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The Art of Passing the Buck
Vol I: The Secrets of Wills And Trusts Revealed
Charles Arthur

The Art of Passing the Buck. Copyright © 2007 by Charles Arthur
Enterprises Trust. All rights reserved. Printed in the United States. No part
of this book may be used or reproduced in any manner whatsoever without
written permission except in the case of brief quotations embodied in
critical articles and reviews.
Any referenced trademarks, service marks and copyrights used within The
Art of Passing the Buck are the respective property of the owner and used
under the nominative use clause.
Publisher:
Charles Arthur Enterprises
12228 Venice Blvd., No. 303
Los Angeles, CA 90066
Second Printing: March 2008
Cover art design by www.arttmann.com
9781257171309

Warning
This information was created to help you, the reader, to make better choices
for your progeny, loved ones and causes you support. This book does not
provide you with the paperwork to create any Will or Trust. We expect you
will consult with professionals in estate planning before you make final
decisions that affect the lives of the people who depend on you.
Likewise, for you who are Beneficiaries, we present key questions for you
to ask about your inheritance. You will find this book can aid you; we are
not offering legal advice.
Information has been gathered from many sources to create this book. We
do not claim to have all the answers. We present this view to add to your
capacity to make informed choices.

Special Note to Lawyers and
CPAs.
Although designed specifically to be easy to read and to understand, we
fully recognize that some of what we cover will, of necessity, not just be
technical and detailed, but may be new, even alien, to you. For these
reasons, we have elected to place much meaty material, both legal and
historical, in the Appendices or in Volume II. Here you will find the case
cites, IRS and legal opinions, and much more. Enjoy, then, the fruits of our
research into obscure texts, littleknown books and the mists of history.

“Do not put your trust in money, but put your money in Trust.”
Oliver Wendell Holmes, Sr. (1809-1894)

Acknowledgments
The pen name “Charles Arthur” represents a group of people contributing
to this work either through sharing direct experience with us, by writing
articles or taking part in an interview.
The information is not only built on experience, but decades of extensive
research. Much of this information has been expressed in various
newsletters and documents published by different Trust organizations and a
stream of articles, and court cases. Not only do we include interviews, but
also we describe experiences. These resources have been summarized and
presented by those who deal in the Trust world, thus creating the broad
database now available in The Art of Passing the Buck.
We thank our Editor, who worked with a team of people while he
researched and wrote portions of new text himself since receiving the
assignment. He raised and addressed many issues, the inclusion of which
improved this book. He labored to excellent effect to make a complex,
scary, often forbidding topic so user-friendly that one of our assistants
volunteered she enjoyed reading it and learned a lot from it. Since
readability and user-friendliness were major objectives in this first-of-its-
kind book aimed not just at the legal and financial communities, but at most
American families, we are thrilled by her reaction.
The resulting two-volume set will, we firmly hope, open eyes and shake the
complacent to their very roots. We aim to give the American people the
information, the options and the power once the sole province of the Super-
Rich and others who are well-connected.
We give thanks to the fine work of all attorneys who continuously grapple
with the difficulties of this subject, and for those who make a special effort
to keep others in the legal community informed. References to those who
work in the legal community, though, do not imply or infer they contributed

to this book in any other way than what they published, and we used as
references.
We would be remiss if we did not acknowledge how much we gained
through reading the book The Constitutional Common-Law Trust1. Within
those pages we had our first glimmer of many aspects of the Common-Law
Trust, which until that point was lost in obscurity, vagueness and the
confusion caused by complicated legal jargon.
Those who are most directly involved in creating The Art of Passing the
Buck drew on the wisdom and the courage of the nation’s founders, who
fought tyranny and sought to preserve privacy. We are especially thankful to
the Quakers (See Appendix A) whose great contribution seems to have been
lost in history. It is thanks particularly to those who gave what President
Lincoln aptly called in his Gettysburg Address, “The last full measure of
devotion” that we still have the Right to Contract and thus, can write this set
of books.

Foreword
Most people have heard of Trusts, but few understand them. Fewer still
know the types of Trusts and their relative advantages and disadvantages.
All of us face transition from this plane to the next. Most of us get involved
as either recipients of monies and goods passed on to us or as people who
will bequeath assets to others upon our deaths.
This work attempts to present you with the major strategic, technical and
emotional issues surrounding one of the most significant events of your
life–inheritance. The information applies to both givers and receivers of
wealth. For those of you who received a windfall, have oodles of money
and do not know what to do with it, this book may just save, not only
relationships with your family and friends, but allow you to keep that
wealth for the rest of your life.
We will parade before you various Trusts and Trust issues to give you an
overview of the value of each Trust type, as well as warn of the traps
inherent in this age-old issue of passing wealth.
We even dare to take you into an in-depth discussion of one of the most
controversial subjects in the realm of inheritance: the Irrevocable Common-
Law Trust. This, when set up properly and managed with care, becomes the
“King’s Trust.” This Trust can perpetuate dynasties. It is the subject of deep
intrigue, and has been constantly under siege by those who would like to
dismantle it by confusing all issues surrounding it. We will show you why.
Even lawyers and CPAs are generally unfamiliar with the immense power,
potential and perfectly legal tax leverage afforded by a properly structured
Irrevocable Common-Law Trust, also known as a Private Trust.
As we will show, ignorance of The Art of Passing the Buck can be
expensive, yet once shown the ropes, you and yours can be savvy when
determining which Trust works best for your circumstances. And to those of

you caught in the muddle of receiving an inheritance, we know this will
clarify many aspects of your own situation. We also hope, if you care to
take on mastering the same techniques the Super-Rich have used for
centuries, you have enough knowledge to separate the con artists from the
knowledgeable.
We believe you should be able to expand your wealth over centuries, just
like the Super-Rich—while minimizing the tax bite and maximizing
privacy.
Further, we seek to discourage those who are unqualified from meddling in
the sophisticated area of estate planning and especially the complex domain
of Trusts. Conversely, we encourage those who have the ability to
determine the future of their progeny.
Join us, then, on this journey into Trusts and learn The Art of Passing the
Buck.

Introduction
Simplification
The subject of Trusts is complex and mysterious. An ancient system used to
pass wealth has gone through a metamorphosis that only time can produce.
Despite this, though, the basics of setting up assets for Beneficiaries
remains. Keeping this one thought in mind, the variety of ways to do this
becomes simpler, and the complexity drops away.
In reality, the average person with a high school education can understand
the basic concept of any Trust. Within this knowledge is the art of wealth
building and management–a subject that everyone should know, at least at a
working level.
Those matters considered technical, or that seem more suitable for
professionals, appear in Volume II where we included court cases and the
more intricate details of Trust structuring. Other matters, some
controversial, are in the Appendices of this book.
So, even if you feel inadequate to the task of sorting out wealth and
inheritance, feel free to charge right in. We wrote this book for you.
“No Classroom Text Available”
We discovered, after over a decade of devoted research, that most people
are woefully ignorant when it comes to the subject of inheritance.
The emotional aspects of inheritance are daunting. When combined with a
forest of jargon, complex financial issues and the possibility that lawyers
and CPAs are themselves usually not taught certain key concepts, the
subject rapidly becomes overwhelming. According to CPAs with whom we
have spoken, the subject of Trusts is not taught in any complete form, and
the IRS volunteers nothing about the subject.
You might be disturbed to learn that it is common that most lawyers and
CPAs have not been properly educated in the basics of Trusts. This is

because there has been a concentrated effort to narrow the field of legal
instruction and to control the courts. The book, Justice for Sale, documents
a multifaceted, comprehensive, and integrated campaign set in motion by
large corporations to create taxpayer-subsidized law firms to ... shape law
school curriculum and to affect the minds and decisions of sitting judges.2
This is also reinforced by a statement in A Trustee’s Handbook (7th ed) by
Loring:
In the late 1960s law schools set about the process of
downgrading courses in the law of trusts from required to
elective status, so that while almost all the law books have made
courses on state regulation mandatory, only a few continue to
afford the law of trusts the status it enjoyed at the turn of the
century. In most law schools trust law is now an afterthought,
buried somewhere in the elective course on estate planning.
Likewise, in the preface to Income Taxation of Trusts, Estates,
Gran tors and Beneficiaries, author Jeffrey Pennel states:
“Unfortunately, when I first recommended to our curriculum
committee that we add a course on this subject, there was simply
no classroom text available.”
Because Trust literature is seldom published, it is virtually
impossible to go to any single source to get reliable information
about benefits of every Trust. Further, available information on
Trusts has been complicated to the point that the average person
has almost no chance of understanding even the basic principles.
The information is out there, though, if you know where to look.
The basic principles of Trusts and their management are simple,
and proper administration of a Trust is no more difficult, and
often easier, than running your basic small business.3
Our purpose is to demystify inheritance by explaining, in clear,
straightforward terms:
The basic ideas;
The nature and history of Trusts;

What the various kinds of both Statutory and Common-Law Trusts can
and cannot do for you and yours;
What you should know about the Irrevocable Common-Law Trust that
offers, among all the Trust types, the best combination of asset
protection, for
￮  Asset growth
￮  Tax minimization
￮  Privacy in an ever less private world
￮  Flexible Beneficial distribution
Once you have a picture of a sophisticated and complete Trust, you can
more easily discover what other Trust type suits your needs, or whether the
Trust from which you receive benefits properly handles administration.
Whether or not you use the information contained here, we are certain that
reading The Art of Passing the Buck will better prepare you and yours to
deal with the emotionally charged matter of preparing for your passing.
This alone pays big dividends by giving you clarity about your choices and
in reduced personal and family stress.

Table of Contents
Title Page
Copyright Page
Warning
Special Note to Lawyers and CPAs.
Praise
Acknowledgments
Foreword
Introduction
Dedication
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Chapter 13
Chapter 14
Chapter 15
Chapter 16
Chapter 17
Chapter 18
Chapter 19
Chapter 20

Chapter 21
Chapter 22
Chapter 23
Chapter 24
Chapter 25
Glossary
Appendix A
Appendix B - Statutory Trusts
Appendix C
Appendix D
Appendix E
Appendix F - Reasonable Skill
Appendix G - Definition of United States
Appendix H
The Art of Passing the Buck - Volume II Trust Blueprints
Need Help With Your Trust?

We dedicate this book to the next genera- 
tion in the hope that lives can be more 
fulfilling, the People better educated 
about inheritance, and the legal profes- 
sion more fully informed.

Chapter 1
The Core Issue—Results
To see why ignorance is not bliss when it comes to inheritance, please read
and carefully consider the following item:
If Only He Cared ...
In an article in the Los Angeles Times4, the Trust Grantor, the one who
started the Trust, remarried a longtime girlfriend, and died suddenly several
weeks later. The new wife inherited the estate. Since the Declaration of
Trust restricted her use of neither Trust principal nor income, she was able
to do as she chose. She chose to deprive the original Beneficiaries (her dead
husband’s children) of their rightful inheritance.
When she was finally, expensively, forced into court by the original
Beneficiaries and made to produce the Trust documents, they found she had
been given carte blanche with all funds, named her relatives as new
Beneficiaries, and planned to pay the original Beneficiaries a pittance ...
eventually.
The column writer advises that this could have been avoided if the husband
named both his wife and a Cotrustee to the estate. This would restrain her
actions as she needed the Cotrustee to cooperate before she could use funds.
The bottom line in the article, written to the ex-wife, the mother of the
children suing the estate, is expressed clearly in these two sentences,
One would like to think the dear departed didn’t know his wife
was not trustworthy, but that rather strains credulity. It’s more
likely that, for whatever reason, he didn’t care enough about
making sure your kids got an inheritance to put sufficient checks
and balances on her.

And here’s another point to ponder: This stems from what might be termed
a “bypass” Trust–although the column writer wasn’t sure–which is another
name for a Revocable Living Trust.5 When the Grantor of a Revocable
Living Trust passes on, the Trust automatically turns into an Irrevocable
Trust. Why? Because the Grantor is no longer alive to change his or her
mind, and what is written in the Declaration of Trust, from now on referred
to as Trust Indenture or Indenture, is cast in stone.
In reviewing some Revocable Living Trusts, we discovered they are weak,
lack direction, and in general, the Trust Grantor casually assigns funds after
his or her death. We suggest that even a Revocable Living Trust, in which it
states the Trust Grantor is the primary focus of the receipt of funds until his
or her death, be written from the view of irrevocability. The Trust Grantor
needs to consider the results of nonchalant assignments and to ensure the
Beneficiaries’ needs are more broadly and seriously addressed.
There is also another choice: set up a Testamentary Trust6 with people
selected as Trustees. When you pass on, the assets are then placed into this
newly created Irrevocable Trust. It is administered by a Board of Trustees
or only one Trustee—preferably not a family member—whose job it is to
take care of all the Beneficiaries.

Chapter 2
What is a Trust?
Before we go on much further, though, we need to make sure you
understand what a Trust is.
Refer to Figures 1 and 2. A Trust is a collection of assets transferred into
financial accounts under the name of a Family Trust. For example, the name
of the Trust might be the Smith Family Trust. These assets, now identified
as belonging to the Smith Family Trust, are managed for the benefit of
Smith family members or other appointed people and groups.
All recipients of goods or funds are identified as Beneficiaries. They
receive the benefits of the Trust which may be assets kept or cash flow
generated. The relationships of the Beneficiaries to the Trust and how these
benefits are given to them control what type of Trust is set up.
The collection of transferred assets, identified as corpus, can be
investments, rental property, promissory notes, business ventures, etc., all
designed or selected to produce a cash flow for the Beneficiaries.
Some Trusts pay most of funds at the death of the Grantor(s), from now on
referred to as Grantor, and some Trusts provide a cash flow to Beneficiaries
during the lifetime of the Grantor. The Grantor does not have to die to
benefit his or her family. Remember, though, that ALL Trusts become
Irrevocable on the death of the Grantor.
How Does a Trust Work?
There are two types of Trust—Revocable and Irrevocable. The Living Trust
is the most common Revocable Trust type. This means you can revoke the
Trust at any time. A Revocable Trust, though, eventually becomes
Irrevocable. This means the person who set up the Trust passed and can no
longer change the terms of the Trust, thus making it irrevocable. Please

refer to the following two Figures to see how funds flow through these two
types of Trusts.
If you would rather not deal with these details, you may turn to Chapter 3 at
any time to read about the benefits derived from being born into a Trust
environment.
Grantor/Revocable Trust - Figure 1
The person(s), such as the husband and wife, who sets up the Trust has
assets to establish the initial corpus. This is how the Trust is funded. He or
she transfers title to the Trust. In this diagram—Figure 1, the Family Trust
is set up. The name of this Family Trust can be the last name of your great-
grandmother, or it can be your name. By creating a contract known as a
Trust Indenture (also known as a Declaration of Trust), a Trust is
established. The Grantor as the Trustee sets forth the rules and regulations
under which he or she agrees to manage funds for the Beneficiaries. In a
Revocable Trust, the immediate Beneficiary is usually the Grantor and
spouse, after which are what is known as the Contingent Beneficiaries.
These are those people who receive funds after the Grantor passes. During
the life of the Revocable Trust the Grantor can give gifts to the Contingent
Beneficiaries, but most of the inheritance remains under the control of the
Grantors—usually the parents.
Acting as the Trustee, the Grantor Trust financial accounts by opening them
in the name of the Family Trust.
For funds to pass without going through probate, the Grantor adds the name
of the successor Trustee to these bank accounts, so when the Grantor passes
on, the successor Trustee becomes the Trustee with signature power on the
Trust accounts. If this step is not taken, then the Revocable Trust may need
to go through probate to allow the bank to recognize the signature of the
successor Trustee.

Figure 1 - Revocable/Living Trust
The most common type of Revocable Trust is a Living Trust.

Figure 2 Irrevocable Trust
Irrevocable Trust
The Grantor can establish an Irrevocable Trust at any time during his or her
life. Once he or she places funds into the Trust, that person no longer owns
them. The funds are the responsibility of the Trustees in the name of the
Trust, and the Grantor is neither responsible for them, nor pays taxes on any
increase.
The Beneficiaries are now eligible for distribution and pay taxes on what
they receive. They do not need to wait until the Grantor passes. They can
also take part in the financial decisions of the Trust if the Trustees invite
them to do so, and they interact with the Trustees chosen to ensure their
welfare.

The role of the Grantor and his or her relationship to the Beneficiaries
changes. Without direct financial control over the Trust assets, the Grantor
can remain as an advisor to the Board of Trustees, if he or she so chooses.
The Grantor can keep control over the distribution throughout his or her
lifetime. We will go more into detail about that later in this book.
With funds in the Trust, the Trustees invest and manage any income earned.
They can sell the initial corpus and buy different assets, or they can
administer the original assets. Because the purpose of the Trust is to
increase assets and especially the cash flow, the Trustees receive a
percentage of distribution as an incentive. It is likely that an aggressive
Board of Trustees (or just one Trustee), will take action to find strong,
profitable investments that have a reasonable margin of safety.
The objective is to ensure the welfare of the Beneficiaries, and so profits
produced from investments the Trust holds are either reinvested or the
Beneficiaries receive some or all the profits.
General Summary of the Trust Basics
The Grantor puts his or her assets into the Trust, and either the Grantor
acting as Trustee, or the Trustees then invest the funds. When there is a
payout of the investments, the funds go directly into the Trust bank account,
where they are distributed to the Beneficiaries. In a Revocable Trust, the
Beneficiary(ies) is the Grantor. In an Irrevocable Trust, the Beneficiaries are
usually the children and/or close relatives of the Grantor. In both cases, a
percentage of the profits can be reinvested.
A Little Beyond Basic
The following section about Divided Title and the U.S. Constitution is for
those of you who want to explore the subject of Trust mechanics and
definitions more deeply.
For those who feel you are not ready for more details about the mechanics
of inheritance, and would like to move onto a more friendly presentation,
please go to Chapter 3.
In Chapter 3 we discuss what life might be like if you were a member of a
strong Trust Group, which offered both financial security and ample
mentoring. The support described mostly applies to an Irrevocable Private

Trust where Trustees may personally interact with and be attentive to the
Beneficiaries. Here you will discover why those with enough funds are
more likely to be successful.
When you feel more comfortable with the ideas of inheritance, we invite
you to return to this chapter to read this key additional information.
Divided Title and The U.S. Constitution7
The fundamental feature of any Trust is the division of full title (complete
ownership) of a particular property into legal title (technical ownership) and
equitable title (the beneficial right to possess and use the particular
property).
Trustees retain legal title to the property within the Trust and are
responsible for administering and enforcing all Trust rules. Beneficiaries
receive equitable title to use Trust property they do not own—provided they
obey all the Trust’s rules.
The United States Constitution declares, “no State shall ... pass any ... law
impairing the obligation of contracts.”8 Therefore, when a Trust is created
without fraud by contract, not statutes, it holds a position in law superior to
any state law. In other words, by voluntarily and honestly contracting with
your Trustee, you establish a lawful Trust. No State can then “impair” or
void the obligation you created. Therefore, Trust rules stand superior not
only to state constitutional law; they form private law which operates
legally outside the U.S. Constitution—as guaranteed by that document
itself.
This does not give you any guarantees, though. Your Trust can still be
challenged whether or not it is set up correctly.
You might wonder why this is so important? Consider the ownership of
residential property. Once put in Trust, several people have a vested
interest. Seizure of the property by the government becomes a greater
consideration because it is unknown how many of the Beneficiaries will
contest the matter, and how much money is behind the Trust veil. This idea
of having the property seized by government authorities is not so
uncommon. In fact, Eminent-domain abuse is widespread.9 The issue of
divided title comes into play concerning whose property is well guarded
and whose is not.

Trusts: What They Are and What they are Not
Many people think that a “Trust” is a group of stocks, bonds and other
investments held by a Trustee to produce money for Beneficiaries. This
would be the most minimal of definitions.
Others believe the rich use Trust to evade taxes, and people spend years
searching for the tax loopholes. Granted, there are enormous tax advantages
to a properly formed and managed Irrevocable Trust, but tax breaks are
only a small part of the picture.
The legal and IRS definitions limit the scope and purpose of Trusts and so
do not adequately or properly describe them. No wonder people have
misconceptions!
The Business of a Trust
A good working definition for our purposes here would be: a Trust is a
particular type of artificial legal entity structured in such a way and for such
a purpose that it can legally take advantage of passthrough accounting
principles. “Passthrough accounting” means the proceeds (profits, earnings,
etc.) pass through it to a secondary recipient (the Beneficiary) without
producing a tax liability for the Trust. The business is granted or settled by
a Trustor, Donor, Grantor or Settlor. Its purpose is to acquire, hold and
increase assets for its Beneficiaries. It is administered by a Trustee or a
Board of Trustees. Within this business may be many other businesses run
by managers who work for it, or it may hold and manage the stock of other
businesses to help them all prosper and produce income. Since the Trust is a
business, it has its own income flow.
According to 
Black’s Law 
Dictionary (First 
Edition), a Trust is 
“an equitable or 
beneficial right or 
title to land or 
other property, 

held for the 
Beneficiary by 
another person, in 
whom resides the 
legal title or 
ownership ...”
The IRS does not classify a Trust as a business. We use this term because it
is in the business of increasing family assets, and should be run accordingly.
Types of Asset Collections
A Trust can be complex and diversified, holding stock in various other
entities and operating several businesses. On the other hand, a Trust may be
just one business10, one piece of real estate and/or a collection of priceless
household goods. It need not be large and complex. Often, a small Family
Trust can grow over several generations into a large, smoothly run group of
businesses such as the Grantor could never have envisioned. The
fundamental requirements of a Trust are simply that it manages and control
assets and that, as a business using passthrough accounting, its structure
provides the maximum tax advantages allowable under the law. Again, its
entire reason for being is to protect the interests of its Beneficiaries.
Now, let us consider a common legal definition. According to Black’s Law
Dictionary First Edition, a Trust is “an equitable or beneficial right or title
to land or other property, held for the beneficiary by another person, in
whom resides the legal title or ownership,” recognized and enforced by
chancery courts.” (Chancery courts are courts of equity; see Glossary)
Black’s provides a second definition of the word Trust as “an obligation on
a person, arising out of a confidence reposed in him, to apply property
faithfully and according to such confidence.” The Trustee is the one who
holds the title to the property due to the “confidence reposed in him” by the
Grantor.
So, the most basic activity is the Grantor creates a Trust by granting
property into the care of a Trustee, who administers it for the benefit of

some third party(ies) known as the Beneficiary(ies). The Trustee can be the
Grantor in a Revocable Trust.
Internal Revenue Code (IRC) Definition
Ordinary Trusts. In general, the term “Trust” as used in the
Internal Revenue Code refers to an arrangement created either
by a will or by an inter vivos (see Glossary) declaration whereby
Trustees take title to property for the purpose of protecting or
conserving it for the Beneficiaries under the ordinary rules
applied in chancery or Probate Courts. Usually the Beneficiaries
of such a Trust do no more than accept the benefits thereof and
are not the voluntary planners or creators of the Trust
arrangement. Generally speaking, an arrangement will is treated
as a Trust under the Internal Revenue Code if it can be shown
the purpose of the arrangement is to vest in Trustees
responsibility for the protection and conservation of property for
Beneficiaries who cannot share in the discharge of this
responsibility and, therefore, are not associates in a joint
enterprise for the conduct of business for profit.11
Further, a classic court case defines a particular Trust type as, “an
agreement by which the property of a syndicate is vested in managers who
have absolute control of it and the funds contributed by certificate holders,
the latter of whom have merely a right to share in the profits in proportion
to their certificate holdings, create a common-law Trust.”12
We will enlighten the reader on the Common-Law Trust later in this work.

Chapter 3
Mentors, Money and Trustees
This chapter addresses mostly situations found in a Private Trust where
Trustees may have greater motivation and be more involved with
Beneficiaries. We describe the ideal here to give you a sense of the
possibilities for you and yours.
The Private Trust is not dependent on court-appointed Trustees, and
beneficial interest is more flexible. Details are found later in this book and
in Volume II.
Further, we include the more common Irrevocable Statutory Trusts
throughout this book and compare these two asset-protection modalities.
Windfalls
Sally received a cool half a million dollars when her grandmother died. It
was arranged that she would get a cash payout every five years in
increments of $100,000.00 and $50,000.00. Sally managed to invest the
funds in various projects, but over a 10-year period she eventually lost all of
it.
Sally is like many people who receive large sums of money. Most lottery
winners have the same fate: 299 out of 300 lose their funds and/or lose their
friends, and become quite distraught and unhappy.13
Connections
How could this be? Although it seems that everyone dreams of having
money, in reality few keep it. Perhaps it is an evil plot to keep us enslaved,
or maybe it is simply a matter of education, training, and most important of
all, “connections.” If Sally had mentors to help her understand money, and

especially Trustees with investment experience or connections to income
streams unknown to most people, perhaps her half a million dollars would
have doubled or tripled. The sad reality is Sally did not have support to help
her multiply the assets.
So, what does support look like? The ideal is when a parent is well
positioned in his or her profession, or perhaps the entire family owns a
particular type of business, and the children grow up under the guidance of,
not only the family, but the advisors.
J.P. Morgan is one of those people who grew up with connections. His
father, a well-placed financier, associated closely with leaders of other
countries. J.P. Morgan’s father designed a mentorship program for J.P. to
provide schooling in various countries so J.P. would learn several languages
and meet the children of those in power. At the age of 13, J.P. acted as
ambassador, delivering important documents to France. These
responsibilities and experiences placed him in various leadership roles in
his life.14
Managing a Large Sum of Money
Managing a large sum of money can be a full time job, and it takes
significant experience. Lack of foresight, and simply not knowing how to
set up and pass on money are the biggest problems with inheritance issues.
The rich are well positioned because they understand the importance of
mentors, connections in the world of finance and trade, and seasoned
Trustees.
If Sally had only known that a Board of Trustees could have given her
incredible advantages .
The Magical Mentor System
There are many things in life we can buy, but have you ever thought of
buying a support system, an entire family or a bevy of mentors?
Pirates and Vested Interest

Perhaps you have never thought about buying support. In fact, what is a
support system? It consists of several people who have an interest in seeing
that you are successful. The best way to create this support is to reward
people who assisted you to achieve success. Examples of such interest
include both pirates and privateers, with everyone involved receiving a
share in the gain.
It is easy to take this same example and apply it to everyday life. If you
have a successful business, then the people who support you are given a
piece of the action in the form of bonuses and unexpected rewards. This is
about shared victory. Victory comes in all sizes and shapes, and is not
limited to money. For example, suppose you received an inheritance that
included a large amount of jewelry, far more then you could ever wear?
Would you share it with your friends, relatives, and others loyal to you? If
the answer is yes, then you already learned how to build the support you
need.
Swap Weakness for Strength
But how about buying an entire family? What could an encouraging family
do for you that your natural family may not be able to supply? If you come
from a dysfunctional family, where brothers, sisters, mother and father do
not get along, you may be quite willing to trade it in for a new set of
relatives. So, how do you get this family? That will be revealed as we
explain the proper structure of a Private Trust also known as the Common-
Law Trust with its built-in mentors.
The Advantage of a Long Range View
We come now to the core subject, the magical mentor. Mentors sometimes
are difficult to find, especially those willing to help you through life.
Mentors usually have a long-range view and want to guide and steer you in
the right direction. Mentors are often focused on a particular area. For
example, if you have a passion to race cars, your mentor would probably be
a race car driver or one who could engineer one of the fastest cars in the
world. In fact, without a mentor, you would probably never rise to any great
competitive status. Of all the people in your life whom you need to help

move you forward, the magical mentor is probably the one most key to your
personal success in life.
Suppose, for instance, that you work 9 to 5, and you have many friends but
you do not have anybody in the company in which you are employed to
give you particular guidance about how to succeed. That is, no one is
interested in bringing you up to the top. Added to this, you have a family
which has no interest in your success. This does not mean it is against you;
it may mean the family just wants you to be happy in life, and offers you no
guidance. In this case, you probably do not have strong support or mentors.
Tom Stevens and His Father
Here is an incredible example of family support that worked. One of our
Trustees met Dr. Stevens in 1984 and asked him how it was he became a
surgeon. He reported his father was a medical doctor and guided him to take
the right classes throughout high school and college. When Dr. Stevens was
asked if he ever resented his father’s taking control of his life, Dr. Stevens
replied he never had any particular idea in mind about what he wanted to do
anyway, so his father’s guidance was accepted and appreciated. Becoming a
doctor was as natural as breathing. At the time the Trustee knew him, Dr.
Tom Stevens was the Chairman of the Surgery Department of a Chicago,
Illinois hospital.
He proved to be fascinating with his marvelous stories about the lives he
saved.
Foundation Elements
If you do not have the father our good doctor had, then you need to create
your own reality. First, strategically build your foundation by finding
people interested in your goals. If you have a goal of beginning your own
clothing-design business, you need to get the necessary education, and in
that process find those with compati ble goals. These others will share their
ideas with you, and as long as you reciprocate and are generous with your
time and enthusiasm, they will be part of your support network.

Contrary to popular 
opinion, the cash flow 
comes from people. It 
is other people who 
create money. Money 
does not happen by 
itself, so you need to 
hook up with people 
who know how to 
create money to get a 
cash flow.
It always helps to have an encouraging family, and as the assets accumulate
in your Trust, you will be able to acquire a “supportive family.” So, how do
you acquire the necessary “stuff” to gather around you those people to
support you? To build your own reality you need to accumulate not only
people, but also a sufficient cash flow. Contrary to popular opinion, the cash
flow comes from people. Other people create money. Money does not
happen by itself, so you need to hook up with people who know how to
create money to get a cash flow. You will also need to take a risk. This risk
could be a small investment in something as simple as “penny stocks,” or
joining a friend on a business venture where your hard labor generates cash.
Whatever it takes, you can assume that a 9 to 5 job, in most cases, is just
not going to get all that you need.
Connections
Like Sally, some people are lucky and may inherit the money. Without that
magical mentor, though, the money dissipates quickly. Knowing what to
invest in and what to avoid takes a good deal of experience. Few people
have this background, and so it takes “connections” to know what to do
with an inheritance.
Some may win the lottery. As mentioned, after winning the lottery the
statistics show that 299 out of 300 people lose their friends and money at
the end of a couple years. And why is this? It is because they did not have

that magical mentor who knew how to steer them through the
extraordinarily difficult and tricky financial world and tell them how to
handle relationships.
You need to trust that you can change. If you want to have any sway in this
world, you need to have backing that is viable in an ever-changing and
complicated society.
Let us explore what a perfect support network might look like. Your mother
is loving and your father attentive. Your brothers and sisters may be
mischievous, but you can trust them. Your mother has connections to
financial organizations willing to have you work for them so you can “learn
the ropes.” Your father has international connections, and this allows you to
spend summers and some of your high school years in foreign countries
learning to speak other languages. Your father’s uncle is an ambassador for
the United States to China. He takes you to China a couple of times a year.
When your family sits down at dinner, both your mother and father tell you
from time to time the true history of the world according to the family’s
interaction with various governments. Also, you go to school with the
future heirs of fortunes. In other words, you are born into a network in
which you are well connected, and from which you are likely to have many
mentors.
If this is not how you were raised, then you need to reassess your life and
get better positioned. Of course, we are not expecting the average person to
be able to accumulate the kinds of wealth and power just described, as that
took generations. We do expect the ordinary person, though, to hold a
vision of the family’s future and to realize that perhaps the third or fourth
generation from this date could possibly have a life described like this. We
realize thinking this way is unfamiliar and perhaps even scary, but those in
power have held this vision for several generations, so why cannot you?
Maybe it is that you simply did not know.
So, let us assume that this person who is born into this incredible support
network is in a position to make a difference in the world. Could he or she
have gotten there without great grandfather’s having set up an Irrevocable
Trust?
Find the Mentor

Few people will take another person under their wing to guide them through
life. To get the vision and achieve the long-range goal for the family, you
will need to find not only one but two or three magical mentors to get you
there. Unless you know what you are looking for, though, you may
inadvertently overlook the person or persons with the needed information.
Thus, the first step in finding these magical mentors is to recognize their
qualities. These are people who have substantial experience in life, and who
also have the motivation to want you to succeed. Like the swashbuckling
pirate captain who shares his loot with his rowdy men, you will have to
realize that whatever you gain needs to have an upside for those around you
who helped you achieve your ambitions. You need to be generous with your
time, your information and perhaps even practice being a mentor to others.
If you look around, you may find that not many people have mentors. In
fact, it might be a good exercise to do a quick survey among your friends
and associates to find out who has taken the time to assist each of them to
move forward in life.
Mentor Qualifications
Mentors are natural teachers; they also understand something about the
psychology of pain. For a person to rise to the point where he or she feels
confident to guide others, it is usually necessary for the mentor to have lost
in some way.
Good mentors are those who are not afraid of getting deeply involved; they
are familiar with starting from the bottom or having hardship in which they
have been thrown off their own paths.
Perhaps one of the most important things good mentors should have is
tough love—the ability to tell you in a strong, but caring way, that you must
change. You, on the other hand, must have enough brains to comprehend
the message and do something about it. Your ability to humbly accept
correction without undue upset will earn you respect.
Mentors are aware of the bigger picture. They can see your potential and
know that if they support you, you can stand up and make a difference for
others. Mentorship is about sharing hard-won knowledge, know-how and
skills.

Built-In Mentor System
The Private Trust is more likely to have a built-in mentor. To form a Trust,
the Grantor must find two other people willing to take on the responsibility
of the assets of the Trust. If your grandmother decides to create a Private
Trust, she chooses one person who is not a family member, and perhaps the
other person would be a family member.
The Cotrustee, who may or may not be a family member, is selected to
ensure it takes two signatures for all the financial documents. This is a
built-in safeguard. If your grandmother chooses these two people to be the
Trustees, though, they automatically become her mentors. Because of
retained powers allowed by the Internal Revenue Code, your grandmother
can continue making beneficial and investment decisions and so will be
working closely with the Trustees. Trusts need Beneficiaries, so now she
names her children and her grandchildren to reap the rewards of strategic
investment planning. As the Trust builds its assets and is able to make a
beneficial or gift distribution, the Beneficiaries become rewarded and now
have a vested interest in the success of the Trust. What you see is a strong
group forming composed of people motivated to assist the process via a
vested interest in a common goal. This, in most cases, brings the family
together.
To ensure there is sufficient communication among all players, meetings of
the Board of Trustees should be held no less than semiannually. Meetings
focus on educating all members of the Trust, including Beneficiaries, about
the investments, the welfare of each other, the long-range goals of the Trust
and the social functions of the group.
In the beginning stages of the Trust, the Trustees may not possess any
particular great wisdom about finances or legal matters. Each Trustee,
though, needs to be willing to get involved to understand them. As the Trust
evolves, the Trustees become both more educated and more valuable.
In the long run, Trustees can develop into parental figures to the
Beneficiaries, teachers to the Trust group, advisors and legal councilors to
the Grantor and the Beneficiaries, function as accountants or have a good
grasp of the finances of the Trust, and with experience gain a smattering of
psychology to counsel with Trust members. So Trustees become, over time,

broad-based persons who have the best interest of all members of the Trust
in mind, and thus are among the first qualified to become magical mentors.
Buy a Family
We mentioned, though, that a person could buy a family. So instead of
having the great-grandmother set up the Trust, you set up the Trust and pack
it with your favorite people. Over time, this group becomes vested in the
interests of the Trust and forms a family. All you need to do is take that risk
to find the initial funds to gather magical mentors with connections around
you. You may find your forte in real estate, environmental cleanup, or a
variety of other areas where risk taking allows great gain. But first of all,
you must realize it can happen, know how it can be created and want to do
it.
Yes, it takes money, connections, friends, trust and the right environment;
you also need to become involved in understanding ways that promote
vested interest. A corporation, as well as other business forms, promotes
this type of interlocking commitment where there is ample reward for all
the participants.
Leadership
And if you are going to pull off your dreams and build a new family, or
support your current one, you need to develop leadership abilities. This
includes consistency, dedication to the goal and, most of all, patience.
Evolution
One of the most valuable attributes of the Irrevocable Common-Law Trust
is it provides a strong structure through which a family evolves and grows.
Consider for a minute the fractured family that we have today. Brothers and
sisters scatter; they are in different states, even countries, and have diverse
businesses and priorities. In some families, there is only the excuse of
holidays to come together, and in other situations families do not meet even
then. What if the entire family were part of a business, though, and that
business was the vested interest of the financial growth of each individual
and the family’s future? What if, instead of coming together for only

holidays, now the family comes together four times a year to discuss the
Trust finances and the education of the future generation? What if one of
the brothers starts a new business and it flourishes? Because the Trust
funded the business to start, now some of the proceeds go back into the
Trust and are redistributed to the Trust members. The same applies to Trust
members who are aspiring artists or musicians who may be worthy of
support. If they become famous, the entire Trust membership gains. What if
the famous artist, Vincent Van Gogh, was your brother? If this was your
family, how interested would you be in the success of your brother’s
business? Yes, you would be extraordinarily supportive of him. So, let us
say he had an assistant who became ill. Suddenly, your brother can turn to
the
Trust group and any member who has some of the qualifications can
temporarily take the place of the assistant. Your brother has a resource to
ensure his success. Van Gogh never received this support during his entire
lifetime.
And if this is a family that you “bought,” you have many people with vested
interest in your success as you need.
Army of Support
It may take many years, perhaps even into the next generation, to have a
mature Irrevocable Common-Law Trust with built-in mentors, teachers and
a pool of unlimited talent.
Here is another example. You are a member of a strong Trust group,
functioning for more than 20 years. Your sister has just gone through a
terrible divorce. Her inheritance is secure, though, because it has been held
in the Family Trust since she was born. Her husband could not get one
dime. Further, she not only has Trustees who came to help her, but she also
has access to legal counsel and an entire family (army) which supports her.
The same could be true for the male members of the family. If the
relationship is financially unequal, though, a separate Trust may be set up
for the wife so she receives a distribution whether or not she remains
married. Other wise, the financial imbalance in the marriage may eventually
create an overt long-range harm. Either the spouse hangs onto a bad

marriage for the money, deceiving the partner, or becomes bitter because he
or she feels trapped.
It may take many 
years, perhaps 
even into the next 
generation, to 
have a mature 
Irrevocable 
Common-Law 
Trust with built-in 
mentors, 
teachers and a 
pool of unlimited 
talent.
Glue
What makes Trusts so powerful? It is something called “glue.” Glue keeps
people together—trust and a vested interest in the success of the group are
the basic elements. The tighter we are bound together in supporting each
other, the better our own chances for survival. In fact, the motive to stay
together is the top priority, and financial gain should be second or third.
There are many ways to get your needs met that do not involve money.
How many people in the trades, such as carpenters, painters, and gardeners,
exchange services with each other? How many people who are hands-on
healers, acupuncturists, or have a healing talent in another modality trade
services with each other? In fact, if you delete money from the system,
everything else goes to barter and trade. Barter and trade are what operated
our world for thousands of years before the “almighty dollar” was invented.
You might even say that riches lie in what assets others hold and are willing
to share with us. When evolving support, these other values need to be
incorporated regularly and consistently.

We hope that we can inspire you to understand that committed
relationships, with vested interest, form some of the greatest advantages a
person could have.
Choose your mentors wisely; you have a big dream to capture.

Chapter 4
Rethinking Ownership
The greatest deterrent to putting assets in an Irrevocable Trust is giving up
control. This chapter gives you an entirely different perspective about
ownership.
It Belongs to Me, Right?
Getting the goods of the world can be a wonderful experience. Further,
strutting your stuff in ways ranging from subtle to blatant is considered
proper, laudable, or even mandatory. Being the “Joneses” instead of trying
to keep up with them is often a secret wish. It means being in control of
your life, instead of at the mercy of others—or is this an illusion? Whether
it be a shopping spree, a new car, or getting a mortgage for a home, the lust
to have is considered normal—but is it?
There is a different way to look at ownership. As a lawyer told us, “The
only reason they let you have anything at all is so, if you do not obey, it can
be taken away from you.” What? You do not believe it?
If you do not pay your income taxes you can lose your home, your car and
anything else the IRS decides it wants to place a lien against. If you do not
pay your county property taxes, your home disappears into the black hole of
forfeiture. As a homeowner, you live with the threat—the constant reminder
—that if that if you step out of line it may cost you everything. Lose your
job, become involved in an unfortunate divorce, and all your hard-earned
equity in the property can be claimed by the ex-spouse, the bank, the state,
or the IRS. You owned it. You lost it. In fact, if you ask people around you
about the state of affairs of their finances, you will probably discover some
of them have lost “it” at one time or another.

