level upgrade is to a trust that protects and benefits all parties during their lifetime. The typical solution offered by attorneys can be fairly complex and expensive. Worse, it usually does not provide for lifestyle changes and resulting modifications to the trust. Few planners want to convince families to commit to a plan that has no way to accommodate the changing needs of the managers and family.
The Private Asset Trust
We have a solution for all of those concerns. Use a simple Private Asset Trust for each single asset that is worthwhile.
This allows for:
- Simplicity of creation
- Simplicity of understanding (one item at a time)
- Choice of Manager / Trustee (different for each asset?)
- Choice of Beneficiary (different for each asset?)
- Single Asset Separates to Maintain Privacy
- Single Asset Limits Legal Attack to a Single Target
- Single Asset to Modify (replace the asset with new car or better home)
- Single Asset to Change Management (Select Better or Replace a Manager)
- Single Asset to Sell or Transfer the Benefits (No fees)
Additionally, this provides a great way to keep family members (or former family members) from disputes. Rather than share management and/or benefits, they can have separate assets to manage and/or benefit from.
EXAMPLE:
A great example is the family of Mr. Smith. He has two kids from his first marriage. The former Mrs. Jones has a child from her first marriage. Now the newly married Mr. & Mrs. Smith have their blended family of three kids PLUS their new baby created together. This creates all kinds of issues for the parents, and ex-spouses, and the various four children of mixed parents. It’s a difficult situation that will be almost impossible to manage and allow fair treatment to all. How can we expect all to agree to a benefit and management plan?
We suggest that a “solution-in-progress” may be the answer.
Possibilities:
- TRUST A – A trust for one asset that has the kids from Mr. Smith (marriage #1) as beneficiaries.
- TRUST B – A trust for the second asset that has the child from the former Mrs. Jones as beneficiary.
- TRUST C – A trust for the third asset that has all children as beneficiaries.
Additional assets can be mixed and matched as well.
The other important aspects are automatic. Keeping separate assets allows the fact that there are different private solutions. It also allows for different management. For instance, the true parents can manage their own child’s benefit, when you are ready to turn over control from yourself.
Get a Free Review of Your Trust
We will do a free review and analysis of your existing trusts. Usually, the existing trusts do not give any protection during their life. Many are very surprised when they realize the potential for disaster with their current estate plan. Upgrading to proper protection is fairly easy, especially since they already have some experience and knowledge.
Revocable Vs. Irrevocable
Revocable Trusts
Revocable trusts, as described in the introduction won’t provide you with tax shelter. However, revocable living trusts can shelter you from the probate threat to your wealth and control over it.
Literally, probate is the process of “proving” your will and transferring assets to your heirs. A lot of people spend a lot of time and effort trying to bypass probate, for these reasons:
* Expense. Depending on your state and the size of your estate, the total cost of probate might be 3%-7% of your assets. Say you die with a total estate of $300,000, certainly not a huge amount in today’s world. From $12,000 to $28,000 might go to lawyers, executors and court fees–just for shuffling papers. For a married couple, two probates may be needed, costing as much as $24,000 to $48,000, before all of their assets can go to their kids. What’s more, the probate fees get paid first, before your family gets whatever’s left.
* Delays. Not only will probate cost your heirs, it can cause critical holdups. Although some states probate an uncomplicated estate in a matter of a few weeks, an “expedited” probate might take six months in others and a few states tie up assets for up to two years.
While assets are in probate, the court is in control. That means your executor or an administrator appointed by the court will manage them until the estate is settled. Will he or she buy and sell to take advantage of market or tax-planning opportunities? Perhaps–and perhaps not.
* Publicity. Adding insult to injury, probate proceedings are on the public record. Anyone can see a list of your assets and the debts you’ve incurred. Illegitimate claims may be brought against your estate and various scam artists may try to prey upon your heirs. If you own a closely held company and it goes through probate, its records will be exposed to competitors and creditors and management during probate will be awkward.
