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Asset Protection Basics

You are you and I am I. Sound silly? Well, let's see. If someone comes after me, be it an attorney or one of several alphabet agencies, can they get your stuff because they are coming after me? "Of course not! That is silly," you might say. But there is an important point in asking. Did you ever stop and think why someone can't get your stuff for my liabilities? This addresses a very fundamental right recognized even by today's government. And that is the right to own property. i.e. private ownership. If it is mine it can't be yours. (assuming there isn't joint ownership). You and I are separate legal entities. Now let's take things a step further. The law also recognizes trusts as separate legal entities. They can own things just like you and I. Whatever you can own, a **Constitutional Pure Trust can also own. And what belongs to the trust is the trusts, what is mine is mine and the twain shall never meet. So the first and most fundamental element of asset protection is separation. When property is held in a **Constitutional Pure Trust, which is irrevocable it is the property of that trust and not my property. A trust is it's own separate entity and owns it's own property just like you and I. No one owns a trust. To restate it simply, property that belongs to "someone" else isn't mine. And if it isn't mine, it can't be taken from me. The second principle of asset protection addresses the extent of separation. If I own property in my name and my wife owns property in her name, someone coming after me may try to get her stuff (even though it is hers and not mine) simply because we are connected by marriage even though separate persons. However if we are talking about your property and mine , there is no chance of that happening. Simply because you and I have no connection whatsoever. The extent of the separation between you and I is greater than the separation between my wife and I. In the asset protection arena a living trust is a good example of this same concept of the extent of separation. Living trusts are great vehicles for avoiding probate. However most are revocable and therefore do not have a great deal of separation from me as long as I am living. Therefore they provide no protection of property. If I am sued, a living trust can be revoked as if it never existed and the underlying assets seized as if they are mine. This is not the case with an irrevocable trust however. Once property is gifted into irrevocable Trust, (or exchanged in the case of a Pure Trust) I can't change my mind and pull it back out. It is now the property of the trusts and no future event can change that. That decision is irreversible or irrevocable. But for that same reason it is as separate from me legally as it can be. So, the greater the separation the greater the protection. (BUT unlike a living trust, an irrevocable Pure Trust protects property and eliminates estate taxes as well as avoiding probate. In short everything a living trust can do a Pure Trust does AND much more). So property separated from me is protected from my liabilities. The greater the separation the greater the protection. But property must not only be separated from me it must be separated from other property. Which brings us to our third principle of asset protection. A trust is also a "person" by law and therefore can be sued just like any other person. So we want to separate property from property for the very same reason we separate it from ourselves. For example, let's say a trust owns a car, a house, a boat, several stocks and so on. What if the car is in an accident and the owner of the car, in this case a trust, is sued.

What is at risk? Everything else owned by the owner of that car. Now what if a trust owned that same car, but another separate trust owned that same house and another the boat and so on, what is at risk if the car is in an accident now? Only the car! Simply because that is all that trust owns and the trusts owning the house and boat are separate entities from the one that owns the car. To state this another way we can say to separate is to isolate and insulate. Once you understand these 3 fundamental principles of asset protection, 1. Separation of property from oneself. 2. The greater the extent of separation the greater the protection. 3. Separation of property from other property. Everything else makes more sense. There is also one more principle regarding protection that is unique to **Constitutional Pure Trusts over all other forms of asset protection. Constitutional Pure Trusts are separate from statutory regulation. What this means is simply that they exist outside the realm of attorneys, the courts, the government and so on. (as long as they are not engaged in activities that are illegal, which could pull them into the statutory realm). This is hard to comprehend by many. We have been led to believe that statutory law has universal jurisdiction over any and all activities, but it does not. And because Pure Trusts do not fall into the statutory realm, they are often completely unheard of by the vast majority of attorneys and misunderstood at best or even despised by some attorneys as well as CPA's. They are simply outside the scope of statutory authority and therefore outside an attorney or CPA's expertise and government regulation. It would be comparable to the Medical communities' attitude towards vitamins and a natural approach to health. These do not fall in the medical communities area of expertise therefore they know little about them at best or condemn them and seek to eliminate them at worst. In short what we don't know of, have control over or understand is often a threat. And just as Doctors are taught virtually nothing about nutrition in medical school, lawyers are taught virtually nothing about Constitutional law in law school. But, you may ask, "if Constitutional Pure Trusts are not part of the statutory realm, by what authority do they exist?" None less than the Constitution of the United States, Article 1 section 10, under the right to contract. But, you may wonder, "isn't the Constitution a statutory document?" No, it is a common law document, just as Constitutional Pure Trusts are. In truth what makes CPT's so unique is they are not trusts at all by statutory definition ( which is why you will find virtually no information about them in "law" books or statutory regulations ) but are contracts in trust form. Trusts as defined by "the law" ( statutory ) operate in the statutory realm and therefore come under statutory regulation. CPT's do not, which makes them private and protected contracts, free from the "interference" of unwanted parties. This may be the most important form of separation which makes CPT's unique to all other forms of asset protection and therefore the best means of asset protection.

Trust Frequently Asked Questions

from http://www.f-f-a.com/faq.html Q. WHERE DO TRUSTS COME FROM?

A. Trusts have a long history of usage. Plato used a non-profit Trust to finance his university in Greece around 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 the Courts of Chancery. Many burdens and conditions fell upon the holder of legal title to real estate. For example, the lord of the land was entitled to relief or money payments when the land was passed on to an heir of full age. 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. 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. There were nearly 100 other taxes and limitations on the ownership of land. It was to avoid these restrictions that Trusts were first created in England. They were designed to avoid the application of these rigid laws by allowing the Creator to vest legal title in a Trustee on behalf of a wife, son, daughter or other person as beneficiary. They had many advantages, not the least of which was secrecy. Trusts were also used in English history to allow religious organizations to use property charitably bestowed which would otherwise not be possible 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. Pure Trust organizations arrived in America with the colonists. The first **"Pure Trust" of record was drafted for Governor Robert Morris of the Virginia Colony, a prominent financier of the American Revolution, by the famous attorney and patriot, Patrick Henry, in 1765, 24 years before the adoption of the Constitution. Known as the North American Land Company, this Pure Trust is still in operation today, over 200 years later. William Bingham, reputed to be the richest American when the thirteen colonies won their independence, started a Pure Trust for his vast estate in 1804. The Trust owned two million acres in Maine which sold about the time of the Civil War. Bingham, a Senator from Pennsylvania in the Second United States Congress, owned vast land holdings. 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 liquidation of assets. Throughout the years, the incomes from property and proceeds from land sales were distributed to the beneficiaries. At the time of liquidation, it had no termination date. During its period of existence it was not affected by the death of its Creator, succeeding Trustees, probate procedures, or death transfer taxes. One of the 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 the royalty payments from the iron deposits and distributes the royalties to the holders of Mesabi's certificates of beneficial interest. Following the transfer of assets from the company to a Pure Trust, Mr. Arnold Hoffmann, then president of the Mesabi Iron Company, announced in the Wall Street Journal on March 14, 1961, that a ruling by the Commissioner of the Internal Revenue declared the Trust would not constitute an association of persons taxable as a corporation. 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, and headed his business until his death in 1931. His two sons, Ralph J. and Charles, succeeded the elder Hines as Trustees of the Trust and retained Trusteeship of their father's Trust after a court fight instituted by two nieces, a sister, and a nephew sought to break the Trust by claiming the administration of the family estate had been erroneous. The court ruled that the Pure Trust was not an erroneous method of managing the assets, and was in fact, a valid and legal arrangement for

the estate. Ralph J. Hines, the eldest son and head Trustee, died in 1950, and again the family assets held in the Pure Trust were not disturbed by estate and inheritance taxes. The younger brother, Charles, subsequently became the head Trustee, handling the Trust for many years. Preserved, intact, for future generations, the Edward H. Hines Lumber Company is still in operation today. Another example of the Pure Trust used for a family estate is that of the Joseph Kennedy family. Joseph Kennedy, father of John F. Kennedy, originally established a Pure Trust to own the famous Chicago Merchandise Mart. The Kennedy family is known to maintain several other Pure Trusts for tax shelter purposes as well. One such Trust was reported in the Chicago Tribune. March 22, 1947 with the caption: "Kennedy Divides Merchandise Mart." "A Trust agreement formed several years before, in which Kennedy's wife, Rose F. Kennedy, and a long time friend and associate, John L. Ford, joined as Trustees, helped to materially distribute ownership in the 30 Million Dollar Merchandise Mart, among members of the family. It is said that many of these Trusts are domiciled in the Fiji Islands of the South Pacific." Things have since gone well for the Kennedys. Do you think they enjoyed any tax benefits from how things were set up or were they just exceptional business managers? The below article was recently released in the Associated Press. TUESDAY, JANUARY 27, 1998 Kennedys Sell Last Business AP CHICAGO, Jan. 26 -- "The Kennedy family said today that it had sold its last operating business, the Merchandise Mart in Chicago, in a $625 million deal that unloaded a substantial portion of the family's property holdings. The buyer, Vornado Realty Trust of Saddle Brook, N.J., will pay $465 million in cash, assume $50 million in debt and offer $110 million in securities. The deal also includes other properties in Chicago and in the Washington area. The Merchandise Mart, the centerpiece of the deal, was completed in 1930 by Marshall Field & Company, the retailer, and bought for $12.5 million in 1945 by Joseph P. Kennedy, the family patriarch. The sprawling, 25-story building of limestone and terra cotta is a national center for the home furnishings and design industries, and it remains one of the world's largest commercial buildings. At 4.2 million square feet, the Mart has its own ZIP code and was the world's largest building until the Pentagon was built, in the 1940's. In the deal, the Kennedy heirs will receive a stake in Vornado, one of the nation's largest real estate investment trusts. Most of the Kennedy fortune is in securities, such as stocks and bonds". William Waldorf Astor created a Fifty Million Dollar Trust estate by a conveyance to Trustees, recorded in New York, August 15, 1991, thereby saving his heirs several million dollars which would have gone for probate costs and death taxes had the estate been distributed by the court instead of Trustees. The Rockefeller family has used various kinds of Trusts as a means of maximizing privacy. Before his death in 1937, it is reported that John D. Rockefeller tucked much of his fortune into about seventy Trusts for his descendants. This vast web of individual and group funds represent assets of considerably more then One Billion Dollars. Nelson A. Rockefeller and his generation are believed to have reduced their personal holdings by the creation of still more Trusts for their own grandchildren and great grandchildren. It has been reported to one source that there are "well over 100 and perhaps 250 Individual Rockefeller Trusts". Many of these Trusts are known to be Pure Trusts placing the funds beyond the reach of the high cost of probate. H.L. Hunt, the Texas oil billionaire, is reported to have paid $75,000 for the setting up of the first Hunt family Pure Trust. Hunt then created at least twenty-five additional

Trusts many of which seem to follow the names of the Hunt family members as follows: 1. Ruth Ray Hunt Trust Estate - This Trust owns a large percentage of the Hunt Oil Company, estimated to be worth in excess of One Billion Dollars. 2. Caroline Hunt Sands Trust Estate - This Trust is estimated to be worth at least One Hundred Million Dollars. 3. Ray Lee Hunt Trust Estate - This Trust bought the Jefferson Dallas Hotel in downtown Dallas, Texas. Ray Hunt called the purchase by his family's Trust an excellent investment according to the Dallas Morning News. 4. Nelson Bunker Hunt Trust Estate. 5. Ruth Jane Hunt Trust Estate 6. Helen Hunt Krelling Trust Estate 7. Swanee Hunt Trust Estate 8. Hassie Hunt Trust - This Trust is involved in the new exploratory oil drilling efforts in the Permian Basin of West Texas and Southwestern New Mexico. Some persons who claim to have been close to the Hunt family estimate that there may be as many as 200 Hunt family Trusts now in existence. The death of H.L. Hunt has not affected any of these Trust estates. The family has successfully arranged their affairs so as to increase the estate generation after generation rather than see the estate cut to shreds by the high costs of probate. Even Ronald Reagan has established such a Trust. Created in 1966, the "Ronald Reagan Trust" has enabled him to enjoy sizable tax advantages. While maintaining a magnificent living standard, Mr. Reagan has, in some years of Trust operation, been free of tax obligations. These are but a few of the many family estates that are preserved generation after generation through the use of the Pure Trust organization.