Here is another hard truth. According to a friend of ours who became
closely associated with an ex-judge, the judge told her, “People never own
their home: that is why the state can take it when they do not pay their
property taxes. Property only belongs to the state, never to the individual.”
We would like to give you a footnote on that, but for the safety of the judge,
we cannot. We quote it here though, because we have heard it several times,
and even from a real estate agent we met at a spa while we were steaming
in a mineral bath. In an astounding confession, she revealed this fact to
several others in that hot pool. Some homeowners flatly did not believe her,
and others were so shocked they fled from the pool in dismay.
A hint the statement is true is found in the definition of land held in allodial
title, “Free; not holden of any lord or superior; owned without obligation of
vassalage or fealty; the opposite of feudal.”15 Do you own your home in
allodial title? No, you own it in fee simple.
Although these people who shared their knowledge about the true
ownership status of property must remain unknown, we can send you to any
law dictionary to look up the term “fee simple.” Property transferred in fee
simple allows it to be inherited, not owned.
You may wonder what the mysterious difference is between allodial title
and fee simple. By answering a few questions and learning some obscure
history, you can more fully understand.
Do you want to pay for all the benefits of the county services? We mean, do
you want to dig your own water well, supply your own electricity, provide
your own fire and police protection? Probably not; therefore, when you
elect to pay county taxes, you also forfeit full ownership of your property.
Obviously, allodial title is not practical. Unless you are ultra rich, fee simple
is for you.
This state-owned property fact is becoming more and more known, and if
you ask around, it will be revealed to you by those who know.
Why Ownership Can Be Bad
Taking the responsibility to pay off a home loan, or to buy a car on
installment payments, is something of which to be proud. We agree, except

in the current corrupt climate of government and tax organizations,
ownership could be a greater liability than most people realize.
The politically savvy kings of ancient times knew all about this. They
bribed the ordinary person by offering him a title and some land if he served
in the king’s army. As a bonus, he would see exotic foreign countries and
find hard-won glory in distant battles. There was always, though, that sly
little royal trick. For a commoner, now a knight, to hold the land took an
army, and without the strength to battle the raiding bands of encroaching
nations, this new little fiefdom was doomed. Now that same honorable
knight must ask the clever king for help to defend his tiny plot of land and
his family. For that, he had to pay a price. Whatever the price was, it
involved some pledge that enslaved him to both king and land, and that
hard-earned title became tainted with a different noble slavery. The serf on
the land may have had a better arrangement than the hapless knight—
obligated, laden with responsibilities and political schemes that complicated
his life.
Although this paints a dark picture, and is perhaps dramatic to make the
point, ownership can be leverage others use against you. If you take this
leverage out of the hands of others, could you find a new freedom?
But, you argue that without the mortgage, you would not have the present
equity in your home against which you could borrow. Delighted that it
turned out to be a forced savings program, you believe it is a blessing to
you.
Not only were you lucky that you did not lose your home, but fortunate that
you bought it where and when the real estate prices increased. Maybe you
even paid off your home, continue to pay your taxes on time, and spend
enough funds for home improvements and repairs. This is the upside of
your dream, but would you like to keep that home in the family? Or,
perhaps, would you like to use your amassed equity in someway to benefit
your family members?
Why Use Is Better Than Ownership
Ownership is stranger than fiction. If you form an Irrevocable Trust, and
transfer assets into it, such as residential property, the ownership becomes
split. The Beneficiaries have equitable interest, and the Trustees hold legal

title. Now recorded at the county, the residential property is owned by the
Trust, and the Trustees’ names are listed as the responsible parties.
As mentioned in Chapter 2, this is known in law as divided title, and no one
actually “owns” the assets. The Trustees are legally responsible for the
assets in the Trust and take care of the property, but only hold it for the
benefit of the Beneficiaries. A Trust removes direct ownership. It takes
money and property out of your hands, where it can be used against you.
Now in the hands of people removed from a direct involvement in
enterprises, legal and financial complications are less likely. Property is
safer.
In other words, if you own a home, have a bad automobile accident where
you destroy another’s property, the car insurance may not cover the
damage. Usually, the claim may require your home to be sold to pay off the
debt. If you do not own a home, though, it cannot be forfeited. There is no
asset for the plaintiff to claim.
You say this is twisted? This makes no one responsible? This, though, is
how most politically protected politicians configure their assets. They put
them into what is known as a Blind Trust. These high officials in
government cannot be sued for anything substantial. They have little in
their name—perhaps a personal checking account and an old car. Since we
cannot infuse morals and ethics into a society, we can only see to it that
people are protected from frivolous lawsuits over which they have no
control. For example, if you lose your job, your home can be lost and then
the IRS can hound you for years for back taxes.
This is not true when you place “your” home in an Irrevocable Trust. It is
removed from you, providing there are more than eighteen months between
the event and when you put the home into Trust. The only time the Trust
which holds the property could be involved in a claim is if the Trust, acting
as a Trust, causes the damage. For example, the Board of Trustees holds a
function at a person’s home. The Trustees sign an agreement the facility is
to be used for five hours. During that time, the party gets rowdy, and
furniture and windows are damaged. Now, the Trust is clearly responsible
for the harm and is responsible for paying the facility owners.
What about marriage? Assets in a Trust before the marriage remain in Trust,
as they belong to neither the groom nor the bride, but to the Trustees held

for named Beneficiaries. Assets gained after a marriage can be community
property, unless the Trust buys them and keeps them for the children of the
newly married couple. The couple can also put new assets in Trust for the
children. We have one circumstance where a person had all his assets in
Trust, and he wanted to marry a fine woman. He explained to her that he
owned nothing as all his asserts were in Trust. She fled the relationship.
One could say she was after him for his money, or maybe he did not offer to
initially fund a Trust for her.
Gullible But Rich
There is also the not-so-uncommon event where assets are in Trust, and the
gullible, not-so-beautiful Beneficiary marries the dazzling princely rogue. If
Trustees are doing their job, the cunning husband wastes oodles of time and
money going to court trying to get the well-protected wife’s assets. He will
eventually discover that she does not own them, and the Trustees do not
care about his plight.
As a reminder, please do not confuse the word Trust with a Statutory Living
Trust. In a Living Trust, property remains in the name of the original owner,
and is not removed into the names of the Trustees. Therefore, a Living Trust
offers no asset protection, and only limited probate protection.
This chapter exposures you to the potentially huge economic, peace-of-
mind, legal and tax advantages of having the use of property in an
Irrevocable Trust without the headaches and legal exposures of ownership.
Now for a deeper understanding, it is time to share with you the history and
evolution of Trusts.

Chapter 5
Trusts Down Through the Ages
Armed now with at least a basic understanding of what a Trust is and how it
works, we turn to a historical survey of Trusts. We address their antiquity,
long tradition of use and the reasons they came into being and have endured
since.
The earliest known writings are tax documents, and Trusts date back to at
least the time of the Egyptian pharaohs. The Bible documents the issue of
inheritance when Esau sold his birthright to Jacob.16 This implies a formal
arrangement existed in those days. We do not have details about these
contracts, though. Around 400 B.C., Plato used a Trust to form a sovereign
university in Greece.
In ancient Rome, only citizens inherited property. When a Roman chose a
foreigner for his heir, though, he could sidestep the citizenship need through
a legal instrument known as a fidei-commissum similar to today’s Common-
Law Trust.17
This fidei-commissum served one purpose and lasted only long enough to
help the transfer of property. It shows the need of a landowner to have trust
in another person to carry out the landowner’s will after his death.
Many examples of this procedure are in Roman judicial records.
Church vs. King
As early as the 11th century, English knights found Trusts to be effective in
safeguarding their property while they were away at the Crusades. Without
this legal protection, they soon found the king was all too willing to
confiscate their property to finance wars and other projects of his own. In
response to this royal thievery, the warriors installed the Church as Trustee

of their property during their absence. Only the emissaries of Heaven had
power enough to block the king’s conniving. The sophisticated legacy of
case law governing the conduct and responsibilities of Trustees we find in
our courts today grew as a result. The Royal Courts of Chancery enforced
the laws of Trusts.
The Mortmain Acts of 1279 A.D,18 also known as the Statutum de viris
relig iosis, forbade the Church from owning land, and certain orders had
taken vows of poverty. Those who wanted to give land to the Church could
do so only through the “use.” Thus, a third-party held title and served under
bond to handle land. Today this third-party is known as a Trustee.
Medieval England provides excellent examples of the “use.” It was a way to
“enfeoff,” or transfer the legal title of land, to one person or group, while
holding the use of the land for the “cestui que use” (the “feoffor” or another
person or group, known in modern language as a Beneficiary). Holding
(lease) title to land under English Common-Law carried with it many
obligations. The lord of the land could claim a “relief,” or money payment,
when the land descended to an heir of full age. If the heir was a minor, the
landowner had the rights of “wardship” and “marriage.” When a daughter
of a tenant married, or a son knighted or the tenant held for ransom, the lord
became entitled to “aids” (that is, more money). A “use” avoided these
extractions while still letting the cestui que use enjoy the benefits of the
land. To avoid the feudal burdens and obligations to care for the land that
came with the death of a single feoffee, (see Glossary) several feoffees
could serve as joint tenants.19
Scholars of medieval English land law note the religious bodies were
among the first to employ the “use” extensively.
Massachusetts Trust
When the English colonized North America, the “use” changed into the
Trust and the colonists brought the idea with them. They further developed
the idea by devising the “Massachusetts Trust,” which is almost
synonymous with “Business Trust.” They did this in part because it literally
took a special act of Parliament to secure a corporate charter to acquire and
develop real estate. The Trust gave them a way to pool their resources
without having to deal with state-imposed controls and burdens.

Some Trusts currently in the United States have existed longer than the
country itself. They provide benefits to countless Heirs Beneficiary (see
Glossary), as well as many communities. By using a Common-Law Trust
and not a government granted charter, a Trust operates with greater freedom
and far more privacy. By providing a common vehicle for the self-interests
of its Beneficiaries, a Trust teaches the lessons of interdependence,
cooperation and working together for the common good.
The Privy Seal and the Queen
Queen Elizabeth I was notorious for robbing her subjects of their money.
Whenever her spies discovered a merchant made a profit, she immediately
sent agents to borrow it through an agreement known as “the privy seal.”
She never paid back any of her debts.20 Historians note that this practice
contributed to keeping the feudal system in place during her entire reign.
Those subjects who had the ability to create riches either hid them well or
left England. 21 Thus, this monarch unintentionally contributed to
developing Trusts among rich, private citizens and to protecting assets by
the clergy.
“John D. 
Rockefeller 
established 
more than 270 
Pure Equity 
Trusts which 
kept his vast 
empire 
sovereign ...”
Early American Trusts
Later in Pennsylvania, Governor Robert Morris of the Virginia Colony, an
English-born Philadelphia banker, a member of Congress and the “financier
of the American Revolution,”22 set up a

Trust named The North American Land Company,23 which remains in
existence today. Similarly, Patrick Henry24 also set up several Trusts which
are now more than 250 years old.
The descendants of these famous patriots, some of them still in leadership
roles, achieved durability for their Family Trusts by carefully training each
successive generation to understand and apply sound legal and financial
principles to Trust management.
As reported in the Chicago Tribune, March 22, 1947, the Chicago
Merchandise Mart is a Pure Trust established by Joseph P. Kennedy.
John D. Rockefeller established more than 270 Pure Equity Trusts which
kept his vast empire sovereign and beyond the reach of inheritance taxes
and other government intrusions.
The U.S. government itself allegedly created thousands of Trusts, including
the U.S. Constitution, Medicare and federal highway programs–the latter
fact posted on highway signs along Interstates, especially during times of
construction.
We know that administration skills allow a Trust to continue. We devote
many pages in Volume II to this subject.
Dark Side
We would be seriously lax, though, if in our discussion of Trusts, we failed
to discuss their other, darker side. This is a story not only of relentless,
multigenerational self-aggrandizement, but of the manipulation and direct
involvement of the U.S. Government in support of that agenda.
The resultant chapter in this nation’s history became so black that learning
about it is compulsory for the U.S. schoolchildren to this day. Further, it
would be fair to say that, to many, this is what the word “Trust” means at a
visceral /emotional level.
In the late 1800s, certain major American industrialists developed the
practice of concentrating their assets into associations or “combinations” in
restraint of trade. Unfortunately for the reputation of Trusts, these
individuals twisted the long-established Trust methods into a new shape to
reach their goals. Though termed “Trusts” and outwardly imitating the

traditional pattern, in reality the conglomerates they created violated the
basic ethical purpose of Trusts—to care for the family. They poured their
immense resources into the petty games of self-protection and self-
aggrandizement at the expense of their other people. These brilliant but
shortsighted industrialists fixed monopolies, manipulated material costs and
product prices, nullified free market competition, corrupted the media and
dominated Congress.25
As we have seen, before that period Trusts were used by the private sector
as a shield against the abuses of kings, queens and legislatures, not as a
cudgel to smash business rivals.
Yet, as Industrial Age technologies concentrated increasing amounts of
power in the hands of ever fewer men and corporations, Lord Acton’s
maxim “power corrupts” took a new turn. Instead of consolidating their
power in the private sector to stabilize families and provide better service to
their customers and the community, they abused their positions, crushing
competitive initiative and reducing service quality to end users.
Clearly, government intervention was justified, and it had to come from the
federal level. The shift of power out of statehouses and into boardrooms
was carried out by several of these associations, whose influence now
crossed not only state borders but national ones as well. Increasingly
independent of local markets, regulations and boundaries, these would-be
masters of the universe gave the time-honored techniques of Trusts new
roles never intended by their predecessors. Seemingly over the financiers’
objections and despite their ability to buy votes, Congress passed the
“Antitrust” laws banning monopolies. Predictably, the executive branch
failed to carry through and enforce them, as shown by the fact we still have
an oil cartel, and few industries show true competitive pricing. In large
cities, the overall trend is that mom and pop stores have been driven out of
business by larger chains whose volume buying power results in pricing
significantly lower than individual stores can offer.
On their face, these laws appear straightforward, genuine examples of the
democratic process at work, embodying the masses’ demand to curb big
money’s abuses of power. Public outrage was present, doubtless further
inflamed by the hired pens of William Randolph Hearst and other “yellow
journalists” 26. At least some of the members of Congress who proposed

and passed the “Trust-busting” legislation had a different motivation from
the voters, though. (Like lawmakers in other eras of democratic
government, they followed the theme, “Government is the art of extracting
votes from the poor and wealth from the rich by promising to protect each
from the other.”) The attention made lawmakers take seriously their duties
as public servants. They took action against the real danger posed by the
giant industrial “Trusts” to the economy and the nation (thus winning the
vote of the little man). In reality, they provided those same wealthy captains
of industry with the federal firepower to blow their competitors out of the
water. Even though it appears the separate companies became different oil
companies, they have not competed. Do they fight among themselves? We
think not!
As Michael Parenti notes in Democracy for the Few:
Progressive Repression
In the twentieth century, as in the centuries before, the men of
wealth looked to the central government to do for them what
they could not do for themselves; to repress democratic forces,
limit competition, regulate the market to their advantage, and in
other ways bolster the process of capital accumulation.
Contrary to the view the giant Trusts controlled everything,
price competition with small companies in 1900 was vigorous
enough to cut into the profits of various industries. Suffering
from an inability to regulate prices, expand profits, and free
themselves from the “vexatious” reformist laws of state and
local governments, big business began demanding action by the
national government. As the utilities magnate Samuel Insull
said, it was better to “help shape the right kind of regulation
than to have the wrong kind forced upon [us].27 (Emphasis
added.)

While the billionaire bankers and manufacturers who owned representatives
in Congress, drafted the laws supposedly aimed at busting Trusts, the
obvious targets of those laws simply changed their tactics. They
restructured their complex Trusts into “holding corporations” and carried on
much as before. As usual, the competition was left to its own devices, first
to discover the new game and then how to play it.28
The public stigma which became attached to the term “Trust” at the
beginning of the last century explains why the public has not searched out
the techniques of wealth building used by these past masters. Like masters
of PSYOPS,29 the rich may well have anticipated their reverse-psychology
campaign which funded both sides of the debates. This is now Standard
Operating Procedure (SOP) for pushing controversial legislation through
Congress. By making it uncomfortable for people to use Trusts, they will
never learn the secrets. Genuine or not, the drama, sensationalist press
campaigns, political cartoons and flowery oratory of the era turned the
American public strongly against this artificial entity. Even now, most
ordinary folks have a hard time seeing themselves associated with a Trust,
let alone creating one.
Nonetheless, students of Trusts who can keep an emotional distance from
the events of yesteryear stand to gain a precious lesson. The instrument
used by Rockefeller, Carnegie, Morgan and others to amass their
monopolistic power (upheld and expanded by their Beneficiaries ) has
precisely the same shape (although not the same purpose or contents) as the
one we examine in this book.
That fact, perhaps more than any other, may help you understand why rich
private interests, and the government agencies which claim to curb them,
keep such secrecy about the uses of this powerful device—and why it is not
taught in the schools they fund.
Some assume the reason attorneys lack information about Common-Law
Trusts is the wealthy, who control the curriculums, have no motive to share
their strategies.
We do not favor or support monopolies or abuses of power by private
interests anymore than we do tyrannies or dictatorships by caesars, kings or
congresses of the people. Having and using a Trust will neither ensure that
your own behavior is ethical nor make up for any other flaws of character,

intelligence, experience or training. We would be lax in our duty as
educators and members of the community, though, if we downplayed or
ignored the enormous potential for power which remains in this family
business. This is precisely because it encourages those who care most about
you to support your dreams and supplement your strengths with their own.
The knights of Old England used their Trusts defensively, as impenetrable
shields against the king. The robber barons of Wall Street turned theirs,
though, into weapons to clobber the competition. How you develop and use
the power of the Trusts you create largely depends on the scope and purity
of your purpose, and neither of those is a known nor a fixed quantity.
One fact is certain, though, just as surely as nature loathes a vacuum, if you
fail to explore and exploit the blessings which life gives you, someone else
will take them away. You can hide from them, bury them, surrender them,
abuse them, ignore them, waste them, cry over them or laugh at them. Or
you can nurture them (and those who contribute to them), develop them,
protect them, add to them, share them, explore them and maybe someday
even grow to understand them.
Tribal Power
Tribal power exists in current Trusts today, especially through the Du Pont
Family, which has a shared interest in not only Trusts but corporations,
partnerships, and limited liability companies all across the world. Even
though the Du Ponts are not registered as holding a majority of stock, the
family votes in blocks. This is how it controls many of the Boards of
Trustees and Boards of Directors in various organizations throughout the
world. Cataloged in a book titled The Rich and the Super-Rich30, the Du
Pont family is similar to the Rockefeller and all the other major families.
These power dynasties long ago discovered that voting as a unit is where
political leverage remains, in other words, the tribal strength of agreement.
Contrary to our belief that rugged individualism is almighty and desirable,
the opposites is the truth—collective agreements are what controls this
world. A handful of conclaves developed and matured to take the leadership
of our planet. Unfortunately, most such groups are not strictly focused on
the welfare of the People. They use financial leverage through group
agreement, and this is the great power of the Irrevocable Common-Law

Trust, a force not available through the average Statutory Trust. The
leverage of a united family available through the Common-Law Trust is
what provides its unique place in the world. And, as long as the United
States Constitution and the state constitutions secure our right to contract,
the Irrevocable Common-Law Trust stays, also giving the average middle-
class family collective leverage.
The Feudal System and the Common-Law Trust
Although we cannot quote an exact source about the term “Common-Law,”
we can assume that common means to share, as in “common good.” In
feudal England the common people equally shared the land. Both the
freeborn and the serfs cultivated strips of land, known as “selions,” which
were 220 yards long by 5½ yards wide. Researchers believe there was an
effort to give each household an equal chance to cultivate some of the good
land of the township with the poor, and thus these selions were scattered.
Because they were scattered, the land became common to the people.31
The Common-Law is based on shared resources. We have all heard the
term, “feudal overlord,” that is the leader, or the overall landowner. The
term landlord comes from this tradition. In that time, though, the feudal lord
cared about the get the better deal, and in the fair distribution of the
resources.32 The people worked the land. Although, considered little better
than animals, to the feudal lord, his serfs were an asset, without which the
land could not become productive. Thus, while there were taxes, it was not
the norm to abuse the serfs. There is an idea that if a person is tied to the
land he is enslaved. This also allowed them, though, to be secure in their
homes. The idea they could not leave to work some other land may or may
not have been a matter of concern. In viewing the feudal age through our
modern sensibilities, we may not see reality as the serfs saw it.
Even in America, eventually the slaveowners came to realize that if the
slave was well-kept, he or she not only lived longer, but became more
cooperative.
By the 1850s many slave holders had become more aware of the
need to increase food allotments, maintain more sanitary living

conditions, and provide adequate clothing and shelter for their
slaves.33
Although this effort became greater after more than 150 years of slavery,
we only bring your attention to this matter to compare it, not to excuse it,
and to broaden the definition and idea of what slavery might be.
This is in contrast to today where corporate management disassociates itself
from the “worker,” and takes no personal responsibility for his or her
welfare. People are discarded when of use no longer. This may be through
downsizing or retirement. The “worker” is then supported by the State in
the form of unemployment and medical benefits. Instead of an overlord
who has an interest in the worker’s welfare, we have a near machinelike
mechanism that handles people with indifference, and sometimes downright
neglect, for example, welfare programs and child services.
As society evolved, the idea of sharing became less centralized, until shared
resources is mainly within the family. Without the support of the family,
members do not have a firm foundation in life to carry them into new
adventures, and to give them the courage to learn and take the necessary
risks to grow.
The idea of any Trust is to provide the financial basis so the family
members can contribute to society from a position of security, instead of
uncertainty. When you must focus on gathering enough to simply make it
through a week or a month, there is not much time to devote to helping
others, contributing to the community, or to developing yourself.
Those who have built up this family power base for generations are those
who are in power today. For generations to come to be in a position to
manage to the common good, families must set the foundation now to have
enough leverage in the future to be of benefit to this world.
The Ulterior Motive
Besides addressing the mundane, legal and philosophical reasons for
creating a Trust, we are taking a massive departure from the familiar. The
presumably safe tradition of legal and historical facts will now segue into

what many of you will find “out there.” Rest assured, though, there is a
good reason for our doing so.
Found hidden in the antiquity of history is one of the hottest political
footballs of all time. This subject remains questionable, even today. Without
bringing it to your attention, though, you would miss the background of
what compels the Super-Rich to use Trusts.
Beneficiaries be damned; the real purpose of the Trust for the Super-Rich is
to accumulate and protect assets for themselves! Ancient rulers who
literally took their servants and treasures to the grave with them could, were
they here, but look in awe and envy at the boldness of the scheme.
The rich are motivated to create wealth so they can reincarnate back into
their own bloodline and thus inherit their resource structure. They not only
keep their material comfort, but also their leverage.
Because of the controversial nature of the subjects of reincarnation and
other esoteric themes in general, we feel that we should address these
beliefs more fully in Appendix H. Here you will find the more amazing
details of some of the rituals of the major organizations and leaders of our
world, and understand more thoroughly why they have such an intense
motive to accumulate wealth. This one area is probably the demarcation
line between those who seek power and those who choose to live their lives
to the fullest capacity without concern about how or when they come back,
or even if they do.
In bringing this point of view to light, we are not offering or suggesting it is
correct, only it is probably a strong motivator for some.

Chapter 6
Wealth Retention: Tactics of the Rich
Before we take you into some of the details of setting up a Trust, you
should understand some broader concepts about wealth. In this chapter you
will enter into an awesome world of power, and get an in-depth look at
vested interest and the cohesiveness of the elite.
This chapter embodies the discussions at the dinner table, or with your
mentors if you grew up in the stratum of society where deals and
manipulations occur to make political moves.
The Eternal Loop
A properly run Trust comes into being, lives and dies for the Beneficiaries.
Indeed, the first test of whether an entity is in fact a Trust and not a scam of
some sort is whether it has at least one real Beneficiary. And, this
Beneficiary cannot be the Grantor who set up the Trust. A viable Trust is
one which is set up for the benefit of someone other than the Grantor.
Beneficiaries are the basis of Trusts, for Trusts are simply specialized legal
vehicles to provide for and care for Beneficiaries, and to ensure that not
even the marriage partners, or anyone else, gets the funds or assets.
Although in many Statutory Trusts, the duration may be just long enough to
liquidate the estate and parcel out the proceeds, as in certain Living Trusts,
it may also renewably run for many generations, as in the private contracts
known as the Irrevocable Common-Law Trusts.
Because of an 
Irrevocable 
Trusts’s ability to 
hold assets in its 

name, and not in 
the name of a 
person who will 
die, it allows 
wealth to be 
retained and 
passed down the 
genetic line 
(progeny).
To prevent Beneficiaries from thwarting long-range plans, the rich
discourage any misconduct through the way Trusts have been sent up: you
cause trouble, you are disinherited. This is better known as the No Contest
Clause.
Because of an Irrevocable Trusts’s ability to hold assets in its name, and not
in the name of a person who will die, it allows wealth to be retained and
passed down the genetic line (progeny). Thus, the legal matter of having
Beneficiaries allows wealth to be kept generation after generation. The
Super-Rich, the dynastic families who run this planet for their private
benefit, thanks to generations of intermarriage and despite amounting to
less than 3% of the population, control at least 95% of all the known wealth
on Earth.
The Business of Hoarding
Even if you do not think that 3% is a real number, you must remember,
these Super-Rich families have been hoarding since before William the
Conqueror ascended to the English throne in 1066 A.D.
Railroad Leases
Further, great sections of the land in America are still owned by royal
families. For example, the railroad leases are part of an intricate network
originally set up through the Lewis Cass Payseur Trust, a scheme devised
by the English Crown on behalf of Marie Antoinette’s surviving son.34
Through the railroad network, the mineral and water rights of America are

owned. You may remember the leases were in a 10-mile square
checkerboard pattern on either side of the railroad lines–prime land where
towns would soon flourish. Consider the accumulation of wealth from just
from this scheme alone. The documentation of the Assets of the Lewis Cass
Payseur Trust is found on page 321 of Pandora’s Box. They include:
Railway, Railroad and Related Companies; Banks and Related
Companies, Cotton Mills, Thread and Sewing Machine
Companies; Electric and Power Companies, Gold and Silver
Companies, Iron and Steel (and other metals) Companies; Motor
Vehicle Companies; Insurance Companies, Tobacco and Related
Companies, Watch Companies, Land and Real Estate
Companies, Food and Other Household Goods and a long list of
miscellaneous companies.
Through the 
railroad 
network, the 
mineral and 
water rights 
of America 
are owned.
If this, alone, does not astound you, then to further convince you, the 1913
Report of the Pujo Committee listed in the U.S. 62d Congress, 3rd Session,
House Report No. 1593, Chapter III. The above list of assets is carefully
reported in detail in the Pujo Committee Report. This underscores the
power of those who have held the riches of this world for thousands of
years. Multiply this effort by the number of dynasties over the past 1,000
years, and you will get the true picture of who owns what.
Welfare: The Double Standard

An old adage holds that children who do not work for a living become
spoiled, cannot handle money, and that money ruins many lives. True,
people who suddenly inherit sums which far exceed their previous income
may find their new fortune leads to misfortune.35 Yet, those who live all
their lives in riches, do not have such problems.
Consider, for example, this statement from a respected study of wealth, The
Rich and the Super-Rich:
In requiring reports of a beneficiary interest in trust funds and of
holdings as a trustee, the law reveals a large portion of the social
security system of the rich. It is an excellent system, and
provides much security for its beneficiaries. But in considering
it, one wonders about the oft-heard thesis of many conservative
and ultraconservative spokesmen and newspapers the federal
Social Security System, the Family Welfare System and the
trade-union system all carry great danger of destroying the
characters of the participants. They might, among other things,
become mercenary or lazy.
The rich themselves very evidently do not believe that being the
beneficiaries of huge trust funds has undermined their
characters, or that establishing trust funds for their children will
distort the children’s characters. No case has come to light
where the children of the wealthy have been left penniless for
their own benefit. All known cases of disinheritance are
punitive, where the children have displeased the parents. Why, if
drawing benefits without labor from a big trust fund does not
destroy character, will drawing benefits in old age from Social
Security or a pension system do so? Why would a true Welfare
State be injurious of the general public when a private welfare
system of trust funds is not apparently injurious to its limited
number of beneficiary heirs?”36
If you still believe that giving your children financial support is harmful,
you might want to examine how you formed that idea. Was it suggested by
indoctrination you received through the mass media, owned and operated

by people who have more interest in obtaining your family legacy for
themselves than in seeing you pass it on to your heirs?
Who Are the Real Welfare Recipients?
Consider the real welfare state erected and run for the benefit of the rich
through such grand enterprises as:
Private banks designed to appear and sound as if they have been
conceived for the public good, yet are privately owned, e.g., the
Federal Reserve Bank.37
Agricultural subsidies in the U.S. alone were 15.2 billion dollars in
200238, with most of the benefits inuring to a handful of vertically
integrated multinational agribusinesses.39 Well-fed contractors who
manipulate events and governments to stay at the public trough, all
aided by a network of public laws passed for private profit and paid for
with unending bribes, gifts, graft and corruption.40 The Boeing bribery
scandal and the billions paid time and again to the super-connected
Halliburton,4142 Bechtel et al.,43 are but a few examples of how the
ruling elite keep the money in their pocket.44
Trade policies, such as those embodied by NAFTA and GATT,
whereby long-standing tariffs have been removed to allow industry
jobs to flee overseas. This provides record profits to owners through
cheap foreign labor, and reduced or nil regulatory overhead without
charging less for products in the United States.4546
That is the real welfare state—an entire nation’s resources and people
bound over to serve a privileged few!
This may be upsetting to some of you, but we are not here to coddle you in
your carefully instilled, constantly reinforced delusions. Rather, we are here
to wake you up, and to show you what you have been taught to believe
about how the system works is simply not true. It extracts as much as
possible from you. Stop being the victim!
Life in the Matrix

You might not think it, but this rather “out there” notion turns out to be
directly applicable to what we are discussing. How? American business is
the Matrix. Instead of running on our basic life force, though, it harvests the
distilled essence, in the form of our money and property, not to mention
irreplaceable time, energy and effort.
The Federal 
Reserve 
System 
created a 
private central 
bank which 
looks 
governmental 
but is not.
The Federal Reserve and the IRS
The robber barons made their stupendous fortunes at the turn of the
Twentieth Century, in a climate of practically zero regulation and no federal
income tax. They then sought to protect their privileged positions by
erecting impregnable defenses around them.
The solutions adopted were simple, practically invisible despite operating in
plain sight, and diabolically effective. The first, the Federal Reserve
System, created a private central bank which looks governmental but is not.
That entity, through controlling the borrowed-into-existence money supply
(the interest on which forms the vast majority of the national debt), can
literally bring about boom and bust at will.
The second, the IRS, is also a faux governmental entity and acts as the
money collector, data collector and enforcement arm for the owners of the
privately owned Federal Reserve Bank. Worse, since these same people
have de facto control of the government, they have long been using its full
weight and power to systematically lie to the people and trick them into
surrendering their rights and property. For example, there is the issue of the

term “nonresident alien.” It means one who is a citizen of one of the several
states and not a U.S. Citizen, who is a taxable entity. This requires a lengthy
legal discussion but seems to be one of the main points of the IRC §861
argument, which is beyond the scope of this book.47
We do not advocate any tax battles. The information, though, is essential to
make correct financial decisions. For example, knowing that the planet is
run by those heavily invested in oil, makes you think twice before heavily
investing in free energy. Trying to take on the “system” needs a deep
understanding and no Board of Trustees should try it.
This, though, constitutes merely the microcosm the American Business
Matrix (ABM). And remember, the money being issued, contrary to the
Constitution, is backed by neither gold nor silver, hence is called fiat money
—decreed into existence. If the American economy collapses, other
countries will not value the U.S. Dollar–which is a Federal Reserve
(promissory) Note and has no backing.
Of Banks and Suppliers
The same interests which own the Federal Reserve Bank also own the
banks, financial institutions, credit bureaus, telephone companies and
manufacturers, as well as service suppliers of every stripe, to name but
some. All of them profit by convincing you to invest your hard-earned
money and property into a business. Judging from the official small
business failure rates of 85% the first year and 95% within five years, you
would be much better off going to Las Vegas and playing the slots, which
pay off sometimes as high as 90%.
And guess what? These same interests are the real impetus behind
“bankruptcy reform” laws which make it hard for Americans ensnared in
carefully crafted debt traps to get out and start afresh.
Remember our fiat money discussion? That is what a business loan is. A
ledger entry is made, a worthless check is issued, then off you go on your
statistically doomed business venture, generally with your house and other
property as loan collateral and your blood, toil and sweat to enrich the
bankers.

Everywhere you turn for items and assistance you need to do business, the
ABM awaits, not just as business entities, but as governmental ones, too:
taxes, permits, licenses, inspectors, user fees, special tags and more.
If you succeed, the ABM makes money at every step both before and
during. If you fail, your business assets are seized and sold to some other
sap as the great con continues, your collateral is forfeited, and you may well
wind up saddled with a lifetime of debt.
What if there were a better way, though, a way in which the potential not
just for failure but the consequences of that failure were minimized, while
at the same time, the likelihood of success was greatly increased?
Because an entire family can put its assets together, either the Private or
Statutory Trust offers great financial leverage. The substantial backing thus
engendered immediately acts to counter such major causes of business
failure as undercapitalization, inadequate knowledge, poor accounting and
internal theft. To do this, though, means first dispelling the ABM
promulgated myth of the entrepreneur.
The Myth of Making It in the World
The American propaganda machine constantly reinforces the belief that the
entrepreneur is one of this country’s most valuable assets. Further, we are
told that America is the “land of opportunity.” Here, we can succeed beyond
our wildest expectations and dreams. The Wall Street Journal reports many
such successes, as do several other high-class magazines, such as Fortune,
and Inc.
What if statistics and generational records prove otherwise? What if the
entire concept of the entrepreneur fails in the face of reality? If the concept
is faulty, then what will you do when you discover what does work?
The average 
person can tilt 
the odds of 
success much 
to his or her 
favor by being 

better informed 
and organized 
when new 
ventures are 
attempted.
The premise that, contrary to what the public has long been told, inherited
wealth owns the political structure, controls the money supply and controls
our lives has been proven through extensive research. We again refer to The
Rich and Super-Rich. The author, Ferdinand Lundberg, demonstrates
through numerous examples the rags to riches concept is false. Even if the
first generation has great financial success, the resulting financial leverage,
when compared to inherited wealth, is nil. Further, inherited wealth controls
the success or failure of the rest of us by manipulating the money supply,
the politicians, and the flow of money.
The average person can tilt the odds of success much to his or her favor by
being better informed and organized when new ventures are attempted.
Through a group endeavor, such as one offered through a Trust group, the
likelihood of success in business is greatly increased. Why? Because the
entrepreneur is no longer working alone. The specific goal of creating
assets for Beneficiaries changes the emphasis and perspective, too. Careful
planning, and understanding strategic money management, require broader-
based decisions, and a hand-picked Board of Trustees highly likely to give
sound advice. Further, when you operate through a properly structured
Irrevocable Trust, you gain many astonishing tax advantages. This is one of
the great keys to asset multiplication.
This is why this book stresses the creation and proper administration of a
Trust. The powers that rule the world are in Trust. We do not expect the first
generation to have the financial leverage of the great “old money” families,
but we do expect generations which follow to be in a much better position
to have a positive effect on the world.
Earlier in this book, we presented the bizarre notion the planetary elite
believed they could concentrate even more wealth and power for
themselves via successive reincarnations into elite bloodlines, but matters
can go the other way, too. Here is a remarkable past life memory of one of

our associates. Notice how beautifully it shows the matters we have been
discussing–and the money did stay in the Trust, no matter what he did:
Destined to be born into the lap of luxury, the Beneficiary of a
Trust, I took it upon myself to be rebellious—I was one of those
children who got the money and did not get the love. Although
my father gave me the best, it was not what I needed, and so fast
women, booze and all the forbidden were my preference—
anything to get my father to see me. He was so busy making the
money, though, that he apparently did not know how to spend it.
In the unspoken reality that often happens between father and
son, it seemed that he delegated spending to me. I did not have
an instruction book, or knowledge of his intentions and
motivation to accumulate wealth, or, especially, what he
expected of me. So I gleefully “threw the money to the wind.”
This only resulted in arguments, neither of us addressing the
unvoiced issue of our relationship. How to invest or build a
fortune was not my interest. Running from my emotional pain
thwarted any attempts to find satisfaction.
Off to Harvard I went, getting there through bribery, I am sure,
for I never applied myself enough to master the art of anything,
except, of course the fast things, airplanes and cars. Japan
invaded China, and I planned to volunteer my talents as a pilot.
The thrill seeker part of me was sure an adventure awaited that
would satisfy my need for substantial excitement, a thrill pill to
assuage my quest for constant challenge and adventure.
Perhaps it was not my path, or maybe I was just too fed up with
all the money, as obviously, I was not succeeding in getting the
attention I desperately needed. Heck, I do not even remember
my mother—what did money do to her?
So, too much booze, and the daring acceleration of my shiny,
red LaSalle convertible on a hot summer’s night, ended my life
in China. I left all amazing opportunities behind to get it straight
then—the war’s excitement vanished before I even got to fly an
airplane there.

Now, I am back, in a new life, with a different set of
circumstances, and the memory of my foolishness. I study the
art of Trusts, because I now know that I did not do it right the
first time. Perhaps this time, I can influence people to pay
attention to their children, as well as give them vast financial
opportunities, so they will not do what I did.
So, you might say, I am “doing time.” I got born in the 1940s
into a lowermiddle-class family, and my father did not seem to
care too much for me. I got to experience what I could have
avoided, if I had not been so hotheaded. This time, I have done
my life the hard way. The limits this financial deprivation place
on my dreams and ambitions are frustrating, for I would truly
like to help the people of the world, far more than I am able to
do having been born into near poverty, and into a family that
was more interested in fighting than succeeding at anything. A
true reflection of my own state of mind—the last time.
So, if you think money is bad, or you worry about giving too
much to your children—that is not the issue. Children need
support, and money is only one avenue. I suggest you teach your
children leadership skills, and to value the people of this world,
to help and assist others to succeed, and to create job
opportunities, as well as all ways possible to expand the
potential of our fellow citizens.
Encourage and support children’s creative endeavors. You never
know. You might have a potential Rembrandt or Einstein
looking for your help and mentorship.
Establishing an End
The rich who have ascended to positions of dominance are vested in the
notion no one else should be allowed into their nest of power. To thwart
those who would disturb or even usurp their cozy place, they ensure the
ignorant remain so. Thus, they invented various ways to make it appear to
the rest of us they allow inheritance, but they have put a cap on it. The

Statutory Irrevocable Trust permits the transfer of wealth from one
generation to the next, but it does not sanction it to accumulate beyond the
third or fourth generation. Excerpted from an actual Trust Indenture is this
paragraph. It demonstrates the principle of “Remoteness of Vesting,” or the
“Rule Against Perpetuities”:48
THE TRUST shall expire at 12:00 noon on the day before the
end of the running of twenty-one years after the death of the last
survivor of one of the following: the Grantor, the initial trustees,
and the children and grandchildren of said parties, which
survivor must have been alive on the date of the creation of this
trust, unless this trust is sooner terminated in accordance with
the provisions of this trust instrument. If this trust is reviewed by
a court with respect to the issue of remoteness of vesting, undue
duration, or a similar rule and the applicable state law has
shorter requirements than the rule against perpetuities, that a
shorter requirement shall be the intent of the Grantor.
Working 9 to 5
The rich encourage a strong work ethic, and we concur that work is good,
especially the experience of working with others to learn new skills. Here
again, though, is another myth. While we are kept working, those with the
time are designing our greater enslavement. By keeping us in survival
mode, we cannot realize our true potential.
Besides, most middle-class Grantors may unwittingly pass along to their
children the attitude that being a contributing member of society necessarily
includes working a 9 to 5 job or an equivalent. The concept of having no
other condition for obtaining one’s money than walking to the mailbox is
foreign to most people. When the cash flow pours into the Trust, the
Trustees must distribute it, and that means trips to the mailbox for all
Beneficiaries.
We have nothing against working 9 to 5, but it should be purposeful and
limited. To remain engaged in manifesting another’s dreams does not help

your life unfold. To turn your 9 to 5 into a meaningful experience where
you can establish your own goals within the framework of another, we refer
to you the book Rich Dad, Poor Dad.49 From this vantage point you can
even start young to build assets and acquire the financial skills which you
will later pass on to the next generation.
Power Groups
Any group of people can misuse power. In a white paper written by Ted
Nace titled Gangs of America50, he outlines the unholy ability of
corporations to amass power. There can be any name, form or scheme to
take advantage of others. The problem lies in the lack of inherent
appreciation and understanding that each person who lives is not only a
miracle, but holds an unfathomable amount of unique knowledge. Nurture
others; gain innate potential and power. People are an unlimited resource, so
why diminish them or, for that matter, even fear them?
Powerful group influence can be used to benefit society, or, sadly, to
degrade it. That is why, when setting up a Trust structure you hope will
enhance the lives of many people yet unborn, you must also take care to
build into it provisions for strong ethics and morals. You might even set up
guidelines for the Trustees and certain tests for the successors within the
Trust, to ensure as much as possible that only those with good intentions
will wield the power the assets will provide.