* Multiple probates. Suppose you own a vacation home or investment property outside your state of primary residence. Your estate will have to go through probate in that state, too, adding still more expense and aggravation. It’s clear, then, that probate is best avoided, if possible.
That’s where revocable living trusts come in. In essence, once you transfer assets into the trust, they’re owned by the trust instead of you. At your death, the assets stay in the trust, to be distributed by the trustee rather than by a probate court.
Interest payments, for example, go to your heirs right away, without the delays of probate. This arrangement makes it very difficult for a disgruntled heir (or would-be heir) to challenge your disposition of assets–a big benefit. Another benefit is privacy: Your assets and their disposition are not exposed to the general public, as they are when assets go through probate.
Won’t an irrevocable trust avoid probate, too? Yes, it will, and some people use them for this purpose. Revocable trusts are used more frequently, though, precisely because they’re revocable. You can change the terms whenever you want even cancel the trust altogether. You can set up a revocable living trust naming yourself as trustee as well as beneficiary. If anything comes up that makes you unhappy, you can back out change the beneficiaries reallocate the trust assets.
You will, of course, name a successor trustee and successor beneficiaries to manage and receive the trust assets after your death. In the meantime, you have full control of the assets, just as you did before creating the trust. If you transfer stocks into the trust, for example, you can buy or sell them at will. You will receive the income from any trust assets; however, you’ll owe the resulting income taxes. A revocable trust is not a tax shelter.
A revocable living trust can be used as an estate planning vehicle, too. In addition to naming individual beneficiaries for assets, you can, for example, set out instructions for other trusts to be established at your death.
The bottom line: With a revocable living trust, you have control over your assets while living. You can name who gets what at your death, and you can change your mind if you want to.
Irrevocable Trusts
All of the benefits of a revocable living trust are usually included in an irrevocable trust.
The problems that most creators face are because of the absolute inflexibility of the trust. That can be avoided by creating the necessary features that allow flexibility.
Basically, you usually need to include special conditions and permissions in the trust agreement.
For example:
- Permission to change beneficiaries
- Permission to change assets
- Permission to change who will pay taxes
- Permission to change distributions
- Permission to change financing
- Permission to change locations
- Permission to change state of jurisdiction
Irrevocable Trusts Can Be Modified
Although it is absolutely required for the trust to be irrevocable to include protection, modifications can be made if you include the proper language during creation and protect the beneficiaries.
Probate
Understanding Probate Process
Many Americans that live the American Dream either own their own home or are in line to inherit the equity when their parents pass on.
Things in life occur like unexpected illnesses, or an untimely death which can place an Estate in chaos. Without having a Trust in place to protect your assets and financial legacy, you may be sitting on a proverbial time-bomb if a family member’s Estate goes into Probate.
Charts
Lifetime Benefits Chart
Lifetime Benefits Chart compares the Advantages and Disadvantages of a Private Asset Trust, Living Trust, Corporation/LLC, and a Will
| LIFETIME BENEFITS | With a Will | PRIVATE ASSET TRUST | Living Trust | Corporation or LLC |
| Buy, Sell, Loan, Borrow or Pledge Assets | Normal | Trustee or Manager Must Sign | Trustee Must Sign | Officer Must Sign |
| Flexibility to Do as You Want | Normal | YES | Yes, Sometimes | Shareholders Must Approve |
| Maintain Privacy of Beneficiaries | No | YES | No | Seldom |
| Maintain Privacy of Control | No | YES | No | No |
| Separate and Protect Individual Assets | No | YES | No | Sometimes |
| Establish Credit Separate from Personal Credit | No | Sometimes | No | Sometimes |
| Separate Business and Personal Affairs | No | YES | No | Sometimes |
| Limit State and Federal Taxes | No | YES | No | Sometimes |
| Limit State and Federal Taxes | No | YES | No | Sometimes |
| Limit Self-Employment Taxes | No | YES | No | No |
| Limit Lawsuit Liability | No | YES | No | Sometimes |
| Change Beneficiary Interests as Desired | N/A | YES | Sometimes | No |
| Allow for Private and Government Health Care | No | YES | Sometimes | No |
| Earn Income Without Affecting Social Security | No | Sometimes | No | No |
| Documentation and Accounting Requirements | Normal | Normal | Normal | Extensive |
| Annual Reporting and Annual Fees | No | No | No | Yes |
| Valid in Multiple States | Sometimes | YES | Sometimes | No, Unless Each State Paid |
| Startup Costs | Minor | About Same as Corporation | About 1/2 of a Corporation | High if Properly Organized |
| Annual Costs | Minor | Minor | Minor | High if Properly Organized |
| Difficulty of Management | Minor | Minor | Minor | Medium if Properly Maintained |
After Death Benefits Chart
After Death Benefits Chart compares the Advantages and Disadvantages of a Private Asset Trust, Living Trust, Corporation/LLC, and a Will.