Q. WHAT IS A TRUST?
A. A trust is a three party contract, a private legal agreement. The Trust is based upon the "Indenture", which expresses the agreement between a person, (Grantor/Creator), who places assets in a Trust, and the (Trustee), an individual entrusted with, the protection, management and ultimate distribution of the (Trust Corpus) assets for the persons, (Beneficiaries), entitled to benefit from the assets and/or income held under the terms of the indenture.

Q. WHY A TRUST?
A. There are various reasons for considering a trust. Asset protection, Business organization, Protection from liability, Avoidance of probate, Relief from high personal income taxes to name a few.

Q. WHAT KIND OF TRUSTS ARE THERE?

A. Black's Law 6ed. lists more than 80 different and distinct types of trusts that are legally recognized and acknowledged.

Q. WHAT IS THE TRUSTEE?

A. The Trustee is the person into whose control the assets have been-transferred. It is the duty of the Trustee to ensure that the instructions of the indenture are carried out and the beneficiaries' interests protected.

Q. WHAT ARE BENEFICIARIES?

A. A Beneficiary is any person or persons or any other legal entity, including another Trust, that has rights to future beneficial distributions according to the terms of the Trust Indenture.

Q. WHO CAN BE THE BENEFICIARY(IES)?

A. Anyone may be the beneficiary of a trust. That includes children, nieces, nephews, grandchildren, a partnership, corporation, charitable or non-profit organization or trust. The fact is that any "person" living or artificial may be the beneficiary of a trust.

Q. WHAT IS THE INDENTURE?

A. An agreement between the Grantor/Creator and the Trustee that is drawn up in order to define the desires or concerns of the Grantor/Creator. While the specific instructions in the Indenture may vary greatly from case to case, the necessary features are: Naming of the Trustee. Defining the terms and conditions under which the Trustee can be removed or resign. Defining the Trustee's powers and restrictions and responsibilities. Describing the assets or initial Trust Property Naming the Beneficiaries. Naming of the Grantor/Creator, the person who conveys the initial assets to the Trust Corpus.

Q. IS IT IMPORTANT THAT THE TRUST BE IRREVOCABLE?

A. ABSOLUTELY!! A revocable Trust is one in which the Creator can change its mind and cancel the contract, thereby taking back all assets placed into the Trust. As a result, a revocable Trust provides no protection of the estate from future claims against the Creator. Say, for example, that for no reason at all, someone sued you, and due to inexperience, lack of knowledge on your part, or perhaps even incompetent legal advice, a judgment is obtained against you personally. In the case of a revocable Trust the judgment creditor could force you to revoke the Trust to allow access to assets to satisfy the judgment regardless of how the judgment was obtained. Since the purpose of the Trust is to preserve and enlarge the estate, you would not want this type of attack to diminish the assets of the Trust. In addition, if you revoke the Trust and the assets return to you, there is no gain in probate savings. In some jurisdictions, even if you die before the Trust expires, the asset value of the revocable Trust is placed in your estate for probate. Under federal law, the value of the revocable Trust is placed in your estate for federal estate tax purposes. To maximize the benefits of a Trust it should be irrevocable. To obtain the maximum benefits from a Trust, It should last for at least twenty-five years. There is no "rule against perpetuities" for Pure Trusts, since the Constitution says that there can be no legislating of contracts. However, contracts must have a "time certain" for performance, so a contract can't go on forever. For this reason a Pure Trust has a renewable term provision that is usually included as a part of the Trust document.

Q. IS A TRUST THE SAME AS A WILL?

A. A trust is quite different from a will in that a will is a letter to the Court providing instructions for assets to be distributed after a death. A Trust is a contract which contains instructions (the indenture) on how assets are to be handled while the

Grantor is alive. At the death of the Grantor, the minutes of the Trust delineate what, if anything, is to be done and when, and how. A trust serves as a substitute that is far superior to a will.

Q. WHAT ARE THE BENEFITS OF A TRUST?

A. The proper use of the proper trust allows one to : Preserve and protect assets Defer, or eliminate estate tax liability Increase opportunities for accumulation of wealth and estate growth Isolate assets from litigation and liens Create a family estate plan that will work for generations Privacy Avoid lawsuit & judgment losses Enjoy Privacy in business Utilize Asset and income diversification Provide for custody of children's funds Protection for retirement savings Avoid probate and estate taxes Facilitate the transfer of the estate to the heirs Protect assets in the event of bankruptcy Protect assets in the event of a divorce

Q. CAN A TRUST OPERATE A BUSINESS?

A. Yes, Trusts are and have long been recognized as legitimate entities that can be or own businesses, land, farms, manufacturing, rental property, etc.

Q. WHAT IS THE SINGLE GREATEST CONCERN PLAGUING WEALTHY INDIVIDUALS AND BUSINESSES TODAY?
A. We live in a society where litigation and punitive taxation have become the greatest means of depleting wealth. As a person accumulates wealth they become a target for either some arcane or obscure tax or liability through a law suit where the award can easily exceed the limits of the insurance, completely wiping out the company and the company's owners or officers.

Q. IS THERE AN EFFECTIVE LEGAL SOLUTION TO THIS CONCERN?

A. Yes. The FFA Trust System can effectively protect assets from potential litigants and creditors. It allows an individual family or business to defend assets against unanticipated claims. In addition it is effective in deferring many kinds of wealth depleting taxes and yet maintain a great degree of flexibility. FFA has assisted over 7000 clients for 14 years in addressing these matters.

Q. WHAT IS ASSET PROTECTION PLANNING?

A. Asset protection planning is the adoption of advance planning techniques which place assets beyond the reach of future potential creditors. In our system, it does not involve hiding assets, nor is it based upon secret agreements or fraudulent transfers. It is based upon a time proven and Supreme Court proven system of using trusts to hold family and/or business assets.

Q. SHOULD MY BANK SET UP MY TRUST AND BE THE TRUSTEE?

A. A very large number of Trusts today are set up and run by banks. Some people seem to be quite happy with this arrangement and apparently completely trust the bank's qualifications to manage their assets. Most banks will insist on having full control over the assets, including the power to sell and invest them as they see fit without any input from you or reliance on your experience managing these assets. In addition, if the bank should choose bad investments and lose all of the Trust's assets, it would be extremely difficult, if not impossible, to hold the bank accountable for its judgment in making those investments. As a rule, banks have an atrocious track record overseeing Trusts. With the Pure Trust you have the ability to choose those individuals whom you deem trustworthy and qualified to handle those assets you have worked so long and hard to accumulate.

Q. SHOULD AN ATTORNEY HELP SET UP THE TRUST?

A. It is not easy to find a competent attorney knowledgeable in Pure Trusts and willing to assist you in creating one. The business of probate constitutes an extremely large portion of the legal profession's income source. Not known for their altruism, it is highly unlikely many attorneys would sever this lucrative source of revenue. Many lawyers have turned down judgeships to remain probate attorneys. Probate attorneys are very well paid, especially in terms of the amount and difficulty of the work involved. When Norman Dacey wrote, How to Avoid Probate the American Bar Association fought unsuccessfully all the way to the Supreme Court to prevent publication of the book. As well as denouncing the probate racket, Mr. Dacey claimed that less than 1 % of all attorneys understand the intervivos or living Trust. Those attorneys who do understand Pure Trusts will share the knowledge with their colleagues and use it for their personal benefit but almost never on behalf of their clients. They just do not want to lose the probate business. Four studies over the last decade confirm that ten to twenty percent of an estate is a reasonable probate fee, a fee that goes directly to lawyers and in many states laws prevent the public from knowing about these attorney fees.

Q. I CARRY SIGNIFICANT LIABILITY INSURANCE COVERAGE - WHY SHOULD I BE INTERESTED IN ASSET PROTECTION?
A. If you review your insurance policies, you'll find that they may not cover you for punitive damages or intentional wrongdoing. Additionally, a claim can always be made which will exceed your coverage. As an aside, who is a better target; a person with little or no assets, or a person with liability insurance?

Q. I ALREADY HAVE A LIVING TRUST. DOESN'T THIS PROTECT MY ASSETS?

A. Simply put, NO. The revocable living trust can be a useful estate planning tool, which, when properly funded, will result in the avoidance of the probate process for the assets transferred to it, but it affords no protection from your creditors. If you get sued and lose, a court can order you to revoke the trust and pay the creditor.

Q. HOW DOES A TRUST PROTECT ME FROM LAW SUITS?

A. Many times the decision whether or not to sue is based on the amount of assets the potential target has. Assets held in trust are not legally yours. This fact alone will dissuade many potential litigants from starting legal action. If it is too difficult to get to the assets, often times that is enough to prevent the suit.

Q. WHY CAN'T I JUST HIDE MY MONEY IN A FOREIGN ACCOUNT?

A. While investing funds in a foreign account may prove to be a worthwhile investment, any asset protection planning which depends upon hiding assets or

secrecy is potentially doomed to failure. You still have to have a mechanism to get the assets back to you. With proper structuring, a Pure Trust Organization may be used with foreign entities to legally remove funds from the US (tax free) and put the funds into international circulation.

Q. IS THIS ALL LEGAL?

A. Yes, prudent planning and structuring to maximize your efforts and protect assets is not only legal but smart. There is no federal law nor any state law that restricts you from doing what is in the best interest of your business and family.

Q. CAN ASSET PROTECTION WORK IF I AM CURRENTLY IN LIT IGATION?

A. In many cases, yes, although your planning options are ordinarily narrowed under such circumstances. Unfortunately, many people first seek to protect their assets after they have been sued or otherwise incurred an obligation. In such cases there are fraudulent transfer laws (in all states) which permit a court to set aside transfers made at the "eleventh hour". So, it makes sense to have restructuring completed before litigation is on the horizon. It can, however, be very helpful during and after litigation, as well. For more information on this click here.

Q. CAN CREDITORS SEIZE TRUST PROPERTY TO SATISFY PERSONAL DEBT?

A. The Supreme Court confirms that a trustee can not be held liable for trust debts, nor may a trust be held liable for a trustee's personal debts.

Q. HOW LONG BEFORE OUR LEGISLATURE LIMITS THE POWERS OF THESE TRUSTS?
A. Trusts come under congressional review from time to time. The result has been that Trusts remain a "protected" entity. In addition to that, there are certain very fundamental guarantees prohibiting the restricting of the "right to contract" (Article I Sec. 10 US Constitution) not to mention numerous laws in the US Code specifying the penalties for interfering with the right to contract. Not to mention, it's unlikely that trusts will be seriously legislated on because many of our legislators enjoy the benefits of Pure Trusts.

Q. CAN YOU ELABORATE ON HOW A TRUST CAN HELP AN INDIVIDUAL REDUCE HIS TAXABLE LIABILITY?
A. From a tax standpoint, it is simple, income that is yours is taxed to you. Trust income is taxed to the trust. Properly established and maintained Pure Trusts are not taxable entities.

Q. WHAT IF I GET SUED? WHAT HAPPENS TO THE TRUST ASSETS?

A. The TRUST assets belong to the TRUST. Your assets belong to you. If someone sues you, they can not get what is owned by the TRUST. If you have already passed ownership of your assets to the TRUST, then no one can get at them if they are suing you, the individual.

Q. CAN THE TRUST BE SUED?

A. Of course it can. It is a legal entity unto itself. The only liability the TRUST has is it's assets. If the TRUST has limited assets, you have no worries. If it was to lose a lawsuit and have a judgment filed against it, the only thing they should be able to get is the current assets of that TRUST. The trick here is to ensure that any Trust liable to suit has no assets. Keep trust assets out of the way of potential liability.

Q. CAN THE TRUST SUE OTHERS AS WELL?

A. Yes! If the trust has cause for initiating legal action then the trust may sue.

Q. WHAT IF I SHOULD GO BANKRUPT?

A. As a Trustee, Managing Director, or Beneficiary, going bankrupt will have no effect on the assets of the TRUST because neither of the above own those assets.

Q. WHAT IF I SHOULD GET A DIVORCE?

A. A divorce has no effect on the assets of the TRUST. Again, those assets are owned by a third entity, the TRUST, and not one of the parties involved in the divorce. One thing to note is that once assets are transferred to the TRUST, neither party has any marital rights to those assets in the event of a divorce. If you feel there may be a problem with an upcoming divorce, it's best to resolve the custody problems first, before considering a TRUST for family matters.

Q. CAN ARTIFICIAL ENTITIES HOLD THE POSITIONS, GRANTOR/CREATOR, TRUSTEE, AND BENEFICIARY?
A. Yes! Any legal entity such as a Corporation, Partnership or even another Trust can hold the position of either the Grantor/Creator, Trustee or Beneficiary.