Chapter 7
The Application of Wills and Trusts
Even though the previous chapters have given you the broad strokes of
wealth and the philosophy of riches, we now want to bring you back to
Chapter 1, where lack of foresight caused great grief. It is a cautionary tale
concerning a common situation that results in the careless dissipation of
wealth, one we deliberately placed prominently up front to shatter your
complacency and seize your attention. Now that you have seen the long-
range results of how a Trust can work for the good of a group, you can see
the true cost of failing to plan properly for your family. It is too late to do
anything once you are gone. Now that you have a vision of possibilities, it
is time to lay in your dreams, but what to do and what not to do?
Will Deficiencies
The typical solution to pass along your wealth has long been a Will. Some
financial reports advise that annually as much as 53% of Americans die
intestate (without a Will), leaving their estates, and thus their descendants,
to the not-so-tender mercies of the Probate Court. This is where blood is
only sometimes more important than marriage, where the state and federal
tax authorities get to take big bites, where creditors get their money, where
fees get paid for court-appointed executors and the like. Asset payout
comes only after a great deal of time and according to a state-mandated,
prioritized list of recipients.
Sadly, even having a Will does not solve the problem. All it takes to contest
even the most carefully drafted Will is one aggrieved person or another
party, such as a charity named in the Will, to dispute anything from a minor
clause to whether or not you were even sane when you wrote it. This
challenge puts your estate into Probate Court, where the wrangling can

continue for years, sometimes to the limits of human and legal bill-paying
endurance.
The Living Trust is not exempt from this flaw. Although it can get around
probate, it is treated the same as a Will if contested. Meanwhile, your
estate’s assets remain frozen (also true if you died intestate), leaving your
descendants with nothing until matters are finally resolved. It was precisely
to address this and other problems that Trusts were created. When properly
constructed and administered, they provide you with maximum say over to
whom your estate goes and how, while maximizing privacy, protecting the
estate, and minimizing the tax bite. Some forms of Trusts are more effective
in providing these benefits than others, but all offer major advantages over
the usual Will.
If you did not read all of Chapter 2, this is probably a good time to go back
and read Divided Title and the U.S. Constitution, along with the legal
definitions given concerning Trusts in general.
What More Do I Need to Know About a Trust?
In its simplest form, a Trust is a legal entity created when you, known as the
Grantor, transfer ownership of personal property to a Trustee or Trustees,
for the benefit and support of a named party or parties (the Beneficiary or
Beneficiaries), according to the terms set forth by you in the legally binding
Trust Indenture.
There are two basic types of Trusts: Revocable and Irrevocable, with many
variations on each.
As explained in Chapter 2, in a Revocable Trust, you become the Trustee
and the main Beneficiary. You can change the provisions in the Indenture
until you die, but whatever the final version becomes, unless there is some
gross legal defect, it is cast in concrete upon your death. It cannot be
changed thereafter. Thus, a Revocable Trust becomes Irrevocable. There is
a big tax catch here, too. If ownership of your estate does not change until
you die, then while alive, you bear the burden for all the requisite taxes. In
other words, personal control equals personal tax liability.
Cast In Stone

In an Irrevocable Trust, though, as soon as you sign and witness the
carefully thought out Trust Indenture, for good or ill not only are you
committed, but likewise your Trustee or Trustees and the Beneficiary or
Beneficiaries. Once the Trust is funded, there is no turning back, and from
this point on, while you have the use of some or many of the assets, you
will not own them, and cannot be taxed for them, either. Why? They no
longer belong to you! They not only belong to the Trust but are insured,
maintained and, if necessary, guarded by funds generated from the Trust.
While alive, you can enjoy some of the benefits of ownership with none of
the hassles–while saving big on taxes and safe in the knowledge your estate
will never be tied up in Probate Court. Why? Probate Court has no
jurisdiction51 over an Irrevocable Trust if it is properly drawn. Since the
assets do not belong to you, when you die, you have no assets to pass on.
The assets are part of the Trust, and the Trustees continue to administer
them whether or not you are alive. Probate is about death, and an
Irrevocable Trust lives much longer than you.
In other words, 
personal control 
equals personal 
tax liability.
Figure 2 in Chapter 2 depicts a generalized Irrevocable Trust structure. It
shows the key players, together with just a few of the many potential
income streams available to it. The permitted income streams in your Trust,
though, will be a function of what you specify in your Trust Indenture.
Breaking It Down
Your Trust begins with you, the Grantor. For this example, we assume the
initial corpus (literally the body of the Trust) consists of $250,000.00 plus
your $250,000.00 whole life policy and, say, another $100,000.00 in mutual
funds.
Depending upon the Trust type, the corpus which forms the assets of your
Trust can come into being during your lifetime or through a Will that

automatically comes into being when you die. This is a Testamentary Trust.
Either way, the Trustees administer the corpus and must:
Increase the value of the Trust.
Follow the terms of your Trust Indenture.
Determine investments (where to put Trust money and/or assets to
generate revenue).
Administer distribution: how much of the profits can be shared with
Beneficiaries.
Properly handle accounting to retain enough funds to:
◯  Cover expected administration expenses.
◯  Keep enough funds to increase investments.
Meet and converse with the Beneficiaries to ensure their needs are met
in accordance with your wishes.
This emphasis on generating revenue from investments is no accident;
diligent Trustees are all about growing the corpus, the more the Trust
makes, the more they make.
Trustees, with the exception of the Grantor who usually acts as a Trustee of
a Revocable Trust, are paid a fiduciary fee based on a percentage of
distribution. Through receiving a fiduciary fee, a Trustee makes money if
the Trust makes money. If the Trust loses money, the Trustee receives either
no money, or much less money. The idea is to motivate the Trustee to bring
in a sufficient cash flow for the Beneficiaries.
There are many issues, though, about what is considered acceptable risk,
and what Trustees should and should not do. These are addressed in the
Probate Code. This body of case law can be an excuse for Trustees to be
fearful to take risks. Recently, laws were passed to encourage Trustees to
increase the value of the Trust for the Beneficiaries. There are Private Trust
contracts that can encourage Trustees to take greater risks, but those will be
handled later in this book.
Remember, your Trust Indenture must be written to provide not just your
Trustees but their successors with clear-cut guidance on, a) your intent and
b) what are and are not acceptable investments.

It may seem a little spooky, but in a sense you eventually reach a point
where you speak from the grave to those entrusted with caring for those
dear to you and advancing the causes you cared about during your lifetime.

Chapter 8
Trusts—Not for Everyone
You may be looking for answers because you are involved or embroiled in
the issue of inheritance as a Beneficiary or as a Grantor. If you are thinking
of setting up a Trust, this chapter defines qualifications with the emphasis
on who should not put assets into a Trust.
If you are a Beneficiary, you will learn some of the intricacies in setting up
a legacy for future generations.
Granted, the chapter title is provocative, but it nicely carries a key idea, that
as marvelous as Trusts may be for some, certain types of Trust may be ill-
advised, harmful to and even illegal for others. The more complex and
legally demanding the Trust type chosen, the greater and more serious the
funding restrictions and administration protocols. The Irrevocable Trust is
by far the most demanding and restrictive, but in such rigors lie benefits
attainable nowhere else.
Often managed by lawyers, CPAs or other professionals, the Irrevocable
Statutory Trust is compatible with current financial methodologies. If not
managed by those licensed, then the Trustee may be an untrained family
member who relies heavily on legal counsel. There also may be a court-
appointed Trustee.
The Irrevocable Statutory Trust is different from a Private Trust. At this
point, we distinguish between the two.
The Irrevocable Statutory Trust comes in many different forms; see
Appendix B for a list. Among legal professionals who specialize in Trusts,
the various kinds listed are complex and involve sophisticated expertise.
This book will not go into detail on each of the applications listed, as it is in
your best interest to speak with a Trust professional.

At this point we simply want you to understand the Irrevocable Common-
Law Trust is the most fully realized form of Trust when set up correctly.
Further, until about 100 years ago, it was the most common Trust used. We
use it as a background and a point of comparison. Later in this book we
discuss the Irrevocable Common-Law Trust in detail because we feel that
all other types of Trusts devolved from this one.
Once you understand this original, ancient and sophisticated Trust, you can
more easily decide how to arrange your affairs.
The following applies mostly to Irrevocable Trusts and especially to the
Common-Law Trust.
When Not to Get a Trust
Just about everyone is eligible to get a Living Trust. Managed by the
Grantor, who becomes the Trustee, you can put funds from any source into
the bank account. After all, you are taxed on all the income that comes in
your name, so the source needs only be legal.
Not everyone needs to have an Irrevocable Trust, and few are qualified.
We will spend a significant amount of time throughout this book explaining
the advantages of a Trust, but sometimes an individual’s circumstances or
capacity is not conducive to putting funds into an Irrevocable Trust. This is
because funds coming into the Trust must only be under the control of the
Trustees. The following conditions compromise the Trustees, or create a
complex tax - position.
Some of the hindering reasons include: government wages, IRAs, W-2
wages, some retirement funds, professional licenses, doubters, excessive
greed, and the criminally minded.
Government Wages
Government wages cannot be assigned to an Irrevocable Trust because
when you have a contract with the government, you receive proceeds from
the government. The government must write the check only to you as an
individual. Some researchers believe this is because the federal government

is itself a Trust, and the People are the Beneficiaries. If this is the case, then
only the named Beneficiary may receive the funds distributed.
Usually, one of 
the significant 
motivators to 
assign assets to 
a third party is to 
reduce taxation.
The correct way to put assets into a Trust is by filling out proper assignment
documents, and the entity (business, corporation, partnership) which pays
the funds recognizes the assignment and writes the check per the
assignment.
The government does not acknowledge any such assignment. Also, the
Trust is not the individual “entitled” to the funds. This is because the
government taxes the funds, and if the funds by assignment go to another
entity, it is not likely to be taxed it at the same steep rate as for an
individual. Usually, one of the significant motivators to assign assets to a
third party is to reduce taxation, and to protect against lawsuits.
If the government wrote a check to you for any benefits, this also cannot be
assigned to an Irrevocable Trust.
Independent and Private Contracts
Sometimes, people have independent contracts with the government. Even
these independent contracts cannot be rewritten and assigned to another
entity. For example, Peter, a friend of yours, is an independent contractor.
He repairs military Hummers. He then decides to get an Irrevocable Trust.
Peter goes to the person with whom he created the contract and asks to
renegotiate it to put it under a different name—the name of the Trust. The
government does not recognize this change, especially if the same person is
doing the same work. The government might acknowledge the change if the
contract were to be rewritten to a company, and Peter was not part of the
company.

Oddly enough, the same rule applies to a contract with a corporation. The
IRS challenges a change of a contract from an individual to a Family Trust.
Retirement Programs
IRA programs defer the taxes until funds are paid out. Such IRAs cannot be
transferred into a Trust, but the Beneficiary can be changed to a Trust.
Roth IRA plans, though, deduct taxes before the funds go into the
retirement program. Therefore, these funds can be transferred to a Trust.
Some private retirement programs are Trusts themselves and cannot transfer
funds to another Trust unless the program has survivor benefits. This means
if the main Beneficiary dies and benefits accrued to him, the benefits may
go to his heirs or to a named Trust.
W-2 Wages
The employer deducts taxes from the employee and reports them on Form
W-2. These wages cannot be assigned to an Irrevocable Trust. The
employer pays taxes linked to a Social Security Number. What the
employee does with the funds is up to him or her. These funds can be
received into a Revocable Trust, but not an Irrevocable Trust. An
Irrevocable Trust must produce its own funds, and the Trustees need to be
solely in control of these funds. If the Grantor of the Trust puts his or her
wages into the Trust, then the Grantor remains in control. The Trust’s status
changes from Irrevocable to Revocable, and the Grantor becomes
responsible for all the taxes in the Trust!
The proper way to arrange funds into an Irrevocable Trust is if, for
example, Mary, a schoolteacher, wants to put money into a Trust. She
assigns her stock portfolio to the Trust. By assigning the stock portfolio, the
profits go directly from the stock account, now owned by the Trust, into the
Trust checking account. Mary has no control over the money. Thus, she is
not taxed. If Mary does not have an investment account, but stills wants to
start a Trust, she can use her paycheck to invest into various opportunities,
even offering a 10% APR loan to a friend. The friend then pays the Trust.
For an Irrevocable Trust to be independent and properly legally positioned,
the Grantor cannot control the Trustees. Because of this, there is no
advantage to putting W-2 wages directly into the Trust.

Professional Licenses
Doctors, dentists, CPAs and lawyers in some states can only work through
corporations, LLCs or partnerships. This particular ruling applies to
California. When you use a corporation, you owe taxes to the state, and
sometimes there is double taxation. When licensed professionals work
through a Trust, the Beneficiaries pay the tax, often at a much lower
bracket.
Professionals can get a corporation, though, and a Trust can own some
corporate stock.
Disorganized and Confused?
Sometimes, unorganized people want to get an Irrevocable Common-Law
Trust. Unfortunately, the disorganization and continual loss of significant
paperwork arise after the Trust is set up. Although this is a workable
condition, these people must learn to become more organized. Because they
work with a group of people who share a common goal, the chaos caused
unsettles the entire group. If you are not paper oriented, and not in a
position to devote time to understanding the legal realities of this more
sophisticated Trust, then it may not be for you. Although, if you just want to
give funds to a Trust and walk away, not be involved, then this arrangement
works to your advantage.
Poverty
People who live hand-to-mouth and do not have any savings are not
candidates for any Trust, though contrary to popular opinion, you do not
need to be wealthy. Those who are mostly without reserves and assets,
though, make incredible Beneficiaries, for they have great need, and usually
have gratitude which those born to kinder circumstances may not have.
The Responsibility of Privacy
Privacy is a core feature of many Trusts, and demanding privacy and
asserting your rights are learned behaviors. These simply do not come

naturally to most people. Only through mentoring can people learn to say
“No” to a terrifying, skilled interrogator. You will find more on this in
chapters to come.
If the most innocuous meeting with officialdom makes you break out in a
sweat, and you are so spineless that you let people use you as a doormat,
how are you ever going to stand your ground to keep your Trust safe? You
need to keep your composure and guard your tongue if confronted with
professionally trained government intimidators, a.k.a. agents. After all, they
fully expect you to offer no resistance whatever. Their “requests” are to be
obeyed. Therefore, you should tamely accept whatever documents they may
wish to give (serve) you as well as invite them in and show them whatever
they may wish to see.
The answer is obvious. You cannot! Therefore, if your natural instinct when
confronted is to cower, roll over and bare your throat, then even a
Revocable Living Trust may not be for you.
You must get beyond your own fears and think of the future of your
Beneficiaries. If you are not willing to do that, then do not get a Trust.
Some wonder why it is important to resist unwarranted searches and
inquiries. People think that if there is nothing to hide, there is no reason to
keep your private affairs.
Pretend for a moment you are fifteen years old and your father rifled
through your bedroom while you were out on a date. Even if you had
nothing to hide, this is a violation of your person, your space and displays a
lack of trust. It is insulting and degrading.
Your own paperwork can be used against you. Endless questioning can
wear you down in your attempt to explain any little thing. Anyone
associated with you now may become a target. If there is no evidence of
criminal conduct, there is no reason to subject yourself to invasion of
strangers. Trained in trickery, agents can make you feel guilty even if you
have done nothing wrong.
Why subject yourself to it? Make them get a search warrant. If they do not
have enough evidence to a convince a judge, then they have nowhere to go.
They must leave you alone, or continue to harass in hopes you surrender
some morsel. Of course, that leads to another morsel ...

Privacy is a major issue. From individuals to partnerships, corporations and
Trusts, all privacy issues are sacred only if you know how to stop illegal
inquiries. Stopping illegal inquiries requires individuals and business
officers to know their rights. People who do not know them, have none.
There is only one way to stop an illegal search and seizure. You must have
enough knowledge to gain the confidence to say “No.” As assets collect in a
Trust, privacy becomes more of a major issue. What others do not know
you have, they cannot covet. Those people who live in fear of the IRS and
are afraid to step forward to take responsibility should not be Trustees.
Trusting strangers and being open about our personal affairs leaves you
vulnerable to government officials and scam artists alike. Both count on our
misplaced trust and openness to make their tasks easier.
Identity theft is a big problem. People have begun to “get religion” on
protecting passwords, account numbers and the like. This makes
opportunities tougher on the con artists and grifters of the world; but how
many people know a) they can protect their privacy when, say, the IRS
comes calling or b) what specific actions to take when so confronted?
Taking these last two stands needs education, training, and plain old guts. It
is possible to avoid surrendering significant information that can be
damaging to you. Your resistance prevents others from being dragged into
the muck and mire of accusations.
Doubters and Skeptics
These are people who are indoctrinated to accept the idea of a Will or
Living Trust. When presented with a more sophisticated Trust, they are not
interested in listening to the advantages of the Irrevocable Trust, whether
Statutory or Common-Law.
Their own fears of surrendering power or assets to others immediately
cause them to panic and warn you of all the evils in the world. They usually
do not have enough information to make a rational judgment about the
subject and believe that all Trusts are bogus. Sometimes, there is great fear
they will get in trouble if they get involved in a Trust group. They do not
believe the advantages, and some believe it is just a trick. Some trick, since
the rich created the game! Should you happen to be one of these doubters,

you will need to either educate yourself or forget about having an
Irrevocable Trust.
The White Man’s Disease
This particular issue does not apply to a Living Trust, where the Grantor
becomes the Trustee. In considering any Irrevocable Trust, though, we may
find difficulties because of our social upbringing. Many are afraid to rely on
and trust one another.
Often, people are not in a social position where they have enough friends to
be able to create a Trust. This is what we call, “The White Man’s Disease,”
as opposed to ancient tribal social support. This disease is rampant
throughout society—the inability to trust others and make deep long-
lasting, committed friendships. Because of this, many people cannot find a
Trustee, someone whom they feel they can trust. After all, it takes much
trust to place hard-earned assets into the hands of another. Without at least
one Trustee who can be trusted, there is no way a Grantor can move
personal and family funds into an Irrevocable Trust.
There is often no intent to share holdings with family or anyone else. What
makes an Irrevocable Trust work, though, is passthrough accounting. This
allows the Trust profits to pass through to the Beneficiaries, who are
generally in a lower tax bracket than the Trust. Passthrough accounting
creates further options which we discuss later in this book and in Volume II.
Greedy people intent on not giving any of their wealth to others miss the
bigger picture—that by sharing, they can multiply their funds, as a Trust is
designed to do.
Do you suffer from this pernicious disease, or are you blessed with close,
deeply respected friends and willing to share your wealth with them?
Bogus Trust Scams
Con artists feed on the fear of trusting. Of all the Trusts that exist, the one
used most by scam artists is the Irrevocable Common-Law Trust. Many
people caught in Trust scams are honest people who do want their assets to
go to their Beneficiaries; Scam Trust Artists have continuously existed for
at least 100 years and prey on the ignorant. They sell their version of an

“Irrevocable Common-Law Trust,” by telling people they can be the
Grantor and the Trustee, and thus, avoid taxes. The details of this game will
be explored in far greater detail in Volume II. In fact, one of our many
motivations for writing about this subject is to ensure that most people will
not fall for this old trick.
People who want only to hide their assets and avoid taxes never think about
their Beneficiaries. When presented with false information about the
possibilities of an Irrevocable Common-Law Trust, they think they can put
assets, for example, in the
People who 
want only to 
hide their 
assets and 
avoid taxes 
never think 
about their 
Beneficiaries.
Cayman Islands under the name of the Trust and thus avoid taxes. This is
not the proper use of a Trust, and the authorities are well aware of this
game.
This is why bogus Trust scams have become rampant. The sales pitch is,
“You can put your funds through a Trust, and still control them. You will be
the only signer on the checks, you don’t get taxed on the Trust income, and
the Trustees will be arms’ length; they will not interfere.” This sounds too
good to be true, and it does not make sense. Often in this game, the ideas of
protecting assets and avoiding probate are tantalizing, and even honest
people get trapped in this con game. These Trust scam participants know
nothing of passthrough accounting, or passing assets to their Beneficiaries
or other Trusts.
Others knowingly try to scam the IRS via improperly constructed Trusts,
and suffer accordingly.

A Trust is a 
sacred 
document. It is 
used to make 
wealth for a 
group of people 
and to share 
material 
goods—a true 
tribal situation.
A Trust is a sacred document. It is used to make wealth for a group of
people and to share material goods—a true tribal opportunity. A Trust can
benefit many. When a Grantor wants to have total control over all the funds,
the government is happy to give such an arrangement its blessing. That
Trust is called a Grantor Trust, and the person who sets it up pays taxes on
the income of the Trust.
In an Irrevocable Trust, though, the person who sets it up properly is never
taxed on the Trust income. Using various techniques which benefit the
entire group (tribe), the income is processed through the Trust. Those
people who amassed assets for generations and centuries know how to set
up their own empire to benefit their progeny. Both the Irrevocable Statutory
Trust and the Irrevocable Common-Law Trust are set up under these long-
term methods and procedures.
Tax Issues
Just because funds are “offshore” does not mean a U.S. Citizen does not
owe taxes. When funds come onshore, taxes may be due. Anyone who tells
you otherwise is lying to you. Check with tax professionals about correct
rates.
We recommend Trusts be set up only for the Beneficiaries. To set up a Trust
for the tax benefits is a demonstration of shortsightedness, and shows a lack
of appreciation for the true intent of a Trust.

For those who are interested in tax information about Trusts, we refer you
to a book titled The Trust Bible.52
Criminals
The criminally minded are not interested in managing this Trust format
because it is based on shared profits. Those who use the Common-Law
Trust for illegal purposes are shortsighted and usually of the emotional
maturity of a two-year-old who only wants his or her own stuff (it’s
MINE!).
Spouses
Married people need to separate joint property before it is put into an
Irrevocable Trust, since community property law supercedes an Irrevocable
Trust agreement. If the spouse will not surrender assets, there can be no
legal transfer into a Trust.
In a Living Trust, it is common for both the husband and wife to become
the Grantors, and there is then no need to have a separation of joint
property.
In some marriages, the husband or the wife may be more passive, expecting
the other to handle the finances. Even if your spouse signs any documents
in blind trust, this is not one of those times when the signature should be
gained without full, conscious consent.
Also, if one of the members of a marriage is dominated by parents, or there
are other outside influences impinging on the marriage, it may not be a
good idea to continue. There are times where the wealthy parents will
oppose any effort for one of their “children” to put assets into a Trust. The
lawyers get rich, the marriage is torn apart, and the new Trustees start their
jobs embattled.
Also, children can be horrified to discover their assets now belong to a
Board of Trustees, or to a Trustee. These reactions by close family members
can last for years. Thus, it is best to tell those affected about the change
before assets are transferred.

Only clear, conscious intent with the support of family allows the smooth
transition of assets into an Irrevocable Trust of any type.

Chapter 9
Parenting and Perpetual Wealth
With more of the basics now understood, it becomes possible to look, in
greater detail, at how important proper parenting is to the success of your
Trust. Your actions can have almost everything to do with whether your
Trust becomes a smooth running cash cow or a raging battlefield driving
Beneficiaries and your Trustees to despair or worse.
Until the last few hundred years, average people were too poor to even
consider getting a Trust for their heirs. Many families today lack experience
in this little known financial area.
Seeding the Future vs. Ceding the Future
Since prospective donors of an inheritance are seldom inheritors
themselves, they may not know what it is like to receive a large bequest.
Thus, they are less likely to be familiar with the emotional, legal, financial
and tax aspects when an estate passes to the heirs. The prospective
recipients are also in the dark about these issues, and bear the extra load of
the responsibility to know how to take proper care of willed investments,
income property, land, etc. The result can be not only confusion, suspicion
and fear, but also when the actual event comes to pass, the heirs can be
quite overwhelmed.
This situation is further compounded by our society’s phobia about death
and dying, resulting in little connection between the intention of the Trust’s
creator and the inheritors. Instead of clear, specific instructions regarding
the who, what, when, where and why of the bequest, we may find innuendo
and hearsay until it is too late and the Grantor is dead. It would be far better
to know who gets what portion of the rental property or other assets and
what that means to the recipient while the Grantor is around to question and

debate, and especially to learn his or her “tricks” of administration and
process of decision making. This is even more true if the Grantor has a
complex financial portfolio.
Young Minds Meet
It might be a good idea to consider preparing children for their eventual
responsibilities. To properly create and perpetuate wealth, though, we
suggest people start when children are young, by including them in
meetings about the family finances, or discussing investment strategies at
the dinner table. People may also want to ensure children have skills in
some financial arena, such as bookkeeping, accounting or investment
counseling.
Preparing children for eventual wealth management requires them to feel
secure. Therefore, we strongly suggest avoiding the not-so-uncommon
mistake of using a pending inheritance to manipulate the would-be heirs, or
pitting one child against the other for bonuses and benefits passed out at
some future date.
We also find it curious that some may favor males or females in deciding
which child is to receive how large a share. Although parents may have
favorites, it is best to leave the results of the inheritance to be shared based
on merit. The emotional issues associated with inheritance can be harsh and
violent, as shown by the sordid stories about those who force a relative into
an early grave. The roots of emotional issues are not in the money gained,
but rather from whether the inheritor feels loved or not loved. Parents may
shower a child with money, and neglect the child’s feelings, ignore the child
outright, or simply favor another child. Shunned, a child never feels good
enough. He or she may well turn into the child whose outbursts rip the
entire family apart when the Will is read to the grieving survivors. In
general, children who are secure about themselves in their early years have
the potential to be the stable members of the family, and be a huge help in
making a smooth financial transition when a significant family member
dies.
There has to be 
a place of 

stability, sanity, 
support and love 
for your children 
while they go 
through the 
incredible and 
even chaotic 
process of 
becoming young 
adults.
Because of the incredible flexibility of administration of Trust assets, the
solution to many of the inheritance difficulties described here can be
achieved through an Irrevocable Common-Law Trust. Beneficiaries can
even be involved in the Trust administration process by working for the
Trust in a clerical or advisory capacity. When the family assets become the
family business, there is a greater opportunity to open communication
channels that are not available through other types of business entities and
Trust structures.
Teenagers
Sometimes, no matter how good the plans, how careful the parenting, the
task can become impossible. It is not unusual, for example, for a long well-
behaved child to become rebellious on entering puberty.
Teenagers’ bodies are positively awash in hormones and all that go with
them. We now know, because of brain chemistry research and the portion of
the brain used, the way they think is fundamentally different from the way
adults do. Indeed, the differences are so extraordinary and pronounced that
more and more researchers are coming to think of puberty as a temporary
form of insanity lasting years! Teenagers’ brains not only process data
differently than do adult brains, but they do it in a much more primitive,
visceral part. It is any wonder, then, that teenagers often seem intensely
tribal, emotionally volatile, even alien and alienated, sometimes all at once?
This is why it is vital to them and you that boundaries and roles are properly
defined. Firm rules, laid down with love, must also be enforced. There has

to be a place of stability, sanity, support and love for your children while
they go through the incredible and even chaotic process of becoming young
adults. If you cannot or will not provide these needs, your children’s
friends, gangs and predators of every stripe will.
By providing proper parenting, though, you teach your children not just
facts, figures and procedures, but a philosophy of life, instilling your values
and providing your children with benchmarks to which they can internally
refer as long as they live.
Healthy Participants
This obviously is not a book on the psychology of child rearing, but it is
nevertheless important that we show how this applies to Trusts.
Emotionally healthy, stable Beneficiaries make for a smoother transition
when you pass. Your well-oiled, competently supervised Trust remains
intact, whereas “crippled birds” and their bottomless pits of need ever
crying out for attention can affect your Trust at levels ranging from endless
irritants to hamstringing Trust management. Just as coaches have their
playbooks and commanders and executives have their Standard Operating
Procedures (SOPs) and plans, so too do Grantors and Trustees have their
own methods for dealing with problem Beneficiaries. Tried-and-true
procedures, developed over the centuries, are readily available. They have
been tested in the legal fires of courts high and low both here and abroad.
Some of this knowledge is in Volume II, for there are ways to handle
problem Beneficiaries.
Predictable Loveless Lives
We have all heard examples of children who are the Beneficiaries of great
wealth, and yet, their behavior is destructive. Here is an experience, written
by one of our Trustees, that takes us through one of those rich-kid
scenarios, and we now have added information about how to avoid this.
Having money has nothing to do with getting out of being a parent as
follows.
In the Right Coin

Good Beneficiaries are not born. To the contrary, they are reared. While
there will always be a few twisted ones out there, we believe that all manner
of self-destructive and destructive behavior by those who will become
Beneficiaries is largely preventable. It requires what the military calls
command emphasis, especially in the critical formative years. What follows
is a look at what children need, coupled with some true-life searing
examples of what can happen when their real needs, not passing wants, go
unmet.
Children need a 
stable, loving, 
disciplined 
environment in 
which to safely 
develop and grow, 
to test themselves, 
learn about 
themselves and the 
world around them.
Command Emphasis Defined
What is command emphasis? It is the direct, continuing involvement of
whomever is responsible for the physical, emotional, financial and spiritual
support of the child or children. Hint: not the nanny, au pair or
housekeeper! What is significant is that lines of loving communication be
built, repaired as needed and expanded over time. Communication must be
bidirectional. Developing these takes time, but it is a wise investment, one
which yields vast dividends in all areas as the years march on. Failure to
invest properly here usually yields broken children, who then become
dysfunctional adults ill suited to life in general, let alone proper stewardship
of your legacy.
Children need a stable, loving, disciplined environment in which to develop
safely and grow, to test themselves, learn about themselves and the world

around them. Without this, children become more and more damaged and
then act out in a largely subconscious cry for help, designed to force the
parents or guardians to intervene and pay attention to them. Sadly, this often
has the opposite effect, causing further alienation and estrangement on both
sides. Granted, the high divorce rate and resultant single parent families are
not helping, but then, neither are “intact” families where substance abuse,
physical abuse, sexual abuse, emotional abuse or abandonment occur.
Nevertheless, it is imperative to provide the necessary ingredients for
children’s healthy development somehow, including proper same sex role
models. If children do not get their basic needs met, they self-destruct.
Based on the writer’s direct experience in junior high school, not high
school, we share with you an unusual perspective.
Junior High with the Upper Crust
Junior high for me in Greenville, South Carolina came as a shock. It was
there that I had my first sustained encounter with the upper class. In this
case, the progeny of the people who owned, presided over, and had upper
management jobs in the fabric mills—a key part of the region’s economy—
or in law offices, accountant firms, suppliers and the like which supported
them. I soon discovered that not only were they far better dressed than I was
(firstborn son of six children of a defense engineer) and wired differently,
but they did not operate in familiar ways. The girls were always
immaculately turned out, complete with makeup, carefully styled and cut
hair, the latest fashions, and looked like junior versions of “The Stepford
Wives”. The boys, naturally rougher and more boisterous, nevertheless
wore expensive monogrammed sweaters, slacks, shirts and penny loafers.
The usual acne problems plagued some, and smoking seemed to be
alarmingly common, especially among the girls. What was pervasive,
though, was an atmosphere of class distinction, elitism and outright
snobbery, with some only mildly that way, and others blatantly so. These
people ruled the roost, held all the important student positions, and lorded it
over the other students. There were a few work arounds, notably academic
excellence, by which you could gain some small status with them, and this,
as we will see, ultimately worked to my advantage.
An Undisciplined Lot

I grew up in a strict, and by my lights, over disciplined home, but the scions
of the wealthy signally lacked in discipline to a shocking degree. The son of
a local barbecue magnate was a juvenile delinquent (repeatedly saved by his
doting father) with an arrest record as long as my arm and, unfortunately for
me, was the former Seattle Golden Gloves boxing champion. He was inches
taller than I , long of limb, strong and a bully. Worse, he had a friend
effectively his twin. I was then smallish, pudgy, weak and uncoordinated.
Ring day, when we got our class rings, was sad and painful. On another
occasion I got bounced off a bunch of built-in combination locks on student
lockers by the two, then wound up almost expelled for simply defending
myself. Another undisciplined one was small, cut class a lot, smoked, was
flunking several subjects, but was of such social prominence that his name
was in the society pages as having attended the midnight pancake breakfast.
It got downright surreal when this kid showed up one day at school, face
barely visible over the dashboard of a brand-new, huge, powerful
Oldsmobile Tornado. He had to sit on a phone book to see at all! Parental
largesse gone wild! And for what achievements? It was not uncommon to
see yawning kids in class who were prominently featured as guests at the
midnight cotillion the preceding night. Up until the wee hours on a school
night? Brilliant!
Because South Carolina’s Tricentennial was coming, we had to do a Civics
class project on our state’s history. Everyone save me in my group was from
the upper crust, and I got a bad feeling about my likely project grade
because of this. My Civics teacher, Mr. Reed, was African-American and a
good and wise man, and it was to him I repaired after a disastrous first
weekend meeting which could easily have gotten me killed en route. Why?
One of my project partners, a short, chubby boy, gave me a ride in his
grandfather’s Cadillac. Yes, another too short driver in a big, powerful car
with only marginal road vision! What followed was terrifying. Ever been
the helpless bystander while doing eighty over a succession of blind hills?
It went so fast I hit the roof a few times! There were no seat belts back then.
The neighborhood in which I eventually arrived was full of mansions. They
were vast, sprawling homes and grounds which made my typical middle
class house seem both shabby and tiny by comparison. Once there, we did
manage to agree on what we would build, but it was downhill then as work

was instantly abandoned for an impromptu sock hop. I think I got a glimpse
of a parent while there, but would not swear to it. We were left alone after
we arrived. A repeat attempt a week later was equally unproductive, which
is why I sought out Mr. Reed a second time. I had to tell him the only
person willing to work in my group was me. He told me to forget them, do
the project myself, and that he’d take care of the rest. Did he ever! First
prize was ten dollars from him. My brother Ed and I tried one idea, swiftly
discarded it, then designed and built an impressive model of Fort Sumter,
whose bombardment by the Confederates is considered to be the start of the
Civil War. Hands down it was the best project in my Civics class, and it
won first prize. Even better were the grades. I got an “A+.” The privileged
do nothings in my original group all got “F” and richly deserved it. Were
they ever shocked!
I learned an important lesson from that experience and carry it with me to
this day. These days, though, I feel sorry for those kids. It is now clear to
me they were high-end latchkey children, children whose parents were so
immersed in careers, themselves and high profile socializing they
effectively abandoned their offspring. To appease their own guilt they threw
money at their kids instead of providing the love, discipline and stability
their kids so obviously both needed and craved. The results confronted me
every day I was in that school, a condition alleviated only when I went to a
new high school, Southside High, in my area and they left to attend
Greenville High. I have not followed their careers, but behaviorally
speaking, the handwriting was already on the wall and it was bleak. The list
was long.
Smoking was common, but some were already into marijuana. I gather a lot
of drinking was going on, too, but I never saw it at school. A notable
amount of sexual activity occurred, judging from events I heard and saw,
plus some incredibly provocative and revealing outfits certain girls wore to
class and, frankly, flaunted themselves in. These are junior high girls, recall,
running around daily in full makeup. Many of these kids had cars or plainly,
unsupervised access to one. As noted, there were severe safety issues
involved. Many of these kids socialized at night, skipped classes, and were
not focused even when in class. Work ethics were marked by their absence,
though there were some who somehow managed to be social gadabouts and
good students. There were several budding career criminals, a path fostered

by parents unable or unwilling to provide a firm hand and a steady course to
their out of control progeny.
Summing Up
Which would you rather have as Beneficiaries, the sad, undisciplined
wastrels described immediately above, kids who knew the price of
everything and the value of nothing, or Beneficiaries who grew up in a
loving, stable, supportive, and properly disciplined environment?
Do you want Beneficiaries with faux self-esteem via sycophancy and
manufactured achievement? Or rather, Beneficiaries with real self-esteem
gained by doing something, by striving for the mark and either falling short
and trying again or hitting it by dint of hard work, belief in self and sheer
dogged persistence? Do you want your legacy in the hands of people who
have solid characters or layabouts who are characters? Whom would you
entrust with such weighty responsibilities while you were still around?
Before deciding, consider that many top leaders started at the bottom,
working in the mail room and the like before reaching the heights. Consider
also that many who have made it failed as many as six times running before
hitting it big. Finally, it might be well to take a look at the Bundeswehr, the
Federal German Army. Officer cadets in the Bundeswehr go through an
accelerated period starting as privates, spend time as noncommissioned
officers, and only then, if they work out, become officers. This gives them a
much-needed perspective on how the other half lives, on the needs and
problems of the soldiers they will one day command and potentially commit
to combat.
The choice is yours. Choose wisely. We recommend that you pay your
children in the right coin, the coin of love, if you want healthy, sane,
functional, Beneficiaries to carry on after your departure from this world.
Properly nurtured and supported people do not need to create drama to get
attention, whether from their parents or others. Nor do they need to destroy
the lives of others, being whole persons themselves.

Chapter 10
The Power of Distribution
We often hear that communism is evil. Sharing equally when not everyone
puts in the same effort is abhorrent to the western mind. The family unit,
though, is based on shared wealth. The family wage earner or earners bring
home the paycheck and share the buying power with the entire family. What
could possibly be wrong with that?
The argument against communism is that those who work harder should be
more rewarded. We agree. This chapter includes rewards and incentives in a
shared-wealth environment.
We take the same family principles and apply them to a larger group, for
example, several families, and we now have a greater financial leverage.
Shared resources have greater buying power and thus get the better deal.
Bringing the idea up one more level, we have collective wealth distributed
through the government programs, for example, Social Security and other
federal benefits. When applied to the government though, it seems the
group power may be limited or even limiting. Benefits often have strings
attached.
For example, if you accept welfare, then a warrantless search can be used
against you.53
When accepting payments from any source, there may be conditions. This
also applies to accepting funds from any Trust. Limits created by the
Grantor often state they cannot be used against activities of the Trust. In the
Standard Oil empire, for example, Beneficiaries cannot invest in any
enterprise that might decrease the oil domination.
Building an Army

The Board of Trustees learns quickly that those who get a dole from the
Trust are beholden to it. This leverage can marshal Beneficiaries into a
united group whose vested interest protects the Trust. Experience shows the
mere investigation of a Charitable Trust produces a strong reaction from the
Beneficiaries, generally in the form of lawyers for the affected charities.
Impoverished Relatives
Often the bane of better-off family members, needy relatives who just
cannot make it on their own, can through the Trust, receive a regular
stipend. This gets them both off your back and off your fret list. Should
their needs increase, they must then go to the Board of Trustees, rather than
you, to argue their case.
If you struggle with your conscience because you believe if you help them,
you make them more lazy and the challenges of life are for them as well as
you, get out of denial. Some people are not cut out for “making it” in the
world. It is best if they are put into a place where they can work for the
greater good of either humanity or the family. The Trust picks up the bill–
even if the only cash flow to them is a couple hundred dollars a month.
Besides that, with a constant cash flow, even that little, they may just get on
their feet. After all, it is less for them to worry about, and life just may take
care of the rest.
We suggest that people take a different look at the potential of family
members and perhaps use them as assets. Even if the only talent is
housecleaning, it is of value to any family to remove the load of the
mundane.
The Anxious and Jealous
Because we review Trust documents, we note that death sometimes presents
an ugly issue about who will inherit, and we have even reviewed Trust
documents created when the Grantor wished to disinherit relatives.
What is astonishing about these documents is they set up a dark scenario.
The entertainment industry writes grand scripts based on this one premise.
People are generally aware that how a Will or Trust is written can determine
who lives or dies. Thus, this aspect of distribution needs to be more

thoroughly looked at. If you are better off dead to others, maybe you should
redraft your plans to distribute your wealth. Some now, with more later
would be a good beginning. Of course, if you do not have much to begin
with, this solution does not apply.
This is one of the reasons some choose to use an Irrevocable Trust, since
death has no effect on the Trust. In fact, death and distribution of wealth are
transparent in a properly structured Irrevocable Trust, whether Statutory or
Common-Law.
In an Irrevocable Trust, whether someone dies or does not die is irrelevant.
It does not change the status of the invested principal, nor does it
necessarily change the income distribution to the Beneficiaries, as the assets
are legally under the control of a perpetual Board of Trustees, not an
individual.
Too many times we have seen families where one member has the talent to
make the money and becomes hated by disgruntled relatives who are needy
and jealous. It only makes sense, that if one member of the family has a
gift, there must be a way to harness it for the benefit of all. Of course, in our
social structure, if you cannot take care of yourself you are considered
inferior, while he or she who brings home the bucks is revered, even if it is
through envy. The idea here is to get everyone to win by working together.
That should be the underlying motive for a plan to distribute wealth.
Talents and Application
In a Trust situation, not all Trustees are talented in the financial arena. Some
have more expertise in the legal field, and others in bookkeeping and
accounting. Those who are known as the “bean counters” are often too
timid when it comes to taking monetary risks. Better in the back room, they
can do wonders with various financial reports. Even in this scenario, we can
see that we all have our gifts and need not chide those who cannot cut it in
the business world by making millions.
There seems to be a sixth sense for those who accumulate millions, and not
everyone has it. When a Trust group finds that magic man or woman who
can multiply the assets, at least part of his or her ability to enlarge principal
should be shared with the entire family.

Too many times we 
have seen families 
where one member 
has the talent to 
make the money and 
becomes burdened 
or hated by 
disgruntled relatives 
who are needy and 
jealous. It only 
makes sense, that if 
one member of the 
family has a gift, 
there must be a way 
to harness it for the 
benefit of all.
Here is a distribution event that did occur, although it was not within the
context of an Irrevocable Trust:
In one family, the husband died, and the wife inherited thousands, and
maybe even millions. She took her entire family on a world cruise, creating
long-lasting memories and deepening the bond between them. Do you want
to build a fortune or keep it? Or do you want to hoard it for yourself? Do
you want to build an army of support? What more could you do if you had
powerful support? That is exactly what distribution procedures do.
You may be grumbling about all of this and say “Not everyone deserves
such a break.” Well, those who are ungrateful just do not get as much, do
they? That is why the Trust Capital Units are distributed minimally at the
beginning of a Trust. Let the Beneficiaries prove themselves. In fact, you
can make up all kinds of challenges for them. For those younger, they can
earn Trust Capital Units by getting better grades or devoting time to Trust
business. For those older, they can make some overall contribution to the
family, or provide services to other members.

For the rebellious, we have all sorts of ways to straighten them up. A
perusal through IRS Publication 1754 lets you know that a distribution can
be given to a Beneficiary without any money included–the Beneficiary pays
the taxes anyway. That usually sobers up the more unwilling to comply. Let
the IRS hound the disobedient for a while. Just the mere threat of it should
get the desired results. We know of no other agency that can cause the heart
to stop in fear—we might as well make good use of such talents.
We discuss broad spectrum distribution in Chapter 25, where wealth is
distributed not only to one’s immediate family, but to another Trust. That
Trust in turn shares the wealth with a different Trust. A diagram can be
found in Appendix D.
For those who are interested in getting into the nuts and bolts of
distribution, we devote an entire chapter in Volume II to the Trust
Certificate Register and the TCU process found only in the Common-Law
Trust structure. Although it may be a “mind fry” to grasp this more esoteric
way of handling shared wealth, it will be to your great advantage if you
choose to go down this path. Also, since this is the first time something of
this depth and nature has ever been published, we hope this information
serves as a foundation point.
Control of Beneficiaries
With distribution comes control. Where cash flow makes a significant
impact on the recipient, the power or its misuse follows. Because a Board of
Trustees is made up of more than just one person who could take advantage
of the situation, we hope to prevent domination games. Should the
distribution be the major financial support of the Beneficiary, then the
Trustees may elect to use gentle guidance and incentives to encourage
greater involvement in education, healing modalities or spiritual endeavors.
In most cases, the Board of Trustees does not get involved in any type of
interference with someone’s life. The funds received can be used as the
Beneficiary chooses, except where the use may be contrary to the Trust
Indenture. In a Common-Law Trust situation, though, inviting Beneficiaries
to a Board of Trustees meeting can be much to everyone’s advantage. Here
is where a great bonding among Trust members can occur.