| AFTER DEATH BENEFITS | With a Will | PRIVATE ASSET TRUST | Living Trust | Corporation or LLC |
| Eliminates Probate | No | YES | Trustee Must Sign | No |
| Eliminates Medical Bills | No | YES | No | No |
| Eliminates Death Taxes | No | YES | Sometimes | No |
| Eliminates Credit Card Bills | No | YES | No | No |
| Continue Protection of All | No | YES | No | Sometimes |
| Eliminates Divorce Claims | No | YES | No | No |
| Eliminates Prenuptial Agreements | No | YES | No | No |
| Allows Tax-Free Vehicle Sales | No | YES | No | No |
| Buy, Sell, or Loan Assets | Normal | Trustee Must Sign | Trustee Must Sign | Officer Must Sign |
| Flexibility to Do as You Want | Normal | YES | Yes/Sometimes | No |
| Maintain Privacy of Beneficiaries | No | YES | Sometimes | Seldom |
| Maintain Privacy of Control | No | YES | No | No |
| Separate and Protect Individuals | No | YES | No | Sometimes |
| Maintain Business | No | YES | No | Sometimes |
| Limit State and Federal Taxes | No | YES | No | Sometimes |
| Limit Self-Employment Taxes | No | YES | No | No |
| Limit Lawsuit Liability | No | YES | Sometimes | Sometimes |
| Change Beneficiary Benefits | N/A | YES | Sometimes | No |
| Allow for Private and Government Health Care | No | YES | Sometimes | No |
| Documentation and Accounting | Normal | Normal | Normal | Extensive |
| Annual Reporting and Fees | No | No | No | Yes |
| Valid in Multiple States | Sometimes | Yes | Sometimes | No |
| Startup Costs | Minor | Sometimes High | Sometimes High | Sometimes High |
| Annual Costs | High | Minor | Minor | High |
| Difficulty of Management | Minor | Minor | Minor | Extensive |
Asset Protection Chart
The Private Asset Protection Chart depicts how vulnerable people can be without a Private Asset Trust. There is no substitute for a Private Asset Protection Trust that can help you protect your assets. Asset Protection ensures that your real property, life insurance policy and other estate inventory are protected against taxation. This will also ensure that your will is carried out in accordance to your wishes. A Private Asset Protection Trust is the best choice when you have a sizable estate to protect, and becomes even more important if you have minor children named as beneficiaries.
A Private Asset Trust uses it’s own name and identity. It is legally a separate entity, as if it is a brother or sister. You may have a Separate credit report, separate assets, and separate liabilities. If you do not co-sign or combine it with others, or an individual; it remains separate.
Planning keeps all Assets totally unconnected. This means that a lawsuit may only affect a single Asset and the other Assets could remain private and unaffected.