Q. WHAT IS A TRUST CERTIFICATE (TC)?

A. A Trust Certificate is similar to a share of stock. The difference is that while a share of stock represents voting power and equitable ownership of a sort, a Trust Certificate represents only the right to future beneficial distributions, if any. The TC has no ascertainable value, this means that no income or gain tax can be assessed to the holder of a Certificate(s). Trust Certificates cannot be sold, pledged or used as collateral.

Q. IS THERE A NEED FOR A WILL IF EVERYTHING IS IN A TRUST?

A. No, not really. The TRUST is all an estate needs to direct the proper distribution of profit and assets. You've already transferred ownership of your assets to the TRUST. Now, it's just a matter of who controls those assets. The one thing you want to keep current is the Successor-Managing Director that will take over the control of the asset's upon YOUR incapacitation,death,or at your request. The Trust will remain intact and undisturbed but control will pass to someone else that YOU designate NOW, at the time of setting up the Trust. If you do have assets that are not held by the trust, even though you have most assets in a trust, you will want to have a will or a will substitute directing the disposition of those assets.

Q. HOW DO MY HEIRS TAKE OVER UPON MY DEATH?

A. If your heirs are the beneficiaries of the Trust, there is no change needed. If your heirs simply want to CONTROL the assets like you did before your death, you need to make sure their name is established as "Successor Managing Director" in the appropriate Minutes. That way, in the event of your death, they automatically take over your position as Managing Director. This way there is no probate or estate transfer taxes.

Q. IS THIS CONSIDERED MY TRUST?

A. NO! You are in control of the TRUST if you are the Managing Director, but it is NOT YOUR TRUST! It is not the Beneficiary's trust, nor is it the Trustee's trust. It is an entity unto itself. The whole purpose of the TRUST is to set something up for the benefit of the Beneficiaries. You can say that you "manage a family trust" or you "manage a business trust", but you should never imply or say that it is YOUR TRUST. In fact, it is not the Beneficiaries' assets either until they are distributed to them upon termination of the Trust or some early distribution as allowed in the Trust Indenture and Bylaws.

You have to be VERY CAREFUL with the wording you choose when dealing with a Trust because there are many people trying to trip you up, mainly the IRS. They may ask questions as to who owns the Trust. NO ONE OWNS THE TRUST! The Trust is an entity unto itself. It is a separate entity set up for the benefit of the Beneficiaries who do not have a vested interest in the assets yet. Only the Board of Trustees has a vested interest in the assets, and yet, the asset's DO NOT FORM A PART OF THE TRUSTEE'S OWN ESTATE! It is totally separate!

Q. DO I STILL OWN THE ASSETS IN THE TRUST?

A. No. You will have exchanged ownership of the assets to the TRUST. You can still have "use" of the assets (i.e., cars, house, etc.) through contractual arrangements made in the minutes of the trust.

Q. DOES THE TRUST PAY FOR MY PERSONAL THINGS?

A. No. The Trust is established to manage assets for the improvement of the Trust. There are lots of things that you, as Managing Director can spend money on. However, if you want to pay for things for yourself with Trust assets, you must first earn a salary. You have a contract and receive compensation from the trust to manage it, and this is your personal income. Then you can buy what you need.

Q. HOW DO I KEEP MINUTES FOR THE TRUST?

A. It is very simple. You document any transaction that takes place, i.e. selling an automobile, buying a piece of real estate, opening a business, etc. You don't have to detail every aspect of each day's activity when running a business. Just the major decisions that are made with assets. debts. etc. Did you apply for a loan, buy new equipment, etc.? Many major decisions may require Trustee involvement. For example, the sale of real estate would require a Trustee's signature.

Q. HOW DO I EXCHANGE OWNERSHIP OF AUTOMOBILES AND HOUSES TO THE TRUST?

A. Automobiles are a little different in each State. What you do is go to the office that handles vehicle registrations and "add" another owner's name to the title (the name of the Trust you created). The actual procedure may vary from State to State. For homes and other real property, the procedure is basically the same with one exception. You "warrant" your ownership to the TRUST and the mortgage is not "due" like in a sale, the trust takes over payments. (Title 12 of the US Code includes provisions for mortgages in the event of exchange of property into trust.)

Q. WHAT ABOUT INCOME TAXES? DOES THE TRUST PAY INCOME TAX?
A. This is a discussion that could take days and still not answer everybody's questions as a whole. Individual tax situations vary from TRUST to TRUST just as they do from one person to another. Pure Trust Organizations (properly established and properly administrated) have no tax reporting requirements.

Q. WHAT KIND OF PROPERTY CAN BE CONVEYED INTO A TRUST?

A. A trust may own all types of property, real or personal, anything that 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, and what it purchases.

Q. WHY IS A TRUST BETTER THAN A CORPORATION?

A. Corporation - When a company incorporates, the Articles of Incorporation must be filed with the State Corporation Commission and then published with the area legal paper. Articles of Incorporation must then be filed with each state that a corporation has an office in. It can cause problems if the name of that corporation is being used by another corporation in that state. An annual report of officers, directors, and

stockholders must be filed, with a fee. A "corporate veil" can be pierced, and if it is, it often leaves corporate officers, directors, and stockholders subject to lawsuits and liable for all debts. "A business trust is a common law entity formed by contract, and thus, is not subject to the same types of state regulation as a corporation." Elliott v Freeman, 220 US 178 and Crocker v Malloy, 39 US 270. Trusts are created under the laws of contracts of the Constitution of the United States, and are not subject to the same regulations as corporations. A Trust can be, but does not have to be, recorded in the County of the State that it is created in.

Q. WHAT IS A PURE TRUST?

A. A PURE TRUST is one that is created in contract between three separate parties. Creator, Trustee, and Beneficiary. It doesn't matter if they are living persons or artificial entities (trusts, corporations, or partnerships) so long as there are three parties.

Q. WHAT IS THE DIFFERENCE BETWEEN A PURE TRUST AND A LIVING TRUST?

A. A living Trust is a trust that is made in anticipation of an event. The death of the creator (you). A Pure Trust is a trust that is made for the propose of managing assets now and also after the death of the person who creates it. A living trust offers some benefits such as avoidance of conservatorship while you are living. At death it does avoid probate and "Estate Recovery" in some states. A living trust is an entity which derives its existence from the laws of the state in which you reside which means that the rules can be changed any time. A Pure Trust on the other hand, is established by contract, where you live has little effect and it cannot be changed at the whim of a law maker or government administrator. A Pure Trust accomplishes all the things that a living trust does and more plus you don't have to die to enjoy the benefits.

Q. WHY HASN'T MY ATTORNEY TOLD ME ABOUT TRUSTS BEFORE?

A. Trusts have been in use for centuries. There is a lot of misinformation and misunderstanding about the law of trusts. Many attorneys are not going to inform you about trusts because they really do not have the knowledge. Norman Dacey mentioned, in his book "How to Avoid Probate", "I would put the proportion of attorneys who know about and recommend the inter-vivos (complex) trust as less than one percent" You won't find many books about trusts in any library, and most people would not read them if they were there. Therefore, the largest reason there are not more trusts today is simply ignorance or lack of knowledge. There is an old saying, "Attorneys make money settling people's estates, not planning them".

Q. IF A TRUST IS SO GOOD, WHY DOESN'T EVERYBODY HAVE ONE?

A. Most people aren't aware of the situations under which a trust could benefit them therefore, they don't seek out the information, and those who are aware do not divulge how assets are held for privacy reasons. It takes a certain amount of savvy to operate a trust. Even though there are amazing benefits and advantages to managing your finances in trust many people either out of lack of knowledge or desire overlook them. Trusts are a means of protecting and preserving wealth and securing your future and the future of your family. Many times those who are not afraid to stand apart from the crowd are the ones who earn the greatest reward.
** Some of the names also used for Pure Trusts are "Constitutional Pure Trust", "Pure Trust Organization", "PTO", "Common Law Trust", "Contract Trust", or "Constitutional Trust".

from http://www.freedomcommittee.com/5522/freedom/trust11.html Can the Trust use the banks? A Trust can have a bank account in its name. To maintain the privacy of an offshore Trust it is essential to use a foreign bank. At the present time, the IRS can gain access to domestic bank records regardless of what name the account is under. Should the Trustor/Settlor (Creator) have a beneficial (equitable) interest? No. If the Trustor/Settlor (Creator) maintains a beneficial interest and is also the Trustee, the Trust may come under IRC 676, a Grantor Trust. Basically, this means that the Trust and the "individual" are considered one person and there is no difference between the "individual" and the Trust. Can the Trustee borrow money? The Trust is authorized to borrow money. It is a separate entity (person). Until credit is established for the Trust, the Trustee can co-sign for the Trust. Remember, the IRS can summon any bank records. Can the Trustor or others add property to the Trust? Any property can be added at any time by anyone with the approval of the Trustee. However, the contribution would constitute a gift since the shares of capital units have already been distributed. Another option would be to sell to the Trust at fair market value. Can the Trustee sell property? The Trustee can sell Trust property at any time as long as it is done in the name of the Trust. Who can question or challenge a Trust? No one, not even the Capital Unit Holders can question or challenge the Trust. The Protector is the only one who can question the operation of the Trust. Can a business be owned in the Trust? The Trust can own any lawful business. The business does not necessarily have to have the same name as the Trust. All licenses, etc., for example, could be listed as ACME Trust d.b.a. Aggregate Gravel Company (d.b.a. means "doing business as").

Should I establish more than one Trust? When you have a business or substantial assets you should have a Total Asset Protection Package comprising a minimum of six Trusts. Every man or woman has different circumstances and needs and possibly one to three Trusts would be adequate. Can the IRS or anyone break the Trust? The only people who can break the Trust are the Trustor(s)/Trustees through their actions of not honoring the Trust and treating the Trust property as personally belonging to them. The Trustor/Trustee and all adult Capital Unit Holders, if they agree, can break the Trust by either written consent or petition to the court. Does the Trust have to be registered or recorded? The Trust generally does not have to be registered. Some states, by statute, require that statutory Business Trusts be registered. So each state's statutory requirements must be checked. The advantage to having it recorded is, if your original Trust gets lost or destroyed, the County Recorder can give you a certified copy. A one-page Synopsis of the Trust for recording is preferable. The disadvantage is that the Trust, its terms and property become public knowledge; the world is put on notice that the Trust exists. It is better to have duplicate copies with relatives or friends in the event the original is lost or destroyed. If I record the Trust, do I have to notify the County Recorder each time property is added? No. Once a Trust Synopsis is recorded, the County Recorder does not have to be notified that property has either been sold or added, other than the normal recording of real estate deeds. Is there a limit on property I must own in order to create a Trust? There is no minimum or maximum amount of property that can be held in a Trust. How many Trustees are allowed? There can be any number of Trustees, from one to several. Just remember the Trustees, whatever their number must be unanimous or at least a majority in their decisions or you end up with a stalemate that must be adjudicated by a board of arbitration or a court of competent jurisdiction. Can I assign salary or commissions to a Trust? You can transfer all or part of a salary or commission to a Trust in order to get the money under the protection of the Trust. However, the IRS takes the position that the

"individual" is still responsible for taxes due on the salary or commission. The Trust cannot report or pay any taxes on a person's salary or commission. In order to lawfully assign earnings to the Trust you must have the Trustee contract with the payor to pay the Trust. Can the IRS seize property or bank accounts that are in a Trust? Not for any liability of the Trustor, Trustee, Officers or CU Holders. If a Trust tax return was filed (which it should never do) and the IRS challenged the Trust and the Trustee did not argue the point, then the IRS will try to take the position that the Trustee and the Trust are one and the same (alter ego or nominee) for collection purposes. This is why it is important not to co-mingle assets, but treat assets (corpus) as lawful property of the Trust. Can I transfer real estate to the Trust and then immediately sell it? This will depend on whether or not a Trust tax return is to be filed. If a Trust tax return is filed, transferring the property would not save on the taxes you would report, if the property is sold within the first two years of transfer (IRC 644). If the purpose of the Trust is to protect the property only, the transferring of the property and immediate sale would not be a problem. Does the Trustee have to get a Trust identification number (EIN) from the IRS? Trustees do not need a Trust ID number from the IRS unless the Trust is: a) domiciled in federal territory, i.e., Washington D.C., the Virgin Islands, etc.; b) dealing in stocks or bonds; c) required by the bank to have an ID number on a savings account or interest bearing checking account established in the name of the Trust; d) receiving Trust "gross income" from United States "sources" (federal enclaves, insular possessions or territories) or are involved in "trade or business" within the United States (federal territories). Does the IRS have to be informed that I have a Trust? No. Technically, you don't own the Trust and you're not the Trustee, therefore you have no responsibility to admit or deny the existence of the Trust. Will the Trust make the Trustor exempt from taxes? The Trust will not make you exempt from taxes if you receive a salary or commission from "gross income." You, individually, are still responsible for any taxes on that salary, according to the IRS, if you are a "taxpayer" , you derive "gross income" from "sources" within the United States (federal territories) or are engaged in "trade or business" within the United States (federal territories). Does the Trustee have to file a Trust tax return?