One More Thing
There is the situation where distribution may support the lazy, deter their
taking on challenges, or make them complacent about life. Putting aside for
the moment the possibility such inability to self-actualize may stem from a
dysfunctional family, there are those who just may not be aggressive
enough to even try. We have a situation where a Beneficiary received only
$100 a month–enough to help her pay her rent. Unfortunately, the Trust
giving the $100 fell upon hard times, and even this small amount was
stopped.
Over time, it may have been the Beneficiary had gotten herself into an
overall better situation where she felt supported, or perhaps the loss of the
$100 provided a keen incentive. Forced by this new circumstance and
desperate to keep her apartment, she went to her boss to explain the loss of
the $100 made it impossible for her to remain where she lived. In response,
he made other arrangements at work and reorganized her commission
structure. In a month she was offered a promotion. By her own words she
reported, “I have always avoided responsibility; I have been fearful of
taking on new challenges. It scares me to accept this position, but I am
going to do it.”
During the five years in which she received the beneficial distribution, she
changed jobs. Being in a better place to make this move, coupled with the
removal of the $100 a month extra cash, allowed her to be willing to meet
this new challenge.
We would not say the $100 a month prevented her from taking on
additional responsibility; we would say the $100 a month provided her the
time she needed to make the right connections. Would she have accepted
the promotion without the loss of the $100? Although the upset provided by
the new situation became highly motivating, she may have done it anyway
because she trusted the management structure. We will never know.
The Board of Trustees always felt honored to help her, even with just this
small amount, and she had been grateful. In a situation like this, it is always
up to the Board of Trustees to make the judgment call as to how much,
when and if a beneficial distribution should be given, or a gift from the
Trust should be offered.

Chapter 11
What Can You Put into Trust?
Legally speaking, any lawful item may be put into a Private Trust. Long
experience has shown, that just because you can, does not necessarily
Lmean you should. Practical considerations must apply, since otherwise
Trustees waste time, energy and money cataloging, managing and
accounting for worthless junk.
Naturally, correctly identifying what is and is not suitable takes both
judgment and discernment. To help you, we provide the series of decision
criteria set forth below.
First Criterion
Does it have intrinsic value?
This applies whether the item is a tangible, such as a house, or an
intangible, such as a patent, copyright or a trade secret.
You may not know its true value, but that need not concern us now. We are
merely discovering whether the item has value. The definition of value can
be how useful it is to the Trust and its convertibility to cash.
Second Criterion
Will it keep, or better still, increase in value?
While market values rise and fall over time, certain factors remain true. The
supplies of gold, silver, prime real estate, high-grade antiques, good art, key
mineral rights, copyrights to timeless songs, etc., are finite. Thus, they are
likely to hold their value.

Van Gogh never sold a painting in his lifetime, but one recently sold for
$46,000,000.00. The songs “Happy Birthday” and “Rudolph the Red-Nosed
Reindeer” may be so familiar to you to be obnoxious, but they are cash
cows to those who hold the copyrights.
Copyrights and patents were established, under Article I, Section 8, Clause
8 of the Constitution. “... to promote the progress of science and useful arts,
by securing for limited times (emphasis added) to authors and inventors the
exclusive rights to their discoveries . . .” The original intent has, over time,
been deliberately and consciously perverted. Consequently works done for
hire now one under copyright for a staggering ninety-five (95) years, with
the FBI in charge of enforcement.. This is how it is now, but when the First
Congress passed the Copyright Act of 1790, the law made sense.
Since passing the first U.S. copyright law in 1790, there has been a clear
trend toward changing what Congress intended as a time limited incentive
for authors into endlessly extended market rights for corporate interests.
This is why insiders called the now-dreaded DMCA (Digital Millennium
Copyright Act) the “Mouse Act,” referring to Disney’s hottest property and
iconic symbol.
While patents may have great value for the Trust, they expire. Trademarks
will, in the long run, have more value for the Trust, since they may be
extended ad infinitum.
Trust Implications
Since copyright law now protects works of all sorts (books, articles, data
bases, computer programs, music, CDs, DVDs, paintings, sculpture, etc),
smart Grantors and Trustees will immediately grasp the great value and
longevity as assets of useful copyrights. What would the rights to, say, the
songs of Elvis, the Dr. Seuss books, the Harry Potter books, or something
like Windows be worth to your Trust? What about Peanuts or The
Simpsons?
Every year, these and other properties bring in tens of millions to hundreds
of millions, maybe even more, both directly and through licensing
arrangements. You well may have something similar in your own family
circle. Know any writers, producers, artists, cartoonists and the like? How
about someone with “points” (profit percentage) in a hit film? These and

many more can form valuable assets for your Trust. Be sure to consider
such offbeat, even macabre to some, possibilities as licensing the use of the
images and likenesses of any famous departed. Every time people like
Elvis, John Wayne, Marilyn Monroe, Humphrey Bogart, Frank Sinatra, etc.,
appear commercially, someone makes money. Indeed, there are whole firms
which do nothing but license such uses and go after those who seek the
benefits of such use without permission or paying licensing fees. Copies of
artwork, songs, books, designs, etc., have the same stipulations attached.
We give you these examples to show you that assets can and do come in
forms well beyond what many people think of, and to help you to not
overlook what could well be treasure beneath your feet.
Third Criterion
Do I want to sell it before I die?
Depending on the asset and the particular nature of those who will inherit
from you, it may make sense to take a valuable, potentially awkward asset
and convert it into cash, placing the money thus gained into Trust. There
need to be tax considerations. An asset placed into Trust is accepted at fair
market value55, and selling it after it has been in Trust for a while may be
much to the advantage of the Grantor’s Beneficiaries. The question is
whether the asset should be put in Trust at all. What is the tax bite if it is
sold before putting it into Trust, and what are the tax advantages after it is
sold by the Trust? Further, if the Trust gains the asset and sells it, the
Grantor will not get the cash, but a portion of the gain. Trust profit is shared
with the Beneficiaries.
There are two other considerations. Is there a place where the Trustee can
keep the asset safely, and will the Beneficiaries fight over it? It is usually
not feasible to put furniture into a Trust because it will not last longer than
the Trust, and because it is more likely to be sold or moved because the
Grantor dies. If furniture or china is put into a Trust, though, the Trust must
have a home in which it is kept, and of course, the Trustees need to
inventory it and handle the maintenance and insurance.
For example, say the asset is a beautiful matched set of fine china. Perhaps
no Beneficiaries want it, but it has great value and so there is a dispute

about whom should have it. Trivial as it sounds, this has torn families apart.
We know, having seen it ourselves. People may not be thrilled if you step in
and sell such an item, but it beats tearing the family apart. In this situation,
where are the Trustees going to keep the china? How are the Trustees going
to settle who gets it? If it is transferred into Trust, and there is no separate
home in which for it to stay, then it needs to be sold quickly. If funds gained
from its sale are large enough, then they are likely to be invested, increasing
the principal held in Trust for investments. If the dispute with the
Beneficiaries is loud enough, the Trustees will simply pay them off. By the
way, the Beneficiaries will then need to pay any tax due.
Fourth Criterion
Does it create a positive cash flow?
A strong cash flow is the fuel that makes your Trust perform, for from it
come the funds for new investments, payouts to the Beneficiaries, and of
course, salaries and overhead to run your Trust.
Property put into Trust may be income producing, such as rental or
commercial units that do have a sufficient cash flow, or it may be residential
property that can be converted to cash and invested to jump start the Trust.
Fifth Criterion
Is it a valuable collectible?
To discover the value of coins, jewelry, art and similar collections, an expert
appraisal settles the fair market value. This sets the initial corpus—the basis
for proving the value of the Trust Corpus. The first corpus is essential to
maintain correct accounting procedures.
Even if the collectible is of value, the wisdom, or lack thereof in placing it
into Trust, has much to do with your purposes in setting up the Trust. Is
your prized collection only an interest of yours, or do any of your future
inheritors share the same passion? If yes, then you may want to give the
collection as a gift. If it is valuable, historically significant, etc., you may
wish to place the collection into Trust, with the condition that it be kept in
one or two designated places. The Trust bears insurance, maintenance and
security expenses. As Grantor, you may also decide what you want done is

to keep a painstakingly assembled collection and even build on it after your
death. This is why we have the massively endowed Getty Museum in
Southern California, which is a Trust. You may have a collection of antique
dolls which you probably would like properly housed and cared for so the
public can enjoy them. You may have one of the best collections of drivable
antique cars in the world, as Jay Leno does, and cannot bear the thought of
its piecemeal dismantlement after you pass. If so, you may wish to set up a
Trust to house and protect your collection of history on wheels, or perhaps
create your own museum for it.
In this case, the cash flow in the Trust must be substantial to care for the
cars, with enough left over for Beneficiaries; otherwise, they will demand
the assets be sold so they can get their fair share.
As an alternative, the Trust could loan the collection to a museum. This
could result in a tax deduction for the Trust, and transfers the insurance
expense to the museum.
Sixth Criterion
Do my Beneficiaries want to use it?
Prime examples of assets meeting this criterion are: recreational property
(ski lodge, beach house, ranch, etc.), planes, helicopters, cars, even
motorcycles and hang gliders. Assuming the cash flow supports keeping
these assets, the cost of maintenance now becomes the Trustees’
responsibility. Nonownership provides legal protections: For example, you
do not own it, it cannot be seized, and you are not responsible for the taxes.
Neither are the Beneficiaries. Here is a more specific example.
The Kennedys have long had a fabulous family compound in Hyannis Port,
Massachusetts, held in Trust for the family’s use. This became important
after the Chappaquiddick Bridge incident. According to Brent Johnson of
American Sovereign Magazine, Ted Kennedy was sued by the parents56 of
the drowned Mary Jo Kopechne. The established facts are that Ted Kennedy
owned neither Hyannis Port, his home, nor his personal car. In Brent
Johnson’s account of a settlement, he states the parents received
$30,000.00. In another account of the settlement, it is stated at

$1,000,000.00.57 Whatever the truth, the result was, the major Kennedy
family assets were protected.
We do not have the exact details of how the Trust is structured, but it is
most likely Senator Kennedy drove a leased car, and the homes were each
held in a separate Trust. With nothing to gain, any lawsuit resolved itself
quietly.
Ted Kennedy is said to have taken an Oath of Poverty, and it is on file.
“Legally speaking, he is a pauper!”58
Seventh Criterion
Can the asset be converted to cash, or does the asset produce a cash flow?
Rental property meets this criterion and is one of the favorite items to put
into Trust. The problem with this lies in managing the property. Will the
Trustees now be responsible, or will the Grantor stay on and work the
property? Will a management company take on the task?
It is another matter, though, if the rental property, bought at market peak,
used an adjustable rate mortgage and the demand tanked while interest rates
soared. Can the rental payments still cover any mortgage taxes and fees due
while leaving enough for maintenance and improvement costs? If it seems
the property may become costly, or is running in the red, it is best not to put
it into Trust unless a financial or tax adviser tells you otherwise.
Good art, though, be it paintings, sculpture, drawings, folk primitive, tribal
or what-have-you, belongs in Trust, to be both enjoyed by your successors
or, if needed, sold to care for your Beneficiaries and their needs.
Registered assets
When goods registered with the state (for example, vehicles) are
subsequently exchanged into a Trust, it holds the registration in its name.
Usually, property transfers easily into a Trust. Once placed there, though,
we do not advise taking out a second mortgage. If you plan to refinance
your home continually, do not place it into a Trust. Unless the Trustees own
the mortgage, the property will need to be taken out of Trust and put back in
the Grantor’s name to refinance. This takes time to take the property out of

trust and place it back in his or her name. Sometimes there is often a time
crunch, the complications of taking property in and out of Trust sometimes
make it impossible to do within the window available.

Chapter 12
Types of Trusts
For those of you interested in using a Trust to protect assets for your
Beneficiaries, this section offers a smorgasbord of choices. For those of you
already involved in a Trust, this will show you a panorama of possibilities
in the Trust world. Because we do not claim to know every Trust type, we
can only hope that this section gives you a working knowledge of the
subject.
Much like a tailor helps you select fabric, measures and fits you for a fine
garment, the next three chapters will help you discover what Trust most
suits your particular set of needs. Each Trust has its advantages and
disadvantages, and all are not equal!
The differences among the types are real and significant. Also, certain
decisions, once made, cannot be undone. Whether from ignorance, by
design, or a little of both, the users of Trusts have crossbred them over the
years to such a degree the field is now overgrown with a tangle of dozens of
different species.59 Many of them vary only in the slightest shape or shade
of color from others. You probably will never have a use for most of the
major categories found in Appendix B, but knowing something about them
may help you to decide what you need. Also, having another item to
compare to the one you are studying can help your understanding dawn
sooner and more brightly.
The Motive for a Trust: The Issue of Title
To review the basics, all Trusts shift the issue of title. To avoid probate, title
must vest into another person or entity either at death or before without the
need of a judge’s approval. This is done by putting another’s name on
financial documents while the Grantor is alive. This successor Trustee can

“go to the bank and get the money” when the Grantor dies. Also, the
Trustees can gain full authority before death. In other words, the Trustees
either become coowners of assets or the owners, and thus have signature
power.
So, why doesn’t everyone do this? Because the other person has to be
trustworthy. Without recourse to recover funds, you are vulnerable. This is
why a Trust Indenture is necessary. It is a contract with those other people
who have signature power limiting them to what they can and cannot do
with the funds.
The Set Up and Administration
The listed Trusts in Appendix B all involve legal documentation. For Living
Trusts, forms can be bought easily through the Internet, or at some office
supply stores. It is much more reliable, though, to go to a lawyer who is
familiar with estate planning issues.
For certain complex Trust schemes, some companies offer seminars about
how good their product is, and how it can protect a family. If you attend a
seminar, you will get an amazing education. Putting into action the ideas
and system presented, though, is a different issue.
The documents which create a Trust organization are only about 25% of
what is needed to make the organization succeed. Paper does not equal
success.
Organizations grow or decrease based on the people who make the day-to-
day decisions and are responsible for the success. Do not think that buying
documents which form a business entity, including a Trust, is enough. Only
knowledge, administrative ability and connections with the right financial,
accounting and legal people will allow your organization to succeed. What
you want to buy is backup support comprised of knowledgeable people.
They can either take the responsibility to provide correct legal and
accounting advice, or train you so your organization has the best advantages
possible in this complex world.
Statutory Trusts

The term “statutory” identifies the laws which apply to these Trusts, and the
Trusts themselves, are designed with guidelines by the state. What the state
makes, it can also change or revoke. Also, on a day-to-day human level,
many Statutory Trusts are created or managed (or both) by individuals
licensed by the state (lawyers, banks, CPAs, and others.) who are subject to
state-imposed limits on their operation. Usually, these limits are determined
by their allegiance to the state and a fear of state and federal taxing
authorities. Trustees who are lawyers or accountants who do not follow the
mandates of state authorities risk having their licenses revoked. Sometimes
this can be good, as there are many necessary laws about Trusts. The other
side is they owe their loyalty to the state, and at times there can be a conflict
between what the Trust needs and their priorities.
Testamentary Trust
A Will can set up a Trust. The Will states the names of the Trustees and the
assets, with a description of the purpose of the Trust. Usually a
Testamentary Trust is not too complex and the directions to the Trustees
simple. After probate, the court approves the Trustees selected, or appoints
a Trustee. Funds then are distributed or invested by the Trustees for the
Beneficiaries, who can be the blood relations of the person setting up the
Trust, or another organization.
Living Trust
Probably the best known, garden-variety Trust is the living Trust. Its name
comes from the Latin inter vivos (“between the living”) and means that,
unlike a Testamentary Trust, it takes effect while both the Grantor and
Beneficiary are alive. Usually, the Grantor is also the Trustee.
As shown in Chapter 1, Figure 1, the Grantor creates a Living Trust when
he or she transfers financial accounts and assets to the Trust’s name, and
authorizes signature power for the person who will take over the
administration on the Grantor’s death. For example, if on the bank account
for the Living Trust, the Grantor’s name is J.B. Watkins and the Trust name
is J.B. Watkins Family Trust, he or she allows the son or daughter to co-sign
on the account. When J.B. Watkins dies, the successor Trustee already has
signature power, and so there is no need to go to Probate Court to get a

judge to give permission to the bank or other financial institutions to release
the funds.
After the death of the Grantor, the Trustee gets an Employer Identification
Number (EIN) or Trust Identification Number (TIN) or the Trust and
assumes responsibility for the taxes. At this point, it becomes an Irrevocable
Trust.
You may be surprised to learn that, in the United States, this most common
of all Trusts is available only to U.S. citizens.
Despite the Living Trust’s name and seeming difference from the
Testamentary Trust, each of them distributes its assets after the
Grantor/Trustee’s death.
As a Grantor Trust, the Living Trust is revocable, that is, the Grantor may
change his or her mind and change or revoke the Indenture. For that reason,
it does not protect the Grantor from tax liability on his or her income. A
Living Trust could be written as though it is irrevocable, though common
use does not follow that pattern. We mean, except for where the Grantor can
be or change a Trustee, the details of a Living Trust should consider while
the Grantor is alive, the irrevocable nature of the Living Trust after the
passing of the Grantor.
The following is a summary of the Living Trust:
This form affords no asset protection against liabilities incurred by the
Grantor. If sued, all the assets can be seized as the result of a judgment
or tax lien.
Beneficiaries can be liable for income taxes on distributions made at
the termination of a Living Trust, unless its final Beneficiary is a state-
approved charity.
It is a large step up over a Will, since it protects the Beneficiaries from
the time, expense and vagaries of Probate Court, but only if its terms
are not challenged by any Beneficiaries or other potential heirs.
Unlike the Irrevocable Trust, a Living Trust is not considered a
business and cannot operate one. Assets from a business can be put
into this Trust, though. For example, a printing press could be put into
a Living Trust to be sold as part of the Trust assets after the Grantor’s
death.

Filed in the county, descriptions of its assets and identification of its
Beneficiaries are matters of public record. Thus, con artists can target
the Beneficiaries.
The Revocable or “Simple” Trust
Although Revocable and Living Trusts are the same, we separate them for
clarity. One of the few major differences is that Revocable Trusts can be
managed by Trustees, while Living Trusts are assumed (by taxing
authorities) to be run by the Grantors.
Created by a Grantor, Revocable Trusts hold legal title and the assets placed
with a Trustee under the name of the Trust. The Trustee administers the
estate. The Grantor may be a Cotrustee. If the Trustee is not the Grantor, the
Grantor retains the right to terminate the Trustee and change the Indenture.
Through the Trust Indenture, the Beneficiary receives equitable title to
benefits from the Trust that may or may not be exercisable during the life of
the Grantor. This means the Beneficiary has the right to petition a court of
equity for redress, should the Trustees fail to perform as needed after the
death of the Grantor.
Some Revocable Trusts require the Beneficiary to agree to termination
before the Trust can be ended.
Despite the obvious disadvantages of the Revocable Trust, it does allow an
owner of real or personal property to pass legal title to someone else. The
second person then assumes responsibility for protecting and expanding the
assets, relieving the Grantor of management duties and liabilities. This
single fact alone justifies its existence and offers some people increased
peace of mind. Clearly, though, its benefits bear little likeness to those
available from an irrevocable instrument.
By the way, for all Revocable Trusts, the Beneficiaries have a right to see
the accounting records back to the beginning of the Trust, when the Grantor
handled the paperwork. The successor Trustee who takes over the Trust on
the death of the Grantor, is responsible to produce the accounting records on
request of the Beneficiaries.60

Irrevocable Statutory Trust
The tax benefits can be impressive, and the asset liability protection is
noteworthy for any Irrevocable Trust. Because you, as the Grantor, give a
percentage of your personal assets to either a Trustee or a Board of
Trustees, this Trust needs to be seriously considered before moving
forward.
You may think that a wife or brother can become a Trustee of a Irrevocable
Statutory Trust. Thus, you the Grantor, believe you remain in control of the
funds because of this close relationship; in §672 of the Internal Revenue
Code, though, there are strict rules concerning who can and cannot be a
Trustee. The rules are designed to prevent close family members from
acting solely on your behalf. It is assumed they are more likely to neglect
the Beneficiaries–the people they are hired to represent and protect–in favor
of your wishes. There are some circumstances where this close relationship
is allowed. We address these in Volume II.
One Irrevocable Statutory Trust, known by some as the Term Trust, can be
used for a 10-year period to divert income from you to your child. Because
your child is in a much lower tax bracket than you, this can often be a great
tax advantage. Just with this information alone, it is easy to see why there is
interest in this estate planning vehicle. For an extensive list of Irrevocable
Trusts, see Appendix B.
All Irrevocable Statutory Trusts can allow other family members to put
their assets into the same Trust. For example, perhaps the grandparents
would like to transfer a mutual fund into the Irrevocable Trust set up by
their son-in-law for their grandchildren.
With Irrevocable Statutory Trusts there are complex issues about taxation
and gifts which the Board of Trustees must handle. You need to consult
with professionals if you feel this is a better way to handle your finances.
Irrevocable Common Law Trust
The Irrevocable Common-Law Trust has the same properties as the above
Trust, but when you exchange goods into the Trust, you receive Trust
Certificates identifying the number of Trust Capital Units received in

exchange. A percentage of the Trust Capital Units equals a portion of the
corpus (the “stuff” in the Trust) of the estate.
You can do the same process with a corporation, such as exchanging a
mutual fund into a corporation and receiving shares of the corporation in
return. Taxes are paid when corporate shares are cashed out. The same
applies to a properly set up Irrevocable Common-Law Trust, the taxes are
due when the Trust Certificates are cashed out.61
Many people can exchange goods into the same Trust. This means once the
Trust is set up, other people (usually in the family) can exchange their
assets for Trust Capital Units. The Common-Law Trust is, thus, a more
complex system. There is also greater flexibility to allow for asset
separation.
The Trust Certificates have value when the corpus of the Trust is sold. If
you hold 30% of the Trust value at the time the Trust is dissolved, then you
will receive 30% of the payout of the Trust. If the Trustees use the initial
corpus to multiply the assets, the Trust can be worth millions. This means
the value of the Trust Capital Units increase.
Further, Trust Capital Units control the share of profit when the Board of
Trustees decides distribution.
Charitable Trust
Once passthrough of profits to Beneficiaries provides for the needs of the
immediate family, the Trustees can then set up a Charitable Trust to help
those other individuals or groups identified in the Trust Indenture. A
Charitable Trust needs to have a specific theme or purpose, and the money
thus distributed to organizations cannot be used to benefit the Grantor or his
or her family. These Trusts are passthrough organizations like the Domestic
Trust, set up in one of the several states.
Tax Exempt Status
This Charitable Trust can generate funds through its own investments and
then distribute profits to various organizations. To receive funds from other
organizations and contributors, this Charitable Private Trust needs to have a
recognized tax-exempt status,62 so its donors can receive tax credits.

The Charitable Trust can receive a distribution from other Trusts, and pass
the funds onto other organizations. If the Family Trust adds to its certificate
register the name of the Charitable Trust, then it receives a K-1 distribution
along with all the other Trust Capital Unit Holders. In this case, the tax-
exempt status is not needed, as the Family Trust is a passthrough
organization.
Charitable Remainder Trusts
Do not confuse the Charitable Trust with the Charitable Remainder Trust.
There are two types of Remainder Trusts: the annuity and unitrust.63 In both
cases, the Grantor is the Beneficiary, and on his or her death , the income
from the principal of the estate goes first to the named Beneficiaries and
then to a charitable organization. Since both types fall under the heading of
Grantor Trusts (the Grantor being also the Beneficiary), no income tax
benefits derive from their use. For more details about these Trusts, check
with your accountant or other financial advisers.
Now and again, people believe that a Trust must contain a charitable
element to qualify for tax advantages. These clients have heard that a Trust
or foundation has just made a donation to a cause, for example, a university,
hospital, Public Broadcasting Systems (PBS), etc., and assume that
everyone must. We have not found any requirement like this except for the
Charitable Remainder Trust.
Among a family’s highest priorities is the care of its members. When you
and your family gain far more than is needed to live comfortably, you may
choose to set up a Charitable Trust or Charitable Remainder Trust. All of
humanity will then applaud you.
Do not stress yourself (or your initial store of assets!) about charity at too
early a date. Engaging in “socially conscious” activities is wonderful and
rewarding when you can well afford it, but it is not necessary to prove that
you have enough interest in others. Simply do the basics well. Create a self-
sufficient Trust cash flow to support your Trust staff and Beneficiaries. In
turn, this supports their families and supplies your
customers/clients/patients with high quality goods or services. Further, this
trains your family members in their responsibilities to be prudent, self-

controlled, law-abiding and industrious. Finally, it ensures the Trustees have
a strong incentive to make beneficial distributions.
Perform just these few, simple actions with grace, humility and persistence
in the face of all the challenges modern life has to offer and you will find
yourself a long way toward carrying out any duty you may feel you owe
society. Such a civic responsibility is enough to qualify a Trust for tax
benefits. Courts will support your mandate to your Trustees to carry out
your plans as stated in the Indenture. The implicit primary purpose for any
Trust is that it looks out for the Beneficiaries.
Educational Trust
A Trust can specifically address the educational needs of the family and/or
in such a way the Beneficiaries are named educational institutions. As with
other Trusts, the Beneficiaries are responsible for any taxes due on the
funds they receive.
Estate planning often involves various schemes to support both the family
and its descendants, as well as to gain the advantage of the best tax
strategies. The Educational Trust is an Irrevocable Trust designed to set
aside specific funds dedicated to various educational opportunities. Tax
professionals can advise you regarding the advantages.
Somewhat similar to a Charitable Trust, where funds are invested, and the
income produced is distributed to various charitable enterprises, the
Educational Trust is set up to support learning institutions, as well as family
members and the Board of Trustees.
The Educational Trust is based on the qualifications of the Beneficiary to
receive the funding. These qualifications are determined either by the
Grantor, or by the standards of our society, such as, if the Beneficiary is
accepted to an accredited institution, then the Trust benefits apply.
The funds can be given, not just for tuition and books, but to support
various aspects of campus living. This includes fraternity or sorority fees, a
living expense allowance, room and board, transportation, and/or travel
involving education, as well as supporting the Beneficiary until he or she
finds suitable work.

Several guidelines can be written into the Educational Trust to define when
the Trust funds stop, or when restrictions on the Trust funds apply. For
example, if the Beneficiary becomes emotionally unstable, acquires a
substance abuse problem or a physical disability which prevents him or her
from continuing an education. In the latter, there can be other provisions in
an overall estate plan, such as a medical policy, or another Trust fund comes
to a Beneficiary’s aid.
The Grantor has ample room for creativity when designing an overall
educational plan for his or her or her family, such as:
Trust support stops at a certain age, to prevent the “professional
student.”
Grade point averages determine amount of Beneficiary support.
Defining the age at which a Beneficiary can name children as
Beneficiaries of the Educational Trust.
Requiring that once a Beneficiary accepts the educational benefits, the
Beneficiary contributes to the Trust to support future generations.
After establishing a career, the Beneficiary gives back to the Trust a
percentage of earnings to contribute to the next generation.

Chapter 13
Trustee Differences
Not all Trustees are the same. There are four classifications. Each Trustee
serves a different purpose and is applicable to different Trusts. The last
None is a danger.
1. Grantor Trustee
2. Independent Trustee
3. Adverse Trustee
4. Dummy Trustee
Grantor Trustee
As mentioned before, the Grantor and spouse usually become the Trustees
as well as the main Beneficiaries in a Living Trust. He or she has enough
motive to increase the assets for the Trust because the Grantor enjoys them.
Placing assets into a Trust assumes consideration for the contingent
Beneficiaries. Because control equals taxes, the Grantor pays the income
taxes on the Trust profits.
Independent Trustee
The Independent Trustee is often a Bank represented by lawyers who act as
Trustees for the Bank. The Bank then receives a percentage of the Trust
distribution to the Beneficiaries.
An individual can be an Independent Trustee who receives remuneration or
a percentage. He or she will not have a substantial adverse interest.
Adverse Trustee

The adverse Trustee, though, takes on a different responsibility than either
the Grantor Trustee, or the Independent Trustee. The adverse Trustee has a
greater vested interest in the Trust than the Grantor and cannot be removed
by the Grantor. The adverse Trustee functions in some Irrevocable Statutory
Trusts and must qualify in all Private Trusts, also known as Common-Law
Trusts. His or her role is more aggressive, and an adverse Trustee has
broader powers than an Independent Trustee.
The adverse 
Trustee 
functions in 
some 
Irrevocable 
Statutory Trusts 
and must 
qualify in all 
Private Trusts, 
also known as 
Common-Law 
Trusts.
The term adverse means the Trustee can be adverse to the wishes of the
Grantor. This would occur if the Grantor wants to use the Trust funds
contrary to the best interests of the Beneficiaries.
Standard Oil Trust
The need for a definition of an adverse Trustee came through lawsuits
against the Standard Oil Trust.64 Because John D. Rockefeller had total
control over the Trustees, who were employees of Standard Oil, he could
fire them. This proved the Standard Oil Trust was a Grantor Trust, and not
an Irrevocable Trust.
Substantial Adverse Interest

To prove the assets belong to the Board of Trustees and not to the Grantor,
there needs to be an adverse Trustee with substantial adverse interest. This
means the Trustee holds a greater percentage of the Trust than the Grantor.
This Trustee has a vested right under the Trust, insists on performance of
the Indenture and cannot be compelled to surrender control.65
Of course, none of this makes sense without some background. To
accomplish this inequality between the Grantor and the Trustee , the Trustee
needs to put assets into the Trust of greater value than the Grantor. Because
that is not likely, the alternative becomes the Trustee’s holding a greater
percentage of the Trust than the Grantor holds. This essentially creates a
reversal of roles. The Grantor, who placed most of assets into the Trust, is
now subservient to the Trustee, who may or may not have put assets into
the Trust, yet holds more Trust Capital Units than the Grantor.
This seemingly contradictory statement may have lost the reader. How can
the Trustee hold a greater percentage than the Grantor if the Trustee does
not put funds into the Trust?
This is where Trust structuring becomes essential. In Common-Law Trusts
the Trust Certificates identify Trust Capital Units held by each member of
the Trust group. The Units held equal a percentage of the value of the Trust
held by the Beneficiaries and by the officers of the Trust. The adverse
Trustee gets more Trust Capital Units than the Grantor, and thus should the
Trust ever “cash out,” the Trustee gets the majority of Funds. Without this
technique, it is not possible to understand how an adverse Trustee is cre
ated, because only occasionally will any Trustee put personal funds into a
family Trust when there is no blood relationship. The great deterrent is that
legally the profits of the assets added by the nonrelated Trustee accede to
the Trust Beneficiaries, and not to the Trustee’s Beneficiaries. Because the
blood relationship between the Trustee and the Grantor is discouraged, it
seems the adverse Trustee is not inclined to share in the Trust.66
If the Irrevocable 
Trust dissolves, the 
adverse Trustee 
gets the greater 

percentage of the 
current Trust value.
If the Irrevocable Trust dissolves, the adverse Trustee gets the greater
percentage of the current Trust value. It becomes unlikely the Grantor
would end the Trust under these circumstances.
In Trusts holding assets worth millions, the Trustee position is bought. That
is, the Trustee gains the position by buying a portion of the Trust Capital
Units.
Once an adverse Trustee can be proven, the Grantor is no longer taxable for
the increase of the assets. As you can imagine, this one issue becomes key
to establishing the legal status of the Trust in reference to its tax standing.
Also you can add a Trustee’s Beneficiary to the Trust complex. Not being
blood related to the Grantor’s family, the Trustee’s Beneficiary cannot pass
on the Trust Capital Units.
Scam Trusts
In a scam Trust, the promoter tells the Trust package buyer that he or she
can be both the Grantor and the Trustee without any tax consequences. This
shady deal has been going on for more than 100 years and fills the coffers
of the IRS with ample extra funds. Once it is proven that a Trust is
incorrectly structured and administered, the Grantor becomes taxable for all
the years the Trust operated. This large dollar amount often requires assets
to be sold, and the proceeds become IRS property. This proves to be a rich
and lucrative con artist game giving IRS Agents great motivation to find
these poorly structured Trusts. Several scam Trust court cases are included
in Volume II.
Both the IRS and the courts recognize the issue of legal title held by an
adverse Trustee. The legal system is clear about the difference between a
Grantor interested in getting major tax benefits and liability protection to
build the assets for the Beneficiaries, and one who wants to use the scam
Common-Law Trust to avoid taxes. Unfortunately, innocent people still get
caught in this scheme.

Motivation
In comparison, the Independent Trustee often lacks sufficient motivation,
because there is no substantial adverse interest. This Trustee gets a
percentage of distribution, but does not reap the benefits of additional funds
because of owning a percentage of the Trust. Corporate banks who act as
Trustee do not hold substantial adverse interest67, and have a reputation for
making only safe investments without the motivation to increase the profits.
When the Trustee is adverse, aggressive investment activity is more likely.
An Independent Trustee is more often a stranger to the Beneficiaries and
sometimes even to the Grantor. This Trustee, chiefly interested in ensuring
the accounting and legalities of the Trust, is not attentive to the personal
interests of the Beneficiaries. There may be little or no communication
between the provider and receiver of funds, so the Beneficiaries do not have
the advantage of a mentor. Wisdom passed on to the Beneficiaries from the
Grantor is lost, as is the family history, which can easily be kept in a Private
Trust.
After Death
After the Grantor dies, the sticky issue of an adverse Trustee is moot. Any
blood relation can become the Trustee as long as the person named qualifies
under the Trust Indenture. For a functional family, this should be an easy
transition, but if the family is dysfunctional, it is better the adverse Trustee
remain in place.
Because death does not displace an adverse Trustee, the Trustee may remain
as Trustee for as long as he or she feels it is necessary. Should the Trustee’s
remuneration be ample, we can assure you the Trustee is not likely to step
down simply because the Grantor passed.
It is often a wise move to keep an adverse Trustee in place. Not burdened
with the more common emotional issues and history of the family, this
Trustee can be unbiased when the volatile issues of investments and
distribution come into focus. In contrast, should a son or daughter become
the Trustee, the undercurrent of jealousy and competitiveness may cause an
otherwise smoothly running Trust to become chaotic.

It is often a wise 
move to keep an 
adverse Trustee in 
place since he or 
she is not loaded 
down with the more 
common emotional 
issues and past 
history of the family, 
and can be impartial 
when the highly 
volatile issues of 
investments and 
distribution come 
into focus.
When the Grantor sets up the Trust, he or she may want to specify in the
Indenture qualifications for being a Trustee. Depending on the family
issues, the Grantor may want to ensure that an adverse Trustee remains on
the Board of Trustees.
The events that frequently happen prior to death include the issue of the
Grantor changing his or her mind. We handle that issue in Volume II.
Because of the emotional issues surrounding death, the adverse Trustee
proves to be one of the greatest assets of the Trust. Dedicated to the
Beneficiaries, the adverse Trustee is not subject to the caprices of the
Grantor.
Definition
The Internal Revenue Code (IRC), has the best and most thorough
definition of an adverse Trustee68. This Trustee cannot be subservient to the
Grantor; that is, not blood related, not an employee, and there is no other
condition under which the Grantor can dominate the Trustee. Although
sometimes it is hard to follow the wording, we include this section so you
can see the complete definition:

a. Adverse Party For purposes of this subpart, the term “adverse party”
means any person having a substantial beneficial interest in the trust
which would be adversely affected by the exercise or nonexercise of
the power which he possesses respecting the trust. A person having a
general power which he possesses respecting the trust. A person
having a general power of appointment over the trust property shall be
deemed to have a beneficial interest in the trust.
b. Nonadverse Party For purposes of this subpart, the term “nonadverse
party” means any person who is not an adverse party.
c. Related Or Subordinate Party For purposes of this subpart, the term
“related or subordinate party” means any nonadverse party who is -
1. the grantor’s spouse if living with the grantor;
2. any of the following: The grantor’s father, mother, issue, brother
or sister; an employee of the grantor; a corporation or any
employee of a corporation in which the stockholdings of the
grantor and the trust are significant from the viewpoint of voting
control; a subordinate employee of a corporation in which the
grantor is an executive. For purposes of subsection (f) and
sections 674 and 675, a related or subordinate party shall be
presumed to be subservient to the grantor in respect of the
exercise or nonexercise of the powers conferred on him unless
such party is shown not to be subservient by a preponderance of
the evidence.
d. Rule where power is subject to condition precedent A person shall
be considered to have a power described in this subpart even though
the exercise of the power is subject to a precedent giving of notice or
takes effect only on the expiration of a certain period after the exercise
of the power.
Dummy Trustee
There is one more classification of a Trustee. He or she functions in an
Irrevocable Trust in name only. Signing checks and other papers may be the
Dummy Trustee’s only obligations while the Grantor runs the Trust. The
problem here is that this Trustee cannot participate in any business, as he or

she has nothing to contribute. Not trained or motivated, clearly a lackey for
the Grantor, this Trustee is not of any value to the Beneficiaries. Usually, a
Trustee of this nature is disinclined to get involved, and the first words to an
IRS Agent are, “I just do what I am told.” Immediately upon hearing this,
you no longer have an Irrevocable Trust, and all profits are now taxable to
you, the Grantor.
Payment for Services Rendered
The presence of a Trustee allows the Trust to meet legal and tax
qualifications, giving the Trust an advantage. Because of this, a Trustee of
an Irrevocable Trust is valuable. Any fiduciary services should be rewarded,
and the more interested a Trustee becomes in the welfare of the Trust group,
the more reward that Trustee should receive. The Trust belongs to the
Trustees, and reasonable funds they receive for their services should not be
questioned.
Custodian Issues in Probate Court69
Now that you have an understanding of an adverse Trustee, we share with
you a problem that has occurred so often the courts determined who cannot
receive funds from an estate.
This article is about who cannot get your “stuff.” We quote Mr. Oldman
from the Los Angeles Daily Journal:
Those who draft or transcribe Wills, Trusts or other instruments
to pass on wealth are excluded from receiving gifts from the
Grantors or Testators because of the temptation to misguide
those in their care. In September the Supreme Court [of
California] has made the following decision:
Under Section 21350 [of the Probate Code], gifts or bequests to
people who stand in a particular relationship with the testator are
presumptively disqualified from receiving the benefits provided
by a will, trust or other instrument...

Later, care custodians were added to the list of disqualified
people. To create this situation, the instrument must have been
executed by a testator who is defined as a dependent adult under
Section 15610.23, and the beneficiary must be a person defined
as a care custodian of a dependent adult under Section 15610.17
of the Welfare and Institutional Codes.
...Section 15610 of the Welfare and Institutions Code includes
anyone who provided medical and social services to a dependent
adult, whether or not the relationship began as a care giving
relationship or as a friendship.
Anyone feeling helpless is tempted to “bribe” those who care for them. It is
not always the fault of caregivers. Here again, the Trust assets cannot be
given away if they are under the care of the Board of Trustees whose
responsibility it is to take care of those who feel helpless. An adverse
Trustee has the authority to stop the Grantor from giving away assets
belonging to the Beneficiaries.

Chapter 14
On Trusting
We previously discussed what some call the “White Man’s Disease,” a
culturally based inability to trust others. The causes of mistrust stem from
or consist of:
Too much mobility that disconnects bonding and long-term
relationships
Personal isolation because of entertainment deriving from television,
computers and other modalities not requiring direct human contact.
Lack of genuine community.
Apparent social upheaval.
The constant barrage of negative information from the media.
The Why
It is understandable we have become a distrustful society, since ripoff artists
abound, people steal identities and strangers assault by e-mail offering us
African riches in return for front money. Worse, our kids cannot be kids,
considering the mass housing of registered sex offenders near schools.
Sexual predators work teen chat rooms constantly, and children are enticed
at the mall and even from their own yards into lives of prostitution. Throw
in drugs, available 24/7, with deadly diseases, and it becomes enough to
make people want to throw in the towel by opting out.
This is not the way to go, though. Fundamentally, we must trust, for it is
how we are wired as humans, and it is one of our greatest strengths. Nature
intended it that way. We innately know that our belief in one another, and
backing each other up, are two of the most powerful survival weapons we
have.