Estate Planning Books
The Protection Book – EJ Lashlee
Private Asset Protection is possible by installing an advanced type of trust called a Private Asset Trust. If you wait, it may be too late to protect assets when you are named in a lawsuit, a divorce, or tax dispute. The time to protect yourself is now! Fortunately, private asset protection can be much easier and far less expensive than you think. In this complete guide, experienced privacy and asset protection experts present the steps you can take to protect your home.
The Privacy Book – EJ Lashlee
Changing your name or creating a whole new identity can be done, but may not be effective, or even legal. The correct method that most beginners employ is to create a corporation or similar organization like a Limited Liability Company (LLC). There are many options. Creating a new organization is one way to get some privacy. This could mean starting a corporation, a Limited Liability Company, a partnership, a trust, or a few other variations of new entity.
True Trust – EJ Lashlee
In this comprehensive book, E.J Lashlee guides you through your understanding of the process that will help you avoid pitfalls, excessive taxes, liability manipulation, and wasted money. The True Trust Book describes steps to: Create a Superior “Private Will” that supersedes the typical public Will, Provide for Family Care and Guardianship, Protect yourself from the Legal and Financial Ravages of Disability, Manage and Reduce Taxes, and much, much more!
Real Rules for Real Estate – EJ Lashlee
Making your first real estate purchase for investment and profit can be a great thing. The problem is that you need a real estate coach and some guidance to make all the right decisions. This guide gives some hard and fast rules to virtually guarantee profits and success. There are some rules that may surprise you. Most real estate professionals are there for the commissions and do not specialize in the actual investments.
Definitions
- A - C
- D - F
- G - I
- J - L
- M - P
- Q - S
- T - Z
Amendments – Changes made, either by way of correction or addition.
Administrator – The individual or institution appointed by the court to oversee the settlement of an estate of a person who has died without a will.
Alternative Date of Death – The executor or trustee of an estate has the option to appraise or value assets six months after the death of the decedent. Estate tax liabilities may be lower in the event that assets values have declined over this six month period.
Affidavit – The written declaration of facts made voluntarily under oath.
Ancillary Administration – The Probate of the decedent’s property located in a different state than which the decedent lived.
Annual Exclusion – The amount of money or value of property (currently $12,000 for an individual and $24,000 for husband and wife) that can be given as a gift to a recipient each year without incurring gift tax.
Appraisal – The process of determining the fair market value of property or asset within an estate.
Ascendants – The ancestors of a person either alive or deceased such as; parents, grandparents, great-grandparents.
Beneficiary – (a) The beneficiaries are those entitled to receive benefits from the trust; (b) The person for whose benefits a trust is created or the person whom the amount of an insurance policy or annuity is payable. The person designated to have and hold the equitable interest in a trust estate; (c) In a Business or Pure Trust, the beneficiaries are the holders of Trust Certificate Units (TCU’s).
Bequest – A Gift of property given under the terms of a will.
Bond – Money that backs a promise that an individual will perform a duty.
Business Trust – A common law contract arrangement whereby a legal entity is established similar in form to a corporation but taxed either as a corporation or as a trust depending on the laws of the particular jurisdiction in which the instrument is created, and in accordance with the terms and conditions of the agreement and the methods by which it is utilized. Any trust which by operation of state or federal tax law can be taxed in the same manner as a corporation. Often termed as “Massachusetts Trust”, Unincorporated Business Organization, Business Trust Organization, Unit Trust, or Common-law Trust. Similar to “Pure Trust”. Commonly abused by tax resistors and promoters. Not recommended.
Capital – Principal or corpus or value of assets placed in trust.
Capital Gains and Losses – A tax calculation, the difference between the purchase price (cost) and selling price (proceeds).
Charter Trust – See “Pure Trust”
Civil Law – The legal system prevailing in the European, Asiatic, Central America, and South America countries which inherited their legal systems from Rome; in practically all except the English – speaking countries.
Claim Against an Estate – Refers to a charge against an estate to settle an agreement or an outstanding obligation (as in the case of bills unpaid at the time of death).