No. See the IRS letter at the end of this document. How do I transfer property that has a mortgage or lien attached? On real estate that has a mortgage, a quitclaim or preferably a grant deed is recorded, transferring the property. Unless there is a due on transfer clause, the mortgage holder does not have to give permission. On vehicles where there is a lien holder, that lien holder must give his approval of the transfer before the title can be changed. This permission is in the form of a letter stating that: a) they acknowledge and approve the transfer and; b) they are still the lien holder. If the lien holder will not approve the transfer, filling out a "Bill of Sale" can transfer the vehicle. This "Bill of Sale" can be secured from any stationery store. When the loan is fully paid, the title should be transferred to the Trust. What if there is a divorce? There are three things married Trustees can do in the event of divorce: 1) keep the Trust in tact with both parties as Trustees; 2) both resign as Trustee and appoint someone else as Trustee; 3) decide how control of the property is to be divided, then transfer part of the property to another Trust with the same CU Holders. One of the Trustees may remain as sole Trustee of the new Trust, having resigned from the old Trust. Do real estate deeds have to be recorded? Yes. Most state statutes provide that although it is legal to not have a deed (color of title) recorded showing a transfer of property, such a transfer is held invalid unless and until the deed is recorded. What kind of records do I need to keep? The kind and the method of record keeping is up to the Trustee. It is best, however, to keep minutes, resolutions and receipts, canceled checks, etc.. These can be confidentially maintained in an envelope or storage box. How can I withdraw money from a Trust for personal expenses? Money for personal expenses can be taken out in the form of Manager, Trustee or fiduciary fees. Where do I keep the Trust? The Trust, being a common law contract, is not kept anywhere. It does not have to be set up in banks or with a lawyer, even though the Trustor(s) can do this if they choose. The Trust papers are generally kept wherever important papers are kept. The property of the Trust is kept wherever it is located. Money belonging to the Trust can be kept wherever the Trustee feels it is the most safe. A duplicate copy should be maintained with a relative

or a close friend as additional security. Business Trusts should be maintained at the place of business. Does having a Trust put me under equity law? Having a Trust does not put a person under equity law. The action or circumstance of any court action is what determines whether one is in equity or not. Theft would not be an equity action. A mortgage foreclosure is always an equity action. Tax Court is also an equity action where you enter as an "individual" or a Trust (In some states the courts have ruled that the common law will be followed in Trust actions). Can a Trust be sued? Under some circumstances a Trust can be sued, but only for its actions-such as foreclosure on Trust property when a mortgage or lien is not paid. It cannot be sued for any actions of a Trustor, Settlor, Trustee or Capital Unit Holder unless that person was acting in the name of the Trust as its agent. Can I designate my spouse as Co-Trustee? Yes. A spouse or relative can be Co-Trustee and have equal say as a Trustee. But to keep transactions arm's length and to avoid piercing the trust by the IRS, it is mandatory not to have a Trustor, spouse or relative as Co-Trustee. Family and Business Trusts should always have third party Trustees, never yourself or spouse. The relationships of the Trust parties is critical. If you have any doubts, contact us and we can help you develop a Trust strategy. Who may I name as Capital Unit Holders? Business Trusts generally have another Trust, foreign or offshore, a corporation, as CU Holder; however, you can name anyone you please. The CU Holders of family Trusts are the Trustor's children or grandchildren, but another entity may also be a CU Holder. Can I change CU Holders? Once the Trust is in effect the CU Holders cannot be changed. There is one exception, however, children either born to or adopted by the Trustor after the Trust is in effect are automatically held to be added as CU Holders. CU Holders may also voluntarily relinquish their shares of capital units to the Trustee whereby the resulting shares can be reissued. Can the Trustee abscond with the Trust corpus (assets)? If you are in any way distrustful of the Trustee's integrity he may be removed through the Protector. You may also be provided a signed undated letter of resignation. The Trustee is a fiduciary and bound by the law to safeguard the corpus for the benefit of the capital unit

holders. If he/she does any fraudulent act, they can be held accountable for their actions by legal action. When capital unit holders become 18 years of age, can they demand everything? At no time can the CU Holders demand any property within the Trust. Do the capital unit holders automatically get everything? No. The CU Holders only receive what is distributed to them. If there are appointed Successor Trustees, they can decide to keep the Trust intact or distribute all or part of the Trust corpus to the CU Holders. What are some of the disadvantages of a Trust? It is sometimes harder to get credit in the name of the Trust. It is sometimes difficult for the Trustor to treat the Trust assets as not belonging to him/her. Property transferred into the Trust cannot be transferred back into the name of the Trustor. The Trustor does not have legal or equitable title to the property. When one of the Trustees dies, does the Trust have to file legal papers of any kind? The Trust does not have to file anything when one of the Trustees dies unless there is only the one Trustee at the time. In that event, the Successor Trustee would record his/her designation, along with the death certificate of the original Trustee, with the County Recorder and file a new affidavit showing that he/she is the Trustee of the Trust. Can a Trust be set up to require multiple Trustees to sign before selling property belonging to the Trust? Yes. The easiest way to accomplish this is to put "and" between the names of the Trustees on the affidavit. If either Trustee needs more assurance, an agreement can be drawn, signed and notarized or witnessed by all parties involved. Who should I designate to take over after my death? As Trustor, you can designate anyone you choose as Successor Trustee. It can be several people. You can appoint one or all of the CU Holders as long as they are at least 18 years of age, however, the Trustees would have to surrender his/their certificate(s) of Capital Units. These persons should be people you can trust to maintain or distribute the Trust assets as you desire and in the best interest of the CU Holders. If my employer makes out my paycheck directly to the Trust, will that exempt me from taxes?

Not as long as the employer maintains that "individual" as an employee on his books, social security is withheld, and the company has not contracted with the Trust. The IRS takes the position that the salary still initially belongs to the "individual" who, in turn, is responsible for the taxes on that salary. To be exempt, the employer must contract directly with the Trust and not specify who is to do the work. Most employers will be reluctant to do this because it is new to them. If I have sold property on contract and receive monthly payments, can I transfer that money to the Trust? TThe contract can be sold to the Trust or the contract can be rewritten, keeping the terms the same, but changing who is to receive the proceeds. If I move to another state, do I have to record the Trust there? Once the Trust is recorded in one state, it does not have to be re-recorded in any other state. If, for some reason, the Trustee prefers to have it re-recorded, this can be accomplished using the same procedure as used when originally recorded. What should I do if the IRS contacts me about filing a tax return? Since the Trust is a Non-Statutory Trust, it does not come under the rules and regulations of Statutory Law. By the admission of the IRS itself, they do not regulate Pure Common Law Trusts. See the IRS letter at the end of this document. Provide a copy of this statue by certified mail to the agent contacting you. * By lawful definition, salary is not gross income unless it comes from a taxable activity defined in 26 C.F.R. 1.861-8. Does the Trust exempt me from property and sales tax? No. The Trust does not exempt anyone from property or sales tax. When does the Trust dissolve? Under the terms of a statutory Trust indenture it automatically dissolves 21 years after the death of the last CU Holder. The termination of a Trust must be outlined in the Trust itself prior to setting up a Trust. After the Trust is in effect, the courts have held that a Trust can be dissolved when its purpose can no longer be accomplished. The easiest way to dissolve a Trust is to distribute all property to CU Holders, leaving nothing in the Trust itself. A Common Law Pure Trust is not subject to the "Rule Against Perpetuities." Do the CU Holders have to belong to the Trust? The CU Holders do not even have to be aware they are CU Holders of a Trust. They do not have to take part in the Trust operation, nor add any property to it.

What happens to a Trust when a CU Holder dies? By the terms in the Trust indenture, if a CU Holder dies, his or her issue (children) take the original CU Holders place if his/her heirs are listed as successor CU Holders. Successor CU Holders must be named or the shares revert back to the Trust for reissue. What about credit cards? Credit cards should not be transferred to a Trust. If a person wishes to eliminate or reduce a "paper trail" or keep his/her and the Trust affairs private, credit cards should be eliminated. However, credit cards may be obtained from a foreign bank from an Offshore Trust and still maintain privacy. How can you designate what is to be done with Trust property after death of the Trustees? If the Trustor(s) wish certain property to be given to certain CU Holders, they can write out the specific instructions, have it notarized and attached to the designation appointing a Successor Trustee. The Successor Trusteewill use the instruction to fulfill your wishes. Where do you record deeds to property? Deeds to property are recorded in the County where the land is located. They do not have to be recorded where the Trust is recorded. What is co-mingling? Co-mingling is when Trust property and assets are mixed in with personal property and assets. It is also where title to Trust property is bounced back and forth between the Trust and a personal name, then back to the Trust again. When the actual owner cannot be determined you also have co-mingling. What should I do if the IRS wants to audit a Trust tax return? If a Trust tax return is filed claiming gross income and deductions, then this audit should be handled as any audit of any other type of return. Receipts for the deductions will have to be submitted or the IRS will disallow the deductions. Any argument can be taken to the Tax Court or District Court for final ruling. IRC Sections 673, 664, 675, 676, 644, and 677 should be reviewed if a Trust tax return is filed. If I don't use a bank, where do I keep the money? After paying the bills, excess Trust money can be invested, as long as it is done in the name of the Trusts.

Is it wise to designate a third person, someone not related, as Trustee and/or Cotrustee? If your salary is the only thing being contributed to a Trust, it is not necessary to have a third unrelated person as Co-Trustee. If there is substantial income from Trust property, such as business enterprise, a third unrelated person as Trustee should be selected. This choice belongs to the Trustor(s). What is a "Massachusetts Trust"? This is a common law pure Trust with beneficial interest certificates that are normally held by several unrelated people. It is usually formed with some business purpose in mind. It may be classified in some states, and by the IRS, as a corporation if it has more than 50% of the six corporate characteristics or indicia and features. Our Trust is not a Massachusetts Trust since it is a Non-Statutory Trust. Can a Trust be set up as an association with several "partners"? Yes. But care should be taken if doing so. Because some states have classified this type of Trust as a corporation, its activities might be required to be registered with the appropriate state and federal agencies. What is a Successor Trustee? A Successor Trustee is a person (or persons) who has been designated to take over as Trustee(s) in the event that the original Trustee or Trustee(s) die. Before appointing a Successor Trustee, it is normally a good practice to inform the person appointed so that, in the event of the death of the original Trustees, the Successor Trustee would be ready to assume the duties of the Trustee. Can a Successor Trustee be changed? The Successor Trustee can be changed at any time during the life of the original Trustor. A Minute appointing a new Successor Trustee and revocation of the previous Successor Trustee is all that is needed. Can Trustees be changed? Trustees can be changed at any time. The existing Trustee simply makes written resignation and designates who the newly appointed Trustee shall be. The Protector has also been empowered to remove the Trustee for cause and appoint another successor Trustee in his stead. What is the main purpose of setting up a Trust?

For a person whose only income is from salary, the main purpose is for the protection of his or her property from probate, death taxes, and suit-to ensure and hold the property so that his or her CU Holders or children will be able to have the property upon his or her death. If it is a Business Trust the main purpose would be to limit liability, reduce taxes and establish privacy of operation. When is the Trust in effect? A Trust is in effect when it is signed, notarized, and property conveyed to it (funded). Property is considered transferred to the Trust on the actual date of transfer of the title, deed, or Bill of Sale. When does the IRS say that an "individual" is personally responsible for taxes due on Trust income? By making all transfers to the Pure Common Law Trust irrevocable, there is no personal tax liability. The IRS takes the following position: When the Trustor (Settlor) retains a reversionary interest in either the corpus (original property) or income of the Trust, the Trust is taxed to the Trustor, unless the Trustor's possession is postponed for more than 10 years, IRS 673 (this is considered a revocable Trust). The transfer in Trust is ineffective to shift tax liability to the CU Holders if Trustor retains the following powers: (a) power to alter or amend CU Holders enjoyment, IRC 664; (b) power to borrow without adequate security, IRC 676; (c) power to revoke and revest ownership in Settlor, IRC 676; (d) power to designate income of Trust to use of Trustor or his/her spouse, IRC 677. If the consent of an opposing party is required for any of the above changes, then tax liability may shift to the CU Holder of the Trust. By making all transfers to the Pure Common Law Trust irrevocable, there is no personal tax liability. Does all the property I own have to be transferred into the Trust? All your property does not have to be transferred into the Trust. It is, however, preferable in order to protect all your property. However, high liability vehicles such as automobiles, motorcycles, boats and aircraft should be placed in their own Trust or encumbered (liened) to the benefit of the Trust. Can a Trust own stock in a corporation? Yes. The corporate stock would be issued in the name of the Trust rather than yours. All dividends would be paid directly to the Trust. Can a Trust be a partner in a partnership? Yes. Everything in setting up a partnership would be the same, except the name of a respective partner would be the name of the Trust rather than yours.