Failure to trust not only has its own inherent downside, but unless we install
countermeasures, it becomes ever more self-reinforcing, eventually making
us high-tech hermits. If your next door neighbor mistook your friendly
greeting as a prelude to an assault or the woman down the hall thinks you
just escaped from San Quentin State Prison, you still need to trust someone
or a group of people. Hav ing your back covered, as the vernacular goes, is
imperative to your existence.
Failure to trust not 
only has its own 
inherent 
downside, but 
unless we install 
countermeasures, 
it becomes ever 
more self- 
reinforcing, 
eventually making 
us high-tech 
hermits.
White Americans have forgotten the hard-won lessons of trust learned by
our immigrant forebears in a strange land where they did not know the
language. Others in the ghetto, the barrio, Chinatown, etc., know and
practice these lessons daily: cooperation, mutual protection, fierce group
identity and community pride. Even when the neighborhoods look and feel
like war zones, you will find these factors at work, often with a strong
religious content as well. And it is precisely this banding together that got
children educations, allowing them to enter the professions, and bought
homes for many people who could not have done it on their own.
Meanwhile, many of us lead lives of “splendid isolation.” If you are going
to have a viable Trust, though, you need to rethink that notion. You cannot
do it alone.
The Who

Who has been there for you through thick and thin? Who offered wise
counsel in the worst of times? Who has a good head for business and at
least some grasp of the law? Who genuinely cherishes you and yours? Who
has a knack for making money–legally? Who has a spine and the will to
stand his or her ground if challenged? Who is naturally curious and willing
to learn? Above all, who has genuine character, is emotionally mature, is of
the highest personal integrity? Who would you trust with your life?
That may seem extreme, but that is what a good Trustee does—looks after
the welfare of others to ensure their well-being according to your wishes.
We realize that this list of qualities occurs not in just one person. This is
why we recommend you choose two people as Trustees. Even in this
combination, only some of these traits exist. The solution to this is found in
their willingness to consult with professionals in areas where they may be
lacking.
It is from people who have these characteristics, who are not blood
relatives, that you will find your Trustees for your Private Trust, or for your
Living Trust that will eventually be Irrevocable on your death. The Trustees
serve under sworn oath and are bound by the terms of the Trust Indenture
that you have so carefully crafted. Your Trustees are in legal control of all
that you choose to put into your Trust, for the care, protection and
advancement of those dear to you and the causes in which you believe.
“What is the next step?” you ask.
Details Save the Future
To ensure the Trust is managed correctly, create a detailed Trust Indenture.
Clear rules, procedures and guidelines do much to assuage your fears. Of
course, this implies that you, the Grantor, have enough knowledge about
Trust matters to be clear about what information you need.
The more exact and detailed the Indenture, the better. If it leaves basic
matters open to question or contains contradictory statements, parts of the
Indenture may be nullified, or the entire Trust may be rendered void. You,
the Grantor, must be involved in the early draft of the document, and you
have full authority to change it however you see fit—until you sign it. For
the Irrevocable Trust, once the Trustees sign their acceptance, the specific
terms and the document as a whole become set in stone, the fundamental

law for the family, and will be upheld if challenged. In a Common-Law
Trust, subsequent Minutes expand and further define the Indenture, but they
must not alter the original intent of the Grantor.
Forming any 
Trust is the 
single furthest- 
reaching 
decision most 
people will make 
in a lifetime.
The Grantor and the Trust Documents
Ideally, the Grantor and Trustees-to-be take active roles in creating the Trust
Indenture. In reality, though, most people know so little about Trusts they
are lost when offered the opportunity to create a contract providing them
both maximum legal protection and maximum financial advantage.
Therefore, some Trust firms created generic Indentures and make them
available to the public. If you decide to use a one-size-fits-all form, we
strongly suggest that you first study and compare the literature of several
companies and meet with various representatives. Forming any Trust is the
single furthest-reaching decision most people will make in a lifetime.
Anyone starting down this road will be wise to gather and study as much
information as possible before making a binding commitment.
In a Statutory Trust, Beneficiaries are named, and what they are to receive
is specified. In a Common-Law Trust, the ‘bloodline’ can be named, and
the first Beneficiaries named, while a list of other Beneficiaries who meet
the specified criteria in the Indenture can be listed on the Trust Certificate
Register. For example, the descriptions of whom will be eligible for Trust
Certificates can be descendants of grandparents, or it can be descendants of
only the Grantor and/or his or her spouse. This list of Beneficiaries is
created by meetings of the Board of Trustees of a Common-Law Trust. That
is, the Beneficiaries are not a static matter but one of qualification. Their

distribution can increase as they earn their way through life, or through
spending time helping the Board of Trustees.
Removing Beneficiaries is not recommended except in extreme cases, with
well-documented statements and reports. The procedure for removal must
be outlined in the Trust Indenture. Beneficiaries can be added by a majority
vote of the Board of Trustees, provided the Beneficiary qualifies under the
rules of the Indenture. This decision is recorded in the Minutes.
For those who 
would like a 
guarantee, 
the Trust 
Indenture can 
specify the 
Trustees be 
bonded.
Trustworthiness
We covered this in detail earlier in this chapter, but need to revisit it now,
mainly in reference to a few points.
People who look at the possibility of placing their assets into an Irrevocable
Trust often are hesitant or fearful the Trustees chosen will be dishonest. The
most common reaction when you consider setting up a Trust is, “Whom can
I trust?” A close friend is often suggested as the suitable person to be a
Trustee. If the friend has no proper understanding or Trustee training, why
would you want to trust the assets to a person with good intentions, but who
has no knowledge of how to manage a Trust?
We found this to be a common problem, trusting property to those not
qualified to know what to do if the IRS requests an audit, or the Trust is
sued. We do not expect new Trustees to have this knowledge, but to be
willing to learn. If new Trustees are terrified of authority, it is not likely
they will eventually take the reins of the Trust.

For those who would like a guarantee, the Trust Indenture can specify the
Trustees be bonded. This is similar to the FDIC insurance on your money in
the bank.
So we are back to the question of “Whom can I trust?” The answer is easier
when you understand the details.
In any Irrevocable Trust, giving the reins of financial control to another
person is not so difficult when the limits are understood. It is even easier if
the Grantor holds all or some of the seven powers of control70 in the Trust:
How the income of an Irrevocable Trust may be applied to support a
dependent.71
At termination of Trust, the corpus reverts back to the Grantor.
How the income of the Trust is to be accumulated.72
How the corpus is to be distributed.
Temporary power to withhold income from a Beneficiary.
Power to withhold income during the disability of a Beneficiary to
accumulate and add to the income corpus.
Power to allocate between corpus and income.
With the Grantor remaining as an adviser, he or she becomes a nonvoting
member of the Board of Trustees. Now, the Trustees and the Grantor
become a team to meet the long-term goals and to build the assets of the
Trust for the benefit of the Beneficiaries. For those who are visionary, the
Irrevocable Trust is a creative process. For example, if the idea of
Disneyland had been only Walt Disney’s vision, he would have entrusted
the remaining scheme to the Trustees, who would incorporate his ideas as
generations passed. This is pre cisely what Randolph Hearst did to
perpetuate his publishing empire. The court cases regarding this specific
issue and the impact on the Beneficiaries are contained in Volume II.
In summary, the main responsibilities of the Trustee are to increase and
protect the assets of the Trust. This is what the courts expect and why the
Grantor chose the specific person for the job. With this in mind, it becomes
clear that Trustees must have a grasp of finance and have some legal
knowledge, or at least be interested enough to learn. This is not an easy
combination to find in one person, and adding the quality of steadfastness
makes finding the ideal Trustee nearly impossible. Since Trusts can have

more than one Trustee, why not have on the Board of Trustees, one (1)
friend and one (1) who is familiar with either accounting or who has interest
in or access to legal information?
Lack of Trust and Abuse of Power
Although we have focused on the issue of trusting Trustees, the real
problems often apply to family members, Grantors and conflicting power
issues. If you are worried about trusting people with your assets, consider
this case where an Irrevocable Trust and an adverse Trustee may have saved
the day.
Health Care Agent
Although we cover the issue of the Durable Power of Attorney for Health
Care (DPAHC) in Volume II, we need to touch on it here. The DPAHC is a
document where you choose who can make health care decisions for you
when you are unable to. This applies when you may be in a coma or near
death. The DPAHC is a necessary step to ensure the assets in the Trust are
not drained unnecessarily. In the following referenced article, an
Irrevocable Trust is not used. The integrity of a family member, though,
displays the care needed to choose people wisely.
Courts have recently dealt with the issue of Health Care Agents, also known
as caregivers, who become recipients of generous gifts by those they serve.
They cheat the family out of their inheritance. Also, a family member may
take advantage of those unable to decide for themselves as we find in the
following disturbing article.
In a letter written to Liz Pulliam Weston in the Los Angeles Times73, we
learn of an event where a daughter stole significant amounts of money
while acting as Health Care Agent for her parents. She drained their savings
accounts, and charged large balances on their credit cards. Not stopping
there, she took out loans against the life insurance policies, leaving nothing
to pay for even funeral expenses. She could have been prosecuted for these
crimes, but she died before the theft was discovered by her daughter, who is
the granddaughter.

The distraught granddaughter seeks legal advice from Ms. Pulliam who
states:
. . . Your mother’s estate is responsible for these debts. If she left
any assets—bank accounts, investment accounts, real estate,
cars, whatever—those typically can be tapped to pay the debts
after her funeral expenses and other necessary bills are
covered...
...if there simply are no assets to tap, . . .seek the advice of a
bankruptcy attorney about filing a Chapter 7 case on your
grandfather’s behalf. That would eliminate the credit card debt
...
The granddaughter is now bereft, for her mother took everything. If the
grandfather had placed assets in an Irrevocable Trust, the daughter would
not have had access.

Chapter 15
Trustees and the Law
With this groundwork laid, let us now turn to the law books to discover
what experiences these mysterious Trustees are having, and what those who
studied the subjects of Trusts have passed on to us. Of course, we would all
like our Trustees to have the wisdom of Solomon and be super heroes
sitting on your Board. Exceptional talent is unnecessary. As one respected
Trust expert, George Bogert, wrote, “Only ordinary care, skill and prudence
are normally required of Trustees.”74 The primary guideline is that Trustees
are bound in the management of all the matters of the Trust. They are to act
in good faith and employ such vigilance, sagacity, diligence and prudence
as, in general, prudent men of discretion and intelligence employ in their
own affairs.
If an otherwise competent Trustee makes an error in judgment, the law
generally will not hold him or her liable. On the other hand, if he or she
fails to display reasonable skill (Appendix F) good intentions will likely
prove no defense. To quote Bogert again, “Good intent will not relieve him
from liability for negligent or improvident conduct.” Should a Trustee claim
some exceptional skill, such as the ability to rapidly increase the value of
assets, the court tends to hold that Trustee to his or her word.
Trustees and Beneficiaries
Trustees must act solely for the Beneficiaries, so the former must never be
dependent on the latter. Bogert explains:
One of the most important duties of a trustee is that of undivided
loyalty to the beneficiaries. While he is administering the trust
he must refrain from placing himself in a position where his

personal interest or that of a third person does or may conflict
with the interest of the beneficiaries. All his conduct which has
any bearing on the affairs of the trust must be actuated by
consideration of the welfare of the beneficiaries and them alone.
He is in a position of such intimacy with those he is representing
and has such great control over their property that a higher
standard is established by the court of equity than would prevail
in the case of an ordinary business relation.75
Because Beneficiaries receive income or other benefits from the Trust, if
the flow slows or is interrupted, they are the first to notice. Therefore,
according to the courts, they stand as guardians of the Trust’s well-being.
Incidentally, a Trust without any Beneficiaries is no Trust.
Trustees are held to a far higher standard of understanding and competence
in Trust affairs than the Beneficiaries. Because of this, a court presumes that
an honest, capable Trustee can easily dispose of all but the Beneficiary’s
strongest allegations of improper conduct, by access to information and
documents not possessed by the Beneficiary.
Should a court decide, despite these considerations, the allegation has merit,
it is the Trustees who must prove themselves blameless, not the Beneficiary
who must prove a tort or criminal act was done. Recall, too, that Trustees
are personally liable for all willful violations of the Trust Indenture.
Can the Grantor be a Trustee?
The proper application of Trust ethics and administration is intricate. On the
surface, it appears that ordinary people can serve as Trustees, and that is
true. No one is born a Trustee, and no Bar card, public accounting
certificate or MBA can qualify someone who is mentally, ethically or
emotionally unsuited for the responsibility. “Ordinary” people, though,
must educate themselves and gain experience in how their Trust works. Few
formal classes in Trustee training are available, and learning to be a Trustee
takes personal study and practice. Sometimes when an Irrevocable Trust is
created, the Grantor becomes its General Manager, since he or she is the
most familiar with the daily financial affairs. Having the advantage of
personal knowledge of the corpus, the Grantor is the logical choice to train

Trustees in the mechanics of managing the affairs of the Trust. Any holes in
the Trustee’s knowledge of Trust administration can be filled by a
professional Trust management company, which may also train the
Trustees. Oddly, the ability to teach others is not an innate talent all have.
Some Trustees need to drag the information from the Grantor by asking a
multitude of questions.
The Grantor may assume a Trustee position under the following conditions:
Once a Trust has been in operation for several years, and has made
consistent Beneficiary distributions.
The ebb and flow of cash and assets have significantly changed the
original corpus.
The Grantor has become thoroughly indoctrinated with Trust
procedures.
Even if these criteria are met, should the Grantor become the sole Trustee,
he or she may become responsible for the taxes of the trust. The Trust can
revert to a Grantor Trust. The exception is, if the Grantor has never taken
any funds from the Trust, or if he or she has taken funds, has declared them
and paid any taxes due.
As a Cotrustee, the Grantor must continue to keep separate checking and
financial accounts for personal expenses and ensure that both personal and
Trust accounting procedures are meticulous. A Grantor who has chosen this
course cannot ever act as a sole Trustee. He or she should, though, have a
least one other Trustee and it is even better if there are two other Trustees.
In Chapter 22 Protection and Support, we discuss the court case of Mr.
Betts, who successfully became a Trustee of the Trust he set up. You will
see the difficulties faced.
Specific Duties of a Trustee
The Trustees handle the Trust’s finances and need to have Social Security
Numbers which have not been compromised through bankruptcy or liens. If
possible, at least one of the Trustees should own property. This proves
much to the Trust’s advantage when setting up merchant accounts, getting
loans, credit cards, etc.

A Grantor, who becomes a General Manager, can be involved in decisions
about many or all the items on the following list. To provide solid evidence
of substance of transaction and “arm’s length distance” (see Glossary), the
Trustees, though, must take part in drafting and signing all documents
connecting the Trust with the business world at large. Such activities
include:
Opening and closing all financial accounts:
◯  savings
◯  checking
◯  investments
◯  credit and debit cards
◯  merchant accounts (to process customer/client credit cards)
◯  offshore banking
Signing/cosigning checks
Opening accounts for private mailboxes, storage spaces, utilities, etc.
Signing all leases, contracts or purchase agreements for:
◯  equipment, including Trust vehicles
◯  property
Negotiating or joining in negotiations for construction, land
development, easements, etc.
Getting all needed licensing and insurance, such as:
◯  vehicle registration
◯  property owner’s (or renter’s) insurance
◯  business licenses
◯  Employer Identification Number
Registering all relevant documents about real property with the county
recorder
handling or assisting with tax and legal matters
A well-written Trust Indenture clearly and thoroughly specifies assigned
powers of the Trustees and the ones held by the Grantor.

Designing The Organization Structure
The Trustees are bound by the precepts set down in the Trust Indenture, this
document contains instructions for setting up and organizing the Trust, a
description of officers’ responsibilities, limits on their powers, naming the
Beneficiaries and directions for managing the assets for them. Working
from a draft Indenture, the Grantor specifies his or her particular desires
regarding the family’s needs, acceptable investments, and generally, sets the
tone for the entire Trust organization.
At this point, we must distinguish between a Common-Law Trust and a
Statutory Trust.
Common-Law Trust
Once completed, the Indenture may only be expanded but not changed. A
majority vote of the Trustees in a fully documented Board meetings may do
this. Created under the right to contract, the Trust must have a definite end
date, although it can be renewed by the Grantor, if alive, or the
Beneficiaries. It is more likely, though, that because of significant changes
in laws and circumstances, the Trust will either be dissolved, or assets will
be put into a new Trust where the Indenture is more current.
Created 
under the 
right to 
contract, the 
Trust must 
have a 
definite end 
date, 
although it 
can be 
renewed by 
the Grantor, if 

alive, or the 
Beneficiaries.
Statutory Trust
Given that (or if) terms in the Indenture allow changes, they are more likely
to happen through addenda. Again, the Grantor would need to expand on
what has been set, not change it. Because this is an Irrevocable Trust, the
Grantor has given up all control, so any changes must be made with the
consent of the Trustees.
The Rule Against Perpetuities (see Glossary) requires all Indentures to set a
definite end date when the principal of the Trust will be paid out to the
Beneficiaries. Known as the remaindermen, they are usually the third or
fourth-generation descendants of the Grantor.
A much more detailed list of information found in the Indenture is included
in Volume II.
The Trustees may expand on the Indenture only to complete the Grantor’s
stated purposes: either to increase the assets for the sake of the
Beneficiaries or to further protect them. They may never contradict or
ignore the terms of the Indenture. In precisely the same way that laws
repugnant to the Constitution are void ab initio, added policies which
violate the spirit or letter of the Indenture are nullities. The Indenture should
include strict rules limiting what may and may not be changed. The Minutes
of the meetings or addenda in which revisions are discussed76 or decided
form a legal record of these supplements and may be subpoenaed in any
court action challenging the Trustee.
Functional and Reliable
Sometimes the only obstacle to setting up an Irrevocable Trust is finding
reliable Trustees. Once that step is performed, the rest may be a walk in the
park. As you have no doubt inferred by now, the Trustees form the keystone
of the arch linking Grantor and Beneficiaries, both of whom hold Trust
Certificates. 77 Trustees hold legal title to the assets, managed by them for

the sake of all Trust members, including themselves, and defend the Trust
before and during any legal challenges. Therefore, they should be (or show
strong signs of maturing into) savvy, organized and experienced men and/or
women, capable of holding their own in the face of opposition from other
Trustees, Beneficiaries, government officials, and, yes, even the Grantor!
Above all, of course, they should be trustworthy. If that list sounds a little
like the Boy Scout or Girl Scout Oath, so be it.
As mentioned 
before, Trustees 
are legally 
responsible for 
the assets of the 
Trust; one or 
another among 
them should have 
a business 
background, at 
least some 
interest in law 
and a grasp of 
accounting.
As mentioned before Trustees are legally responsible for the assets of the
Trust; one or another among them should have a business background, at
least some interest in law and a grasp of accounting. They need not be
attorneys, but at least one of them should be willing to find his or her way
around a law library, learn the basics of court and banking procedures. The
two most important duties are:
Protecting the assets by holding to a minimum the potential for legal
challenges.
Defending the Trust effectively if a conflict does arise. Of course, they
may hire competent lawyers or other professionals if necessary.

Do not worry if you will never discover this blend of Henry and Richard
(H&R) Block, Arthur Andersen, Donald Trump, Johnny Cochran, Matlock
and Superman among your circle of friends and acquaintances. Remember,
thanks to the large body of case law proving the legality of Trusts, few are
ever challenged.
At the same time, your search for these individuals should be thorough,
reasoned, careful and unemotional (beyond, perhaps, the “emotion” of trust
or confidence). For that reason, prepare to create your Trust for the same
reason you buy insurance, that is, well before the possible events you hope
to avoid. Do not wait to start shopping for a Trust and recruiting Trustees
after creditors or other troubles are sniffing at your heels or haunting your
doorstep. Under pressure, you may make serious errors—such as selecting
Trustees whom you later realize are still unqualified and may never be
qualified. We do not mean, though, that you should expect to be blessed
with someone who is fully prepared from day one; the first year or so of the
Trust will be a trial-and-error period for all involved.
Many generations of successful families have refined the structure of the
Irrevocable Trust to ensure that Trustees are well motivated to help their
Trust Group family become millionaires many times over. Your job is
simply to find “a few good men or women” who can both follow the
program and understand it well enough to think on their feet when a new
situation arises. The longer they work within this proven structure, the more
comfortable they will be with it, and the more committed they will be to
your combined success.
While it is important you understand the need of finding competent
Trustees, in your enthusiasm for finding your collection of Mr. (or Ms.)
Wonderfuls, do not overlook the power of training. Just find bright and
honest people; a solid Trustee-training program run by a skilled Trust
management firm can do the rest. Such a program includes how to prevent
audits, lawsuits and seizure of assets. Again, prevention is the key, and it
takes the form of reporting accurately and timely required information.
Controlling Your Trustees
There are several ways to keep your Trustees’ performance on track while
you preserve the “arm’s length” (See Glossary) distance from the assets as

needed by legal precedent and taxing authorities; the following three are
interrelated. First, the Trust Indenture should clearly say that you divest
yourself of all legal and equitable interest in the assets (arm’s length).
Equally clearly, it should spell out your purposes for the use of the assets,
and the specific Trustees’ duties. Second, you may involve yourself
personally in Trust activities, either as Manager or (at least) as a remote (but
not too distant) supervisor who needs frequent reporting in enough detail to
keep yourself well-informed. Third, educating your Beneficiaries and
personally keeping them up-to-date on Trust activities in reference to their
potential involvement. This means that if you expect one of your
Beneficiaries to eventually become a Trustee or a General manager, he or
she should read the Indenture. This encourages them to keep watch over
their own interests.
A fourth method, so obvious that it might be overlooked, is your choice of
Trustees. Any Indenture, or written contract of any kind, is merely the
record of a prior meeting of the minds between you and your original
Trustees and, ideally, between every member of the Board of Trustees and
the Successors. Only in this way can true continuity of your original intent
be assured.
If you create 
the Trust for 
your 
Beneficiaries, 
then you get 
to know the 
Trustees 
personally.
In a Private Trust, Trustees who stray from the Indenture may be challenged
by the Protector. This is a person appointed by the Grantor to oversee the
Trust functions, and who has the right to fire Trustees for violation of said
Indenture. Volume II gives the details about the Protector.
The Beneficiaries’ first recourse is with the Protector. This person stands
between the Trust and a court of law, since he or she has the power to

resolve issues without litigation.
If you create the Trust for your Beneficiaries, then you get to know the
trustees personally. This allows you to give them your instructions about
these Heirs Beneficiary, take the time to write the Trust Indenture correctly,
and keep an eye on matters as they unfold.
Obviously, it is much easier to state the ideal than to bring it about in the
face of a myriad of every-day challenges. Nevertheless, if you as Grantor
take care to pass on your spiritual values to your Trustees and children, you
will give them irreplaceable essentials of your own soul. This will help
them to act as you would in circumstances and times that you cannot now
imagine.
Despite there being no law requiring a Trust to have more than one Trustee,
two is an ideal minimum (and three even better) for several reasons. Except
the obvious benefit of added security for the assets and beneficial
distributions, naming two or more Trustees at the beginning saves time,
money and loss of control to the state. If you start out with only one, and
the Trust Indenture does not provide for adding a second one, appointing a
replacement in an emergency or additional ones for convenience may
require a trip to court each time. This principle applies equally to Common-
Law and Statutory Trusts. With two Trustees, one Trustee can always
appoint another.
Trustee Replacement
A Private Trust may lose its Trustees. There may be no Trustees to take
their place. This can be because of the following reasons:
Successors are not available.
Trust Protector is not functioning to prevent both Trustees from
leaving.
The terms in the Trust Indenture do not allow the Grantor to select
other Trustees, or the Grantor has long passed.
If this occurs, there is no place to turn but to a court–and now your Private
Trust just changed into a Statutory Trust.
Exchangers

In a Private Trust there is another name for those who exchange assets into
the Trust for Trust Capital Units. Identified as “Exchangers,” this
classification is different from Beneficiaries who have given nothing to start
the Trust and who have not contributed to any of the Trust funds.
Exchangers are people or organizations, besides the Grantor, who have a
reciprocal agreement with the Board of Trustees when they place assets into
the Trust. Exchangers are typically family members. The Trust Capital
Units received, identified on a Trust Certificate, allow Exchangers to
become eligible for distribution with the Beneficiaries. The Grantor
becomes an Exchanger when he or she places assets into the Trust.
The Grantor appoints the First Trustee, who in turn appoints the other
Trustees and hires the Officers. At least the First Trustee should be
unrelated by blood or marriage to any of the Exchangers, although certain
specific exceptions to this rule exist. If you have two Trustees, though, the
second one may be a member of an Exchanger’s family, so long as the first
is not. The purpose for this rule is, of course, to preserve the arm’s-length
distance between each Exchanger and the assets, quashing in advance the
possible allegation by anyone unfriendly to the Trust (or Trustees) that an
undue influence has been exerted on a Trustee to act improperly.
Again, the Trustees are legally responsible for the Trust property, and, if
any asset or provision of the Trust is challenged, they must handle the
matter. If the manager is also the Grantor, he or she needs to become
comfortable with the Trustees’ being legally responsible. What were
formerly his or her private possessions, are no longer personal property.
Trustee Responsibilities and Powers Summarized
The powers and participation of the Trustees of an Irrevocable Trust
are greater than those of Trustees of other Trusts.
Trustees must not be subordinate to or subject to the control of any
other participant in the Trust; therefore, no Trustee should be an
employee of the Grantor.78
The Grantor of a Irrevocable Statutory Trust must never have more
than a 5% reversionary interest in a Trust he or she creates of the
Corpus or interest. Do not structure your Statutory Trust to have more
than 5 percent ever revert (come back) to you, unless through certain
clear exceptions defined in that section. If you do, you will have not

only wrecked your Trust, but exposed you and your Trustees to legal
sanctions and fines. This rule of Trust structuring is so basic that
violating it, even while doing everything else right, will set you up to
have the Trust annulled, exposing the Trustees to fines, and the corpus
and profits to seizure. Because of the Trust Capital Units in a Private
Trust, though, this particular rule does not seem to apply.

Chapter 16
Privacy
In our experience with Trusts, one of the most misunderstood subjects is
privacy. We live in a world where if you seek to keep information about
yourself and your family private, you are suspected of being a terrorist. This
chapter may shock some people, for we have taken a hardline position
regarding your right to have privacy, and so some of these ideas may be
quite a revelation.
Concern for privacy may not be as stressed in a Statutory Trust. The
officers of the Trust may rely on lawyers, who are officers of the court and
beholden to that system. New Trustees may also rely on CPAs who may be
in a similar situation with the IRS. Banks and other types of large
organizations which take the responsibilities of Trusteeship often assign the
fiduciary responsibility to a lawyer. In a Private Trust, though, the Trustees
are usually more diligent about the privacy of both the members and the
investments, and thus can resist efforts of government agencies to delve into
Trusts and identities of the Trust group.
Direct Access by the State
A corporation exists through permission of the state in which the
corporation is placed. You need a Social Security Number to start a
corporation. With double taxation, and the state’s having direct access to
corporate books,79 privacy is doubtful.
A sole proprietorship is similar, since the entire business is under the
owner’s Social Security Number, and all assets can be seized, even if the
owner does nothing wrong except unwittingly do business with the
incorrigible.

The Right to Say “No”
Because a Private Trust does not exist by permission of the state, without a
court order or a search warrant, its books are not open to the state for
inspection. Unlike a Statutory Trust where the Beneficiaries are part of the
public records, the Beneficiaries in a Common-Law Trust are kept
confidential. This is to protect them from unscrupulous individuals who
may target them.
Unless you have some knowledge of the law, you cannot understand the
value of privacy. It comes from the simple fact that if someone does not
know what belongs to you, then he or she cannot know how to get it. Why
make yourself a target?
Further, in issues about taxes–without evidence to use against you through
voluntary compliance–there is no evidence.
Privacy is an art form, and is most simply stated in the Fourth Amendment
of the U.S. Constitution:
The right of the people to be secure in their persons, houses,
papers, and effects, against unreasonable searches and seizures,
shall not be violated; and no Warrants shall issue but upon
probable cause, supported by Oath or affirmation, and
particularly describing the place to be searched, and the persons
or items to be seized.
Privacy is a sacred right, but you need to guard the right to have it. Without
appropriate knowledge of how to handle privacy, you may unwittingly give
up valuable information to the unscrupulous, aggressors, and unlicensed or
unauthorized agents of any organization, including the government.
We can claim that placing assets into an Irrevocable Trust separates it from
the original owner, but the assets are still only as safe as the Board of
Trustees makes them.
In some Statutory Trusts, the Trustees may be untrained and thus rely on
lawyers and CPAs for advice. You can only assume that these counselors

are educated in the finer details of Trust law if they have experience dealing
with Beneficiary and distribution issues.
A Grantor may, for example, ask his or her lawyer to be a Trustee. If the
lawyer is familiar with estate planning and Trusts in general, this is
probably a good choice, but just because one is a lawyer, does not make
him or her a good Trustee. This is a specialty field, and the legal knowledge
is only one part of a much larger picture.
Lawyers can also be compromised if they are Trustees, because as officers
of the court, their first priority is to adhere to the wishes of the court. To
keep his or her Bar card, the lawyer is beholden to the courts for the
ongoing support given, and so may not, in the long run put up a consistent
fight to keep the Trust private.
Lawyers can be excellent Trust Protectors, though. This is a subject we will
delve into more in Volume II.
In our experience with lawyers with whom we have dealt on Trusts, we
found, contrary to what you might expect, they often need as much training
as the average person.
Tactical Resistance
Those people who have become members of any Board of Trustees need to
be educated about how to handle warrants, investigations and unsolicited
inquiries. This may sound scary to you because you have not been properly
trained. The more knowledge you have, the better you can handle
confrontations. After a while, Trustees become brave when they know the
law, the rules, the procedures, and know how to have a conversation with
inquisitive agents.
In our society, most people have been trained through the collective
educational process (public school, news and entertainment media, etc.) to
be naively open about their personal affairs. Fictional and “real TV”
portrayals of police search-and-seizure operations show their barging into
citizens’ homes with little or no reference made by commentators to the
Fourth Amendment protection against unauthorized entry into private
homes. Because of omitted training about their rights, many people are
unaware of the Fourth Amendment and other guards against invasions of

privacy. This barrage of misinformation creates oppressed attitudes in the
portions of the mind and psyche which should be filled with self-esteem
and knowledge of the law.
Because of 
omitted training 
about their rights, 
many people are 
unaware of the 
Fourth 
Amendment and 
other guards 
against invasions 
of privacy.
Like children parading their proud possessions before visitors and bragging
about their accomplishments, too many adults flaunt their assets or discuss
them openly with friends and other family members not involved in
business with them. In general, people are too willing to share what should
be kept confidential. These two beliefs, that one should and must be open
about private business, are common among the American public at the
moment. They create mental tendencies which make training a new Trust
Officer to keep the records and documents private one of the toughest
aspects of teaching him or her to perform Trustee duties competently in an
Irrevocable Common-Law Trust.
Should you have some doubt about our claims that lawyers are beholden to
the courts, you will find the below excerpt from the Corpus Juris Secundum
(CJS), most enlightening. This is from one of the most respected
compendiums of American law and states:
Thus, an attorney occupies a dual position which imposes dual
obligations. His first duty is to the courts and the public, not to
the client, and wherever the duties to his or her client conflict

with those he owes as an officer of the court in the
administration of justice, the former must yield to the latter.80
If you took offense to our characterizing as children those adults who make
a show of their riches, you will not feel much better about how lawyers are
trained to view their clients. The CJS goes on to say,
A client is one who applies to a lawyer or counselor for advice
and direction in a question of law, or commits his cause to his
management in prosecuting a claim or defending against a suit
in a court of justice; one who retains the attorney, is responsible
to him for his fees, and to whom the attorney is responsible for
the management of the suit; one who communicates facts to an
attorney expecting professional advice. Clients are also called
“wards of the court” in regard to their relationship with their
attorneys.81 (Emphasis added.)
Who are wards of the court? According to the most popular legal dictionary
now in use by American lawyers, they are “infants and persons of unsound
mind placed by the court under the care of a guardian!”82
Attorneys depend on the courts for their livelihood, and, let us face it,
courts are run by judges, all of whom must be members of the Bar. Like
anyone else whose “right” to work depends on having a license, a lawyer
fears losing the support of his or her professional or trade association.
Disbarred, a lawyer cannot present arguments before a judge other than for
himself or herself. Like other licensed professionals, lawyers can lose their
standing not only for malpractice but also for failing to bend to the will of
the particular organization to which they belong or for becoming an
embarrassment to it.83 This is why, when purchasing an Irrevocable Trust,
you should decide what level of security you want, how high a priority you
place on it, and how much you are willing and able to manage your own
affairs.
Lawyers As Trustees, a Plus

On the other hand, having lawyers as your Trustees has its attractive side.
There is the obvious benefit of installing them in the driver’s seat while you
sit back and enjoy the ride. They can create all the documents you will
need, hire a CPA, get any needed licenses from state and local agencies, and
open accounts at a local bank while you play golf, fly to Hawaii or tend
your roses. Besides, a law firm will probably have more credibility when
interfacing with these other corporate entities than your best friend,
Howard, or your college roommate, Grace. The lawyers’ familiarity with
legal procedures could so make your setup faster and smoother.
Do not 
assume that 
because 
someone 
belongs to the 
Bar, he or she 
knows how to 
be a Trustee.
Do not assume that because someone belongs to the Bar, he or she knows
how to be a Trustee. There is still a steep learning curve, and in our
experience, the average lawyer’s attitude prevents humble learning of basic
paperwork and other administration skills.
As the assets in a Trust multiply, the professions (if any) in which your
Trustees practice may not matter much. If the cash flow produced is
enough, they may surrender their licenses to practice law in favor of loyalty
to their new slush fund–the assets held for the Beneficiaries.
Howard or Grace, though, might turn out to be far more diligent as Trustees
than licensed professionals. These friends are likely to have more personal
interest, not just in the revenues which the Trust can create, but also in you
and your family.
Speaking of revenues, the fees your Trust can pay the Trustees in its early
stages may look like peanuts to lawyers, inadequate to hold their attention.

On the other hand, it could be important money to Howard and Grace,
further securing their loyalty to you and the growth of the Trust.
Of course, a key reason in your deciding whether to hire a trusted friend or
a stranger who happens to be a professional is defining precisely what Trust
procedures you want established. Individuals steeped in “the system” will
be an advantage mainly if you intend to create a Statutory Trust; usually,
their greatest strengths lie in their knowledge of that world.
No matter whom you choose to keep your assets safe, you should directly
involve yourself in the administration. There is simply no substitute for
keeping your hands on the operations in the early months and years. The
downside of this, is your inability to let go. If you cannot delegate and teach
others, it may be best that you remain distant from daily operations.
After you place assets in a Trust, you do not own them anymore; the
Trustees do. Since, presumably, you are not a Trustee, you have no duty to
disclose anything, except under certain limited circumstances. The Trustees
are the only ones who know anything of the assets held by the estate. You
graduate to the sublime state of blissful ignorance and overjoyed poverty.
To help you gain confidence that your privacy can be increased by the
proper use of a Trust, consider the implications of the following opinion of
the U.S. Supreme Court, handed down in Hale v. Henkel:
“Power to contract is unlimited, and the Citizen may refuse to
open his books to the State.”84
This ruling applies to all contracts, including Trusts. A corporation, on the
other hand, is not a contract but rather, a licensing agreement between the
citizen and the state. Corporate officers may be powerless to resist demands
to open their books from taxing and other government agencies.
Again to quote Mr. Halliday, a Trustee of a Common-Law Trust:
We live in the information age. Information, that used to be
confidential and private, is readily available on almost every
aspect of a person’s life. Privacy becomes an increasing

problem. Trusts traditionally enjoy a protected status around
privacy. Often Times (sic), Trust records are difficult, if not
impossible, to subpoena.
In 1995, I followed a court case in Hawaii between the IRS and
the owner of a car dealership. The individual’s business and
family financial holdings had previously been organized into
Trust. The Trust was refusing to surrender financial records
based on the precedent that Trust records are private and
surrendering them could compromise the Trust and risk the
interests of the Beneficiaries. The defense attorneys had done
notable preparation and presented various court cases that
substantiated the privacy of Trust records . . .
. . . The end result was that the IRS failed to find any fraudulent
intent. The judge ruled in favor of the Trust, the Trust’s privacy
was maintained and the case was dismissed. The case was
subsequently appealed to the Ninth Circuit Court of Appeals and
again, the privacy of the Trust was upheld . .”85
J. Paul Getty
Further, we can take a good lesson from J. Paul Getty, who knew well the
value of privacy. In The Rich and the Super-Rich, Frederick Lundberg noted
Getty’s penchant for privacy:
Getty’s entire life has been subdued in pitch. He went to school
quietly—first to the University of Southern California, later to
the University of California, and, then, to Oxford. He traveled
the world quietly, went into business with his father quietly, and
later bought large amounts of stock very cheaply—and quietly.
He married quietly seven times and as quietly divorced, with no
hint of scandal ...86

The Rockefeller Foundation
John D. Rockefeller, arguably the richest man in America at one
time, if not in the world, had five sons and one daughter. To this
day, exactly how much money his children inherited remains a
mystery to the rest of society. The information has been
vigilantly guarded since their birth. In fact, none of the terms of
the Trusts established for them by their father has ever been
revealed, and even the names of the Trustees are known only to
the family and a few key advisers.87
Handling Privacy and Challenges To It
Here is a FAQ from a web site: “Who can see the Trust documents?” The
answer offered is, “Anyone can see them if you want him to.”
In a true Irrevocable Common-Law Trust, though, no one may see the
documents without the express permission of the Board of Trustees. In fact,
before reading them, anyone else should sign a sophisticated nondisclosure
agreement or some oath of privacy. After all, is not privacy one reason you
want a Trust in the first place?
That sounds good, but remember the important element of training. To
handle privacy matters correctly, you and your Trustees must eventually
become educated in Trust administration. For example, how should you
behave when staring down the barrel of a loaded search warrant? How do
Trustees handle inquiries by government or IRS agents? Without a mentor
to teach you such basics of Trust privacy, you are likely to make critical
blunders. Fending off agents schooled in intimidation techniques is a high
art. Without a few basic pointers, the average person will cave in to their
stubborn, derogatory attitudes. So, before you plunk down your cash for
any Trust, get informed and get smart. With a few ounces of education
about what Trusts are and the differences between a scam and a real
McCoy, you will be amazed at how easily you can bypass the one and pick
the other.

Cayman Islands Lifts Veil of Bank Secrecy88
Often a favorite place for offshore Trusts and offshore banking, the Cayman
Islands once provided a secure place to put money. This was mentioned
earlier, but now it is time to provide specific details on how the changes
affect individuals. We quote:
. . . In a stunning break from tradition, Cayman authorities have
turned over records showing that Kenneth H. Taves of Malibu,
who is accused of improperly billing up to 900,000 credit card
holders, transferred $25.3 million in allegedly illegal profits
since mid-1997 to Euro Bank Corp. on Grand Cayman . . .
Although the Cayman government has agreed to release
confidential bank information for use in U.S. criminal
investigations under a 1990 treaty, it does so only if the offense
is a crime as defined by the laws of both countries.
Until three years ago, there were no criminal penalties for
Cayman bank officers who covered up money laundering. And
because the Cayman Islands has no direct taxation, it doesn’t
deem tax evasion a crime.
Dead Giveaways
Although we said a great deal about privacy, we also recently discovered
the words you choose, and the way you type on a keyboard, gives others a
clue to your identity. Despite encryption, you can be tracked and identified
to 70% accuracy just by how you express yourself. During Black Hat
Briefings in Las Vegas, Dr. Neal Krawetz of Hacker Factor Solutions
demonstrated how he and others use nonclassical digital forensics . . .
analyzing the words used or the keyboard characters typed ...89
This latest forensic discovery underscores how on top of privacy we must
be to prevent unwarranted intrusions into our lives.

The Silver Spoon Curse
Why is it so necessary to protect the Beneficiaries? Because con artists go
through county records to discover them. Now, they can be targeted. For
those who come from millions, there is a great effort to obscure any large
amounts to which the heirs have access. This ensures the Beneficiaries
cannot be readily discovered and the information about their fortune is
unavailable.

Chapter 17
Common-Law Trust
Referred to in previous chapters, but not thoroughly explained, is the
Common-Law Trust. Among some groups, organizations and the legal
profession, this Trust is the “bad” guy on the block.
No matter how much we tell you a Common-Law Trust is marvelous, there
are pitfalls. We address these more in the last chapter of this book.
Our so-called freedom is threatened by bullies. Whoever owns the gold,
owns the world. When you think of domination and control, think
Common-Law Trust, and like the King of the Mountain children’s game,
the King will not let you climb to the top. He takes away the ladder. We are
here to restore at least some of it. An outline of the Indenture and other
agreements are found in Volume II.
What Is a Common-Law Trust?
All Trusts are contractual agreements between three parties: the Grantor and
Trustees for the benefit of a third party, the Beneficiary. As mentioned
before, a contractual agreement is known as a Declaration of Trust or a
Trust Indenture. This carefully detailed agreement establishes the wishes of
the Trust creator and his or her instructions to a Trustee or Trustees about
the welfare of the Beneficiaries. Without this initial agreement, there is no
Trust.
The Common-Law Trust is an Irrevocable Private Trust, and the
Beneficiaries hold Certificates representing a portion of their interest in the
Trust. A Statutory Trust, though, has no Certificates. The sophisticated
nature of Certificates involves skilled administration since they are legal
financial instruments. Volume II provides their details of use and
application.