Clifford Trust – A short-term irrevocable trust which lasts at least 10 years. When the trust ends, the principal is returned to the original owners.
Codicil – An addition or other change to an existing will.
Contest of a Will – Challenging the validity of a will, through a legal proceeding, to prevent the distribution of estate assets.
Common Law – That part of the law which has developed over time through court decisions and opinions rather than by state statue or other legislative process. The legal system prevailing in the English – speaking countries; that is, the United States and the countries making up the British Empire and Commonwealth of Nations. Originated in England. Different from that of Roman civil law. Compare Civil law.
Common-Law Trust – See “Business Trust”.
Community Property – An undivided interest arising by operation of state statute, in real or personal assets owned during or acquired during marriage by the spouses. Can be nullified by transfer from one spouse to the other. Property in which a husband and wife have each an undivided one-half interest.
Competent – Legally qualified; possessing adequate mental capacity.
Complex Trust – (a) Any trust in which the trustees have the discretion whether or not to distribute income, or a portion thereof, to a beneficiary or beneficiaries in any year; per IRS Code is a trust that is not defined as a “simple trust” or a “grantor trust” under the IRS Code.
Contract – An agreement in which a party undertakes to do, or not to do a particular thing. The essential elements of a written contract are (a) parties competent to contract, whose names appear in the writing; (b) the subject matter of the contract, or a clear statement of what is to be done or not done; (c) lawful and valid consideration, and if made up of mutual promises, then a clear and explicit statement of what each party promises to do or not do; and (d) agreement of the signed parties.
Contract Law – See “Law of Contract”.
Contract And Declaration Of Trust Indenture – See “Trust” and “Contract”.
Conveyance – The act by which title to property is transferred. Usually an instrument in writing.
Corporation – An artificial being created by law and endowed with certain rights, privileges, and duties of natural persons.
Corpus – The body of assets or property belonging to an entity, such as a trust or estate. The principal or capital of an estate, as distinguished from the income.
Creator – A Creator in a document is the person who establishes a trust by conveying assets to it. aka Grantor, Settlor or Trustor.
Creditor – A individual, business or entity which may be owed money by an estate.
Death Taxes – Federal and state taxes that are due against property or the transfer of assets upon the death of the owner. Often referred to as estate taxes or inheritance taxes. (estate tax calculator)
Decedent – The person who has died.
Deduction – For tax purposes, the portion of an estate that does not generate tax (such as the unlimited marital deduction).
Descendants – Any children or offspring leaving or deceased including grandchildren.
Declaration of Trust – An acknowledgment, usually but not necessarily in writing, by one holding or taking title to property that he or she holds the property in the trust for the benefit of someone for or to the use of another. See Trust Indenture.
Deed – Written document by which the ownership of land is transferred from one person to another.
Deed of Trust – Almost always is used as a protective device like a mortgage or used as a recorded document to notify and secure monies against real estate. Could be used for some other secured right.
Descendant – One who is descended in a direct line from another, however remotely; the same as “issue”. Relatives.
Devise – A gift of real property by will. A person who receives such a gift is called a devisee.
Discretionary Trust – A trust which entitles the beneficiary only to so much of the income or principal as the trustee in its uncontrolled discretion shall see fit to give the beneficiary.
District / District of Columbia / D.C. – A location within the continental United States, that is NOT a State or within any State of the United States. Designed by the originators and forefathers of the constitution as a separate place that cannot be controlled by any state. A safe, independent, small, city-like community, that is the central place of national government of the United States of America as a whole.
Dividend Trust Certificate Units – Trust Units similar to “Stock” that cannot be attached, given away, or taken away that are limited to income (not principal). See similar “Equity Trust Certificate Units”.
Domicile – The legal residence of a person or entity. The state and county that the decedents lived (primary residence). A person’s domicile may or may not be the same as his or her residence at a given time.
Donee / Donor – The recipient of a gift; the giver of a gift.
Dry Trust – Any type of trust without assets. A shell.