What happens if the Trustee becomes totally incapacitated? Provided the Successor Trustee or the Protector can verify that the original Trustee is totally incapacitated, no longer has the mental ability to manage the Trust, or no longer able to perform his duties, the Successor Trustee assumes those responsibilities. What happens if there is no Successor Trustee appointed? If there is no designation appointing a Successor Trustee at the time of the original Trustor's death or if the Successor Trustee declines the duties and refuses to appoint someone to take his place, the adult beneficiaries and/or the guardian of any minor beneficiaries must petition a court to have one appointed. The court can name a bank, lawyer, one of the beneficiaries, or anyone to be Trustee of the Trust and require that a fee be paid for services as a Trustee. Does the designation have to be recorded? No, the designation appointing a Successor Trustee does not have to be recorded. It is probably preferable not to record the designation if there is any possibility that any change may be made as to who would be Successor Trustee. For statutory Business Trusts, some states require the filing and recording of the Trust indenture. What part of the Trust can be recorded? A one-page Synopsis of the Trust is preferable for recordation, without any Minutes or Schedules. The Synopsis outlines the purpose, duties, and limitations of the Trustee(s) and officers. The certification identifying the Trustees should also be recorded. Should all property be listed on "Schedule A" in the Trust before recording the Trust? When recording a Trust, that document becomes a public record and anyone can read it. Therefore, if you do not want to have it known that a particular piece of property is being transferred to the Trust, these items should be added to "Schedule A" after the Trust is recorded. Technically, only one piece of property need be listed on "Schedule A" to put the Trust in effect. However, you can list any property you want on "Schedule." How do I show in the Trust that property has been added, sold, or purchased? As property is acquire or purchased, the title, deed, or bill of sale should be made out in the name of the Trust and entered on "Schedule A". When property is sold, a line should be drawn through the item on "Schedule A" and the notation made: "sold on (date)." What about insurance?

A Trust can have its property insured in the same manner as an "individual". With car insurance, instruct your insurance agent to add the Trust as an "additional insured". With life insurance, notify your insurance company to change the beneficiary to the name of the Trust. Because medical insurance is for the person who may become ill and not the Trust, the trust cannot have medical insurance; however, it may pay the premiums for Trustees. How are household goods and personal effects listed? Items in a household do not have to be itemized on "Schedule A." They can be listed simply as "household goods" and "personal effects". However, if there are things of great value such as antiques, coin collections, valuable jewelry, etc., these should be listed separately. How are items, which are used in business listed? Inventory, tools, equipment, furniture, etc. used in a business should be listed separately and itemized whenever possible. Inventory items can be listed as the inventory of such and such business. Hand tools and other small tools can be listed as small tools. Are Trusts created in the several states of the Union required to obtain EIN (employer identification numbers) if the Trust does not have "source" "gross income" from the "United States" and the Trust is not engaged in "trade or business" within the "United States"? Some uninformed people consider this as a controversial issue; however, based upon our research, we find no such controversy. Any Trust created in any of the several states of the Union (America the Republic), outside of any federal enclave, is foreign to the "United States" (see definition in IRC 7701(a)(31) and therefore exempt from any liability or requirement to file a return. The Trust must be created in a federal State or territory, i.e., Washington, D.C., and receive gross income from the United States" (not the Union of States) and or be effectively connected with "trade or business" (see definition IRC 7701(a)(26)) within the "United States" before it is subject to the jurisdiction of the IRS. Since a Trust created, foreign to the "United States," in one of the several states of the Union, is not subject to the legislative acts of Congress, it is therefore exempt from any income tax requirements; unless the Trust is involved in regulatable and taxable activities such as the manufacture of alcohol, tobacco, firearms wagering, etc. Business Trusts or Family Asset Protection Trusts are treated as nonresident aliens for tax purposes and would not be required to obtain EIN numbers, even for establishing noninterest bearing bank accounts. An IRS W-8 Form (Certificate of Foreign Status) would be supplied the bank or brokerage account in lieu of an EIN number. How does one acquire a nonresident alien identification number for a Foreign Business Trust Organization? The Trustee would complete and file an IRS SS-4 Form (Application for Employer Identification Number), absent any Social Security Number, and attach a completed IRS

W-8 Form and mail it to the Director of Foreign Operations, Internal Revenue Service, Philadelphia, Pennsylvania 19255. NOTE: The information contained in this report is believed to be true and correct based upon available information. All information herein is for educational purposes only and is not to be construed as legal or accounting advice. For professional opinions, we recommend you contact competent and experienced attorneys or certified public accountants knowledgeable in common law pure trust matters. WARNING, not all professionals are knowledgeable or experienced in common law pure trusts, so any advice coming from someone without any background should be weighed accordingly. According to the law firm of Breen, Kator, and Wolf in their publication, United States Law and Practice (July, 1974) Internal Revenue Code: 7701 The Foreign Situs Trust permits the United States investor to achieve party with the nonresident alien by expatriating his capital. Properly structured, a Foreign Situs Trust qualifies as a "nonresident alien individual" and achieves "most favored investor" status for the United States Citizen investing either at home or abroad. Furthermore 26 C.F.R. Sec. 301.7701.5 states: "The foreign Trust has long been regarded by the courts as nonresident alien individual for tax purposes."

from http://centre.telemanage.ca/links.nsf/articles/5086DB6DE97A77F9852568E0005D43F1 Answers about Pure Trusts Government Is No Longer Your "Business Partner" "The taxpayer -- that's someone who works for the federal government but doesn't have to take a civil service examination." -President Ronald Reagan The greatest secret of the ultra rich for avoiding the hated income tax is A PURE TRUST, more commonly known as a "contractual agreement" (which is misapplied since in Common Law, there are NO agreements, only contracts). This tool of the super rich is guaranteed by Article 1, Section 10 of the U.S. Constitution, which states in part that a Citizen has the right to contract. Further, Article 1, Section 10 states: "No state shall pass any law impairing the Obligation of Contracts,..." Note that the State can not pass laws which control or influence the "contractual agreement." A PURE TRUST is a contract NOT formed by a contract-with-the- State as is a corporation or a statutory trust. It (the PURE TRUST) is created by a contract between private persons each of whom has the Constitutional Right of Contract.

WHY MUST THE PURE TRUST BE "IRREVOCABLE?" To make sure that there is no confusion about the fact that you do not still own the PURE TRUST property, the assets must be permanently transferred to the PURE TRUST. Under statutory law, a revocable Trust is one in which the Exchangor (you) can change his mind and cancel the whole transaction, thereby taking back all assets placed into the trust. This provides no protection to the estate from future claims against the Exchangor. For example, if someone sues you for no reason and a judgment against you personally is obtained, if you had a revocable trust, the judgment creditor could pierce the trust and get at those trust assets to satisfy his judgment, regardless of how the judgment was obtained in the first place. This type of attack could never diminish the assets under a PURE TRUST. In addition, if you can revoke the Trust and got the assets back, you would have gained nothing in probate or income tax savings at all. Even if you die before the trust expires, in some jurisdictions, the value of a revocable trust estate is placed in your estate for probate and tax computations. Under federal law, the total value of a revocable trust is placed in your estate for federal estate tax purposes. THE CONTRACTS OF THE PURE TRUST 1. Between the Creator and the Exchangor, giving birth to the PURE TRUST. 2. Between the Creator and the Board of Trustees, giving the Trustees fiduciary authority over this artificial person that the Creator and Exchangor created in order to hold some asset. 3. Between the Trustees and the General Manager for proper functioning of the day-today activities of the PURE TRUST Organization. THE IRREVOCABLE NATURE OF EXCHANGING ASSETS INTO THE PURE TRUST If the assets are given irrevocably to the Pure Trust, can the Pure Trust be disbanded or terminated? The answer is, "Yes." Do the Contracts cancel when the Pure Trust is terminated? Yes, they do. This brings us to the purpose for having Certificate Holders. The Certificate Holders are NOT beneficiaries -- their whole purpose is to be there to assume possession of the

proceeds of the Trust (the remaining assets), should it ever terminate. So, in the cases above, the assets of the PURE TRUST would, upon its closing, be transferred to the Certificate Holders. The irrevocable nature of the PURE TRUST means that the assets go to the PURE TRUST absolutely. You do not have the chance to say, "OOPS, I made a mistake. I didn't want to put my house in, so I'm taking my house back." The reason there is no question of ownership is because you have irrevocably exchanged ownership into the PURE TRUST. No one can take your assets away from you, because you have given them up irrevocably. ORIGINS OF COMMON LAW As discussed earlier, law in the western world (primarily Europe) evolved slowly over the centuries. This body of "laws" owed its heritage to the laws imported and imposed during the Roman occupation. These laws were a written list of instructions of how the citizens of the society were supposed to conduct themselves. This "Law" was known as the "Civil Law." This basic Roman system still prevails in many countries. However, after the Normans killed King Herold and won the critical Battle of Hastings during their conquest of Britain in 1066, a legal tradition called the "common law," different from the civil law, began to develop in England. This system of law was based upon respect and responsibility. These laws were not written down, but were "common" knowledge among the population. They were based, not on written rules, but upon the concept that God was supreme, and that the citizens had been granted certain unassailable "rights" as a result of being created by God. An example would be the right to enter into an agreement with one another, and then be bound by that agreement. This came to be known as the Right of Contract. In the twelfth century, during the reign of the legal reformer, Henry II, court decisions were written down and catalogued according to the types of cases, just as they earlier were under Roman Law (Civil Law). When the courts had to decide similar issues later, they reviewed the earlier decisions and if a precedent was found that covered the current case, they applied the principle of the earlier decision. They called this doctrine, "stare decisis," a Latin term meaning "To abide by, or adhere to, decided cases." Under the rule of "stare decisis," once a legal issue had been resolved, a court did not reconsider that legal issue in a later case where the facts were substantially similar. Misuse of this "Civil Law" system by the King was the source of a great amount of unhappiness and injustice over many years. Finally, the forced signing of the Magna Carta by King John in the thirteenth century established the process of "common law" as a viable, reliable legal forum. During America's colonial period, most of the common law tradition, imported from England, was adopted by the colonialists. The "common man" lived by the "Common

