Overview

What Type Of trust Is Used

The trust is an irrevocable, contractual, complex trust which affords privacy and continuity. The
complex trust affords the trustees to either accumulate or distribute income. Contractual means
that it was created by contract between the creator and the trust.

What Are The Main Advantages Of trusts

If a landlord has all deeds to properties in a corporate name and a disaster occurs at one property,
all of the properties could be lost. However, if each property was owned by a trust and a disaster
occurs, then only that property could be lost. The landlord did not own the properties so he
would not lose all of the other properties.

Is There An Advantage To Selling Real Estate If It Is Owned By A Trust

A property in trust has the advantage over other types of ownership because the trust can either
deed the property to a new owner or the trust itself can be sold. If the trust is sold there is no new
deed required. In such a case it is a personal property sale and there is no transfer tax to be paid.

Does The IRS Approve Trusts

The IRS acknowledges trusts by having trusts use the SS-4 Application, Schedule C, 1041 and
K-1 forms. Because these are pass through (dry) trusts the taxes can even be reported as a sole
proprietor or as a corporation. In some cases people prefer to have the trust pay income taxes. It's
a business decision. A trust can obtain a Federal Tax Employer ID Number (EIN) and use it for
banking and recording purposes.

Do I Lose Control Of The Assets

Although one cannot be the one who creates a trust and manages it, they do appoint the trustees.
Trustees protect the assets of the trust. Those who create it also appoint a protector, who
safeguards the interest of the creators/beneficiaries. If a trustee is doing something wrong the
protector and Settlors can remove that person and appoint another one. Also, if the Settlor wants
to remove and appoint a new protector, they have the power to do so.

Must The trust Be Recorded

The Bill of Sale in the personal property trust will be recorded. In some circumstances a
memorandum of trust is recorded. If there is real estate the deed can be recorded, which shows
that the title is no longer in your name. In some states there is a transfer tax if real estate is placed
in trust. However, the memorandum of trust contains verbiage which usually will suffice to
prevent one from having to pay the transfer tax. You should check at the county court house to
see whether a tax must be paid in your state or not.

Should The Trust Open A Bank Account

Yes, and when one is opened, then only the trustees can sign checks. The creators and
beneficiaries cannot be trustees. Many people who create trusts want to sign the checks
themselves, but that creates problems.
Can I Change The Contents Of The trust
Yes. Although the trusts are irrevocable, they are amendable. Therefore, in the best interest of
the trust, assets can be transferred out of or into the trust, mortgaged or leased.

What Happens If You Move To Another State

Nothing. All of the provisions remain in effect. You move but the trust does not unless you
choose to move it.

Must A Trust Have An EIN

If there is need for a checking account or other banking needs, the trust has to have one.

Are The Laws, Regulations, And Rules Uniform In All States

No, because the laws, rules and regulations vary from state to state and county to county, it is up
to you to find out how to operate your trust program. Not only that, but there are variations
within counties in a state. This is very important when recording documents dealing with the
trusts. If an older person places their real estate in a trust and then goes into a nursing home and
the federal government pays for their upkeep, the real estate has to have been in the trust at least
five years prior to their death. If it is not in the trust for five years, upon the death of both the
husband and wife, the government can take the real estate to pay back their outlay.

What Happens When I Die

A person dies, the trust does not. You name the people who will become beneficiaries upon your
death. Usually, it is your children or grandchildren.

Our Purpose
Many people have heard about the rich protecting their assets by using trusts but never imagined
they could afford to protect their family and hard earned assets the same way. Now you can.
With the proper trusts in place, you and your family can move toward becoming invisible and
judgment-proof. You can place your real estate and personal property into trusts. The assets will
then be owned by the trusts. You control the future of the assets, even after your death. Wills
become unnecessary because you die, but the trusts do not.

Our goal is to help people set up an asset management and protection program. We endeavor to
help you make your family judgment proof. The program is not set up as a tax haven. How you
operate your program is a business judgment for you to make.