Equity – A system of legal principals, rules, and law which arose outside the common law which has power to enforce discovery, and administer trust, mortgages, and other fiduciary obligations, administers and adjusts common-law rights were rights where the courts of common law have no means, and supplies a specific and preservative remedy for common-law wrongs where courts of common law only give subsequent damages. Its characteristic is flexibility and its aim is the administration of justice.
Equity Trust Certificate Units – Trust Units similar to “Stock” that cannot be attached, given away, or taken away that are limited to principal (not income). See similar “Dividend Trust Certificate Units”.
ESOP Dividends – dividend distributions from employer stock within an ESOP (employee stock ownership plan) are exempt from the early distribution tax.
Estate Tax – A tax imposed on a decedent’s estate from effects of a will (or lack of a will).
Executor – An individual or a trust institution (perhaps nominated in a will and) appointed by a court to carry out duties.
Family Limited Partnership (FLP) – an FLP protects assets by limiting the ability of a limited partner’s creditor from accessing partnership assets to satisfy a debt. Even if a creditor gets a charging order against a limited partner’s interest, the creditor would only be able to receive distributions if they are made – and a general partner could elect not to make any distributions.
Family Trust – A term loosely defined as any Trust that is to manage and protect assets for family members.
Fee Simple – Absolute title. The kind of ownership which enables the owner to manage and control property.
Fiduciary – An individual or a trust institution, a person, persons, acting for the benefit of another party. The individual or institution responsible for acting in the best interests of another party. Fiduciaries are bound by law to put aside personal interests and act in good faith when making decisions for the benefit of another.
Foreign Corporation – A corporation organized under the law of another state or country.
Funded Insurance Trust – A trust with assets which could be an insurance policy and/or other kinds of property.
Joint Tenancy – aka Joint Ownership – An undivided interest in property held by two or more persons, who all hold the same title and rights of possession, at the same time, jointly, and under which the survivor or survivors take the entire interest.
Judgment Proof – A person without assets or concern of lawsuits.
Jurisdiction – The authority of a court to determines legal cases.
Land Trust – Commonly referred to as an Illinois Land Trust, for houses, property, or other real estate (or notes and mortgages secured by real estate). Unique features for land ownership.
Last Will – Literally, the will last executed by an individual, which revokes any former existing wills.
Letters of Administration – Documentation signed by the probate court give a person authority to act on behalf of an estate.
Law of Contract – The basis upon which many contracts exist (as opposed to the Law of Statutes). The right to contract was exposed and granted by the U. S. Constitution.
Law of Statute – Laws based on a single State of the United States. Usually binding in other states, but based upon state law. Most attorneys assume contracts are based upon the local state law, unless stated otherwise within the contract. Also, most attorneys will create contracts based upon their local state laws, because their license, training, and background are similarly based.
Lawyer – “A licensed person representing the court practicing law, not necessarily justice.”
Legal Ownership or Legal Title – An estate or interest in property which is enforceable in a court of law.
Lien – A hold upon property until payment of a debt or duty.
Life Estate – Only a benefit during the life of a person.
Lis Pendens – “Suit pending”; notice of action.
Living Revocable Trust, Living or “Inter Vivos” Trust – A trust created during the lifetime of the creator.
Living Will – A legal document in which an individual states, in advance of final illness or injury, his or her wishes regarding procedures and equipment designed to extend life.
Massachusetts Trust – See “Business Trust”.
Nevada Trust – A trust created based upon Nevada Law because of favorable laws regarding state taxes.
Notary Public aka NOTARY – A person that attaches a signature and Seal by a Notary Public signifying that a specific person(s) has personally signed a document. Sometimes also attesting that an oath was stated as well.
Passive Trust – A trust regarding which the trustee has no active duties to perform, being merely a titleholder or holding entity.
Perpetuity Law – Any limitation or condition which may take away or suspend the power of alienation for a period beyond life or lives in being and 21 years thereafter.