Law." When the U.S. Constitution was written in 1781, it was based upon the tenants of the common law. It declares that the Citizen is the Sovereign, and grants powers to the state only so far as is required for the sate to function the way the Citizens desire. But, those who secretly still supported Britain, wanted to impose the system of statutes known as the "Civil Law" upon the populus of America. So, they made sure that the laws enacted by Congress and the states had to find support in the written law, or the laws had to be discarded. (See the establishment of the American Bar Association by delegates of the British Bar Association in 1878 in Saratoga, New York. ORGANIC SOVEREIGN AMERICAN FREEMAN COMPENDIUM, Chapter 12.) So we see two different legal systems; Common Law and Civil Law being adopted in this country. "The Common Law is absolutely distinguished from the Roman or Civil Law system." People v. Ballard, 155 NYS 2d 59 This important distinction which set the Common Law apart from the Civil or statutory law was the bane of those who wanted to recapture control of the "colonies." So, in 1938, the united States supreme Court solved the problem of the lack of control over Common Law, by overturning 100 years of precedent (stemming from the Swift v. Tyson case in 1840) declaring that henceforth, the Common Law would be "statutorized" and be a part of the statutory or Civil Law in this country. Any graduate of any law school can confirm this fact for you. It was contained in the Erie Railroad v. Tompkins decision. As a result, all courts in this country today are "statutory" or "Merchant Law" courts. The Common Law no longer exists. In fact, in some states, such as Ohio, laws have subsequently been passed to make clear that "Common Law" activities are no longer legal. In Ohio, for example, "Common Law marriage" is specifically BANNED by statute! [NOTE: If anyone EVER attempts to present you with a document that is written under the "Common Law," be aware that they are presenting you with a fraudulent document. The precedent set by the Erie Railroad v. Thompkins case still stands, to this day.] Today, the court decisions which are published and available in the law libraries, and thus become a part of statute law, are almost always appellate court decisions, not trial court decisions. The U.S. supreme Court and the state supreme Courts are part of the appellate court systems in this country. The appellate court opinions which appear in published form in the law library follow a format as follows: 1. The Facts, which are taken from the lower court's determination. 2. The Issues, which are presented by the appealing parties. 3. The Ruling or Holding, which is the answer to the issues. 4. The Reasoning or Rationale, which is the discussion. Most judges try hard to be consistent with decisions that they or a higher court have made. This consistency is very important to the statutory law tradition. For this reason, if

you can find a previous court decision that rules your way on facts similar to your situation, you have a good shot at persuading a judge to follow that case and decide in your favor. Under Civil Law, there are two ways to argue your case when you want to persuade a judge to rule your way. One is called "precedent authority," and the other is called "persuasive authority." Under precedent authority, using the principle of stare decisis (to adhere to decided cases), means that the court is compelled to uphold the earlier decision if there is nothing unique or different from the one being decided. If the earlier decision was a U.S. supreme Court case, that case is the binding authority on all courts in this country. Under persuasive authority, as a general rule, the higher the court, the more persuasive its opinion. In the absence of a precedent case, a case may be considered persuasive authority by many out-of-state courts, although the case may not be binding outside of the state in which it was decided. Two Important Questions Q. WHAT IS THE MAIN DISADVANTAGE OF MANAGING A PURE TRUST? A. The one main disadvantage of managing a PURE TRUST is that you must not commingle any personal finances with those of the PURE TRUST that you manage. If PURE TRUST funds are used to pay personal expenses or PURE TRUST funds are commingled with personal funds, a court could rule that the PURE TRUST was merely the "alter-ego" of the individual, and the transfer with the PURE TRUST a "sham", and in that manner, set the PURE TRUST aside. Q. PEOPLE OFTEN ASK IF THE PURE TRUST IS LEGAL. HOW CAN I RESPOND? A. You may be shocked to learn that the PURE TRUST is not legal. However, the PURE TRUST is lawful. As revealed in the definitions of "lawful" and "legal", "lawful" means that it is not illegal. "An act that is described as "lawful" means that it is an approved, authorized, or sanctioned activity. To say that an activity is "lawful" carries with it a moral or ethical evaluation." The PURE TRUST is lawful, not because it has to comply with any tenants of the statutory law (because it does not), but because it is in compliance with the Constitution of the United States.

Source: http://www.wealth4freedom.com/wns/puretrust.htm

from http://www.buildfreedom.com/tl/pct09.shtml

REPORT #PCT09: PURE CONTRACT TRUST QUESTIONS AND ANSWERS

CAVEAT This publication is based on sources believed to be reliable. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or tax guidance service. If legal advice or other expert guidance is required, the services of a competent professional should be sought. This publication is for information only. The author and publisher assume no responsibility for the consequences of anyone acting in accordance with this information. GENERAL QUESTIONS AND ANSWERS Q. What is a trust? A. Basically, a trust is a tool to protect yourself, your assets, your business, your income, or your privacy from unwanted intrusions. The whole tradition of trusts is that they are legal instruments to circumvent the laws of government thieves, and to protect against other thieves. Trusts can take as many forms as there are people to invent them. Consider four types of parties: (a) Government thieves; (b) Lawyer thieves; (c) Other thieves; (d) Trust users. The basic purpose of the people who masquerade as "government" is to obtain their survival wherewithal through theft, because it's easier to steal than to work - see The Economic Rape of America: What You Can Do About It. Most lawyers operate on the same basis. Practically all "legal systems" are designed with deliberate "loopholes" so lawyers can exploit them, and also charge their clients substantial fees so they can also exploit the loopholes. There are also many other thieves constantly looking for wealthy people they can sue or legally steal from. Trust users seek to organize their lives and affairs so as to minimize the risk of being robbed, regulated, and spied upon by government, layers, and other thieves. (Despite the cynicism of the foregoing it needs to be emphasized that there are a few good, honest lawyers and people in government!) So a trust is a protective tool or instrument. There's a wide range of trusts. They can cost anything from $1 to $20,000. You need to select the one(s) best for you and learn how to use it(them). Technically, a trust is created when party A hands party B property to be held by party B on behalf of party A or party C. For example, if I give you my car to look after while I'm on vacation, that's a trust. Or if I give you $10,000 to hold on behalf of my son and to give to him on his 21st birthday, that's also a trust. Q. What's so special about the Pure Contract Trust? A. The special features that make the Pure Contract Trust so powerful are covered in

Report #PCT02. One of the most important is that the trustees (who are sovereign individuals) are provided for you. The ideal is to use an entity that's completely separate from you, with trustees unknown to you so there's no link between you and the trustees. This enables you to not own assets, but to control them. Q. What rights does the Pure Contract Trust have? A. The Pure Contract Trust has the same constitutional rights as any sovereign individual. That is, the right to do business as expressed by Hale vs. Henkel, the right to privacy, to freedom from unwarranted search and seizure, to refrain from self-incrimination and all other common law and constitutional rights. Q. Can a trust own and operate a business? A. A trust can own and operate any lawful business. The business does not necessarily have to have the same name as the Trust. For example, "Acme Holdings dba Aggregate Gravel Company" (dba means "doing business as"). Q. Does the trust have to be recorded? A. Trusts generally don't have to be recorded. The main advantage of recording the Pure Contract Trust is that it enables the Managing Director, if challenged by a bureaucrat, to say, "You need to speak to the principals; you can get their details from the Recorder in Maricopa County; it's public record." The second advantage to having it recorded is, if your original trust document is lost or destroyed, the County Recorder can give you a certified copy. A third factor is that recording the trust gives it an "official birth date" and, in general, adds to its credibility. Q. What if there's a divorce? A. There are three things a Managing Director can do in the event of divorce: (a) Keep the trust intact with both parties as Managing Directors; (b) Current Managing Director(s) resign and appoint someone else as Managing Director; 3) Decide how control of the property is to be divided, then exchange part of the property into another trust. Husband gets to be Managing Director of one trust; wife of the other. Do-it-yourself divorce made easy! Q. What's the function of the Certificate Holder? A. The Certificate Holder is comparable to a beneficiary. Though he or she isn't a beneficiary. The Pure Contract Trust has no beneficiaries. The only "claim" that the Certificate Holder has is a demand that the terms of the trust agreement be carried out. The Certificate Holder is appointed by the Managing Director and needs to be a trusted friend. He or she has a function similar to that of the executor of a will. Should the Managing Director become incapacitated, then the Certificate Holder appoints a new Managing Director in accordance with the trust Minutes and ensures that the wishes of the former Managing Director are carried out. Q. Why doesn't the Pure Contract Trust have beneficiaries? A. There is considerable case law that defines one of the requirements of a trust being that it has a beneficiary or beneficiaries. The Pure Contract Trust is a contract that creates a trust. The assets are owned by the trust itself, and are managed for the benefit of the trust - not the Certificate Holder or anyone else. In a sense, the trust is its own beneficiary. Statutes designed to curb the freedom of tusts are generally worded in such a

way that they don't cover this unique structure - they define what they mean by "trust" and their definitions don't apply to the Pure Contract Trust. Q. What kind of records do I need to keep? A. The kind and the method of record keeping is up to the individual Managing Director. The records need to be sufficient to enable the Certificate Holder to organize the continuance of the trust, in the event of the incapacitation of the Managing Director. The Certificate Holder needs to be able to find all the assets owned by the trust and needs to find out what to do with each asset. The trust can also serve the same purpose as a will. Q. Where do I keep the trust documents? A. In a safe place, but accessible by the Certificate Holder. Q. Can a trust be sued? A. Yes; it's a legal person. Under some circumstances a trust can be sued, but only for its actions - such as foreclosure on trust property when a mortgage or lien is not paid, or, for example if a vehicle owned by the trust is involved in an accident. It cannot be sued for any actions of Managing Director unless that individual was acting in the name of the trust as its agent. Q. Can the trustees abscond with the trust assets? A. In general, the trustees don't know where the trust is being used and what assets it owns. The trustees delegate most of their powers to the Managing Director who manages the assets, without supervision or reporting to the trustees. The trustees cannot remove the Managing Director without proper cause. As long as the Managing Director adheres to the terms and conditions of the trust and the appointment contract, the trustees cannot remove him or her. The trustees don't know the address of the Managing Director. Q. What are some of the disadvantages of the Pure Contract Trust? A. It's sometimes harder to get credit in the name of the trust. There are sometimes difficulties in opening bank accounts. (How to open bank accounts is covered in detail in The Pure Contract Trust Manual.) The Managing Director does not have legal title to the property and can't pledge it as collatteral. It's sometimes difficult for the Managing Director to treat the trust assets as not belonging to him or her. The trust can't be listed on a stock exchange. It's also not suitable to serve as a company with many shareholders. Q. Can a Pure Contract Trust be set up as an association with several "partners?" A. No. The Pure Contract Trust is definitely not an association and cannot have partners. However, it can have multiple Managing Directors. Q. Can a trust be a partner in a partnership? A. Yes. Everything in setting up a partnership would be the same, except the name of a respective partner would be the name of the trust rather than the name of an individual. Q. What is a Successor Managing Director? A. Successor Managing Director is a person who has been designated to take over as Managing Director in the event that the original Managing Director dies. Before appointing a Successor Managing Director, it's normally a good practice to inform the individual to be appointed so that, in the event of the death of the original Managing Director, the Successor Managing Director would be ready to assume the duties of the Managing Director. The appointment of a Successor Managing Director should be done in the trust Minutes. The Certificate Holder should be informed.

Q. Can a Successor Managing Director be changed? A. The Successor Managing Director can be changed at any time during the life of the original Managing Director. A Minute appointing a new Successor Managing Director and revocation of the previous Successor Managing Director is all that's needed. The Certificate Holder should be notified. Q. What happens if no Successor Managing Director has been appointed and and the original Managing Director dies? A. The Certificate Holder assumes the role of Managing Director or appoints a new Managing Director. This is recorded in the Minutes. Q. Can the Trustees be changed? A. Trustees can be changed at any time. The existing Trustee merely writes that he or she resigns and designates who the newly appointed Trustee shall be. A Trustee can also be removed for cause and and another Trustee appointed Q. When does the trust go into effect? A. The Pure Contract Trust goes into effect on the date it is created. On this date it is signed, notarized, and property conveyed to it. All this, as well as filing with the County Recorder, takes place before the trust documents are delivered to the Managing Director. Q. When does the trust terminate? A. Under the terms of the trust indenture it automatically terminates 25 years after its creation. The Managing Director may extend the duration of the trust for another 25 years (or shorter period) through the Minutes. In this way the life of the trust can be extended indefinitely. Q. What kind of names (titles) should I use for my Pure Contract Trust? A. Use names such as "The Acme Foundation," "Great Investments," "Elbow Enterprises," "Midas Holding Company," "Efficient Management Systems," "The Silver Group," "Family Fiduciary Fund," "Golden Resources," or "Silver Services." In general, it's not a good idea to have the word "Trust" in the name or title of your trust, because it may attract unwanted attention. In some states there are statutes requiring special licensing of "trust companies." Q. What is the current charge for setting up a Pure Contract Trust? Does it cost the same to set up a 'personal' trust and a 'business' trust? Is there a discount for setting up two or more trusts at the same time? A. The cost for setting up a Pure Contract Trust is $1,750. For subsequent trusts the price is $1,450. The features of the Pure Contract Trust are such that it's an "all-purpose" trust that can be used for either (or both) personal and business purposes. LEGALITY OF THE PURE CONTRACT TRUST Q. People often ask if the Pure Contract Trust is legal. How should I respond ? A. The educational material furnished covers the basic law and court cases on the legality of this system. But proving something is legal is more difficult than proving something "illegal." There are two basic factors you need to understand: (a) The obligation of contracts clause in the U.S. Constitution coupled with Hale vs. Henkel; and (b) Some government agencies (including judges) operate on the basis that they're above the law and whatever they say is "illegal" is "illegal." So the best way to operate is to organize your affairs in such a way that if you come to the attention of any government agency