An Irrevocable Trust scares many people, who shy away from further
investigation. It is necessary to set it up correctly. Otherwise, you may find
yourself in trouble with taxing agencies or other people who do not have the
Trust Grantor’s best interests in mind.
As in all other Trusts, the Indenture sets up the authority. The Trustee gains
the power to take assets given to him or her by the Trust Grantor and
manage them for the benefit of the Beneficiaries. This means the Trust
Grantor transfers assets to the Trustee, and the Trustee then holds them in
the name of the Trust.
The Trustees sign the Trust checks. The investment and other financial
accounts are opened by the Trustees, and the financial responsibility of the
Trust belongs to the Trustees, not the Trust Grantor. Up to this point, the
Common-Law Trust is the same as a Statutory Trust.
The agreement 
between the Trust 
Grantor and 
Trustees forms 
the Trust and 
empowers a family 
through its vested 
interest, to 
continue the Trust.
The agreement between the Trust Grantor and Trustees forms the Trust and
empowers a family through its vested interest, to continue the Trust. Also,
personal expenses, paid with after-tax dollars, may now become pretax
business expenses–a writeoff to the Trust that is in the business of
managing family assets. This is handled through proper accounting
procedures. You can infer from just this tidbit of information there can be
many advantages to turning your family into the family business.
Although the Grantor, with the Trustees can take part in running the
Common-Law Trust, with this opportunity comes the responsibility of

learning the intricacies of Trust administration. The Private Trust is more
complex than a Statutory Trust, and is not for everyone
Why This Type of Trust?
So what makes the Irrevocable Common-Law Trust so different? Perhaps, it
is the independence of the family, the members of which have taken
responsibility for their own destiny, or maybe it is the right to privacy
which allows a group to bond. After all, shared secrets, such as how the
cash flow is created, can make people more committed. Through Trust
Capital Units, each member of the family has a vested interest in achieving
family success. This encourages people to want to participate.
Trusts in the Media
Used among the rich and famous, Private Trusts are sometimes addressed in
published articles. Because the average person is so unfamiliar with the
inner workings of a Trust, the statements about benefits gained are often
vague. Here are some of the comments made in various publications:
“Henry Ford II left the bulk of his fortune, estimated at $250
million, to a Private Trust whose Beneficiaries are unnamed
according to his will . . .”
The New York Times, Wednesday, October 7, 1987
“Upon the death of Mayor Richard Daley of Chicago, Illinois, it
was learned that much of his assets were put into Family Trusts
after a 1974 stroke. That would put most of his holdings in the
hands of his wife or seven children with no public disclosure!”
Combined Wire Services, Chicago Tribune
“Mesabi Iron Company received a ruling from the
Commissioner of the IRS allowing it to transfer some of its
assets into Trusts so they would not be taxed as corporations.
The effect of the ruling is the Trusts themselves were
nontaxable.”
Wall Street Journal, March 13, 1961

“Rupert Murdoch transferred Boston TV Station WFXT into an
independent Trust to avoid cross-ownership laws that would
have put the TV station at risk.”
Wall Street Journal
Probate Examples Without The Use of Trusts
Mr. A. Deeds, Chairman, NCR, of Dayton, Ohio, gross estate of
$13,312,905.00. Total cost and taxes at time of death,
$7,902,005, reducing his estate by 58%!
Albert H. Wiggin, retired Chairman, Chase National Bank of
New York City, New York, gross estate of $20,493,990.00. Total
cost and taxes at time of death, $14,865,310.00, reducing his
estate by 72%!
Additional Examples of the Power of Trusts
Ronald Reagan established the “Ronald Reagan Trust” in 1966 enabling
him to receive sizable tax advantages. In some years, Mr. Reagan paid no
taxes at all while at the same time maintaining a magnificent lifestyle.
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. Today, it is estimated the
family uses 200 or more Trusts, and we can only guess how many millions
this represents.
Joseph Kennedy, father of John F. Kennedy, used many Common-Law
Trusts for his family and various businesses still in existence today.
Substance of Transaction
Two important reasons decide whether a Trust deserves classification as a
genuine Trust: (a) structure and language of the Trust Indenture and (b)
substance of transaction. Again, what counts is not the name, but the
operation of the organization; is it being run as a Trust—or as a corporation,
sole proprietorship, etc.?90

Speaking of names, even within Common-Law Trusts, there are dozens of
minor variations on the basic pattern, each known by a different name to
distinguish it from its near relatives. To keep it simple as you learn your
way around, however, just remember: if it looks like a duck and walks like
a duck ...91
Many common Trust elements create a legally set Common-Law Trust
Indenture. The private nature of this contract between the Grantor and the
Trustees gives the Grantor a broad range of possibilities that are not
available through the Statutory Trust.
Before we go too much into the parts and details of a Common-Law Trust,
we will give you some of the many and varied types of Trusts within this
category.
The Massachusetts Trust
As mentioned before, this Trust originated in the Massachusetts
Commonwealth during the colonial era. This is a Business Trust in which a
business or (originally) real estate is “vested with” (that is, entrusted to)
Trustees who manage it for the owners of the beneficial (equitable) interest
(the Beneficiaries). Although Trusts existed for thousands of years when
Europeans emi grated to America, the colonists of Massachusetts were the
first to provide Certificates of Capital Interest to individuals who placed
their assets into the Trust. This practice is used in all Trusts based in
Common-Law.
Courts defined the Massachusetts Trust as
(a) business organization wherein property is conveyed to
Trustees and managed for benefit of holders of Certificates like
corporate stock Certificates.” 92 They defined a “Massachusetts
Business Trust” as “an unincorporated association organized
under Massachusetts law for purpose of investing in real estate
in much the same manner as a mutual fund invests in corporate
securities.93

Under the heading “Trust estates as business companies,” Black’s Law
Dictionary states:
A practice originating in Massachusetts of vesting a business or
certain real estate in a group of Trustees, who manage it for the
benefit of the beneficial owners; the ownership of the latter is
evidenced by negotiable (or transferable) shares. The Trustees
are elected by the shareholders, or, in case of vacancy, by the
Board of Trustees. Provision is made in the agreement and
Declaration of Trust to the effect that when new Trustees are
elected, the Trust estate shall vest in them without further
conveyance. The Declaration of Trust specifies the powers of
Trustees. They have a common seal; the Board is organized with
the usual officers of a Board of Trustees; it is governed by by-
laws; the officers have the usual powers like corporate officers;
so far as practicable, the Trustees in their collective capacity, are
to carry on the business under a specified name. The Trustees
may also hold shares as Beneficiaries. Provision may be made
for the alteration or amendment of the agreement or declaration
in a specified manner. In Eliot v. Freeman,94 it was held that
such a Trust was not within the corporation tax provision of
the tariff act of Aug. 5, 1909. See also Zonne v. Minneapolis
Syndicate [citation omitted]. See also Massachusetts Trust.”95
(Emphasis added.)
Other Business Trusts
The definition of a Business Trust has been clarified in the court case of
Berry v. McCourt.96 Here it states that if a business is put into a Trust by a
Grantor and there are Beneficiaries who did not also contribute to the
original corpus, then a Trust has been created. If a business has been put
into a Trust by partners, and each contributed his or her own funds, then it
is not a Trust, it is a partnership.

As noted earlier, Business Trusts have been defined as “entities which
provide a medium for the conduct of business and the sharing of its gains ...
operating under a written instrument or Declaration of Trust ...”97 Such a
broad definition grants Trusts much leeway, but it also confuses
newcomers.
The Massachusetts Trust is so well-known that it has become nearly
synonymous with the term “Business Trust”. Yet, it is no longer necessarily
the Business Trust of choice, and under our definitions it could be an
Unincorporated Business Organization more than it is a Business Trust;
read further for greater detail.
While all Business Trusts contain one or more business entities which they
hold or govern, certain others evolved for different uses. Other major
categories of Business Trusts include: Unincorporated Business
Organizations (or “UBOs”), Management Trusts and just plain old
“Business Trusts” of various descriptions.
Management Trusts manage investments held by other Trusts. They hire
managers to run the other Trusts or businesses.
Many Trustees of Business Trusts decide to get Employer Identification
Numbers (EINs) to ease their movement through commerce. Although this
procedure is not mandatory, we recommend it to make operations easier.
Without it, it becomes difficult to use a Trust. For instance, it will not be
possible to open a U.S. bank account without an EIN.
Unincorporated Business Organization (UBO)98
The Trust that is the most misunderstood is the UBO. It is more similar to a
partnership than a Trust, as it may or may not involve the family members.
The UBO is set up when Trustees are in place and the Grantor funds it. That
is, he or she gives the assets to Trustees, who open bank accounts in the
name of the UBO.
A true UBO occurs when the Grantor has funds to invest and requests
others to add funds to the UBO; in both cases the Trustees issue Trust
Capital Units These are similar to shares in a corporation, but they do not
have voting rights. The Grantor shares control with other Trustees.

The remaining investors become the TCU holders, known as the
Beneficiaries. In the UBO, it is more likely the Grantor, who has the
greatest vested interest, continues to run the organization with other
Trustees. If the Grantor is investment savvy, he or she makes investment
decisions with the other Trustees.
The percentage of the Trust Capital Units held by the investors determines
the percentage of profits at the end of the year. The investors are
responsible for any taxes due for funds received. The only difference
between a Trust and a partnership is the UBO has no Beneficiaries who did
not contribute to its set up. Otherwise, it is the same as a Trust. For
example, it is handled through a Board of Trustees which holds the funds in
the name of the Trust, and those who put funds into the Trust have only
beneficial Interest. This means they have no legal claim on the funds in the
Trust, and are subject to the distribution determined by the Board of
Trustees. Therefore, any lawsuits against the Trust are only against the
Trust, not against the Beneficiaries, who were the original investors. The
Beneficiaries are affected adversely should the UBO either lose money
through investment complications or by legal challenges, because their
distribution will be less.
There have been some advertisements about UBO’s that list a notable
amount of advantages. Here is a discussion about these claims.
There is no yearly fee.
◯  This is mistaken because Trustees must have a vested interest.
That is, they are financially affected should the Trust gain or lose.
They receive, at the least, payment either based on the number of
Trust Capital Units they hold, or on a percentage of distribution.
Limited Liability.
◯  This is true for the investors, not necessarily true for the Trustees
who are responsible for the funds in the UBO.
◯  Although the Trustees are not personally liable if they adhere to
the strictures within the Trust Indenture, they are legally
responsible as a Trust group for the investments.

Privacy: All officers or Members of the Board of Trustees do not
have to be revealed.
◯  This is true occasionally. It depends on the investments. For
instance, before a Trust can invest with a stock brokerage firm, all
Board members involved with the transactions are identified.
◯  Information needed includes Social Security Numbers. Other
types of investments may not need disclosure the Board of
Trustees.
Your financial records are private under Common-Law and
require notification and a court order to be seen.
◯  This is true, but in reality, as you have seen through many
television programs, the law enforcement agencies use pressure.
Privacy is only as strong as the ability of the Trustees to say
“No”.
◯  If the Trustees cave in, there is no privacy. This is why it is so
important that Trustees be trained in legal, accounting and
administration procedures.
Privacy in personal and business dealings.
◯  How savvy your Trustees are determines how well they can get
around many of the challenges where facts about the UBO are
requested.
Greater control over what you acquired and accomplished.
◯  This is false. Surrendering assets gives control to the Board of
Trustees. Only then will the UBO qualify as a legal organization
under the current laws. The only control held by the Grantor lies
in the power to determine distribution and investments.
◯  A couple of the other controls that could be retained by the
Grantor are to allocate between corpus and income, and to
distribute corpus.99
Reduced exposure from lawsuits and claims of adverse parties.
◯  This is true.

Reduced liability when owning and operating a high-risk asset or
performing high-risk professional services, thereby saving money
on high-priced insurance premiums.
◯  This can be true if the UBO is set up correctly. It is best, though,
to put high-risk services or equipment into a separate Trust.
◯  Lease large equipment, instead of owning it.
◯  Excess funds earned by a high-risk business should be put into a
separate legal entity, preferably another Asset Holding Trust.
Increased profits by reducing business costs.
◯  This can be true; it depends on the sophistication of the
accounting protocols and Board of Trustees.
Flexibility and creativity in personal and business planning.
◯  This is dependent on the abilities of people involved in the Board
of Trustee as well as the terms of the Indenture.
Simplicity of doing business in this increasingly complex society;
including buying and selling big-ticket capital assets, businesses
and real estate.
◯  We cannot say it is simpler; we can say it is more private.
Preserve and distribute assets at your sole discretion.
◯  This is only applicable to the desire and will of the Trustees, who
may or may not accede to the will of the Grantor, and to the terms
of the Trust Indenture. A well-trained adverse Trustee will not
always agree with the Grantor’s wishes.
Avoid probate and eliminate death taxes.
◯  This is only true if the Trust administration handled all legal
documents correctly and has investments in the name of the Trust.
Reduce or avoid federal and state income or franchise taxes.

◯  The Trust does not avoid taxes. It uses passthrough accounting to
shift the tax burden to the Beneficiaries.
◯  This may lessen the overall tax depending on the tax brackets of
the Beneficiaries.
The Trust may develop its own credit and investment program to
provide security and protections for the Beneficiaries at retirement
.
◯  This is true. The problem, though, is that most financial
institutions attach only to a person with a credit rating. They
accept a corporation as a person, but most of them do not accept a
Trust.
◯  To set up a credit history, the Trust assets are usually in the
millions.
Business Trust Considerations
The IRS has taken a position there is no such thing as a Business Trust.
Suspicious of the name, it seeks to destroy this business organization when
it can. Their challenges are based on the strategy of proving there is no
Substance of Transaction.
After a good amount of experience, we agree with the IRS’s reasoning.
Usually, a Trust is not a good place for sole proprietorships. This is because
the engine that drives the business is usually the Grantor. Without this
motivated person, the Trust ceases to have a cash flow. Whether or not the
Grantor signs his or her name on checks and legal documents, the Grantor
holds the Trustees hostage because the Grantor is the sole source of funds.
This is the same as a Grantor Trust, as he or she controls the cash flow.
Substance of Transaction applies here, because within a Trust, the Trustees
need to be in control of the funds. Trustees cannot be held to the will of the
Grantor. We recommend that if a business is exchanged into the Trust, it be
changed to a partnership, making the Trust a partner and recipient of a
percentage of the cash flow. This allows the business owner to reign over
his or her domain, and a cash flow goes directly to those who work for him

or her while the Trust reaps a large percentage of the increase. The business
pays its taxes accordingly, and the Trust can pass through the profits to
Beneficiaries.
Trusts and Partnerships: Business Conduct
Trusts and partnerships need to create a separate stream of income which
cannot be attributed to a sole individual.
In a Trust, most of the funds created need to be through income-producing
investments. This includes investments in promissory notes, joint ventures,
rent collection, and stock portfolios.
The partnership usually produces goods or a service. If only one partner is
paid, then it is not a partnership, and if the accounting methods do not
support a partnership, then it is a sole proprietorship.
Substance of 
Transaction 
applies here, 
because within a 
Trust, the 
Trustees need to 
be in control of 
the funds. 
Trustees cannot 
be held to the 
will of the 
Grantor.
For a partnership, the agreement cannot specify that only family members
may participate because it can then be judged as a Testamentary substitute
—which means funds go into Probate Court to be distributed. If only family
members are involved, it should be a Trust, not a partnership.

For a partnership, the 
agreement cannot 
specify that only 
family members may 
participate because it 
can then be judged 
as a Testamentary 
substitute—which 
means funds go into 
Probate Court to be 
distributed.
In a partnership, all partners need to receive a distribution. In a Trust,
though, while the Grantor is alive, distribution can be at his or her
discretion. If most of the distribution, though, is given to the Grantor, the
Trust will be treated as a sole proprietorship for tax purposes.
In a partnership, there needs to be a provision for continuation of
management. If not named in the agreement, then the partnership can be
disqualified. In a Trust, there also need to be provisions for Successor
Trustees.100
Summary
If setting up a Trust or a partnership, you need to have nontax reasons for
forming either organization. In other words, you will need to think of others
to make it work. If a Trust, it must be set up for the benefit of the
Beneficiaries, and although the tax savings may be the hidden motive, keep
it to yourself. You only want what is best for the Beneficiaries, nothing else.
The benefits to you will happen without question.
Other Trusts
The Holding Trust or Pure Trust

This most basic, bare-bones Trust is established on the format we have
already seen. It has an agreement (contract) whereby one party (Trustee)
promises to hold assets granted to him or her by a second party (Grantor)
for the benefit of a third (Beneficiary). While we have mainly been
considering active, dynamic enterprises, in this case the keyword is hold. A
“Pure” Trust is a static entity, not engaging in business beyond, perhaps,
receiving and distributing interest which accrues to it from the assets. It is
Irrevocable and should not have an EIN. The most common static asset is
residential property. If rented, the Management Trust or another business
entity so appointed handles transactions through a management agreement.
Of course, as with any other distribution, taxes may be due on any funds
distributed as profit.
A “Pure” Trust 
is a static entity, 
not engaging in 
business 
beyond, 
perhaps, 
receiving and 
distributing 
interest which 
accrues to it 
from the assets.
The Asset Holding Trust also is based on Trust Capital Units and issues
certificates to the Beneficiaries and Officers of the Trust. For Trusts to
remain separate, the Beneficiaries or combinations of Beneficiaries must be
different in each Trust.
Statutory and Common-Law Trust Differences
The process through which Beneficiaries are served by one of these is
different from the other. When there are conflicts and confusion within a
Statutory Trust, we are sometimes consulted to provide choices. As a result,
we get to see how various “Brand X” Trusts work. So, here are some of the

differences and what they mean to both the Trust Grantor and the
Beneficiaries.
Trustee Motivation
Of the Irrevocable Statutory Trusts that we have come across, few have an
adverse Trustee who had “substantial adverse interest”101. They have a
Trustee getting a percentage of distributable income or an annual fee. This
fails to motivate the Trustee to take particular interest in aggressively
increasing the Trust assets for the welfare of the Beneficiaries’. Instead, the
Trustee takes a percentage of the distribution, year after year, enough to be
satisfied. For example, corporate bankers who become Trustees are not
considered Trustees with “substantial adverse interest.”102 They have their
set percentage and do make some investment moves to increase the assets,
but they do not take advantage of reasonable ventures where the earnings
could be substantial.
Grantor’s Control
Also, we have seen where the Grantor of a Statutory Trust has not preserved
his or her involvement in the Trust administration, as allowed by the
Internal Revenue Code.103 What we see, instead, is that many professionals
have taken over investing funds for the Beneficiaries, and, fearing to lose
money, or lacking any particular interest in multiplying the funds, have
been too cautious. If the Grantor remained as an adviser, or kept the power
to control where the money would be invested, the fiduciary would be
relieved of that risk-taking responsibility. To the one who sets up the Trust,
this risk-taking is a necessary part of multiplying the assets, and the Grantor
might be skilled in this aspect of asset accumulation.
Trustee’s Personal Interest
The Statutory Trustee, who might be a stranger to the Beneficiaries and,
sometimes, to the Grantor, ensures accounting and legalities are in order,
and is not involved with the personal interests of the Beneficiaries. Usually,
little or no communication exists between the provider and the receiver of
funds, so the Beneficiaries do not have the advantage of a mentor. Wisdom

passed on to the Beneficiaries from the Grantor is lost, as is the family
history, which can be well kept in the Private Trust.
High Taxes and Distribution
Sometimes Trustees are unaware of the advantages the Trust has in giving
out income to the Beneficiaries. We have had telephone calls about the
excessively high taxes a Trust must pay. The callers fail to understand the
lawmakers do not expect a Trust to keep all the money it earns, but to share
it. Further, the callers or Trustees have little concern about how much tax
the Beneficiary must pay, only that the Trust should not pay the tax. While
there are many ways to make a distribution without overburdening the
Beneficiary with taxes, this is sometimes not the Trustees’ focus.
Alternatively, the Beneficiary can pay taxes on funds not received so the
Trustees may reinvest the funds for long-term greater gain. This is legal and
addressed in the IRS Publication 17:104
Estate and trust income. An estate or trust, unlike a
partnership, may have to pay federal income tax. If you are a
beneficiary of an estate or trust, you may be taxed on your share
of the income shared or required to be shared to you. However,
there is never a double tax. . . .
Current income required to be distributed. If you are the
beneficiary of a trust that must distribute all of its current
income, you must report your share of the distributable net
income, whether or not you have actually received it.
Current income not required to be distributed. If you are the
beneficiary of an estate or trust and the fiduciary has the choice
of whether to distribute all or part of the current income, you
must report:
1. All income that is required to be distributed to you,
whether or not it is actually distributed, plus
2. All other amounts actually paid or credited to you up to the
amount of your share of distributable net income.

Conversion of Assets
The statutory system usually provides for only an income account, and
possibly some property that yields a monthly or quarterly cash flow. Other
assets which the Beneficiaries could use, such as a family home, are often
quickly converted to cash and invested, either on the death of the Grantor or
when the Trust is set up. This scenario could apply to a private Common-
Law Trust, but it is not needed as it is with a Statutory Trust. Statutory
Trusts cannot hold a private business, and, if one is left by the death of a
Grantor, it is immediately sold to reinvest the funds or make a cash
distribution. In a Common-Law Trust, though, the business can be carried
on by the children of the Grantor, or converted to cash—but why convert a
profitable business into cash?
Provided the original Grantor left it in Trust to the children, or is not
primarily involved, the Common-Law Trust can keep a business
The Grantor’s Share
In the Common-Law Trust, the Grantor holds Trust Capital Units, which
represent a percentage of the corpus of the Trust, and receives a pro rata
share of the profits. In a Statutory Trust, the Grantor surrenders ownership,
and may be unable to get extra funds if needed. In a Common-Law Trust,
the Trustees may allow the Grantor to cash in some Trust Capital Units or
may give him more funds through a loan, or a quarterly distribution of the
cash flow, if the Trust Indenture allows. This entire area has been grayed
out by current IRS policies, and CPAs have few to no guidelines.
Why A Common-Law Trust? Personal Advantages
Asset Protection
If thieves and other types of con artists do not know where and what the
assets are, then they are not inclined to scheme to get them. One of the
many reasons to put assets in a Trust is to be invisible on paper. Should the
government or others want to take what they think you have, they cannot

find it because it is not in your name, and not yours anymore. A Common-
Law Trust is designed to allow the Grantor to live any life style he or she
wants, and to take the necessary risks in life without the worry of having
assets seized.
Inheritance
We have all heard the stories of how someone’s relative passed on and the
lawyers and taxes devoured almost all the estate before the inheritors got
their portion. If any Irrevocable Trust is managed correctly, then death does
not cause a change of ownership. The ownership of the assets is in the name
of the Trust, and in the Common-Law Trust they can effectively be
perpetual through the renewal of the contract.105 Therefore, if mother dies
and her assets are in Trust, the assets remain in Trust and can be used by the
Beneficiaries, or sold to convert them into a steady cash flow for the
Beneficiaries.
Reasons for an Irrevocable Statutory or Common-Law
Trust
Would you rather pay the IRS or give the money to people who support
you?
With a Trust, the people who support you are paid first, and this is treated as
a business deduction of the Trust. The IRS receives taxes on the money paid
to the Beneficiaries.
For example, if your income puts you in the 40% tax bracket, then you are
most likely seriously looking for a way to reduce income tax. After setting
up an Irrevocable Trust, the 35% to 40% of the money slated for the IRS is
now deductible as fiduciary fees, payments to Beneficiaries and business
expenses. You not only reduced your personal tax burden, but your Trust
now supports an army of people to help in building a solid asset basis to last
for generations.
Here are some of the common legal and tax advantages of any Irrevocable
Trust:
◊ Reduce gross estate for estate tax purposes—Everyone has an estate.
An estate refers to the sum total of what you own. If you have a life

insurance policy, investment accounts, and three homes, you get
interested in reducing your gross estate so you fall into a lower tax
bracket.
◊ Shift the income tax burden to those in a lower tax bracket. What if,
instead of paying for your child’s education, you placed money in a
Trust, and the Trust paid for the education? Suddenly, you land in a
lower tax bracket!
◊ Eliminate probate and other estate costs. With a Trust, there is no
probate or inheritance tax because when assets are placed in a Trust,
they can be perpetuated generation after generation. Not attached to a
person who dies, all issues of probate and inheritances taxes end.
◊ Solutions to liquidity problems. You bought your house for $50,000.
Now, it is worth $250,000. If you sell it, you owe capital gains; if you
exchange it into an Irrevocable Trust, the tax basis of the home
changes. Fair Market value at the time the Trust receives the home, is
the value of the asset, thus lowering the capital gains if the Trust sells
the home later. Of course, the reverse is also true. If the value of the
real estate decreases, then the Trust suffers. Some counties are now
changing their rules about a change of ownership into a Trust without
reassessment of the property value which results in paying more taxes.
Some of them insist they will only allow the transfer into a Trust if at
least one Beneficiary is a family member. This presents a conflict of
privacy, for if Beneficiaries need to be named, then this information
becomes public record. In the chapter on Privacy, we went into detail
about why no Beneficiary’s name should be made public.
◊ Provide independence and security for the Beneficiaries. Perhaps you
have a second spouse who does not get along with your children. If
you die first, your children may lose everything. If you create an
Irrevocable Trust, you prevent anyone from interfering with the
inheritance status of the children or any other recognized
Beneficiaries.
◊ Provide significant tax savings to the Trust Grantor. You can continue
living in a comfortable life style, while drastically reducing your tax
liability.
◊ Provide financial protection for a relative who cannot take care of
himself or herself. The Irrevocable Trust is an excellent way to set up
competent care, at a notable tax advantage to the Grantor of the Trust.

◊ Maximize long-range estate planning for the benefit of future
generations. The Irrevocable Trust gives incredible flexibility and
opportunity to increase assets without significant tax increases.
◊ Offers protection against personal lawsuits. How can you be sued for
what you do not own? Legal title belongs to the Board of Trustees.
Characteristics of the Common-Law Trust
Offers protection against personal lawsuits. How can you be sued for
what you do not own? Legal title belongs to the Board of Trustees.
A properly trained Board of Trustees provides strong privacy under the
laws of the United States.
A Common-Law Trust is a lawful entity and lives on after the death of
the Grantor.
Assets properly put into the Trust are safe from probate.
Offers large personal tax advantages.
Through restructuring of assets, cash flow can substantially increase.
Because of gifts that can be given from a Trust, recipients of these
gifts, that is, Beneficiaries, do not pay tax until the gift is more than
$12,000.00106 a year for each Beneficiary.
Trust Capital Unit Holders have no voting rights; otherwise, the Trust
can be judged a corporation.
Trust management is in the hands of the Trustees.
No document recording requirements. “The Trust Contract is carried
out by private parties for personal purposes, and is not registered with
the corporation Commission.”107 Contracts are not registered at the
County Recorder’s Office.
Issues at least 100 nonvoting Trust Capital Units in the form of
Certificates.
Not dependent on state or federal governments for its existence.
Providing proper procedures are followed, may engage in lawful
business enterprises anywhere in the world.
If its Indenture so specifies, the Board of Trustees may speculate in
any venture, including buying commodities, municipal bonds,
racehorses or even gaming.
Not limited to conducting business in any one state.108
Not subject to probate.

Personal Liberty
The Common-Law is rooted in the belief that people have fundamental
rights under the law.
It has survived, moreover through several periods of political
crisis which seriously disturbed the balance between (sic) three
elements fundamental to the English constitution–the
prerogative of the Crown, the privileges of Parliament, and the
individual liberties of personal security, personal liberty, and
private property.109
The Irrevocable Common-Law Trust, based in ancient tradition, survived
hundreds of years of political turmoil. The rules are basic to human nature.
People use the Common-Law Trust to unite family, increase bonding and
camaraderie, and to unite in a common cause—the increase of assets for the
benefit of the Beneficiaries.
You are probably getting a sense of how this Trust game operates. There is
much more to know, before you are ready to make any serious decisions.

Chapter 18
Offshore and Foreign Trusts
The Statutory Trust is no longer applicable in this discussion. We suddenly
step off the map into a new reality. The subject of jurisdiction now becomes
one of our major concerns. That is, who has the power to settle disputes
about Trusts? The answer to this question involves situs. Situs means where
the Trust physically does business.
The Difference
Contrary to popular opinion, the definition of the United States is not what
most people think. The federal government, identified as the United States
of America, is under contract by the 50 states, administers among them and
between them. The 50 states are superior to the federal government, except
where political pressures blurred the lines.
IRS is Not an Agency of the United States
Also, the Internal Revenue Service (IRS) is NOT authorized by the federal
government, nor is the Internal Revenue Code (IRC) federal law. There are
no records of its being codified, as the IRS is not part of the United
States.110 The following is a quote from Dan Meador, a well-known
researcher of the tax laws. In his summary111 of the Diversified Metal
Products case referenced in the footnote he reports:
Diversified Metal was served a notice of levy for money owed
to the T-Bow Trust. To discover rightful ownership, Ohman filed
the interpleader action for Diversified Metal. In his complaint,
he stipulated facts. His fact #4 is as follows: “Defendant Internal

Revenue Service (IRS) is an agency of the United States
government.
In her January 24, 2000 response, U.S. Attorney Betty H.
Richardson made the following correction to Ohman’s
averment: “Denies that the Internal Revenue Service is an
agency of the United States Government but admits that the
United States of America would be a proper party to this action.”
(Emphasis added)
The key point here is there is a distinction between the United States
Government and the United States of America. They are, clearly, two
different jurisdictions. The United States of America, a corporation,
manages the several states. The united states form “We the People” of the
U.S. Constitution.
We realize these statements will probably add to a growing confusion about
the issues of authority and jurisdiction. The knowledge needed to
understand properly what is going on is not part of this book. For you to
track the intricate web of the Federal Reserve Bank, its collection agency
the IRS and the federal government, takes times and patience. Later in this
chapter we refer you to a book written by Eustace Mullens about the
Federal Reserve. That is a good place to start. The curious will need to put
the pieces of an intricate puzzle together from there.
This basic understanding is not only a motive for forming a Domestic
Foreign Trust, but is critical knowledge when you form any other
nonstatutory entity. You need to know the limits and liabilities. You can be
ignorant and get by with any Statutory Trust, but you cannot be ignorant of
both laws and tax consequences when you get involved with Domestic
Trusts, Foreign Trusts and Offshore Trusts. No, they are not the same.
Many have gotten “caught” in the subgame of Offshore Trusts, and few
know what a Foreign Trust is. Because it appears you do not need to pay
taxes if funds are in a foreign country, the entire issue of Offshore Trusts
becomes a temptation. Although we will mostly avoid the major and deeper
issues of taxes within this book, we will address the issue of taxes in
reference to Offshore Trusts.

Venue
For those who are unaware of jurisdictional issues and why they are
important, it works like this: the place (venue) where you operate your life
has certain rules and procedures. What rules you break, determines what
judge you go before. Some offenses, for example, are against a city or
county, some ordinances against state laws, and some against federal laws.
The same is true with a Trust. The place of venue, the situs of the Trust, is
stated in the Trust Indenture. For example, the place can be the State of
California, or it can be California state. These are two different venues. The
first one is where a Statutory Trust operates; the second is where a
Domestic Foreign Trust operates. Domestic means within the 50 states of
the United States, not the United States of America, a corporation. Foreign
means “foreign to the federal government,” also referred to as the U.S.
Government. All 50 states are foreign to the U.S. government–and no, we
are not hallucinating—“The United States government is a foreign
corporation with respect to the state.”112
Evolving over the past 200 plus years, the federal government developed an
intricate, confusing web of lies and deceit to hide the truth from the
American people.
United States Courts
We have not lost our mind. The IRS, though, recognizes the difference, and
here are the legal cites so you can see we did not make this up. 26 U.S.C.
7701a (30)(E)(I) defines a United States person as “(E) any Trust if a court
within the United States is able to exercise primary supervision of the
administration of the Trust.” At (B) in that same section it states “the term
‘foreign Trust’ means any Trust other than a Trust described in
subparagraph (E) of paragraph (30).”
This means Trusts that do not have court-appointed Trustees are not United
States persons.
States are Separate Countries

You may be frowning in wonder at what just happened. Let us fill in the
gap. The 50 states are separate countries from the federal government; the
United States of America is a corporation that manages the 50 states. The
Trust can be under the jurisdiction of the United States of America if it is
managed by a court-appointed Trustee. It can be under the jurisdiction of
the states if it is not administered by a court-appointed Trustee, thus making
it foreign to the U.S. Government.
Under this definition, if the rules and regulations—the law of the Trust—
establish clearly the Trust operates in a Common-Law venue, then it is a
Foreign Trust in reference to the corporate United States. We think you are
now beginning to get the picture of why many lawyers have not been
trained in this particular realm of Trust law.
We will be using the word foreign to indicate outside of both the corporate
United States and in another country. If we capitalize Foreign Trust, we will
be talking about a Common-Law Trust, or any other Trust that is Domestic
in the United States.
Do not confuse the issue of Foreign Trust with offshore entities. These are
two separate issues. Not only is a California Trust set up under Common-
Law classified as Foreign, so is a Trust set up in another country if it is not
controlled by a U.S. Court. An Offshore Trust could be a Foreign Trust.
Unless the assets of your Domestic (Foreign) Trust grow large or you own
foreign property or investments, you do not need to “go offshore” to set up
more Trusts or other businesses. The Common-Law Trust can invest
offshore and manage offshore investments.
Many people who choose Offshore Trusts do so merely to avoid taxes
(sometimes without examining the downside). If taxes form your
motivation, the Offshore Trust you consider may not be set up properly and
may be what the IRS terms “abusive.” We will go into much greater depth
on this issue in Volume II. At this point, though, we simply want you to get
the idea.
The Offshore Trust is essentially the same as a Domestic Common-Law
Trust but established outside the fifty states. The Offshore Trust uses a
foreign Trustee and may have a bank account either in the country of its
situs or in the United States. It does not need a U.S. EIN. This may

erroneously lead some to believe they will not have to pay federal income
tax from such a Trust.
The proper method for setting up an Offshore Trust is the same as for
Domestic Trusts, except the corpus is located in a foreign jurisdiction and
the rules of the foreign country need to be considered.
Distance of Trustee = Disinterest
Offshore Trusts have distinct disadvantages. You must deal with offshore
Trustees who may be unfamiliar with your particular enterprise and its
stateside business environment. If problems arise, you may have to travel to
the country where the Trust is set up and contend with the applicable laws
in that jurisdiction. These may be unfamiliar and written in a foreign
language. Usually, the Trustees will not come to the United States to appear
in court for you if your problems are in the United States.
Money Laundering
The Money Laundering Act of 1998113 targets offshore entities (including
Trusts) as well as many offshore investment schemes. If you have an
offshore bank account and are merely accused of money laundering, your
offshore funds may be confiscated. This act increases the government’s
power to force forfeitures by creating a rebuttable presumption114 the
source of the accused’s U.S. funds (Offshore investments) is illegal. It
singles out “shell” corporations (“international business corporations” or
IBCs) and bank accounts held in nations with financial secrecy laws, on the
premise the funds in them are tainted and should be seized.
If accused of money laundering, with your assets confiscated, you will be
able to contest the seizure in a U.S. court115 only if you waive the privacy
protection granted by the host country. If you agree to open your books to
prove your innocence, you might spend much unrecoverable time and
money in the effort with no guarantee of exonera tion. Even an eventual win
in such cases is often a Pyrrhic victory (see Glossary) which leaves the
business and its principals exhausted and wondering what they have won.
How strenuously this law is enforced is a direct reflection of the great

reward for the IRS, SEC, etc. Motive is enough to make Offshore Trusts
targets.
If accused of 
money laundering, 
with your assets 
confiscated, you 
will be able to 
contest the seizure 
in a U.S. court 
only if you waive 
the privacy 
protection granted 
by the host 
country.
As we know, communications and international treaties continue to shrink
the world, and the result is that Offshore havens are becoming fewer and
less secure. Rather than counting on obvious distance and the kindness of
strangers, both of which may prove illusory, most people who make fully
informed decisions choose to buy a properly designed Domestic Foreign
Trust Indenture which can withstand any legal challenge. Then, they take a
hands-on approach to both learning about and running their Trusts and stay
in touch with Trustees with whom they are familiar. Further, Trustees who
understand jurisdiction are worth a million dollars right there, because they
can defend against any onslaught from the IRS or other agencies looking
for a quick trip to the bank.
Trustees who 
understand 
jurisdiction are 
worth a million 
dollars right there, 
because they can 
defend against any 

onslaught from the 
IRS or other 
agencies looking for 
a quick trip to the 
bank.
Many people have questions about the differences between an Offshore and
Foreign Domestic Trust. Since the IRS is fond of breaking Offshore Trusts
for the same reasons it finds Domestic Trusts faulty, there is not any
difference between the two types of Trusts. Both need a Grantor, Trustee,
Beneficiaries, and to prove Substance of Transaction.
There is a difference, though, between each of the Trusts regarding which
one is suitable for what types of assets.
If the assets are physically found in a foreign country, you may need an
Offshore Trust and will need an Offshore Trustee located in the same
country. Taxable funds created here in the United States of America,
though, if taken offshore to scam the tax agencies, can bring many
complications and grief, including allegations there has been money
laundering.
The Offshore Trust must be created under the laws of the country in which
the Trust is set up. Many countries do not allow Trusts, but instead use
International Business Corporations (IBCs).
Grantor/Trustee Relationship
We recommend the Grantor should always know the Trustee and establish
trust between them. Too many people have lost money by thinking they
avoid taxes through placing money Offshore, and then the Trustee takes off
with the money, or the IRS breaks the Trust.
The same rule applies to a Foreign Domestic Trust. Why place money into
the hands of stranger? A Trust is about trust.
If, for some reason, you have assets placed in an Offshore Trust, but the
assets are physically located in the USA, you can be challenged, audited or
involved in legal technicalities. If you have an offshore Trustee, the odds

are, the Trustee will not come “onshore” to rescue you. The purpose of a
Trustee is to protect the assets for the Beneficiaries. Some Offshore Trusts
are holding companies for people’s money, and are not genuine Trusts
holding assets for Beneficiaries. Therefore, the Trustee has no interest in
showing up in court to support anyone.
If you are thinking of buying an Offshore Trust, understand the issue is
always substance of transaction. You cannot hide behind the paper of a
Trust Indenture or Declaration of Trust when the actions taken by those
managing the Trust do not support the Trust’s purpose to benefit of the
Beneficiaries.
U.S. Citizens
Taxation works this way: if you are a U.S. Citizen, no matter where in the
world you go, you owe taxes to the IRS on your taxable income. It does not
matter if you have a job in Mexico, Uganda or Russia. You earned it, you
owe it.116
If your Trust is in Belize, and the money going into it was earned in the
United States, the Trust may owe taxes. If the money going into the Trust in
Belize was earned in another country, that country probably wants its taxes
paid too. If any money in the Trust in Belize is paid to a U.S. Citizen, that
person must pay taxes on the money received.
If your Trust is in 
Belize, and the 
money going into it 
was earned in the 
United States, the 
Trust may owe 
taxes.
DO NOT set up a Trust to avoid taxes. Set up a Trust for the Beneficiaries,
who pay the taxes. Few people know the inner workings of the IRS. If you
understand the Beneficiaries pay the taxes, you will find the best Trust.
“But, Judge, I Wasn’t Money-Laundering!”

Because of certain RICO117 laws, some Grantors of Offshore Trusts
discovered they may face federal criminal charges if they try to bring their
funds back onshore. This traps them in a Catch-22: declare the income and
pay taxes on it, or leave it unreported and run the risk of having it seized—
or worse, going to jail themselves. At this point, many become frustrated
and disenchanted with the Offshore solution. “After all,” they say, “what
good is an Offshore Trust if it doesn’t help me avoid taxation legally?”
Only a properly set up Irrevocable, Domestic Common-Law Trust can
move Offshore money back home without risk. That sounds strange, but it
is true. The reason is simple: a well-designed Domestic Foreign Trust can
use tax savings built right into the Internal Revenue Code (IRC) itself,
including the technique of passing profits straight through to the
Beneficiaries as a distribution. The Trust claims the “income.”
The Only Need For Offshore Trustees
Much confusion and misinformation exist about the entire subject of Trusts.
This begins in sections of the IRC which should be ruled void for
vagueness, to Irrevocable Statutory Trusts designed only to exploit specific
tax loopholes. Add to this Common-Law Trusts, which are no more than
paper scams, and Offshore Trust companies which promise the world.
Sadly, many well-intentioned people, to protect their assets from taxation,
move them Offshore, only to learn they have been misinformed or misled.
Here is a hint. If you understand that you are a slave of the rich, then you
need to find out what the rich legally do to reduce and even avoid taxes. If
you follow along in their footsteps, you are more likely to be mistaken for
one of them.
The only ones who may need an Offshore Trust are those who own physical
property in another country. In such cases, they should have at least a
Trustee who is a resident or citizen of the foreign country. He or she
represents the Domestic Trust in the country where the assets are found, or
a Trust structured under the laws of that country, managed by people in that
country. For example, if you have a Domestic Trust which holds property
placed in France, one of the Trustees should be a French citizen or resident.
In every other circumstance, a Domestic Trust can handle all transactions

easily and efficiently, well within the guidelines of U.S. tax laws, gaining
maximum tax benefits and running no risk of violating the RICO statutes.
Investments and Taxation
When making offshore investments, many people hire Offshore Trustees
because investment programs require that they use an Offshore Trust or an
IBC. This is acceptable provided they do not count on it to protect them
from the U.S. income tax. Remember, investment income and your wages
are taxable no matter where it is earned if it is paid out to a U.S. Citizen.118
Your Offshore Trust with a bank account in a U.S. Bank can receive the
funds, but once it gets into the hands of a U.S. Citizen, it is taxable. If a
distribution or cash is sent to you, you owe the tax. Your Social Security
Number makes you liable for it regardless of where you live or where the
payment originates, or whether or not you use your Social Security Number.
The best way to handle this is to channel the funds into a Domestic Trust
whose trained Trustees manage the distribution, reinvestment, tax reporting,
etc.
Internet Traps
Perusing the Internet, we found some strange ideas about Offshore Trusts.
Here is our own take on them for your benefit.
Asset Ownership
As a Frequently Asked Question (FAQ) one web site asks, “Who owns the
assets?”And then answers correctly: “The assets are owned by the Trust.” In
other words, the offshore Trustees (usually strangers to the Grantor) have
control and ownership of the assets. You hope yours will prove honorable,
but some Offshore Trust Indentures we reviewed are poorly written. The
rights of the Grantor use hazy terms. We are doubtful of the legality of the
Trust or its real intent.
Do not assume all Offshore investments or Trusts are questionable, though.
We do not claim any expertise in this arena. Our experience with the
Offshore Trustee who would not come to the United States, though, is real
and firsthand.

No-Interest Loan Strategy
One web site promises prospective clients that, once their Offshore Trusts
are set up, they can draw all of their funds out of them in no-interest loans.
When we asked one veteran CPA119 about this tactic, his response startled
us.
The rules are vicious and very demanding. The loan proceeds
need to be reported to Uncle (Sam), and default on loan
payments triggers distribution of income. It is possible to be
taxed on the same money twice if anything goes wrong. It is a
tangled web!
Further, before the Trustees can give loans to anyone, the Trust Indenture
must give the power to the Trustees, and must describe under what
circumstances loans can be given. No-interest loans are no longer tolerated
since too many “scam” Trusts tried this scheme. A loan to or from a Trust
must be at a reasonable lending rate.
Risks v. Guarantees
An FAQ on another web site asks, “Can I lose money by putting it into a
Trust?” The company posting that site guarantees that its customers’ funds
will be safe. This hopeful assertion leaves us asking how it can guarantee
the stability of the local government (especially in a small country), let
alone the future of the entire financial world? So far as we know, money is
not safe anywhere, life itself is a risk, and anyone who guarantees the
security of your money—even the FDIC has a limit—should be viewed
with the utmost skepticism. Besides, we know of some Offshore programs
which simply cannot pay anyone back. Of course, some others pay
wonderful returns, but a guarantee? Well, really!
Domestic Trusts: What Confusion?