Person – Either a human being, corporation, partnership, trust, or other entity, unless shown that only a human being is intended.
Personal Property – All property other than real property.
Petition – Documents filed in probate court to request that an action be taken, such as a petition to open an estate for probate.
Power – Authority or right to do or to refrain from doing a particular act, such as a manager’s banking power.
Power of Appointment – The power given by an individual to another in a will or trust document to determine which persons will receive an interest in his or her estate.
Power of Attorney – A legal document authorizing one individual to act as the agent or “attorney” for another (the “principal”). If the attorney is authorized to act in behalf of another for all matters, he or she has general power of attorney. Authority to act solely regarding specified situations is special power of attorney. If the authority granted extends beyond the disability of the principal, the attorney has durable power of attorney.
Preference – The payment of certain types of creditors before other creditors.
Principal – In either a trust or a will, the real and personal property which initially makes up the corpus of the estate or which is subsequently transferred thereto from which income is produced; or in an agency relationship, the principal is the individual who authorized another to act on his or her behalf, which individual is also known as an agent.
Private Asset Trust – A trust created for the privacy, protection, and benefit of a designated beneficiary or designated beneficiaries, such as a trust for the benefit of the settlor’s or the testator’s spouse and children. Beneficiaries may (or may not) be aware of the trust or its’ terms.
Probate – Procedures which are followed under court direction and supervision to allocate property with (or without) a will. The court system takes authority over the assets of the estate of an individual and determines validity, distribution, and appoints a legal representative to manage the affairs for a large fee.
Probate Court – The court that has jurisdiction with respect to wills and intricacies and sometimes guardianships, adoptions, etc.; also called court of probate (Connecticut); surrogate’s court (New York); Ordinary Court (Georgia); Orphan’s Court (Delaware, Maryland, New Jersey, Pennsylvania); and Perfect’s Court (New Mexico).
Probate Fee – A fee pertaining to probate. Usually in addition to lawyer fees and court costs.
Pro rata – A portion of value based on percentage amount.
Prudent Investor Rule – Legal term that refers to the duty of the fiduciary to invest and manage assets in the best interests of another.
Prenuptial Agreements – Agreements made before marriage about what will result of each spouse’s assets and belongings they owned before the marriage in case of a divorce.
Property – The assets that are owned by a person. Quite often refers to real estate, or an interest in real estate.
Public Administrator – In many states, a public official whose main duty is to inventory, protect, move, and control all assets until a court determines the settlement of the estate of persons who died without appointed individuals and have assets not in a trust.
Pure Trust – An irrevocable trust arrangement, based on the Laws of Contract, that does not have a Grantor, which that holds fee simple title to the trust assets, and has a termination date. The beneficiaries of which are the holders of Trust Certificate Units (TCU’s). Additionally, the trust must not contain three of the following: Centralized management, Continuous Life, Easy transfer of beneficial interest, or Limited personal liability of trustees. Commonly abused by tax resistors and promoters. Not recommended.
Qualified Personal Residence Trust (QPRT) — allows an individual or married couple to gift up to two homes to their children and continue to live there. The purpose of a QPRT is to remove the value of a grantor’s primary or secondary residence from their taxable estate, and insulating it from creditor claims.
Qualified retirement plans – IRAs and 401(k)s provide an extra layer of asset protection as well as a tax deduction for contributions.
QTIP – Inter Vivos Qualified Terminable Interest Property Trust – this spousal trust protects assets from creditor claims for both spouses.
Quit-Claim Deed – A legal instrument by which one conveys all of his right, title and interest in real estate to another without giving any guarantees of any kinds as to what, if any, that right to, title, or interest in the property is.
Real Estate – The right, title, or interest that a person has in real property that legally are classified as real; opposed to personal property.
Real Property – Land and that which is attached to the land.
Reciprocal Trusts – Trusts made by two or more persons that make reciprocal provisions in favor of each other.
Recordation – Notification to the public by filing with a government recorder that confirms trust existence.