they'll discover that you have no assets and/or you're too tough a nut to crack, and you're not worth going after. In addition to the above, the Pure Contract Trust is designed in such a way that if it's attacked, you deflect the attack onto the trustees. In other words, much of the risk is transferred from you to them. This is possible because your name doesn't appear anywhere in the trust document. This separation is crucial. In many other trust systems there are links between the user and the other parties, making it relatively easy for the enemy to claim that the trust is a sham. You need to understand how the bureaucrats work. They need to "collect" extra money. They have quotas to fill. If they think you don't have money, or they'll have to spend too much time finding assets you control, or if they find them there will be liens that effectively stop them, they tend to leave you alone, in order to go after "easy pickings." In any case, here are some citations: "No state shall pass any law impairing the obligation of contracts." U.S. Constitution, Article I, Section 10. "The judicial branch has only one duty, to lay the Article of the Constitution which is involved beside the statute (rule or practice) which is challenged and to decide whether the latter squares with the former." U.S. vs. Butler, 279 U.S. 1; 16th Am. Jur. 2nd., Sec. 177, 178, 210 and 547. "The right to labor and to its protection from unlawful interference is a constitutional as well as a common law right. Every man has a natural right to the fruits of his own industry." 48 Am. Jur. 2nd., Section 2 at Pg. 80. "A State may not impose a charge for the enjoyment of a right secured by the Federal Constitution." Murdock vs. Pennsy., 319 U.S. 105. "Where rights secured by the Constitution are involved, there can be no rule making or legislation which would abrogate them." Miranda vs. Ariz., 384 U.S. 436 at 491 (1966). [If any government agent asserts that contrary rules apply to an individual, then the individual can demand that the government agent provide (a) Proof of the rule; (b) Proof that the rule applies to the specific individual, and (c) Proof that the government agent has the authority to enforce the rule. See Report #TL16B: Sample Correspondence to Beat the IRS.] "The proponent of the Rule has the burden of proof." Title 5 U.S.C., Sec. 556(d). "This Constitution is the supreme Law of the Land (Common Law). All judicial officers of the United States are bound by oath or affirmation, to support this Constitution." Hayburn's Case, 2 Dall. (2 U.S.S.) 409; U.S. Constitution, Article VI, Sections 2 and 3. "Disobedience or evasion of a constitutional mandate may not be tolerated, even though such disobedience may promote in some respects the best interests of the public." Slote vs. Board of Exchange, 274 N.Y. 367. "Law repugnant to the Constitution is void... " Marbury vs. Madison, 1 Cranch, 137 (1803).

"Once jurisdiction is challenged, it must be proven." Hagens vs. Lavine, 415 U.S. 533 Note 3. "The law provides that once State and federal jurisdiction has been challenged, it must be proven." Main vs. Thiboutot, 100 S. Ct. 2502 (1980). "Jurisdiction can be challenged at any time, even on final determination." Basso vs. Utah Power & Light Co., 495 F 2nd 906 at 910. "Where there is absence of proof of jurisdiction, all administrative and judicial proceedings are a nullity, and confer no right, offer no protection, and afford no justification, and may be rejected upon direct collateral attach." Thompson vs. Tolmie, 2 Pet. 157, 7 L. Ed. 381; Griffith vs. Frazier; 8 Cr. 9. 3 L. Ed. 471. "No sanctions can be imposed absent proof of jurisdiction." Standard vs. Olsen, 74 S. Ct. 768; Title 5 U.S.C., Sec. 556 and 558(b). PURE CONTRACT TRUST VS. LIVING TRUST Q. What's the difference between a Living Trust and a Pure Contract Trust? A. The Living Trust was created by staute. It's basically designed to reduce probate and estate taxes. Q. Does a Living Trust protect my assets? A. No, it does not protect your assets or your privacy while you are alive. If someone filed a frivolous law suit against you, he could serve you with a subpoena to produce your Living Trust at a deposition, thereby exposing all your assets. His next step would be to get a judgment attaching all assets in your Living Trust. Also, if one of your children were to file bankruptcy, the bankruptcy court could attach the child's interest in your Living Trust. Q. What are some other differences between a Pure Contract Trust and a Living Trust? A. The Pure Contract Trust is irrevocable. Generally, Living Trusts are revocable. Living Trusts provide no protection against lawsuits or government asset seizures; the Pure Contract Trust does. Living Trusts are governed by statute law; the Pure Contract Trust is governed by common law and protected under the U.S. Constitution. Most Living Trusts do not qualify as contracts for the following reasons: (a) Usually there aren't two different parties. One party is usually the Grantor and the Trustee. So, there is no "contract" between two different parties in the sense of the constitutional meaning. (The government generally regards husband and wife as one entity.) (b) A Living Trust is a "trust agreement," but not a "contract." It's difficult for the state to intrude into the affairs of a contractual agreement if the state is not a party to the contract. That's why the Pure Contract Trust includes a dispute resolution procedure that is independent of the state. CONTRACTUAL AGREEMENT Q. How does the Pure Contract Trust qualify as a contract? A. There is an offer and acceptance between two or more parties who are of legal age and competent, and there is consideration paid between the parties, including a legal object, and there is a termination date.

Q. Does the U.S. Constitution give citizens the right to contract? A. No. The U.S. Constitution does not give citizens the right to contract. Every citizen already has that right, a common law right that antecedes the Constitution. The U.S. Constitution supposedly guarantees that right - see Report #PCT08. WHAT ABOUT OTHER TRUSTS? Q. My friend took some literature on the Pure Contract Trust to an attorney and was told that it was the same as a "Massachusetts Trust." Is this correct? A. No. You may want to cite to your friend the following court case: "Designation of form of trust is not controlling; court will look to substance of circumstances and not labels placed on them by parties." Johnson vs. Hychyk, 517 P 2d 1079. The Pure Contract Trust is unique in that it has no beneficiaries. It is primarily a contract and secondarily a trust. It is very different from a "Massachusetts Trust" or an "Unincorporated Business Organization" (UBO). Some states have statutes that subject trusts and UBOs to the same licensing, reporting, and taxation as a corporation. If you research these statutes, you'll find that their definition of "trust" does not include the Pure Contract Trust. And even if such a statute were to specifically name the Pure Contract Trust, it would be unconstitutional because it's primarily a contract and "no state shall pass any law impairing the obligation of contracts" (Article I, Section 10, U.S. Constitution). Q. What is a "Massachusetts Trust?" A. This is a common law trust with beneficial interest certificates that are normally held by several unrelated individuals. Sometimes it's also called an "Unincorporated Business Organization" or "UBO." It's usually formed with some business purpose in mind. It may be classified in some states, and by the IRS, as a corporation if it has more than 50% corporate characteristics and features. Some states have statutes that subject Massachusetts trusts to the same regulation, reporting requirements, and taxation as a corporation. The Pure Contract Trust is greatly superior to an "Unincorporated Business Organization" or "UBO." Q. According to some articles I read, aren't Pure Contract Trusts and other common law trusts disastrous for people who put faith in them? A. A trust is a tool to help beat the enemy, who wants to steal your wealth. You need to put your faith in yourself and your ability to take correct actions. You may need to develop confidence. In order to do that, you may need to acquire more knowledge. You have to be very careful how you use your trust. A trust can be a double-edged sword, because it can attract the enemy's attention and alert him that you might be a "rebel of substance" whose wealth must be looted. The enemy is voracious and dangerous. Our Pure Contract Trust Manual contains a section on pitfalls to avoid. If you don't make the mistakes covered there, you'll be very safe. PURE CONTRACT TRUST VS. CORPORATION Q. Can a Pure Contract Trust be used to replace a corporation or limited partnership in doing business? A. Yes. It can operate a business very easily, depending on the type of business. It's particularly suited for a business that can easily operate "out of sight," for example, a mailorder business. It's also very well suited for independent contractors. If it's a business requiring government interaction, such as a medical practice, then it may be necessary to

continue to operate a corporation. The corporation handles only those functions it absolutely has to. It need not own any assets. It can have a contractual agreement with a Pure Contract Trust whereby the trust leases property to it, provides it with services, etc. covered in more detail in our Pure Contract Trust Manual. Q. My plans are to replace my business corporation with a Pure Contract Trust, thereby operating as a private business as suggested by Hale vs. Henkel. What should I tell my accountant? A. Simply tell him that you no longer own the business and the new trustees have advised you that they no longer need his services. Q. What is the main reason I should consider a Pure Trust over a corporation? A. The popular business organization form, the corporation, appears to hold out "carrots" or advantages, but for most purposes there are both obvious and hidden penalties that far outweigh any advantages. The corporation is a creature of the state, subject to its jurisdiction and statutes that can be changed at any time. The corporation is like a slave owned by a deceitful, whimsical, random, haphazard, erratic, unpredictable, fickle, capricious master (the state). That's why major corporations (and aspirants) spend millions to "buy" politicians and bureaucrats. The Pure Contract Trust is completely private, and a sovereign entity not subject to statutory jurisdiction or regulation. Q. Why then do people use corporations? A. Our current legal system got the idea of a "limited liability" company from old English history. It was called a "corporation." It's the usual method of doing business. It's almost always recommended by attorneys and accountants. Why? Because it's formed under statute law and is subject to all kinds of state and federal regulations - which only the attorneys and accountants can understand (they claim) - therefore you have to pay them thousands for their advice. People are brainwashed in schools to use corporations - and to listen to attorneys and accountants. The state needs slaves. A corporation is a "privilege" issued by the state. It's an exchange of "rights" for "privileges." The state operates on the basis that it has the unilateral right to change the rules governing corporations at will. In practice, the contract clause in the U.S. Constitution provides no protection for a corporation or against a unilateral change by the government in the corporate contract. You must always have an attorney represent the corporate entity. Make no mistake. When you form a corporation, you surrender many of your constitutional rights. Your books and records are open to the public through the State Corporation Commission. Each year you must report to the state, file your annual financial status, and submit the names and addresses of the directors, thus giving up all your privacy. Q. Why should I as an entrepreneur consider a Pure Contract Trust? A. The economy of the free world depends on the entrepreneur and the entrepreneur's survival may well depend on his ability to protect his assets, reduce his taxes, and increase the privacy of his activities. Imagine if your business didn't have to keep records for the bureaucrats, if you didn't have to send them all kinds of paperwork and money, if you didn't have to submit to their regulation - just imagine how much more productive and profitable your business could be!

Q. But what if my employees wanted to stay in the system; how do I handle them? A. For those of your employees who want to stay in the system, you use a personnel leasing company such as Manpower. The personnel leasing company becomes the employer of record. They handle all the paperwork and interaction with the bureaucrats. You pay them a lump sum every week or month. For practical purposes, the employees are still yours, but all the red tape is handled by the personnel leasing company. If any of your employees want out of the system, they could set up trusts. The trust you manage could contract for services with the trusts they manage. DUTIES OF THE MANAGING DIRECTOR Q. I understand that if I were to purchase a Pure Contract Trust, I would be appointed the Managing Director. To whom is the Managing Director of a Pure Contract Trust accountable? A. The only persons to whom the Managing Director is responsible and accountable are the Trustees. No other individual or agency can question the duties, management, decisions, distributions, or expenditures made by the Managing Director. The Trustees delegate practically all their powers to the Managing Director. Provided the terms of contract (trust agreement) are carried out, the Managing Director is authorized to conduct the affairs of the trust without supervision by or interference from the Trustees, or even having to report to the Trustees. Under certain circumstances the Trustees may resign, and the Managing Director may appoint new Trustees. Q. Can I designate my spouse as Co-Managing Director? A. Yes. A wife, husband, relative, or anyone else can be Co-Managing Director and have equal say in managing the trust. There can be up to four Managing Directors. Q. What happens if one or more of the trustees dies? A. If there is a remaining trustee, he or she appoints additional trustees. If all the trustees die, the Managing Director has the power to appoint new trustees. Q. Who .should I designate to take over after my death? A. You can designate anyone you choose as Successor Managing Director. There can be several people. These individuals should be people you can trust to maintain or distribute the trust assets as you see fit. You make these arrangements in the Minutes of the trust and clear them with the Certificate Holder, to be sure they will be carried out. TRANSFERRING VS. EXCHANGING Q. Explain the procedure for transferring or exchanging assets into the Pure Contract Trust. A. It's more appropriate to use the term "exchanging," because that more accurately reflects the nature of the transaction. Once the Pure Contract Trust has been created, the Managing Director may exchange assets (equipment, cash, property, etc.) with the Pure Contract Trust and receive in return a "Certificate of Capital Units." When those assets are placed into the Pure Contract Trust, it's not a sale, nor a gift. It's an "exchange" for valuable consideration, but with only indeterminable value. Thus, there is no taxable event. The U.S. Supreme Court has ruled that "if property received in exchange has no fair market value, it does not represent taxable gain to the recipient." Burnett vs. Logan; 283 U.S. 404.