Trusts have to pay taxes on income earned. Although a trust can be taxed slightly higher than an
individual, paying money to consultants and trustees or distribution to the beneficiaries are valid
expenses of the trust and transfers the taxes to those who receive the income. This is usually at
their lower tax rate. A trust doesn't have to pay social security on its income. This whole question
is an academic one because your program is a pass through program, so the tax can be paid by
the people who receive the income, not the trust.
At tax time there is a variety of ways to report income. You might elect to file taxes as a trust, as
a sole proprietor, or an S corporation. The decision about tax reporting is flexible and is up to
you and your CPA. Check into the best method for your situation and do accordingly.

You can use five or six trusts to provide for asset management, estate planning and management
for a family, or dozens of trusts to enable a large company to operate using the trust program.
Professionals are able to cut down on their liability insurance because they no longer own assets
which could be at risk. A doctor can put all of his equipment into a separate trust, his office
furniture in another trust, and then lease the offices from a real estate trust which owns the
building.

Be Aware
Many trust advisers will create one trust and place all your assets there. "All your eggs in one
basket", so to speak. If you were involved in an accident that was beyond your control, an “Act
of God”, and it resulted in major harm or even loss of life to others, you would likely have
judgments against you. Without trust protection you could easily lose everything you own. If all
your assets were in one trust you would explain that you own nothing and are therefore
judgment-proof. However, the law would allow that party to next pursue the owner of the
vehicle…..your trust. The “owner” of the vehicle is the owner of all your other assets and they
can then be taken as easily as if they were being taken directly from you. Proper asset
management dictates that you have a “basket for each egg”. A trust for each major asset.

One for:
§ Your home
§ Your personal belongings
§ Your car
§ Your spouse’s car
§ Your boat, etc...

But let’s go further. As your material wealth increases, what about;

One for:
§ Your motor home
§ Your vacation home
§ Each of your rental properties

Now you are beginning to understand how the rich live. Why the Rockefeller family, for
example, has well over 200 trusts. Had your assets been properly protected when the above
mentioned accident might have occurred, you would have had no assets to take so the total asset
losses could have been limited to the loss of the equity in the vehicle owned by that trust. As a
responsible citizen, you would have been covered with liability insurance that would have been
available to help cover real losses. And a final note for this section: Revocable trusts often expire
when the Settlor dies creating a situation not unlike that of a will. An irrevocable trust is
ongoing. It is irrevocable…..but amendable!
Irrevocable Trusts Should Be Used
You cannot be both a trustee and a beneficiary of a trust. Therefore, you must choose your
trustees wisely. This should be of great concern to anyone who wants to use trusts as a vehicle
for asset management, protection, and control. The trustees look out for, and protect, the assets of
the trusts. The trusts have a Protector who is there to look out for the interest of the beneficiaries
and Settlors (those who put assets into the trust and are usually called “Settlors”, "Grantors", or
“Creators”).

The trustees have the power to hire consultants to help them run the trusts. The power to contract
is contained within the trust and the minutes, but the contract itself is a separate document. It is
important to remember that the trustees cannot be the Settlors or their children or grandchildren
if they are the successor beneficiaries.

Trust History
From the time of the early Roman Empire until today, the trust has been used successfully.
Caesar appointed some Roman Senators to be his trustees to look out for his assets when he was
at war and then after his death. Trusts have been used in England for centuries. Patrick Henry set
up one of the first trusts in America. Called the North American Land Company, it was set up in
1765 and is still operating today.

The trust allows one to leave assets to beneficiaries without going through probate. Because of
the privacy of the trust, the names of the beneficiaries are not disclosed. As with any entity, there
are taxes to be paid when income is generated. Unlike a person, the trust lives from generation to
generation. We may die, but the trust does not. There may be no probate expense or delay. When
the assets of the trust are sold, however, there may be tax consequences. The wealthy have used
the trust for centuries. In this country some of those who have used trusts are the Kennedy
family, the Henry Ford family, the Astor family, and H.L. Hunt. The Rockefeller family has
established more than 200 trusts.

President Ronald Reagan and other Presidents of the United States believe in, and have used, the
trust. It has been disclosed that many Members of Congress use trusts. Not only do trusts keep
asset ownership and management private, but also make one judgment proof. If your name is
Hunt, Caesar, or the person next door, the trust is for you. Most people think that the trust is only
for the rich, but that is wrong. Anyone who wants to preserve, manage and control their assets
while alive, and after death, can benefit by using trusts.