Remainderman – In the case of a trust, this term refers to the individual who will receive the principal of a trust when final distribution takes place.
Revocable Trust – A trust which by its terms may be terminated.
Rule against perpetuities – A rule of common law that makes void any estate or interest in property so limited that it will not take effect or vest within a limited period of time.
Settlor – An individual who establishes a trust in order to transfer property. (See Grantor)
Simple Trust – (a) Simple; (b) Short, readable, singular purpose; per IRS Code that:
- Is not a grantor trust or required to be treated as a grantor trust;
- Is required to distribute all income annually; and
- Does not distribute the corpus of the trust or make charitable contributions.
SPA Trust – Special Power of Appointment Trust – Most trusts allow and provide for the power to appoint additional or replacement trustees.
Special Needs Trust – A special needs trust can help by paying for things to improve quality of life that the government will not generally pay for; education, cultural events, travel, computer and media equipment, gifts, and books. It can be established for an adult of any age, and anyone can contribute to the trust.
Spousal Gifting Trust – if you’re married, you and your spouse can create a Spousal Gifting Trust to protect assets against estate taxes and creditors, while retaining the control and use of those assets.
SS-4 – The application form that is used to apply for a federal tax identification number with the IRS.
State Inheritance Taxes – Only pertains to assets or residents in certain states.
State Law – See “Law of Statute”.
Successor Trustee – or Successor Executor – An individual or institution taking the place of a trustee or executor unable to continue the responsibilities designated in the trust agreement or will.
Summary Administration – A simplified probate proceeding for estate valued at less than a stipulated amount (see state statues) and holds no real property.
Taxes – Trusts are not required to file a tax returns, provided that the tax reports on all items of income and allowable expenses are reported on a personal Form 1040, U.S. Individual Income Tax Return.
TCU’s / Trust Certificate Units – In a Pure Trust arrangement, the division of the right to receive distributed income and right to receive corpus at termination, into 100 units which represent one percent each of those rights.
Tenancy-in-Common – A form of shared ownership where there is no right of survivorship. Tenants-in-common can own property in unequal shares, unlike joint tenants who each won an equal share of the property.
Testamentary Trust – Any trust which is established by will, or does not take effect until the death of the Settlor.
Testate – Leaving a valid will. Testator – A person who leaves a will or testament in force at their death.
Title – Legal ownership of property. (see transfer by title article)
Totten Trust – A simple savings bank trust, revocable at any time before the death for the depositor/settlor.
Trust – A legal, fiduciary relationship in which an individual or institution (the trustee) holds legal title to property with the responsibility for keeping or managing this property for the benefit of another person or beneficiary.
Trust Agreement – A legal document that establishes a trust and outlines the rules and guidelines affecting its management and disposition.
Trust Fund – Property held in trust. This term originally applied only to money held in trust, but is frequently used when referring to all property held in trust.
Trust – A relationship in which one person (the trustee) holds title (often subject to a number of conditions) to property for the benefit of another person (the beneficiary). A trust is commonly used when money is left to people inexperienced in its management such as children or as a tax saving device. A testamentary trust is one established by a will.
Trust Deeds – See “Deed of Trust”.
Trust Organization Bylaws – Rules determining operations of trust.
Trustee – (a) The only person(s) in control (with power); (b) The person(s) appointed conserve and administer the assets of the trust for the beneficiaries; (c) The trustee holds legal title to the trust assets and is required to administer the trust on behalf of the beneficiaries according to the express terms and provisions of the trust agreement. A fiduciary is an individual or organization charged with the duty to act for the benefit of another. NOTE: A trustee is always a fiduciary.
Trustor – Same as Creator, Grantor, or Settlor.
U.B.O. BUSINESS TRUST – See “Business Trust”.
Unified Credit – A federal tax credit that offsets gift and estate-tax liability. (see unified Credit & estate tax charts)
Will – A legal document in which a person states who he wants to inherit his property, etc.