Q. I think I understand how to exchange my personal assets into the trust with the exception of assets which are already registered with the government. For example, my automobiles are registered in my name with the State of Texas. As another example, my home is registered in my name. How do I exchange such assets so that the government registration accurately reflects ownership by the trust rather than by me? A. There are two crucial principles involved here: (a) Exchanging assets into a trust with or without leaving a paper trail; (b) Having many different assets in the same trust. The ideal is to have all assets in trust, without any paper trail connecting you with the trust. If you exchange your home into a trust - which is done via quit claim or warranty deed then you leave a paper trail. An option to consider is to sell your home and have a trust you control buy another home. Another option is to have a trust file a lien against your home. Automobiles can be sold to a trust. You can also find out from your local DMV the procedure to follow to exchange a vehicle into a trust. There is a tricky way that works in some states. Suppose the vehicle is registered in the name of "John Doe." Ask your DMV to change the title to "John Doe or (name of trust)." A month or so later, ask your DMV to change the title to "(name of trust)." Suppose both vehicles and real estate are owned by the same trust. A vehicle is involved in an accident, and the owner (the trust) is sued. Then all the assets owned by the trust are at risk. That's why it may be necessary to use several trusts in order to create "watertight compartments." Asset protection can be further strengthened by certain trusts file liens against the trusts holding assets. Q. In the case of assets that are actually equity in mortgaged assets, how is the equity exchanged into the trust? For example, I own a home worth approximately $200,000 with a 30-year mortgage of $100,000. How do I exchange the $100,000 in equity into the trust? Note that in Texas it is not possible to simply get a home equity loan and transfer the cash as this is a so-called "homestead state." A. A trust that you manage files a lien of $120,000 against the home. That protects your equity, because if anyone tries to foreclose, they have to pay off the lien first. Q. The mortgage note reflecting the $100,000 mortgage mentioned above has a pointer to me. It would be a simple matter to correlate the pointer with the asset in question. Is there a way to hide this correlation? I.e., is there a way to get the name on the mortgage note changed? A. Generally, mortgage companies won't allow this. Simply filing a lien against the property solves the problem. Q. Are there any other ways to handle these situations? A. I've heard that in some states, real estate that has a mortgage can be exchanged into a trust by recording a grant deed, without the permission of the mortgage holder. For vehicles where there is a lienholder, that lienholder must give his approval of the exchange before the title can be changed. This permission is in the form of a letter stating that: a) they acknowledge and approve the exchange and; b) they are still the lienholder. If the lienholder will not approve the exchange, the vehicle can be exchanged by filling out a "Bill of Sale." A Bill of Sale form can be obtained from any stationery store. When the lien is fully paid off, the title can be transferred to the trust.

Q. I have exchanged everything I own into several Pure Contract Trusts. What next? A. If you've exchanged everything you own into Pure Contract Trusts, then it's best if you cease to "exist" as an entity. That is, everything you buy, sell or contract is done in the name of the Trust for the Trust. Q. What if I should become bankrupt? A. Your personal bankruptcy has no effect on the trust assets. John King placed roughly $240 million into a trust for his family, and later declared bankruptcy to 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 the bankruptcy. Note here, however, that exchanging assets into the trust cannot leave you insolvent, or without the means to pay your present bills or expected future bills, or contribute to your personal bankruptcy. If so, then again, the exchange of assets into the trust can be set aside as a fraudulent conveyance. Q. What is fraudulent conveyance? A. Suppose the IRS or a creditor sent you a demand for payment of $20,000. You then exchange all your assets into a trust to evade the creditor. This would be fraudulent conveyance. The safest way to protect yourself against a possible charge of fraudulent conveyance is to arrange your affairs so it's never your assets being exchanged into a trust. If it's legally possible, you should seriously consider changing your status to "nontaxpayer" - someone with no tax liabilities. Also, whatever arrangements you make, should be done well in advance of any "troubles." If you wait till there's "trouble," and then try to "hide assets," you may set yourself up for a charge of fraudulent conveyance. PROPERTY Q. Do individuals have common law rights to the fruits of their labor? A. Yes. Individuals have an inalienable right at common law to labor and to the fruits of that labor. This is a natural property right and a constitutional right to be protected from unlawful interference from government encroachment. Q. Can property be added to the trust? A. Any property can be added at any time by the Managing Director(s) to the trust. Q. Can the trust sell property? A. The Managing Director can sell trust property at any time as long as it's done in the name of the trust. Q. Do I have to notify the County Recorder each time I add property to the trust? A. No. Once a Trust is recorded, the County Recorder does not have to be notified that property has either been sold or added, other than the normal recording of real estate deeds. Q. Is there a limit on property I must own in order to create a trust? A. There is no minimum or maximum amount of property that can be held in a trust. Q. Does all the property I own have to be exchanged into the trust? A. No. For ideal privacy and protection, all major assets should either be in trust or liens should be filed against them. High liability vehicles such as automobiles, motorcycles, boats, and aircraft should be placed in separate trusts.

Q. Can the IRS seize property or bank accounts which are in a trust? A. In practice, IRS agents can do anything they want. Some of them operate as if they are above the law. Legally they can't seize anything without a court order. Legally they also can't seize anything for any liability of the Managing Director. In practice, though it's illegal, if there is a paper trail from the manager of a trust to the trust itself, IRS agents sometimes operate as if the trust doesn't exist - for example, if you exchange your house into a trust by quit claim or warranty deed (creating a paper trail), they may simply sell the house. A very powerful way to protect against this is for another trust to file a lien against the house. Q. Can I exchange real estate into the trust and then immediately sell the property? A. Yes. You can, in fact, sell either the property or the trust itself (which includes the property). Of course, to sell the trust itself you would have to find a buyer willing to learn how to use the trust. Two of the criteria you apply to decide how to structure such transactions are: (a) Who might see the transaction?; (b) What will they see? Q. Do real estate deeds have to be recorded? A. Yes. Most state statutes provide that although it is legal to not have a deed recorded showing a transfer of property, such a transfer is held invalid unless and until the deed is recorded. Q. If I move to another state, do I have to record the trust there? A. Once the trust is recorded in one state it does not have to be re-recorded in any other state. However, if real estate is to be exchanged into the trust, and the property is located in a state other than where the trust was originally recorded, then the trust may have to be recorded in the second state. An "extra front page" of the trust document is provided for this purpose. Q. How do I show in the trust that property has been added, sold, or purchased? A. As property is purchased, the title, deed, or bill of sale should be made out in the name of the trust. On 'Schedule A' add this newly acquired property (real estate, vehicles, and other major items) to the list. You can add an additional pages as necessary. When property is sold, a line should be drawn through the item on 'Schedule A' and the notation made: 'sold on (date).' For minor items, use 'Schedule B.' (The trust documents you receive will include Schedules A and B.) Q. How are household goods and personal effects listed? A. Items in a household don't have to be itemized. They can be listed simply as household goods and personal effects on Schedule B. However, if there are things of great value such as antiques, coin collections, valuable jewelry, etc., these should be listed individually on Schedule A. Q. How are items which are used in business listed? A. Inventory, tools, equipment, furniture, etc., used in a business should be listed separately and itemized whenever possible. Inventory items can be listed as the inventory of such and such business. Hand tools and other small tools can be listed as small tools. Realize that all this information is private. Records are kept for the benefit of the Managing Director(s). The records also need to be such that, in case of the demise of the current Managing Director, the Certificate Holder and/or new Managing Director will know what is owned by the trust and what they have to do with these assets.

TAXES AND REPORTING REQUIREMENTS Q. Do I have to tell the IRS that I manage a trust? A. No. The less you tell the IRS the better. You don't own the trust and you're not a trustee, therefore you have no responsibility to even admit or deny the existence of the trust. Q. Will the trust make me exempt from taxes? A. The Trust will not make you exempt from taxes. If you are liable for taxes, you, individually, are still responsible for any taxes on any "taxable income" you receive. The trust itself is not liable for taxes such as inheritance taxes and capital gains taxes. It also avoids probate. Q. Do I have to file a trust tax return? A. No. The Pure Contract Trust is not a taxable entity and has no reporting requirements. The only exception is if the trust is involved in business related to tobacco, alcohol, firearms, or anything subject to excise tax. Q. What are the technical legal reasons why, unlike a corporation, the Pure Contract Trust has no reporting requirement to the state? A. "The Pure Trust is a common law entity formed by contract, and thus is not subject to the same types of state regulations as a corporation." Elliot vs. Freeman, 220 U.S. 128. Q. If a government agent walks into my place of private business (operated as a Pure Contract Trust) seeking information, how should I respond? A. State that it's a private business. Ask him to put his questions in writing. Request that he not phone you. This issue is covered in considerable detail in Reports PCT05 and PCT06. "The cooperative taxpayer fares much worse than the individual who relies upon his constitutional rights. Only the rare citizen would be likely to know that he could refuse to produce his records to Internal Revenue Service agents. "U.S. vs. Dickerson, 413F 20 1116. Hill vs. Philpott, 445 F2d 144, 146 held: "In numerous cases where the IRS has sought enforcement of its summons pursuant to statute (26 USC 7402), courts have held that a taxpayer may refuse production of personal books, and records by assertion of his privileges against self incrimination." The court quoted Stuart vs. U.S., 416 F2d 459 and U.S. vs. Kleckner, 273 F Supp 251. Q. Does the trust exempt me from property and sales tax? A. No. The trust does not exempt anyone from property or sales tax. Q. What if the IRS says that an individual is personally responsible for taxes due on trust income? A. Refer the IRS to the principals (trustees) - see Report #PCT06. For additional details on how to deal with the IRS, see the Terra Libra tax reports. MONEY AND BANKING Q. Should I use the banks? A. A trust can have a bank account in its name. How to open bank accounts while maintaining privacy is covered in detail in The Pure Contract Trust Manual.

Q. Can the trust borrow money? A. The Trust is authorized to borrow money. It's a separate entity (person). It can pledge its assets collateral. Q. Do I have to get a trust identification number (EIN) form the IRS? A. No. You may need a number to open a bank account. This is covered in detail in The Pure Contract Trust Manual. Q. How can I withdraw money from a trust? A. The Pure Contract Trust can pay the Managing Director in the form of both salary and expenses. The trust can also loan money to the Managing Director. Q. Can I assign salary or commissions to a trust? A. A trust can contract with any individual, organization (or even a corporation) to provide goods or services to that that entity in return for valuable consideration which will be received and owned by the trust. Q. If my employer makes out my paycheck directly to the trust, will that exempt me from taxes? A. Your paycheck needs to be made out to you. However, instead of employing you, the company could contract with the trust to provide services. Unfortunately, some companies will be reluctant to do this, but there's usually no harm in asking them. Q. What about credit cards? A. Never use any credit cards in the name of the trust. If you wish to eliminate or reduce "paper trails" or keep your and the trust affairs private, you should eliminate credit cards alltogether. However, credit cards may be obtained from a foreign bank with near-perfect privacy. Q. Can a trust own stock in a corporation? A. Yes. The corporate stock would be issued in the name of the trust rather than in the name of the individual. All dividends would be paid directly to the trust. Q. What is co-mingling? A. Co-mingling is when trust property and assets are mixed in with personal property and assets. It's also where title to trust property is bounced back and forth between the trust and a personal name. Depositing a check made out to the Managing Director in a trust account would be co-mingling. Writing checks from a trust account to pay for personal expenses of the Managing Director is another example. Apart from leaving "paper trails," co-mingling is strong grounds for claiming that a trust is a sham. Q. What about insurance? A. A trust can have its property insured in the same manner as an individual. A vehicle owned by a trust is simply insured in the name of the trust. Regarding life insurance, notify your insurance company to change the beneficiary to the name of the trust. (Insurance bureaucrats in some states may require that the trust be "registered with the government" before they make it a beneficiary. You may have to use resourceful means to overcome this problem. For example, persuade a sales person from the insurance company to help you cut the red tape; set up a Wyoming Trust, register it as required, and make that the beneficiary; etc.) Medical insurance stays the same as before the trust was implemented because it is the individual who will become ill, not the trust.