An owner of a business would be foolish not to use trusts. The trust allows you to run a business
while making you and your business judgment proof. The use of various trusts places the
business stock or ownership in one trust and the equipment, tools, and inventory in other trusts.
Today, those in the medical field, professional people, and business owners are foolish not to use
trusts. Although many people feel that other aspects of doing business are the worst enemy of
business, the jury has become their biggest enemy. The jury has helped create prohibitive
insurance costs for the average hard working business person.

The advisers for the very rich use complex irrevocable trusts. A "complex" trust is better than the
"simple" trust because it allows more flexibility. Proper templates fulfill Black's Law Dictionary
definition of complex trusts. That is, the trustees have complete discretion as to whether to
accumulate or distribute trust income. The trustees may or may not distribute income annually,
and/or make distributions other than income. Under certain circumstances there can even be
uneven distributions. When your CPA does your taxes they just check the box "Complex" on the
tax form.

Accountants and financial planners operate within the system. Most of these professionals set up
living trusts. Most of the standard “form trusts” that are used by these consultants consists of a
living trust, possibly used in conjunction with a corporation, joint venture, or some other
statutory business. A statutory business program does not provide the privacy that a proper trust
program will. By contract, you create a private trust and create a new, private identity for
yourself. You transfer assets into a trust that you use and control during and after your life. The
properly drawn trust will permit you to decide who will manage your assets and distribute them
when, and as, you wish. It could be prior to, upon, or after your death. And it is much easier to
designate certain assets to particular children the way that you want, without governmental
intervention. There is no will, so your children will not be fighting each other someday over who
gets what. The trust program provides a shield of protection and privacy. It can make you
judgment proof and can protect you from bankruptcy. The assets you control remain within the
trust and the public does not know what assets are “yours”.

There are various reasons for setting up trusts. For some people limited liability is primary. For
others, excessive taxation is their biggest concern. For them proper estate planning is essential.
Many people want complete privacy. Your trust program can accomplish these goals and relieve
you of many other concerns. In order for complex trusts to fulfill legal requirements, there must
be a contract between the person setting it up and someone else. You create your program by a
contract between those who create the trust and the accepting trustees. It qualifies as a contract
because it meets the essential elements of a contract:

1. The parties are competent to contract – sane, sober, of age, and drug free.
2. There is a meeting of the minds - an offer and an acceptance.
3. There is consideration - something given by each party. The asset is exchanged for the Units
of Capital Interest – the trustees will manage the assets on your behalf.
4. There is a definite termination date but it can be renewed for successive periods indefinitely.
We make it every 14 years to comply with contract laws of each state.

Many professionals who set up trusts for people create a mystical, complex document. The trusts
we provide for you are simple and can be understood and managed by the average person. You
are judgment proof, but the trust is not. If one's home, car and other assets are all within the same
trust, and there were a lawsuit based upon an automobile accident, then the home and other
assets would be vulnerable. This is overcome by creating trusts where each vehicle, parcel of real
estate, and other assets are each in its own trust.

One of the most difficult problems confronting people is their reluctance to release ownership of
assets. Even though ownership is released to the trust, properly formed trusts allow the trust and
its trustees to carry out the wishes of those who form the trusts. Remember, personal ownership,
not control, is given up. Properly created trusts afford you control of the assets during life and
after death.

The IRS And Trusts

Trusts are authorized because the IRS provides the following forms to be
used by trusts:

§ SS-4 Application for Employer Identification Number (Tax ID #)

§ 1041 - U.S. Income Tax Return for Estates and trusts
§ K-1 - Beneficiary’s Share of Income, Deductions, Credits, etc...
§ Schedule C – income and expenses for trusts

Trust Packages
Some trusts Provide
ONLY ONE TRUST:
§ A Living or Family trust, which holds all the assets.
CONSEQUENCES
§ All of your assets are in one trust.
§ Because everything is in one trust, you might be judgment proof, but your trust is not.
§ Income automatically is passed on to the beneficiaries.

We Provide
SEVERAL PASS THROUGH TRUSTS AND:
§ A management trust.
§ Your retirement is managed by those whom you appoint.
§ One of the greatest prenuptial plans ever devised.
§ Assets can be added or removed from the trust.
§ A spendthrift clause prevents irresponsible waste.
§ Your children's spouses cannot get assets.
§ Your trusts outlive you, they are irrevocable.
§ No probate, so there will be no probate delay.
§ Income can be automatically passed on to the beneficiaries.