If you ever hear the oddball complaint that Domestic Trusts should be
avoided because U.S. tax and legal rules are unclear, know that you are
listening to a poor student, an Offshore Trust salesperson or both. To us the
rules boil down to just two points: 1) get real. That means get a real adverse
Trustee, real Beneficiaries and a real Grantor. 2) Use passthrough
accounting, so the Beneficiaries pay the tax (at lower rates and after
expenses are subtracted). Simple enough for you?
Oh, there is one other small point which even most Offshore Trusts omit:
training . To operate a Trust correctly, the Trustees and officers must know
exactly what they can and cannot do—and how to do it. Funny how often
that little “detail” gets overlooked.
So, the basics are simple, but the Trust case law is extensive, and you would
be smart to read some of it before creating your Trust. We have a set of
three key cases which we named “When Is The Grantor Taxable?” This set
is in Volume II.
Not only is the Common-Law area mostly lacking suitable training for both
Grantors and Trustees, but even lawyers create intricate Trusts, giving two
inches of paper to their client without instructions on how to do all the
transfers and other paperwork. Just how many people do you think can do it
correctly without help and training? Few indeed.
Cayman Islands
Back in August of 1999, the Los Angeles Times120 reported that
investigators of an international credit card fraud traced advances to the
Cayman Islands. On this pretense the secrecy laws of the Cayman Islands,
long known as “the Switzerland of the Caribbean,” were breached.
In November of 2001, the Cayman Islands Governor Peter J. Smith,
Treasury Secretary Paul O’Neill of the U.S.A. and Christopher Meyer, the
British ambassador to the U.S. were involved in a signing agreement to
share tax information and to track down violators.121
This paves the way for audits to uncover tax evasion, drugs, money-
laundering and other misdeeds.

The article states the U.S. has lost $70 billion in tax revenue each year
because of Offshore tax havens, but we need to correct this statement. The
Federal Reserve lost $70 billion in tax revenue, since none of it goes to the
U.S. government anyway.122
We would like to remind our readers the powers that rule this world can
bribe anyone, anywhere, any time, and if bribery does not work, blackmail,
extortion and worse do the job. Tax havens are all subject to corruption and
disappear as those who wish to control and dominate the lives of everyone,
keep us all stirred up in a nonstop battle for our freedom. This is also
known as distraction.
To get the details of how the IRS works, you need only search the Internet.
This book does not focus on the IRS but only on some of the issues of the
Federal Reserve Bank. If you want more information, we recommend the
book, The Secrets of the Federal\l Reserve.123 The Internet provides a
reliable source of information about both the Federal Reserve Bank124 and
the Internal Revenue Service.
Because the issue of Trusts is so strongly tied to the financial system, it is
wise for those who are considering putting assets into any Trust to have a
grasp of the realities of this world’s finances.

Chapter 19
Religious Trusts
Since there are so many previous court rulings regarding Religious Trusts,
the limits of what can and cannot be done are clear. A Religious Trust
Indenture for members and leaders of a church can be created. This entity
does not depend on a state-created privilege such as IRC § 501(c)(3) for its
tax-exempt status. Furthermore, the tax-free status does not stop with the
place of worship itself but extends to each of its individual members.
Legal research regarding the Corporation Sole and the Ecclesiastic Trust
gives evidence that Religious Trusts are recognized by many states in the
union. It has recently come to light that the control the IRS has over religion
is startling.125 To keep a tax-exempt status, a cleric of any sort cannot make
what are defined as “political statements” from the pulpit. If a Corporation
Sole or an Ecclesiastic Trust is properly set up, the IRS issue can be
avoided. Like all other entities the IRS does not like, though, the leadership
may be challenged to prove the legality of the tax-exempt status, and both
the Church and its members harassed.
We have the experience of one religious leader in his quest to discover the
appropriate ways to establish a Corporation Sole. We share his interview
with you. The interview has been edited for clarity and slightly redacted to
preserve privacy.
Per others, though, the Corporation Sole is not limited to the method this
Reverend used. We make no recommendation or judgment, as we feel it is
up to the reader’s further investigation.
The Mysterious Corporation Sole
An interview with the Reverend, High Priest of the Nation of Leviticus:126

AC: We often get inquiries about a Corporation Sole because it is a
form of a Religious Trust. We also have conflicting information
regarding whether or not it is purely religious, or if it can also be
an educational institution. Could you please clarify?
Rev: There is no such thing as a Corporation Sole without its also
being an Ecclesiastic Corporation Sole. It is automatically null
and void if the leader is not a member of an old religious
organization and cannot prove his or her lineage back at least
500 years.
AC: When you say it is “null and void,” what exactly do you mean?
Rev: A Corporation Sole needs to be recognized by the state and/or
federal government. If it is not recognized (as a religious entity),
it cannot enjoy its unique nonprofit status.
AC: How old is the term Corporation Sole?
Rev:
We know that a Corporation Sole is a rollover from British law.
The current Queen of England is the leader of the Church of
England, which is a recognized Corporation Sole.
AC: Are there any references in law or history books where the
information can be found?
Rev: There are several legal cases that have been recorded in
California and other states.
AC:
I understand that you kept submitting the Corporation Sole
papers for your religion to the Secretary of State in California,
and they were rejected. Could you tell me what happened and
why?
Rev: We followed the basic format of many of the political groups
who are writing Corporation Sole paperwork and selling them to
people. The legal assumption was that if a person declared
himself or herself a Corporation Sole, he or she was tax exempt.

At the time, I believed the research that had been done was valid,
so I used much of their work and created 16 pages declaring the
Nation of Leviticus a Corporation Sole. I submitted a
Declaration of Status to the California Secretary of State. The
paperwork was rejected. I resubmitted it, and it was rejected
again without an explanation. I submitted it three more times,
and was again rejected without an explanation. I called the
Office of the Secretary of State on several occasions and was not
able to get any further informa tion, until one day, I was quite
fortunate, as one of the staff members was a Christian. This
person questioned me extensively to determine whether I was
truly ordained, and to determine my religious under standing.
When she was satisfied that I was qualified to know the cor rect
procedure, she took the time to explain to me what was wrong
with the paperwork. I was astounded when this person told me
the correct paperwork must contain a specific type of
information, and it was to be no longer than one page!
AC: One page? Is this true in just California?
Rev:
No. We contacted several other states. We found the requirement
to be the same. However, last year,127 the State of Arizona did
not recognize a Corporate Sole. It claimed there was no such
thing. We recently es tablished the Levitican Empire of the
Nation of Leviticus in Arizona, and the papers have been filed
there.
AC: Is the Corporation Sole only recognized at the state level?
Rev: No, it can be recognized on a federal level, but it becomes a
contradic tion of terms, or a “Catch 22.”
AC: What do you mean?
Rev: On the federal level, a Corporation Sole must be a continuation
of a religious order; the Corporation Sole also must have a board
of direc tors. Here’s the trick. To set up a Corporation Sole at the
state level, the person must be the highest-ranking official of a

two-part church. There is no board of directors, and it’s an
individual that operates and controls the entire religious order.
AC: What is a two-part church?
Rev:
There is a mother church that provides the religious direction of
the offspring churches. For example, the Catholic Church is a
two-part church. The pope is the leader of the mother church,
and then each church established by the Roman Catholic Church
is an offspring church. There are many of the older religions that
are established in this format.
AC: Since you used that example, I’m under the impression that a
Corpora tion Sole is like a benevolent dictatorship?
Rev: Yes, and there is no board of directors. However, the Bible is the
Dic tate.
AC: Why do you believe there is a conflict?
Rev:
Those who are misinformed may want to get a 501(c)(3) tax-
exempt status. The federal government is always willing to be
part of anyone’s church. The true Corporation Sole excludes the
federal government and state government as well. A Corporation
Sole does not ask permission of the government to exist; it
simply notifies the government that it does exist.
AC: Explain this more. The federal government is willing to be part
of any one’s church? How does that work?
Rev:
When a church asks permission of the IRS to have a tax-exempt
status, a church opens its books to the IRS and then must adhere
to certain procedures or it loses its tax status. This means the IRS
has the poten tial to control religious direction and dogma.
AC: Do you think this happened?
Rev: I know this happened, because churches are silent on several

issues, where they should be quite outspoken.
AC:
I can see this could go off into many different fascinating
religious discourses. I will leave that for another interview. I
need to focus on clarifying the Corporation Sole’s status. Have
you heard of a Corpora tion Sole’s filing for a 501A status?
Rev:
That is a nonprofit religious organization tax-exempt status, but
again, the IRS can now audit the church’s books, and again
control the direc tion of the religion. This is what is meant by the
term “state religion.”
AC:
Since you have gone to the effort to establish the Nation of
Leviticus as a Corporation Sole, what are some of the
advantages?
Rev:
For members who are truly part of a Corporation Sole, they are
person ally tax-exempt; they also are not eligible for federal or
state benefits. To some, this may be frightening. The members
must take a religious position regarding matters of taxation. A
Corporation Sole is for those who have a strong ethical belief
system, and who are willing to take a religious stand.
Because the membership is not eligible for any state or federal
benefits, the Corporation Sole is financially responsible for its
members. There is the potential in this situation, that if the tax
status of the member is questioned, or some other situation
arises, the member may need to go to a court of law. Should this
occur, the mother church assists in the defense of the member,
who is under the authority of the leader of the Corporation Sole.
AC: Does that mean you personally have to appear in court?
Rev: No, I can send a representative, but if it is local, I’m likely to
appear in court.
AC: Has this happened?

Rev: Yes, a couple of times.
AC: For the Corporation Sole to qualify in the eyes of the state, are
there certain rituals that must be included in the religion?
Rev:
Ministers have to be trained in ecclesiastic procedures, and
ordained by the high priest who has a lineage back to the
founder of the religion. Baptismal rituals are required for
Christian organizations and other types of rituals for other
religious sects.
AC: It sounds quite different from most other religions.
Rev: Yes, it is more of a proactive approach to actualize one’s belief.
AC: Thank you for your time.
The Corporation Sole is a controversial matter. There are those who oppose
the point of view given in this chapter, and who claim the structure is not
limited to a two-part church. This type of Religious Trust is not our
expertise, and we merely report the recorded conversation here.
The following definition comes from Wikipedia, the free encyclopedia.
A corporation sole in English law is a legal entity consisting of a
single person (“sole”). This allows the corporation to pass
vertically from one holder of a position to the next, giving the
position legal continuity.
Most corporations sole are church-related; for example the
Archbishop of Canterbury and most mayors are corporations
sole. In contrast to a corporation sole, a corporation aggregate
consists of two or more persons, typically comprising a board of
directors.
The corporation sole is inherently compatible with certain
churches, and in particular the Roman Catholic Church, because
of its top-down governance by bishops. A single bishop governs

an entire geographic region of churches, known as a “diocese.”
Church property is titled to the bishop who serves in the office
of the “corporation sole.” It is largely because of the need in
certain churches for a corporation which is governed by a single
person the corporation sole came into existence.
While most corporations sole are used for legitimate and legal
church purposes, there has been a widespread abuse in recent
years of the formation of many new corporations sole which are
being used for tax evasion purposes. As a direct result, the US
Internal Revenue Service issued Revenue Ruling 2004-27,
warning of abuse of corporations sole under United States of
America tax law.
Most U.S. states which still provide for corporations sole only
permit them for religious purposes. However, historically they
have been legitimately used for other purposes as well. For
example, mayors of certain English towns have traditionally
been corporations sole.
Likewise the monarch of the UK is a corporation sole–she or he
may possess property as monarch which is distinct from the
property she possesses personally, and may do acts as monarch
distinguished from their (sic) personal acts. In fact, the British
monarch is one natural person but several corporations sole --
Her Majesty in right of the United Kingdom is a distinct legal
person from Her Majesty in right of Australia, which is in turn
distinct from Her Majesty in right of Canada, and Her Majesty
in right of New Zealand, and so on. Likewise, she has a distinct
corporation sole for each of the Australian states and Canadian
provinces.
There is ample reading available on the subject of the Corporate Sole on the
Internet, along with an IRS warning.128

Chapter 20
What Trust is Right For You?
Okay, you are still with us after getting past Chapter 8, where we listed all
the reasons not to have a Trust. Armed with at least a working knowledge
of Trusts, how they came to be, their subsequent history, and their uses and
abuses, you are nearly ready to make a choice.
You may not believe it, but at this point you now know more about Trusts
than do most of the people in this country. For you to achieve the real
benefits a Trust makes possible, though, it is necessary to delve further.
As we noted earlier, any properly completed Trust provides better asset
protection, more efficient and easier asset access for the Beneficiaries, and
abetter tax posture than does a Will. From hereon, we will refer to Statutory
Trusts and Private Trusts only.
Rating the Trust Types
Before going into a detailed discussion of the Trust types and the purposes
for which you might wish to use them, it is important to remind you that
Statutory Trusts are more easily understood. Because they are commonly
accepted by the legal and financial professions, using one is likely to be a
more comfortable experience. This, in turn, provides not one, but a series of
resources on which you can draw in creating your own Trust or Trusts.
Like everything else in life, though, just because people set themselves up
as authorities, does not necessarily mean they have all the answers and,
therefore, they could guide you down the wrong path. Even though you
should be able to rely on sound legal advice, there are many cases where a
Trust has not worked out the way it was planned, and other cases where
Statutory Trusts proved to be deceptive. This will be handled in more detail
later in this chapter.

When selecting and funding a Statutory Trust, much still depends on your
knowledge, research and what you learn through consulting with proper
professionals.
The combined experience in the Common-Law Trust of all the contributors
to this book is more than 50 years. We claim no similar familiarity with
other Trust types.
If you are not the 
adventurous or 
risk-tolerant type, 
but wish to do 
better for your 
Beneficiaries than 
you could with a 
Will, then the 
Statutory Trust is 
preferable.
If you are not the adventurous or risk-toler ant type, but wish to do better
for your Beneficiaries than you could with a Will, the Statutory Trust is
preferable. Either the Living Trust or the Irrevocable Trust may be the way
for you to go. Also, if you are more of a maverick than a herd follower,
more of a calculated risk taker than a risk avoider, have the time and are
willing to study and learn, the Private Trust is better. You are likely to be
more comfortable with the power, flexibility, financial and tax leverage for
you and your Beneficiaries inherent in a Private Trust. Here, you not only
can define a broader portfolio and assets the Trust will accept, but your
wishes can be more precisely spelled out without some of the limits of the
Statutory Trust.
Why is there such a difference between a Statutory Trust and a Private
Trust? Creativity and flexibility are maximized in a Private Trust, precisely
because it is not statutory. Under the U.S. Constitution, Article I, Section
10, you may make a private contract to do just about anything, as long as it
does not harm others. Statutory Trusts may limit some of your investment
choices. This is because of legislation passed based on experience, or by

those who have influence over the political arena. Please remember, though,
that no matter what we tell you about a Private Trust, the Statutory Trust
comes automatically with the backing of both the legal and financial
communities. Any Private Trust needs trained Trustees, or Trustees who are
willing to be trained.
Thanks to decades of prior experience, though, many of the sound rules
long found in the Statutory Trusts are usually incorporated into the Private
Trust. For example, the instructions in the Trust Indenture need to include
whether the Trustees have the right to lend or borrow money to or from the
Beneficiaries. If the instructions do not exist, then the funds cannot be used
in that manner. Further along this line, lending money to the Grantor cannot
be without interest. As it happened in the past, the Grantor funds the Trust,
then the Trustees give him or her the money back without interest! This is
not a Trust used for the Beneficiaries.
Renewable Contract
Through a Private Trust or any Irrevocable Trust, you can lay the
foundations for multigenerational success and prosperity more easily than
you can with a Statutory Trust. This is because the contract between the
Trustees and the Beneficiaries can be renewed every 25 years, thus making
it enduring, depending on the will of each generation. For example, the
Pennsylvania Land Trust was set up by one of our Founding Fathers and
lasted past 1900. It disbanded because it became nearly impossible to
manage the assets–too many Beneficiaries!
A Statutory Trust has a definite end time, which is usually the third or
fourth generation. Further, in this Trust, the idea of privacy may be minimal
or nonexistent. In speaking to many lawyers on this subject, they cannot
fathom the need for such privacy. Some lawyers find alien the idea that if
others do not know the assets in the Trust, then they cannot take them.
Those lawyers involved directly in asset protection, though, are more
keenly aware of the need for privacy.
Set Up a Life Change—Why?
Operating through a Private Trust provides a new way of seeing the world.
Setting up a Trust shifts ownership from you as an individual, to the Board

of Trustees. Now, your checking account reflects only your personal
expenses, and any funds coming from the Trust become a K-1 taxable
distribution to you. If you no longer own a car, but the Trust owns a car and
you can use it from timeto-time for Trust business, all those expenses you
once bore for your personal car disappear. Therefore, how you handle your
own money, separate from the Trust, becomes an interesting journey.
This is why we do not recommend putting all of your assets into a Trust,
since you would surely like to have your own pile of cash. As you can see,
though, there is a good possibility you can substantially lessen your income
tax bite at the end of the year.
Trusts are often associated with the names of J. Paul Getty, John D.
Rockefeller or the Kennedy family. In this setting, a Trust represents power
and secrecy. These elements are not part of an average person’s life. By not
using Irrevocable Trusts, though, you automatically exclude yourself from
some astonishing possibilities.
As we try to lift the veil obscuring Trusts, we hope to broaden your scope
and vision. This can make your world a little more intriguing.
Motive
A Trust should be designed for your unique view on life. This includes
spiritual values, as well as educational priorities. Sometimes, a Trust will be
applicable to what you need to accomplish. So, before a discussion about
Trusts and setting up a life change can occur, you need to consider
motivations and out of these motivations, what business or Trust vehicle
may be best for you.
Some people want to pass their assets to their children or to charity. These
are usually older people who now grapple with the emotional issues of
death. They talked to lawyers and CPAs. They investigated Trusts.
There are other people who have businesses and want to protect assets from
lawsuits. These are people who understand that if they put their home into a
Trust under the names of Trustees, and they lose a lawsuit in their business,
their home will not be taken to pay the debt. These people have probably
seen their friends lose their assets in a divorce or because of other
unfortunate financial circumstances.

A Trust should 
be designed for 
your unique 
point of view. 
This includes 
spiritual values, 
as well as 
educational 
priorities.
There are people who realize that an Irrevocable Trust removes the assets
from all the family members and puts the assets into the hands of third
parties who can professionally manage them. This keeps the more morbid
family members from waiting for the Trust Grantor to die. Further, it limits
the possibility the Beneficiaries will mishandle or squander their money, or
be duped out of their assets. It takes money to learn how to handle money,
and most people have no such training.
Share Now, Not Later
Trustees can manage assets so a cash flow is given to the members of the
family during the lifetime of the Grantor. This has the magical effect of
removing anxiety from those family members who have a difficult time
making money, and it relieves those creatively inclined so they have some
cash flow to manifest their dreams. This newfound shared wealth usually
causes a heartwarming effect on the entire family as people realize that they
are recognized. Of course, there can be other complications which may
arise, but in general, sharing assets works wonders for a myriad of family
problems.
Depending on who the Trustees are and how the Trust is set up, the family
members can get involved in the financial planning and administration of
the Trust estate.
Taxes

There are also those who want to avoid extreme tax liability. Moving assets
that bring in a large cash flow, such as a stock portfolio, into the hands of
third parties, that is, Trustees, takes away the tax load from the Grantor.
Irrevocable Trusts have a different way of handling taxes through
passthrough accounting. It may interest you to know that each Beneficiary
of your Trust can receive up to $12,000.00129 per year as a gift. This
reduces the taxable basis of the Trust, and can be an incentive for people to
put assets into a Trust. We believe that most parents would rather give the
money to the Beneficiaries than they would to the tax agencies.
Structure Choices
There are several options of how to set up a business to reduce taxes and
take care of family members. Use a corporation when dealing with a high-
volume business. Tax consultants can advise you about the advantages.
Limited liability companies also have certain advantages.
Because the one who knows how to run the business is the greatest asset,
loss of him or her may end the business. The Board Of Trustees becomes
subject to his or her whims, for the “owner” is the financial engine of the
Trust. Therefore, we usually suggest a partnership, and the Trust becomes a
partner. Leaving a business in a Trust can work, though, as long as after the
sole owner exchanges it he or she then allows the Trustees to run it.
In a Statutory Trust, it is assumed that any business left to the Trustees will
be sold. After it is sold, the Trustees invest the cash for the Beneficiaries or
pay out the earnings of the sale to them. It is common to sell a business
listed as part of the assets of a Living Trust. If the business is successful,
and the management competent, this decision to sell the business can be a
loss to the Beneficiaries.
Statutory and Irrevocable Trusts
In a statutory Trust, usually CPAs and lawyers are involved with whomever
the Grantor chooses as the Trustee. The Trustee can be an aunt or uncle or
other member of the family and consults with lawyers and CPAs about the
tax liabilities and other decisions of the Trust after the Trust Grantor passes.

These personally selected Trustees have little to no training about
Trusteeship.
While a Private Trust is likely to be set up without CPAs and lawyers as
Trustees, the Board of Trustees consults with them in matters about taxes
and law. The Trust documents are not filed at the county, and Beneficiary
names are not available to those who may inquire. The Board of Trustees of
a Private Trust has more power than a Trustee of a Statutory Trust and
therefore has more discretion about investments and distribution to
Beneficiaries. These types of Trustees must either have Trust experience,
have mentors, or receive Trustee training.
A Statutory Trust must be recorded at the County, thus making the
Beneficiary names public. It is not uncommon for them to be directly
contacted about assets. Then, there is the possibility the unscrupulous can
take advantage to woo them away from their inheritance.
Staying Power
Any organization that allows others to have a vested interest in it usually
has more staying power than one which does not. Contrary to a Living Trust
which often ends when the Grantor passes, or the Sole Proprietorship which
may not survive the owner, a corporation that sells shares has a body of
people who are interested in its success. The more of the shares owned by a
person or a group of people, the more interest and influence with the Board
of Directors. Like an Irrevocable Trust, the Board of Directors perpetuates
the life of the Corporation.
Vested interest in a Common-Law Trust comes in the form of Trust
Certificates. These Trust Certificates are nonvoting, but they represent a
percentage of the corpus and can allow the person who holds them to
receive a percentage of distribution of the profits of the Trust. A corporation
is a business, and it is not necessarily a business for the family. A Private
Trust, though, is more likely to be structured around the needs of the family,
for the family. This provides the family with a motive for staying together
and working as a single unit. From here, this can evolve into a dynastic
power. Here lies the secret of the “plutocracy” families, that is, the
Rockefellers, Kennedys, Du Ponts, etc. Whether or not they have this Trust

type is unknown, but we do know that they have a powerful vested interest
in staying together.
A corporation is a 
business, and it 
is not necessarily 
a business for the 
family. A Private 
Trust, though, is 
more likely to be 
structured around 
the needs of the 
family, for the 
family.
Set Up a Life Change—How?
As stated before, a corporation is created by permission of the state. This
gives the state and taxing agents carte blanche to examine the books and to
get into the business of the corporation. A corporation is set up by filling
out an application and sending money to the state. In return, it sends a book
of instructions and the Minutes to set up the corporation.
There are several ways to set up a Trust, depending on the Trust type. A
Grantor Trust can even be established by buying forms at a stationery store
—not something we recommend. It is, obviously, better to consult with a
lawyer. Also, Internet sites exist where the format for a Living Trust can be
accessed.
The Irrevocable Statutory Trust is complicated. This complexity requires
attention to details by the Grantor, who usually cannot set it up without the
help of a lawyer.
The Common-Law Trust is even more complex and is based on different
principles. People who want to establish this Trust should consult with
professionals in the Common-Law Trust area. The Grantor must be

knowledgeable and dedicated, as well as have support of people who have
experience in the complexities.
Because of lack of knowledge, some lawyers may scoff at any attempt to
create a Private Trust, and especially mock the reference to “Common-Law
Trust” because all they heard about Nonstatutory Trusts is that these Trusts
are scams. The IRS makes sure there is plenty of publicity about such
scams, and provides no information about how to properly set up the
Common-Law Trust.
In Volume II we present several IRS Revenue Rulings for study.
Gray Area
Here is a caution about any Trust. It is no casual matter. Even if you buy the
stationery forms and fill them out, you need to at least do some research and
ask questions of professionals before completing the forms. The entire
world of Trusts is a murky, gray world where definitions and protocols are
not welldefined.
We have been asked to review Trusts and found that not only have the
“uninitiated” in the law created some extraordinarily doubtful Trusts, but
lawyers are also guilty. They should have access to good legal documents.
Some have set up bizarre Trusts. Some unscrupulous lawyers even use
standard “back doors” to Trusts so they can financially bleed them. These
standard back doors are more common than you might suspect in
Irrevocable Statutory Trusts. So, buyer beware!130 When we discussed this
revelation with a lawyer we met casually, she laughed and said it was
common.
Declaration of Trust
As we mentioned before, a document to set up any Trust is known as an
Indenture.131 A good Trust Indenture is complex and has twenty pages or
more. The rule is, “Every little detail helps the future of the Trust.” The
Trustees look to the Indenture to provide clarity about decisions they make
about Beneficiaries and investments. Anything the Trust Grantor can do to
avoid confusion by the Trustees about decisions they may need to make for
the Beneficiaries should be put into the Trust Indenture.

One of the most important features of an Indenture is determining the order
of inheritance and how inheritance is to take place. This is where many
“what if” clauses are explored. For exam ple, what if the first Beneficiary
dies without children, or what if the Indenture was created when a child was
fifteen years old and suddenly another child is born? What if the main
Beneficiary becomes involved in drugs and alcohol?
One of the most 
important 
features of an 
Indenture is 
determining the 
order of 
inheritance and 
how inheritance 
is to take place. 
This is where 
many “what if” 
clauses are 
explored.
How is that to be handled? Who inherits and in what order due to various
circumstances?
The answers to these questions must be in a real Indenture, whether
Statutory or Private, that is designed to handle distribution over at least two
generations.
The Indenture also lists the powers of the Trustees. One of the powers to
spell out is the right to mortgage property. There is a standard list of the
powers of the Trustees included in most Indentures that should be edited by
the Grantor, or at least understood. For example, do you know what an
“undivided interest” is? If not, then you need to ask questions.
Suggested points to include in an Indenture are provided in Volume II.
Funding

Once the initial Trust document is set and the rules and regulations of the
Trust established and signed into being, the Trust needs to be funded. A
bank account is set up by the Trustees, and the initial funds and assets to set
up the Trust, known as initial corpus, are either transferred or exchanged to
Trust accounts. After the Trust is set up, other people can usually add to the
funds or the Grantor can put in more money. Any beginning money added
to the Trust sets up a “floor” from which the accounting evolves. When the
Trust investments are less than the initial corpus, the funds received are
then applied, first to principal until the initial corpus is recovered, and then
to income. This is in accordance with certain accounting rules and
regulations.
Before even initial funds can be put into the Trust, though, Trustees have to
be named, and in a Common-Law Irrevocable Trust you may also want to
name an Executive Secretary or a General Manager.
Administration
The difference between a Private Trust and a Statutory Trust lies in the
administration. Irrevocable Statutory Trust administration is usually less
involved and more distant from the Beneficiaries than an Irrevocable
Private Trust. The focus of a Statutory Trust is on accounting, not
necessarily on the personal needs or evolution of the Beneficiaries. An
Irrevocable Private Trust usually has Trustees who can be more interactive
with the family, and the family members have an opportunity to participate.
This also needs sophisticated administration, and more frequent meetings of
the Board of Trustees. In a Statutory Trust, meetings are probably not
required unless mentioned by the Trust Grantor, as Minutes may not be
needed. Minutes are vital to managing a Private Trust.
Goals
The trick to having a Trust be successful lies in the Grantor’s having fixed
specific goals for the group of people for whom he or she set up the
organization. If the goal is only to pass on assets, that can be simple. But if
the goal is to see the family members are educated in a specific way, taken
care of in a certain manner, or any other wish the Grantor has, then the
Trustees must take a more active role. For example, some Trusts are set up

to take care of a handicapped member of the family. If a bank takes care of
managing this Trust type, it will hire a caretaker. A Private Trust may also
hire a caretaker, but it is likely the Trustees will be more involved and see
the other family members are active in making sure this person is well cared
for.
We do not mean to imply that Statutory Trustees are not likely to take this
extra step, only that, in a Private Trust, this is more likely.
Involvement and Details
Those interested in setting up an Irrevocable Common-Law Trust must first
realize it takes more time than a Statutory Trust and more attention.
If you pay for documents to create a Trust, whether through a lawyer or
through a private company, you need to realize that you must be involved.
As pointed out before and in accordance with guidelines, and the Internal
Revenue Code, the Grantor of an Irrevocable Trust can hold some powers
even though the Trustees hold legal title.132 One of these powers is deciding
beneficial distribution, and the other is to keep control over investment
decisions. If these two powers are kept, it means that you, the Grantor, will
be included in the Board of Trustees to review the cash flow of the Trust
and to aid with investment research.
Many Grantors are surprised to learn after starting their Common-Law
Trusts that they have to take part in training the Trustees how to take care of
the assets. This is because the Grantor has the reasoning behind the
investment decisions and asset locations all in his or her head. He or she
also has a specific set of views that can only be experienced in response to
circumstances during meetings of the Board of Trustees. To ensure effective
administration and long-term survival of the Trust, these details must be
communicated.
In a Irrevocable Statutory Trust or a Statutory Living Trust, this link
between the Trustee and Grantor may or may not happen. For example, in a
Charitable Remainder Trust, the Grantor died and his brother became the
Trustee. The Grantor never took the time to tell him where all the assets
were and how he was administering them before he died.

In a Common-Law Irrevocable Trust, the Grantor must be involved with the
Trustees in training them to manage to the family and teaching the Trustees
where the assets are and how they need to be handled. Going back to the
Charitable Remainder Trust Grantor, he had been involved in several
different types of investments. Real estate was one of them. When he died,
it took the Trustee over a year to gather all the information and papers to
establish himself as the Trustee to take over the accounts,.
Those who should not get an Irrevocable Common-Law Trust are those
people who delegate the administration of their assets to others and who do
not want to be involved with the details. We have spoken to a couple of
CPAs about Common-Law Trusts, and discovered that most of their clients
are expecting the CPAs to manage their assets–and do not care whether the
assets are in a Trust or not. The clients are not of the mind-set to become
involved in the intricacies of setting up a Common-Law Trust or any other
Trust system.
Impact
Because of the impact setting up a Trust has on other family members, and
the attention needed to set up an Irrevocable Common-Law Trust, it causes
a life change; the advantages are wonderful, and the adventure astonishing.
Some members of the family will be unhappy with the decision, while
others will be elated. Broken lines of communication among family
members may need to be reestablished to prevent too much upset.

Chapter 21
Resistance
Beneficiaries are the essence of life, those to whom we pass on our legacy
and who benefit from our contributions to society. They are the reason for
living. Even if you do not have children, the future of our world depends on
the next generation.
Heirs: The Favored and the Flawed
Of course, there are times where someone does not want to pass on a legacy
to the children, and there are those situations where people are just plain
greedy and mean.
Bloodline
Beneficiaries are usually your children or grandchildren who represent the
family genetic line, also known as the “bloodline.” In a Statutory Trust, that
is a Living Trust, or an Irrevocable Statutory Trust, to be eligible, the Trust
recipients must be of the bloodline133 or adopted. In a Common-Law Trust,
though, Heirs Beneficiary can be anyone chosen by the one who set up the
Trust. For example, in the original Rockefeller Trust which held the
Standard Oil Empire, the Beneficiaries are allegedly the people of Earth.
If you do not have Beneficiaries to whom you can pass on your worldly
goods, then those in need, close friends or people who helped you through
life might be suitable. The major benefit to naming friends to receive the
legacy is that they can become closer to the Grantor of a Common-Law
Trust–at least, one would think the honor of being named might be
appreciated.
I cannot, I will not

Naming Beneficiaries, though, is sometimes not so simple. Many times the
first resistance to passing possessions to the next-in-line often comes from
the Trust Grantor. An Irrevocable Common-Law Trust sets up a cash flow
to Beneficiaries while the Grantor is still alive (Inter Vivos Trust).
Sometimes we hear the strangest reactions, and often the saddest excuses, to
avoid passing assets.
When counseling people that sharing their wealth is the purpose of the
Trust, we find it difficult for some to grasp the following two points:
They will have enough to share when assets are restructured.
It is a great benefit to the Trust to pass on the wealth.
The initial wall of resistance stems from, “I never had anyone ever support
me, so why should I give money to people before I die?” This leads us to
realize that when a generous pattern has not been fixed by previous
generations, it takes an effort to break poverty thinking and, perhaps, even
innate selfishness. While the overall need for survival keeps people in a
limited focus on self, in reality, sharing assets assures survival.
Tax Breaks
Passing on wealth gets the Trust a tax break. For example, you can decrease
your gross income by giving up to $12,000.00134 a year away to each
Beneficiary, thus you have less money of your own on which to pay taxes.
In fact, the Trust does not pay any income taxes if all profits are distributed
and then Beneficiaries pay taxes on them. The Grantor cannot keep the
funds anyway. Either give money to the IRS, or to the Grantor’s offspring.
For some reason, many Grantors would rather pay the income tax than give
away the money.
The Devil
Oddly enough, though, one of the greatest challenges in teaching people
how to set up and use a Common-Law Trust is to get them to understand
the value of Beneficiaries. The Beneficiaries automatically protect assets by
their vested interest in the future of the Trust. It is being created for them.
This resistance from the Grantor about selecting Beneficiaries also often
stems from the complete lack of support by the Grantor’s family during the

formative years. Either poverty was a big issue in the early childhood, or
the parents believed hard work was such a divine virtue, that financial
support to follow one’s dreams became akin to supporting the devil.
The Last Penny
Some people panic because they feel they might need all that money in their
old age. Gripped by fear, they will not give up a dime, even if putting their
money in a Trust allows assets to multiply. The assumption here is they will
be sick, and medical bills will soar. The Grantor wants the best care, even if
his or her last penny is given to the doctors. Of course, the Grantor remains
a TCU holder in a Common-Law Trust. No Board of Trustees can ignore
this fact.
Control and Domination
There is also the need some people have to keep children on a leash. They
can do this by doling out their money to them on a whim, keep children
begging for more, and even competing with siblings. This type of parent
thrives on being able to manipulate those dependent with dollars, and thus
keep them subject. Once the Trust is settled, and has a strong cash flow, that
particular issue no longer applies, as the Trust can issue a predictable check,
whether it be a mere $100 a month, or a whopping $20,000.00 a month.
Either way, the Beneficiary is freed from the controlling needs of the parent.
Manifest Dreams
Another common belief among the average person is that Beneficiaries
should work for the money, lest they become corrupt. Perhaps they will be
lazy, expecting a handout, or turn to drugs because they have no purpose. It
is always astonishing to us that people think so little of their offspring.
What people would these errant children be if they were financially
supported? What would happen if the children could manifest their dreams
instead of working 9 to 5 in a dreary job, slaving for others who know how
to build wealth? Where do you want your children to be in the next ten
years? Locked into a slave status, compromising their ideals to make a
buck? Just where did that idea come from? Is this known as the Christian
Work Ethic? Maybe if children had enough money, or extra money, you

would discover that they had some great ideas to contribute to both the
family and the world.
Easy Money
As we have previously shown, the wealthy do not expect their children to
work, and they do not think of them as useless and lazy. We can suppose
that they even silently mock the rest of us because we are so foolish in our
thinking, and that we have set our minds to toil in their fields while they
reap their fortune. By the way, the rich make money out of money–an
investment here, an investment there, a gamble on the right business and
they have an overnight success. A slave to no one, they choose to work
doing what they love to do, whatever that is. Yes, some even use their
cleverly earned cash to go sailing, or to compete in some awesome sports
event, such as circumnavigating the globe in a balloon.
Caged Bird
The hardheaded position that people need to work to build character does
have merit, and we are not against the idea. We want people to realize,
though, that long-term enslavement is damaging. If people want their
children to learn about hard work, five to ten years are enough, otherwise
the deeply ingrained slave mentality makes even retirement a fear. It is also
a fact that when a person has been 9 to 5 patterned, it takes a long time to
get out of this social programming. Developing a new view about life, and
grasping the ideas to increase personal worth, can be overwhelming. Not
having ever having freedom to explore his or her own talents, such a person
might behave like a caged bird. Though you may open the door, the bird
never flies out. The wealthy who use our toil for their gain count on that, by
the way.
The Dream Home
Of course, some children have enough wits, pluck and skills to find their
ideal jobs. They do not need parental support or help from a Trust, but who
would not want some extra backing, and an opportunity to explore greater
possibilities? For those lucky children, would you want them to get a loan
from a bank for that dream home, or would you rather have a cash-rich

Trust loan them the funds? A friendly Trust family banker is always helpful,
and the Trust earns money on the interest. This earning by the Trust passes
on to the Beneficiaries through periodic distributions.
The Rich And The Poor
Then, there is always, “I do not have enough money.” Some people, no
matter how much money they have, never have enough. Oodles of money
seep into every crevice of some people’s lives, and still they are “poor.”
This is a poverty complex that knows no end, and takes much internal
processing by the Grantor to overcome so the Grantor may learn how to
share wealth. John D. Rockefeller was like this; everyone hated him. He
became friends with a preacher, who convinced him to start a Charitable
Trust. Nearly overnight, and with the help of the heavily reported, high
profile handing out of dimes, suggested by a publicist, John D. became a
great benefactor, and the resulting goodwill brought about even greater
wealth.
Shock
Surprised reactions by those named as Beneficiaries range from the
astounded, “Why me?” to the angered, “You cannot do this, you are being
scammed, and I will have nothing to do with this Trust!” Why such
reactions, and what do they mean?
When assets are properly restructured, though, people who have always
carefully kept track of their pennies may suddenly realize they have far
more than they ever expected. Their prior money attitude deeply affected
their children, who now believe their parents have gone mad, thinking that
the restructuring of their funds has given them more than the parents could
possible ever have. Hysterically, they deride and degrade their parents for
their foolish behavior of putting their assets into a Trust. The good news?
With careful Trust management, those same Beneficiaries become believers
in about five years, and see their own potential for wealth.
Some children believe that when their parents die the children will get the
house, the bank account, and the cars in the garage. When funds are put into
any Irrevocable Trust, they are out of reach of the children. They will no
longer inherit them. The Beneficiaries can use the goods, and get a cash

flow from them, but do not own them. There is an initial shock as
Beneficiaries have to rearrange their thinking, and the backlash can be
astounding. The unbelievable greed that sometimes surfaces may even be
frightening. All the issues of lack of trust, betrayal, favoritism and
downright rage come to the foreground. The Beneficiaries may fear their
inheritance has been ripped from them, and that everyone around their
parents conned them. If there is more than one child involved, this can
throw the entire family into crisis. Again, it takes about five years for the
children to figure out they got the deal of the century, and they are loved
and supported, but in the meantime, there are no secrets left in this family.
When funds are 
put into any 
Irrevocable 
Trust, they are 
out of reach of 
the children. 
They will no 
longer inherit 
them.
Beneficiaries can initially be liabilities. The “dark” children surface. It is
more often the rebellious children who eventually become part of the
Trusts’s administration team. This is because they have an interest in
control, and want to know the details of the finances. With proper training,
their interest turns into an asset.
Special Cases
Beneficiaries with addictions or who may display criminal behavior need
special treatment, and the Grantor must counsel with the Trustees to give
them specific instructions. Since the assets are never in the names of the
Beneficiaries, the Trust can be spared many of the more distressing
problems caused by Beneficiary irresponsibility.
Financial Ignorance

Criticizing Beneficiaries because they do not know how to handle money
may be inappropriate. Did anyone ever give them a large enough amount of
money so they could learn how to handle it? Living from paycheck to
paycheck is not the schoolroom atmosphere needed to teach people how to
create or even manage a fortune. As reported on the radio in Philadelphia in
the 1960s, Lamar Hunt, H. L. Hunt’s son, lost a million dollars on a new
business venture. When reporters asked what Mr. Hunt what he thought of
this, he replied (paraphrased), “My son has nine million more to practice
on.”
It takes money to make money, and it takes practice and experience. If
Beneficiaries are unfamiliar with the terms of wealth, such as interest
income, margin accounts, dividends, selling short, bear market, and the like
why does anyone expect them to know how to handle money? Give them a
few thousand to experiment with, and some proper mentoring, and they just
might learn something. This is how the wealthy do it. They pass on their
knowledge to their children, maybe even at the dinner table where they
share their business venture stories and introduce their children to the ideas
that movers and shakers of the world hold to be true.
Disruptive Children
What if a Grantor just plain does not like his or her children? There are all
sorts of reasons for this. One might be the Grantor was not so kind or
available when the children were in the formative years. If the Grantor did
not take the time to make friends with his or her offspring, then why should
the children care about their parents? Sometimes, though, children are just
downright mean, selfish and abusive.
Control and Domination
There is also the classic situation where one parent pits the children against
one another, and this dissension and manipulation includes turning children
against the spouse. That is a thorny one to resolve, and sometimes the
communication channels necessary to clear the emotional wounds never
happen. The reasons for the dysfunctional relationship may be many, but
the result is the same. Children simply dislike one or both of their parents
and display this in myriad ways. We recommend that something be left to

them anyway. Simply because of their blood relationship, they can claim
some of the inheritance. Why throw the entire Trust fortune into a legal
battle? There are many ways this can be handled to satisfy the Grantor.
The Payoff
Probably the most shocking statement we ever heard was from a third party
who knew about a beneficial distribution, but had no idea of how a Trust
works. He exclaimed, “Why would you just give money to people?” The
Trustee, startled at the reaction, replied, “All the needs of the Trust are
satisfied, and the extra funds are passed on to the Beneficiaries.” The
reaction of the Beneficiaries was even more startling. They never received a
beneficial distribution before this, and the Board of Trustees gave them no
warning. The surprise paid off, and the overwhelming gratitude satisfied the
Board of Trustees and the Grantor. After all, that is why we do Trusts.
There is a special perk in helping others.
Who Are the Heirs or Beneficiaries?
Once past the resistance, choosing Beneficiaries becomes the issue. One
would think that this is simple if the Grantor has children, or adopted
children, but not so. It depends on the relationship with the children. From a
disabled child, to a child with criminal behavior, to the irresponsible, to the
divine and favored child, the Grantor has to decide how to manage each. In
a Irrevocable Statutory Trust, these factors are more defined in the Trust
Indenture, leaving less judgment for the Trustees to make about each child.
In the Common-Law Trust, individual needs can also be defined, even
though the Grantor continues to take part in and advise the Board of
Trustees, so this becomes an ongoing process.
The law states that each Trust must have different Beneficiaries, so when
forming more than one Trust to ensure asset separation, it becomes a
problem if the Grantor has only one child. The next eligible set of
Beneficiaries can come from the Grantor’s siblings. By law, the blood
relationship takes precedence over other Beneficiaries.
Adding nieces and nephews automatically involves the parents of the
chosen Beneficiaries. This gives them a vested interest in the Trust being
formed. This increased support adds to the safety of the assets. After all, if

your children become the Beneficiaries of your brother, you are much more
likely to support your brother’s endeavors. This often proves to deepen the
sibling relationship, or even heals old wounds. Since the overall intent of
the Common-Law Trust is to bring the family together, this tactic has
proven to be worth its weight in gold for the long-term survival of the
family.
Bereft Of Friends
If you do not have children, friends can become the Beneficiaries of your
Common-Law Trust. We have even seen the situation where a person
claims to have no friends for potential Beneficiaries. With the poverty and
despair in this world, how can people fail to choose even one person as a
Beneficiary? We know people who spent their entire life making money, yet
have no one to leave it to. If you are one of these people, all we can say is,
“Open your eyes, look around, join a club, get to know people.”
Financial Leverage
As a Common-Law Trust evolves, it builds financial leverage. The
objective is for the Trust to perform like a family bank, and to provide
private mortgages and loans for family members. Solid family leadership
gives generations to come the advantage, and provides financial stability
instead of the hand-to-mouth survival that many of us experience. With this
added support, we just might be able to develop some leaders to take our
world into a better place.
The Risk Factor
The initial group of people to start the Trust are usually those who have
taken risks to collect the assets. These are financially savvy individuals who
discovered other ways of making wealth. They stepped out of the norm to
discover a broader spectrum of reality in which they can create the rules to
their own games. To continue the build-up of assets, train the next
generation. We recommend that at least one child who displays a talent or
an interest in the finance/accounting arena be trained. This child should get
an education in accounting or law. Preferably, there will be two
Beneficiaries worthy of this task. As mentioned before, the adverse Trustee

will likely remain as Trustee after the Grantor dies, and should be a strong
mentor so the qualified progeny become skilled Trustees to carry on the
legacy.
Before this transition happens, though, the favored son or daughter learns at
his or her parent’s knee the lucky gambler techniques and holds a
management position in the Trust to take those calculated risks. These risks
will continue to augment that golden goose to forever shower good fortune
on the rest of the family.