Keep Control Of Assets

§ Each asset is in a separate trust. If there is a lawsuit it may get no further than discovery before
the suit is dropped. You personally are judgment proof (formerly owned assets are owned by
trusts).
§ Some consultants or advisors make themselves a paid trustee of these statutory trusts they set
up.
§ With our trust system, you can determine who the trustees will be and who the successor
trustees are to be.
§ The trusts are irrevocable, but amendable, so trustees, protectors, assets, and beneficiaries can
be changed. To change beneficiaries, the current beneficiaries would have to turn in their Units
of Capital Interest and have new ones issued by the trustees.
§ Restrictions can be placed as to when, or if, beneficiaries receive income or asset distribution.
§ You can give your children a "life estate" and then state that the asset can only be sold after so
many years and/or only for certain reasons.
§ It can be stipulated that only blood relatives can be beneficiaries. That is handled by a "per
stirpes" clause, if you wish.

Types Of trusts
Management trusts
Some people who create trust programs have the trusts work in conjunction with other entities.
The trusts lease the assets to, and sign a management agreement with an LLC, a company, a
partnership, or corporation, which already has an existing banking relationship. This affords
anonymity, which is one of the main reasons people use a trust program. It also may contract
with consultants. A trust can obtain a federal tax ID number, open a checking account, and
obtain a safe deposit box. Other trusts in the program can then contract with this trust to receive
and disburse money on their behalf and be managed by it.

Pass Trusts
These trusts contain only one asset and are a valuable tool to help make you judgment proof. If
your car was in a separate trust and there was an auto accident, only that asset could be taken -
not any other trust’s assets.

Although there are various types of pass trusts, your package includes:

§ A real estate trust. Each parcel of real estate is placed in a separate trust so that if someone
gets hurt on the property, the only asset they can take is that particular property. Also, when it
comes time to sell the real estate you might just sell the trust and the purchaser names new
trustees, protector, and beneficiaries. Because personal property, and not real estate, was sold,
there may be no real estate transfer tax or stamps required for the sale. In addition, some states
have laws stating that assets must be in a trust for a stated period of time prior to death or filing
for bankruptcy.
§ An automobile trust. A realtor who had an auto accident and lost everything said, "Anyone
who carries people in their car is a fool not to have everything they own placed into trusts.”
§ A personal property trust. All non-real estate is called personal property and is placed into a
trust so that creditors cannot take it. This would include all clothing, furniture, jewelry, notes
owed you, your TV – Your "stuff."
§ A variety of other pass trusts. Examples are: dangerous equipment, animals, insurance, tools,
attractive nuisances, and guns.

Keep Records and Receipts

You still have to get receipts. Although you must keep minutes of meetings of the trustees, these
minutes are not available to be read by the public! But you still have to keep them. Write
them into everyday language.

Certificates of Units of Capital Interest

The "beneficiaries" do not have ownership of the trust. They are issued Certificates of Units of
Capital Interest, which are non-ownership and non-voting units. Each trust must have at least 100
units of capital interest.

Banks and Trusts

In order to open a trust bank account you have to fill out an SS-4 form to apply for an Employer
Identification Number (EIN). You do not open your account until after you have applied for, and
received, the tax ID number (EIN). When opening a trust account a social security number must
be used. If you decide to have your trust open accounts, we suggest that you have your trustees
open the account and obtain a P.O. Box. You must apply for the EIN and use the new P.O. Box
as a return address on the EIN application before you open the trust account. If you want to have
a trust set up a bank account, the management trust would be the trust to open it. The bank may
ask for a copy of your trust. If so, give the financial institution the "Bank docs" that are provided
for you with your trust package. This explains in writing that this relieves the bank of any
obligation or responsibility, which is really their only concern. The rest is your family's personal
business and is none of the bank's business.

Deeds
Although there are many types of deeds which can be found in stationary stores, it is a good idea
to have a title company prepare the deed because different deeds place a different kind of
liability upon the seller. The quitclaim deed is often used, but let the title company decide. When
you transfer the home that you live in and it is mortgaged, it is advisable to notify the holders of
existing liens that you are setting up an asset management and estate planning trust for your
family. If you do not, the lender may say that transfer to a trust will terminate the mortgage and
call the note. The Federal Due on Sale clause law prohibits them from doing this if it is your
primary residence (your domicile), but for peace of mind contact your lender. If you do not live
in the real estate, notify the lender that you are setting up an asset management and estate
planning trust program to protect your family. If you do not notify them there might be problems.
Do not transfer ownership to the trust if it is not your residence and you have not notified and
gotten authorization from the lender. As long as you notify lenders and have their permission,
they cannot call the note. Very rarely do lending institutions refuse permission to place non-
residence property in trust as long as you work with them.

The Real Estate trust: You must give a deed to the trust. Note: when a deed is given to a trust,
one must recite in the deed “To the trustees, as trustees, and to the ________ trust.” If this is not
done there can be serious problems.

The Automobile trust: This trust is funded by the vehicle. You have to apply for a form from
the motor vehicle department to transfer ownership. Most auto lenders will not allow one to
transfer ownership to a trust.

The Management trust: This trust is usually funded by funds to put into the new trust bank
account.

Personal Property trusts: Once items are placed in this trust by bill of sale or an assignment, it
is funded. This is accomplished by stating in Schedule A that all of the personal property is
transferred to the trust. Insurance policies and stocks and bonds can be assigned to this trust or
placed into their own trust. Be sure to record the bill of sale that is incorporated in your material.

Your Trust Program

§ Who will your trustees will be? It must be someone whom you trust. Every trust package must
have at least two trustees. They cannot be Settlor, beneficiaries, or successor beneficiaries.
§ Be thinking of names you want to give your trusts. This will help keep your identity secret.
§ Address: Most people use a P.O. Box number, which keeps you address private. Have a trustee
§ Generally, before you can use your trusts they must be funded or they will not be valid.
§ If you wish, you can record the memorandum of trust at the courthouse, but usually the bill of
sale in the personal property trust is the only document recorded. With the real estate trust, the
deed will be recorded.

Controlling The Trusts

§ There is a contract between the Settlors and the trust.
§ The consideration is the exchange of assets of the Settlor for the beneficial units of the trust.
§ The Settlors appoint trustees, who will manage the trusts. The trustees must look out for the
interest of the beneficiaries, assets, and the trust.
§ The Settlors place their assets into the trust.
§ The Settlors appoint a Protector who looks out for the interest of the beneficiaries.
§ The trustees may appoint additional trustees, with the consent of the Protector and the Settlors.
§ If there are no trustees left, the Protector may, with the consent of the Settlors, appoint a new
trustee. The Settlors appoint a new trustee if there is no Protector. If there is no Protector or
Settlors, the beneficiaries or successor beneficiaries may appoint a new trustee.
§ There are beneficial interests that are distributed by each trust. The beneficiaries, who usually
are the Settlors and later, their heirs, are liable for any applicable income taxes.
§ The Settlors appoint successor beneficiaries who succeed them upon their deaths.
§ Trustees may be removed by the Protector with the permission of the Settlors, who usually are
the original Beneficiaries. Upon the death of the original beneficiaries the successor beneficiaries
take their place. The standard of the reasonably prudent person is used. Example: if there is
misfeasance, malfeasance, or wrongdoing and the reasonable person would remove them, then
they can be removed.
§ Asset Management trusts may open their own checking accounts. A corporation may lease the
assets of the trusts and then handle monies by using the corporate accounts.
§ Personnel are given a 1099 and assume their own tax liability.
§ The Board of trustees may appoint officers, directors, managers or agents to act on behalf of
the trust, subject to the approval of the Protector and Settlors.

PURPOSE
The trust Program is set up for asset management and control, and for becoming judgment proof,
not for tax evasion purposes. How you report your income is a business decision that you and
your CPA must make. A trust can contract with an LLC, a corporation or other entity to lease the
assets of the trusts and handle money on behalf of the trusts.
TAXES
The trusts are subject to the laws, rules and regulations of the IRS. Sales or real estate taxes are
paid by the trust. Remember that these are pass through trusts, so the beneficiaries can pay the
income tax.

The Protection Group LLC

theprotectiongroupllc.com

theprotectiongroupllc@gmail.com