Chapter 22
Protection and Support
Few would turn down the opportunity to join a group offering protection
and support. To create that environment, though, takes dedication to the
greater good.
Shelter from the Storm
When the skyline of New York lost a measure of its height and grandeur on
9/11, the emotional tone of the world downshifted a few notches. Many
people now live under greater stress in one or more aspects of their lives.
This circumstance offers an excellent background to examine the calming
and stabilizing effects of the ancient, proven wisdom built into an
Irrevocable Trust and especially the Common-Law Trust.
A Better Future
Because many feel uncertain now and more than usually challenged, we
share with you our vision. These are the deeper reasons we have for striving
to bring this time-honored information about the Common-Law Trust out of
obscurity and make it available beyond the privileged classes. Recent world
event make this revival and popularizing of Common-Law Trusts timely;
they have been tested in many earlier periods of unrest (Roman wars, the
Crusades, the American Revolution, etc.) and proven reliable. As repeatedly
demonstrated throughout history, without trustworthy relationships, nothing
is certain. The true values in life lie not in money or political power, but
in competent and caring people committed to helping one another.
Trust Builds Wealth

Human relationships based on trust create wealth, not the other way around.
While life holds no guarantees, trained people dedicated to common goals
offer the strongest chance for group comfort and security. As people get
involved in various forms of Trustee administration training, we strongly
encourage them to build trusted relationships among Grantor, Trustees and
Beneficiaries, and to nurture and improve their communication. Then, if
difficulties arise, they can count on one another. If one of them has special
needs, the others provide for him or her. Money is not necessarily a major
part of the solution—sometimes not an element at all. Maybe what is
needed is the loan of some piece of equipment, a place to live or just plain
wisdom from Trustees. Through this support, Trust members can get the
guidance needed to avoid many of life’s pitfalls.
Assistance To The Beneficiaries
When a well-managed Trust exists for several years, the Trustees become
familiar with the other Trust Officers and the Beneficiaries, and the assets
multiply. Then, if a crisis arises—in the family or in the broader community
—members of the Trust can pull together to respond effectively. When
Trust Beneficiaries or other family members need work, they may be able
to contribute their skill to help manage the family assets.
Extra or unused equipment may help those out of work to pick up odd jobs.
A computer, desk, truck, automobile or other useful item may be the
missing ingredient which turns an otherwise idle Trust member into a
thriving entrepreneur who contributes to the Trust’s expanding wealth.
Because Trustees interact with bankers, corporate executives, brokers and
other professionals, a friendly recommendation in the right ear may prove
to be exactly what an outof-work Beneficiary needs to get a job.
A Beneficiary of one Trust recently found himself caught in the chaos of
New York following the World Trade Center disaster and unable to find an
apartment. Friends allowed him to sleep on their couch, but jobs were in
such short supply he could not find work to support himself. Enrolled in
school there, he could not leave the city, either. To relieve his predicament,
the Trustees sent a laptop computer in a rolling case from their inventory,
plus some extra funds.

Reason For Being
Such timely, real-life support is what Trusts are all about. By helping people
get on with their lives in tough times through removing as much undue
stress as possible, Trustees fulfill the faith placed in them by the Grantor.
This is what each Board of Trustees is charged to provide, first by building
the assets year by year, and then by responding properly when the need
arises. With this support, a Grantor’s Beneficiaries may follow their God-
given talents to aid our beautiful, but troubled, world. Moments like these
refresh the Trustees’ awareness of their purpose and why they work so hard
to create and preserve Trust assets.
Speaking of working hard to keep assets for the family, here is the story of a
valiant man, who had so much to give, that he shared his wealth. We
include this now because this foreshadows some of the information in our
second book which focuses more on the technical nature of an Irrevocable
Common-Law Trust. Although this is based on a court case, we “upgraded”
the legal details to be more user friendly, as we have with other court cases
in Volume II.
The following article, “Beneficiaries and the Battle of Betts,” specifically
displays how a Trust campaigns for the Beneficiaries, and protects them:
Beneficiaries and the Battle of Betts
This case brings out many aspects of an Irrevocable Trust, as well as its
complexities. For those of us who work with Trusts every day, it is
wonderful to know that Mr. Betts outfoxed, them all.
Commissioner of IRS vs. Betts135
Mr. Betts, obviously a generous man, created an Irrevocable Trust in the
early 1930s for his family, which received a bounteous steady income. In
those years the Board of Trustees paid the income tax for the Trust by
dutifully filing the needed paperwork (Form 1041 and related schedules).
The IRS, for various and seemingly baffling reasons, decided that Mr. Betts
should pay taxes on the income even though the Trust had already done so.
The amount assessed for back taxes was substantial.

To appreciate the depth of this particular matter, we need to understand
some of the Trust details. When the Indenture was written136, Mr. Betts, a
stockbroker, kept the power137 to make the investment decisions.138
Further, the income collected each year was paid to his mother and his wife.
On the death of either of them, the survivor received 100% of the Trust
income. If both Beneficiaries died during his lifetime, for the balance of his
life the income was added to the principal. After he, his mother and his wife
passed on, the Trust estate was to be divided equally among his children or
their lawful descendants. If Mr. Betts’s mother and any of his known
descendants survived him, or if he should survive both his mother and his
wife but leave no descendants, the Trust would transfer to his Heirs
Beneficiary as outlined in the Trust agreement. This also included his sister
and brother.
In other words, all parties named gained from the Trust, while the Grantor,
Mr. Betts, received none of the funds from its investments.
Directing Investments
Ignoring the great benefits offered the Beneficiaries, the relentless IRS
agents on the case claimed that by directing the investments, this provident
family man kept control of the Trust. This rationale allowed the agency to
hold him liable for the tax. Fortunately for Mr. Betts, his ironclad Trust had
no a chink through which to attack him as Grantor. To decide whether our
humane stockbroker was in control of the Trust administration and had the
power to revoke or alter the Trust agreement, a federal judge examined the
Trust Indenture. He discovered that Mr. Betts waived all power to revoke or
alter the Trust agreement except with the approval of his wife, mother,
sister, or brother.
For whatever personal or professional reasons, the IRS agents refused to
stop there. The U.S. attorney continued to complain the Beneficiaries did
not have “substantial adverse interest” and would bow to the will of the
Grantor. Thus, the attorney argued, the Grantor still had the power to revoke
the Trust and revest the estate in himself. He based his position on the
premise that Betts’s mother, brother, sister and wife, whose consent he
needed to revoke the Trust, did not have substantial adverse interest.

The court needed to discover whether the wife, mother, sister, and brother
were under the control of Mr. Betts. In other words, would they qualify as
“adverse parties”? An adverse party is one who is so substantially vested in
the Trust that he or she has much to gain if the Trust assets increase and
loses if they decrease 138.
As an adjunct to this, note that Mr. Betts was not legally obligated to
support his mother, sister or brother, nor required to be as generous with his
wife as he was. Therefore, if the Trust dissolves, all of them were adversely
affected because their Trust income ends and all funds would revert to Mr.
Betts. Therefore, the court determined that these Beneficiaries qualified as
adverse parties. Its ruling reads:
It may be that because of family affection they might consent to a
revocation but that fact does not of itself destroy their quality of adverse
holding protected by the statute. What Congress had in mind obviously was
such a person as has a vested right under a Trust agreement to insist on its
performance and cannot be compelled to surrender the same. Such persons
are both the mother and the wife. We find no justification for reversal of the
finding of the triers of the facts the Beneficiaries were adversely interested.
Control and Disillusionment
This showed that Mr. Betts neither controlled the Trust nor could he easily
dissolve it. As the court stated, “his power of revocation was an
exceedingly remote possibility and contingent on the decision of others . . ,”
At this point in the case, the thoughtful reader may wonder whether the
government had an ulterior motive. It seems this can be used to set up a
legal precedent defining Trust guidelines. Is the IRS blind to the obvious or
does greed rule the agency and its superiors? Clearly, this generous family
man neither controlled nor benefitted from this Trust he created.
In any event, although the IRS’s first two arguments failed, it tried still
another tactic. Failing to persuade either the trial court or the appeals court
that Citizen Betts was fair game for its money hunters, it nevertheless rolled
right on to submit his Trust to its next legal test, “the fruits of the
ownership.” It did not matter the agency cited many (but inappropriate)
court cases to support its claim; Mr. Betts did not enjoy any of the Trust
income (fruits of ownership) and received no other benefit from the Trust.

Still undaunted, the insistent IRS attorney argued that if Mr. Betts survived
the Beneficiaries, he had the power to revoke the Trust. The court rejected
this idea, too; it ruled the power to revoke was not vested in him but “was a
remote possibility, contingent and uncertain with no insurance of ever
coming into existence.” The IRS’s argument collapsed because there was no
way to control who would die in what order. After all, Mr. Betts might die
before his mother or wife.
Substance of Transaction
Today, the issue of adverse interest has an added dimension. Because the
Beneficiaries enjoyed the Betts Trust income consistently for three years,
the Trust was well established by a legal principle called substance of
transaction. In other words, since it conducted its routine business as an
Irrevocable Trust, its day-to-day transactions confirmed the intent and tax
status of the Grantor.
Even today, some might claim that a mother and a wife can be adverse
parties under the circumstances described here. The last 50 years, though,
of court cases reveal that using that argument alone is inadequate to prove a
Trust as Irrevocable139. Too many people misused this aspect of Trust
procedure. Further, too many fail to understand that beneficial distributions
must be given to others named in the Trust instrument. In today’s alltoo-
popular “scam Trusts,” wives and mothers are often named as Trustees
without enough structure in place to give them substantial adverse interest.
At the same time the Grantors fail to surrender control of the assets. Scam
Trusts have no beneficial distribution going to anyone other than the
Grantor, who, usually, further compromises the Trust by making himself or
herself a Trustee.
Scam Trusts have no beneficial distribution 
going to anyone other than the Grantor, 
who, usually, compromises the Trust by 
making him or herself a Trustee.

By comparison, a closing statement in the battle of the Betts Trust shows
the Trust he set up was managed properly. As the judge said, “There is no
question but that income payable to the mother is in excess of any amount
which there is legal obligation upon respondent [Mr. Betts] to pay under the
Illinois Statute.” That is, the cash flow Betts provided for his mother
through his Trust far exceeded what he was obliged to give her.
Beneficiaries First
Despite the challenges an Irrevocable Trust may face as it multiplies its
assets, its final goal is the welfare of its Beneficiaries. It may be slow
gathering enough financial momentum to share as described here, but its
Trustees will do well to remember Mr. Betts’s skill and generosity as a
financial manager and patiently follow his example.

Chapter 23
Cash Flow
A Trust is much like any other vehicle; the driver-manager or Trustee
decides where it goes and what it does. This fundamental reality needs
serious study by anyone setting up a Trust.
Initially supplied by the Grantor, cash flow, the fuel of any Trust, may
continue to be pumped by him or her. In a Common-Law Trust, the General
Manager, who is sometimes the Grantor, often handles the day-to-day
activities, with then Trustees playing a guiding but less active role until they
become more familiar with the assets. They oversee the accounting and
legalities, ensure the Beneficiaries get their distributions and pay the taxes,
but, in general, are less assertive and may be hesitant and shy away from
risk. To the world they appear as the movers, while sometimes they are
“fronts.” Ideally, the steering position is inherited by the child most
qualified to climb into the driver’s seat left vacant by his father or mother.
Any Trust group must first acquire enough cash to make a significant
investment yielding a steady dependable payout. The most immediate and
sometimes the easiest way to achieve this is to invest in a business or sell
residential property through a Trust. The most suitable way to become
involved in a business is through forming a partnership. Direct the profits
from the partnership to the Trust where the Board of Trustees can place it
where “money can more than multiply itself.”
Once a strong cash flow is established, it funds charities, educational
institutions, and, of course, the Beneficiaries’ own projects and businesses.
Support for any of these recipients further benefits the local community by
creating jobs and other businesses.
What future would you choose: one where your children must work two
jobs or one in which they raise the standard of society and invest in their

dreams for a better world?
Making It!
There are a great many pitfalls when starting a business, from owner
ignorance of marketing and accounting, to the financial games played by
lenders. During this learning curve, if possible, find financial support
outside the usual channels.
Because it is statistically proven that most businesses fail in the first five
years, the leasing game becomes profitable. This applies to the restaurant
business, where equipment is partially paid for, and when the buyer
defaults, the equipment is sold or leased afresh to another startup company.
Default usually comes at that critical time in the company’s development
where a change of direction would save the business, except the clock runs
out.
If only the cash distribution from a Trust could just set up that lucky
someone blessed with a bright idea—or do you suppose that is how the rich
would set up a lucky Beneficiary?
Because you may not grasp how the rich think, we present the following to
“rewire” your belief. After all, continuous wealth is founded on having the
right connections, and realizing how the game is played.
Cash Flows In . . .
Sometimes, it seems just like magic: all that lovely money washing into a
Trust’s bank accounts. Unfortunately, it takes more than magic to get the
cash pump primed and flowing for the Beneficiaries. It takes planning and
strategy. Generation after generation pays close attention, and the pump
handle must never be idle. For a Trust to be well funded and productive, its
gathered assets must be large.
Understanding Cash Flow
If you do not have a basic understanding of accounting, what is likely to
happen to the cash flow? Even if you depend on accountants to advise you
about the “bottom line,” the accountants are not usually the ones

responsible to develop the next scheme to make a business work. The
accountant is not the one to close the business deals and make split-second
decisions about the various matters concerning productivity. Without an
understanding of the accounting, those decisions may not be as accurate as
they could be.
The marketing budget in any company is likely to be one of the largest
expenses, but the ratio of marketing to cash flow needs careful balance.
Without getting the word out the product is unique and the best, it is not
likely people will buy. The early cash to get the marketing rolling to bring
in the business, though, can be a major drain on the budget. This is where
most businesses decide to get a start-up loan, which adds pressure to the
performance of the business, and often cuts the product’s quality.
Employee expenses can be the largest item in the expense column,
especially when combined with payroll tax commitments, matching funds,
and other benefits. What if, though, the owner’s salary–often in the long-run
the largest single payroll item–were not even a factor? What if the owner of
this business received a personal cash flow from the Trust? This gives the
fledgling business a great benefit, as the first expenses are not so great, and
may add notable time to that five-year clock.
Of course, having a cash flow to support you allows you to manifest your
dreams and have the time to both gain the business experience you need,
and to dabble in what has meaning to you.
That Bright Idea!
If you had enough funds, you could probably make almost any business
succeed simply by lasting longer than the competition, by being able to use
the wisdom gained in the long run and through sheer tenacity.
For those who start a business, the first five years are usually grueling. The
learning curve is steep, especially if the business you start is based on a new
idea and mentors are rare or nonexistent. Unfortunately, manifesting the
dream, whatever it may be, can bring you into the light of harsh reality. We
must remember, though, “If you want something you have never had, you
must do something you have never done before.”
Nurturing Beneficiaries

Most people have never had the experience of receiving from a Trust fund a
check in the mail regularly, either monthly or quarterly. Whether the check
is large or small, it offers support to the Beneficiary’s life style. The larger
the check, the less the need for the Beneficiary to compromise himself or
herself by working for others.
Here is a myth: “If you give too much to your children, they become
spoiled.” Children should work for a living so they can recognize what they
have.” These are thought patterns laid into our society that have nothing to
do with reality. In truth, nature has plenty of food, and infinite possibilities,
but our financial system is used to restrict the people to keep them busy, and
to keep them working.
Born Millionaires
The rich, who have no such constraints, support their children. The parents
are willing to ensure their children receive the best educations and
experience the finest of material goods. A child may be born into a Trust
worth millions! Trustees support the child from the first breath and ensure
the child’s well-being. As mentioned before, when a child grows and
marries the funds stay with the Trust for the benefit of the child, subject
neither to nuptial agreements nor divorce settlements. It is a different way
of living, a way most of us never experience.
Money Destroys Character?
As previously stated, there is no case on record in which the children of the
wealthy have been left penniless for their own benefit. Further, if drawing
benefits from a huge Trust fund does not destroy character, it stands to
reason that drawing benefits from Social Security does not destroy
character, either. The entire idea is false.
The rich manipulate the people into believing money erodes morals by
making sure that some specific cases come to light.
In reality, if people do not have to work for a living, they are drawn to what
they do best, and what they enjoy the most. People can manifest their
talents, nurture the world we live in, and, above all, be happy.

Money is Happiness?
Happiness is not based on money. In fact, we might even go so far as to
state that happiness has nothing to do with money, except that in our
society, where money is used to manifest our dreams, the two are tied
together.
If the family has the foresight to plan for the Beneficiaries, then the future
of that family has endless possibilities. One way to do this is through an
Irrevocable Common-Law Trust. Are you just a little bit curious about how
it all works?
Rather than having your children work for a living, might it be more
beneficial to have them work in a creative environment or even better yet,
create jobs for others through entrepreneurial opportunities?

Chapter 24
Family Empowerment
World history is filled with the rise and fall of economies, governments,
and even civilizations. To reach the top (or remain there) when a new order
rises, families need organization. To be strong enough to get through hard
times, a stash of assets large enough to help them climb, hold on or buy
their way back in is necessary. National governments are short-lived, and
the family which governs itself has the best chance of surviving calamity.
No culture shows this fact better than the Chinese, whose rock-solid
extendedfamily village withstood thousands of years of tyrants, some
calling themselves “emperor,” others “chairman.”
Flexibility and Survival
One of the greatest assets which survives and grows with the proper use of
the Common-Law Trust is the family history. Through it, each succeeding
generation builds on the lessons of the past. Suppose your skilled parents
and grandparents bought land and passed on to you several choice pieces of
real estate in prime locations. With it, they passed on the knowledge of
preserving and developing holdings? How much further ahead would you
be in developing a real estate business or taking over the management?
The more people working toward a common goal, the more receptor points
a group has to receive valuable data. When their efforts serve not only the
group’s interests but their own and their family’s, their focus sharpens,
lessening distractions and multiplying their effectiveness. When the Board
of Trustees meets, it brings to the table more choices offered by many
minds.

Also, the shared 
talents and pooled 
tangible assets give 
the Board greater 
leverage to perpetuate 
the Trust and, thus, to 
survive.
This broader base of interested participants identifies multiple resources.
This gives the Trustees and manager or managers of the business greater
power to act wisely and timely for the good of all.
Thanks to this assortment of choices, the Common-Law Trust offers
flexibility. Also, the shared talents and pooled tangible assets give the
Board greater leverage to perpetuate the Trust and, thus, to survive. All
participants in the Trust have personal stakes in its success. They are likely
to pull their own weight and seek ways to increase cash flow and to reduce
waste.
Setting up any Trust is complex, as will be shown in Volume II. Not only
will we provide the basic points, but through a story told about the Trust
Certificate Register of one Trust, we dramatize a scenario of how “it” is
done. As a much simpler beginning point, we offer the fictitious story titled,
“Romance and Trust” found later in this chapter. This explains a Trust
consultation and the various preliminary decisions to be made.
Although this example of Romance and Trust is about a man who has
notable wealth, in reality, people with far fewer complexities set up Trusts–
the secret being how willing everyone is to pull together. You may be
qualified to have a Trust even if your financial circumstances are far less
than in this example.
The overall idea, though, is to empower the family and significant groups
through sharing. So let us ask the question one more time:
Why should you place some of your assets into the hands of another
person?

Family Trials and Tribulations
Family Dissension
Having Trustees handle the estate minimizes bickering and fighting among
the heirs. Because title is divided, the Beneficiaries get the use of the goods
and a share of the profits, but without the headaches of ownership and
competition for parental affection.
Intrigue
Sometimes intrigue and darker motives exist in large inheritance matters. In
an extreme case, someone may plot to get the assets. This might be one of
the greatest reasons many wealthy people place their goods into an
Irrevocable Trust. The Trustees are the only ones who know what the assets
are in an estate. Those who scheme to get assets through stealth may not
even be able to discover what assets are part of the Trust, where they are
and who holds the legal title.
Keep the Assets in the Family
The third reason is many people who have large assets fear their children
may marry a person who is after the family estate. The following shows this
wonderful advantage of an Irrevocable Trust.
Romance and Trust
Imagine a gentleman in love with a lady. Not just any gentleman, this man
has had a successful business career and amassed a substantial net worth.
Unfortunately, his personal life has yet to match the success of his career, as
attested to by child support and alimony payments to two ex-wives. The
lady with whom he is enamored has never married, provides well enough
for herself but has not achieved anywhere near the success the gentleman
has. They have discussed marriage, at least in the abstract.
Prenuptial

Given his history, and the financial disparity between the couple, his friends
(and his attorney) strongly advised a prenuptial contract. The memory of
two divorces inclined him to agree.
When he raised the idea (once again, only in the abstract) the woman gave
him a different perspective. She said that she saw a prenuptial agreement as
a way to sabotage the relationship by agreeing in advance what to do when
it failed.
Reflecting on what had gone wrong in his previous marriages, and why, he
could see a certain wisdom to her argument. Besides, he knew that if she
married him it would not be for his money. Of course, a friend reminded
him he had “known” the same about wife number two, right up to the bitter
battle in divorce court.
As talk of marriage became less and less abstract, the issue of a prenuptial
agreement loomed larger and larger as a potential showstopper. It finally
reached a point where the couple decided to seek counsel from a third party
and scheduled time to talk with a common friend, a minister.
During the conversation with the minister, they got to the real issue behind
their feelings about the prenuptial agreement. It came down to trust. Did he
trust her and her motives? Did she trust him to do right by her?
A Matter of Trust
As they discussed the trust issue, the minister realized that he might have a
solution to the problem. He reported his congregation had recently received
a large gift from a Trust set up by one of the members. Could a Trust
possibly provide an alternative to the prenuptial agreement which they
could both live with?
When they both agreed to explore the possibility, the minister found the
phone number of the member whose Trust had made the gift to the church.
After the minister called the member and explained the situation, the
member agreed that a Trust offered an excellent solution to the problem and
gave the minister the name and phone number of his Trust specialist.
Before they left the minister’s office, the couple talked with the Trust
specialist on the phone. She agreed that a Trust could provide an answer to
each of their needs in this situation, and then told them of the costs in both

time and money necessary to set up a Trust. They readily agreed it would be
a worthwhile investment and set an appointment to meet with her. She also
got their e-mail addresses so she could send them information to study and
suggest books they should read before their meeting.
At their meeting the Trust specialist explained that a Trust works by having
a person transfer his or her property or possessions to a Board of Trustees.
It then holds same in Trust for named Beneficiaries. Sometimes, if the
couple wants to be involved in Trust administration, it can use some of the
assets. Therefore, the gentleman would have nothing his potential wife
could take in case of a divorce, and he could use some of the property and
possessions. His wife-to-be would still have what she had brought to the
marriage and, under the community property laws, a claim to half of what
the couple made during their marriage, but nothing more. Both readily
agreed that this was fair and made at least as much sense as a prenuptial
agreement.
Goals and Ambitions
So, they got down to business with the specialist inquiring about what the
gentleman wanted to do with his money, as well as what obligations he had.
While listening carefully and asking questions that could have only come
from years of experience, the specialist made pages of notes. She then
asked the woman what she wanted and some questions about her finances,
and took more notes.
When they finished the interviews the specialist said that she could see the
couple loved each other and she looked forward to helping them achieve
their goals. Explaining she needed time to digest the information and draw
up a plan, she offered the suggestion that they get back together the
following week, and they agreed.
Trusts, Alimony Payments and Ex-wives
During the second meeting the Trust specialist laid out a plan that proposed
a Management Trust and under it five different Business Trusts:
The gentleman would set up two Trusts, one for each of his two ex-
wives, to make the alimony payments.

He would set up a third Trust to provide for the child support payments
and college expenses for his children.
He would set up a fourth Trust to hold his premarriage assets.
The potential wife would also set up a Trust to hold her premarriage
assets.
After many questions, answers and extensive discussion, the couple
requested two weeks to think about the proposal and decide exactly how it
wanted to continue. The Trust specialist agreed that would probably be wise
and set an appointment. Before the couple left she told each to consider
whom to have as Trustees and as the Trust Protector for each of the Trusts.
The following week, the gentleman had his divorce attorney contact both of
his ex-wives’ lawyers and explain what he proposed to do about the
alimony payments, child support and college expenses. Once the ex-wives’
lawyers understood that having the money in a Trust guaranteed the
alimony payments would continue no matter what happened to the
gentleman, they had no problem getting approval from their clients. Of
course, the same applied to the idea of a Trust to provide child support and
college expenses.
After the third meeting, the couple agreed that it would follow the Trust
specialist’s proposal. It wanted a few minor changes, though.
Instead of a single Trust for all three of the gentleman’s children, he wanted
to set up a Business Trust for each of them. The Business Trust format gives
the most financial flexible management. Once his first ex-wife understood
what he wanted to do, she asked if she could also put something into the
Trust for her children. When ex-wife number two heard this, she insisted
that she also wanted to put something in the Trust for her child. To simplify
matters, they all agreed to set up a Trust for each child. The Trust specialist
recommended that they set these Trusts up as Asset Trusts under the ex-
wives’ Business Trusts.
Child Support and College Expenses
These Trusts not only provided child support and college expenses; they
assured each child had a proper financial foundation for his or her life.
Besides giving the gentleman a certain peace of mind on the subject, his

fiancé felt that by encouraging him to be generous in doing this she could
reassure the children that she was not after their inheritance.
Equalizing the Marriage
They also wanted another Trust set up as their Family Trust; the gentleman
offered to fund the Trust with $250,000 as one of his wedding presents to
his wife-to-be. They told the Trust specialist that working together on how
he would give away his money had drawn the two of them closer together
as she saw more of his generosity and he saw more of her support.
Having heard their ideas, the Trust Specialist agreed they made a lot of
sense. She then explained what it would take in the way of time and effort
to put each of the Trusts together. Given the work involved, she estimated
six to nine months before they would complete the documents, especially
given the extent of the gentleman’s holdings. He promised to have his staff
make it a priority to help on the matter. After all, the couple already
scheduled their friend, the minister, and his church’s chapel for a day in just
under eight months for the wedding.
Multiple Needs
As the owner of three businesses, the gentleman did not believe in putting
all of his eggs in one basket. Also, his study of the materials given him by
the Trust specialist convinced him of the value of having more than one or
two Trusts, given that he could afford to set them up properly, which he
could. Therefore, he decided to set up seven Trusts, one for each of his
three children, one for each of his two ex-wives, one for his premarriage
assets and one as a Family Trust with his new wife. She would also set up
one for her premarriage assets.
After spending a few hours filling out a questionnaire for each Trust, the
gentleman met with the Trust specialist. They discussed the answers he
provided and determined the purpose of each Trust. That information would
come in handy in choosing the people involved in the Trust. Obviously, the
gentleman would be the Grantor, and the Beneficiaries would vary by Trust.
This left the key positions of Trustees and Protector for each Trust to be
filled.

Adverse Trustee
The Trust specialist explained the need to have at least one adverse Trustee
on each Trust to make it a legitimate Trust. She also explained that she had
a handful of people working with her, serving as Trustees on Family Trusts,
and that they would be available to work as Trustees on any Trusts she
helped the woman and gentleman set up. Not related to the Grantor, they
qualified as adverse Trustees. Since he would probably also want people he
knew working as Trustees on the Trusts, she would train them to properly
handle Trust administration. They agreed each Trust would have at least one
experienced Trustee. The other Trustees being recommended by the
gentleman.
One of the Trustees working with the Trust specialist happened to stop by
the office just as the meeting ended. The young man started working as
Trustee on a Trust set up by a friend of his, and impressed the Trust
specialist who invited him to work on one other Trust. He explained that he
was working on an MBA and enjoyed the Trust work, as it gave him an
education into building wealth that surpassed what he could get in the
classroom. His personality clicked with that of the gentleman and, after a
discussion with the Trust specialist, they all agreed the young man would
work as the adverse Trustee on some of the Trusts set up by the gentleman.
After further conversation, the gentleman realized he might not want the
young man as the adverse Trustee on the Trust for his premarriage assets or
his new Family Trust. He felt that could create a conflict of interest should
he want to hire the young man to help run one or more of his businesses.
The specialist assured him she could provide another qualified adverse
Trustee for each of those two Trusts.
Over the next two weeks the gentleman managed to find the people to serve
as Trustees on each of the Trusts. He filled the Trustee positions on his
children’s Trusts by approaching their godparents. The older son’s
godfather, an insurance agent, the daughter’s godmother, a realtor, and the
younger son’s godfather, a small business owner, each agreed to serve on
his or her respective godchild’s Trust. He let each of the ex-wives pick her
own Trustee. These were Trustees without experience, so the Trust
consulting firm supplied the second Trustee on these Trusts.

Board of Trustees
For his own Trusts the gentleman decided he needed three Trustees. As first
Trustee he would use the young man he had met at the Trust specialist’s
office. A friend of his from college, whom he had done business with over
the years, would also serve as a Trustee. Finally, a young lady, who also
worked with the Trust specialist, would serve as the adverse Trustee.
Having the Trustees in place, he was ready to find Protectors for the Trusts.
His first wife suggested that he use her attorney as the Protector on her
Trust and the Trusts for each of her children. Knowing the attorney to be
both competent and a worthy opponent of anyone who would challenge the
Trust, the gentleman readily agreed. On hearing about this, his second wife
suggested her attorney for her Trust and her son’s Trust. Once again, the
gentleman agreed. As Protector on his own Trusts he chose an attorney who
served him well as corporate counsel over the years.
Meanwhile, his potential wife had also met with the Trust specialist about
the Trust for her premarriage assets. She agreed it made sense to have the
same young person as adverse Trustee on her Trust as would serve on the
Family Trust that she and her husband-to-be were setting up. She selected
an uncle to serve as the second Trustee. An old friend of hers who worked
in arbitration agreed to serve as Protector on her Trust.
Rules and Regulations
With the cast assembled, it was time to draft the Indentures for the Trusts.
While this could have come first, the woman and gentleman agreed with the
Trust specialist that it would be worth letting the Trustees and the Protectors
join on this exercise. This would give everyone a fuller understanding of
what the Trust they served on was about and why it existed. It also helped
them better understand their particular roles.
Obviously, the couple hoped the Trust would grow over time, but of all the
Trusts, the new Family Trust proved the simplest to set up. The entire res,
also known as the corpus, consisted of $250,000 cash to start the Trust. The
Beneficiaries were the husband and wife-to-be, his children and the state
park. He and his children had spent many happy hours camping in some of

the state parks. By naming the state parks as a Beneficiary, it becomes
impossible for a court to challenge the Trust without the presence of the
state’s attorney general representing the people.140
Funding and Cash Flow
Since the Trust set up for the woman’s Trust involved so few assets and so
few people, it took next to the least amount of time to set up. She deeded
her equity in her condo to the Trust. According to the Indenture, after
expenses any money from renting the condo would go first to her to pay the
mortgage. Any profits from the rent would go to pay the expenses of the
Trust and to the Beneficiaries. As Grantor, the fiancée named as
Beneficiaries her husband-to-be, herself, a favorite charity, and a group of
public libraries. (By naming the public libraries, people of the state become
a Beneficiary and it never hurts to have the attorney general on your side if
someone challenges your Trust in court.) Her car went into an Asset Trust,
with Trust Capital Units from the main Trust; these provided income for the
Asset Holding Trust to pay for the maintenance, insurance and eventual
replacement of the car. Jewelry, artwork and other valuables went into a
second Asset Trust with enough Trust Capital Units to cover the insurance.
While each of the gentleman’s ex-wives had kept the house after the
divorce, his attorney (he could afford the best) had made sure he kept a 50%
financial interest in each house. Each ex-wife got to place her house in her
Trust in exchange for Trust Capital Units, which were divided among the
children’s Trusts. The gentleman also put plenty of stocks and bonds into
each of the ex-wives’ Trusts to ensure payments at least equal to their
alimony payments. Each of these specific Trusts had an end date to coincide
with the end of his obligation for alimony payments.
Child Support Payments
Each child’s Trust received enough in the way of stocks and bonds to
ensure the beneficial payments to the child (via the mother as the adult
guardian) met or exceeded the gentleman’s child support payments. Also,
there were enough funds to cover the expenses of running the Trust.
Although a term requirement for child support was included, this set up
surpassed these legal duties.

As part of his financial planning for putting his children through college,
the gentleman bought a condo near a college on each child’s first birthday.
His thinking was that, by buying the condo with a 15-year mortgage, it
would be paid off when the child graduated from high school. It could be
used to get a loan to help pay for the child’s education or provide the child a
place to live while in college. Each child’s Trust had an Asset Trust to hold
the condo the gentleman bought for that child. A stipulation in the Indenture
stated that money from the condo (each of which had positive cash flow)
would go the child’s main Trust, to be held for educational expenses.
To ensure a close working relationship between his children (who got along,
even when their mothers did not), the gentleman had each of the children’s
Trusts issue 15% of its Trust Capital Units to each of the other siblings’
Trusts. This would give the children a vested interest in the success of their
siblings.
Since the gentleman put a fair of amount of his personal stock from his
corporations into the various Trusts, he did so with the stipulation the Trusts
assign the chairman of the board of each respective corporation their
proxies. This allowed him to share some of his wealth with his children and
ex-wives without giving them control of his companies. (Had the proxies
been assigned to himself, he would have been seen as the owner of the
stock for tax purposes under Internal Revenue Code 675(4)(A)).
By moving his premarriage assets into a Trust, and setting up all the other
Trusts, the gentleman got ideas how to use his own Trust to help his
businesses.
While setting up the Trust he and his lady agreed to use instead of a
prenuptial agreement, the gentleman realized the value of using Trusts in
estate planning and assuring his children’s futures. He had also realized he
could use Trusts to improve the bottom line for his businesses.
The most obvious example involved the company cars. His companies
provided company cars for over a dozen field reps and top executives.
While the companies had the money to buy the cars outright, they realized
far greater tax breaks by leasing the cars and writing off the lease payments.
In fact, it was enough of an advantage that his accountant promised to shoot
the gentleman if he ever bought a car again.

Leases
After a conversation among the gentleman, his accountant and the Trust
specialist, he had the Trustees draw up the paperwork for the Trusts to buy
the cars and then lease them back to his companies. They agreed to not have
more than two or three cars in each Trust to limit the exposure to liability in
case of an accident.
It turned out the best way for him to do this was for the Trusts to be
Business Trusts under the three Holding Trusts he had set up for his
children. This meant that through the lease payments for the equipment, a
portion of the money from his companies would go to help pay for his
children’s educations. He also arranged for major office equipment (for
example, expensive copiers), as well as other equipment for his businesses
to become assets in the Asset Holding Trusts, generating more lease
opportunities. None of this redirection of funds went to him.
While doing this, he realized he stumbled on the solution to a problem he
had with one of his businesses. He and one of his top engineers had come
up with a new way to make one of their products. It involved a unique way
of using three different pieces of equipment together. This resulted in
cutting the time of manufacturing almost in half and cutting the expense by
a third. Obviously, this would give his company a real edge in a competitive
market. The problem was that he knew at least one of the three sellers he
would buy the equipment from would let his competitors know what he had
bought. Eventually a smart competitor would put the pieces together and
figure out what he was doing (or, to use the technical term, reverse engineer
the process).
The epiphany that helped solve his problem came when he realized that
each of his three children’s Trusts could buy one of the three pieces of
equipment and then lease it to his company. By having the equipment
bought by three separate “companies” (that is, the Trusts, each using a
fictitious name) and delivered to three separate addresses, he could keep
confidentiality. After all, no Trustee could tell anyone to whom the Trust
leased the equipment.
Given his faster turnaround on orders and his competitive pricing using the
new process, his company got enough new business that it needed to

expand into a new facility. During a discussion with the accountant, they
talked about the advantages of buying versus leasing. The accountant then
asked “Why not do both? Put together a Trust to buy the building, and then
have the company lease it from the Trust.” By doing this, the business got
the tax advantages of the lease, while the Trust realized the appreciation of
the property and profits from the lease payments.
Research and Development
Meanwhile, another of the gentleman’s businesses had a slightly different
problem. It owned all of its equipment, but needed to spend more money on
research and development. The company was asset rich but cash poor, and
he felt that this could harm its capacity to stay innovative and competitive.
The accountant stated that from an accounting point of view, it would be
helpful for the gentleman to let the Trusts buy the equipment and lease it
back to the company. This would give the company the cash it needed and a
set of tax writeoffs, while the profit from the leases would once again go to
his children’s Trusts.
Obviously, all this depends on the Trustees of his children’s Trusts working
with the gentleman to make this happen. Fortunately, they knew him to be
an exceptional business leader and agreed that any venture he undertook
would be a good investment.
On a more personal business matter, the couple decided to buy a new home.
While his businesses were doing well enough he could afford to pay cash
for the house the two of them wanted, you can imagine the accountant’s
reaction to that idea.
Looping Profits
The gentleman talked with the Trustees on the Trust he had set up before
the wedding and explained that he wanted to borrow money from the Trust
to buy the house. They agreed to loan him the money at a rate equal to the
average of the best rates he could get from any other three established
lenders. This removed questions about the legitimacy of the loan. He and
the wife would get the interest write-off on their taxes, and the Trust
realized the profit from the loan.

Chapter 25
Anomalies, Black Holes and Dreams
Irrevocable Trusts offer fantastic possibilities and opportunities to you and
your family. That said, we want to be sure you recognize and understand the
following key factors:
Getting a Common-Law Trust is not be the easiest path to choose
The possibility of opposition along the way
If you have a particular ambition, it may be the best financial system
available
If well managed, it is the safest vehicle for protecting both assets and
Beneficiaries
Requires dedication and time.
We have not written this book to convince you to set up a Trust. After
comparing and distilling our collective experience, we want to be sure you
know what you are getting into before you get involved in Trusts. The
greater message is the need to take responsibility for you and your family
the best way possible amid a strange political era where your assets can be
the target of the greedy.
Before we get into the anomalies and black holes of reality, we want to
share with you our dream.
Redistribution of Wealth—The Right Way
The International Bankers thrive on war. By selling weapons and
ammunition to both sides of any conflict, they continue to dominate the
planet with their never-ending build-up of wealth. Destitute lives churned
up into desperation and distress through poverty become fodder that breeds
armies. Outrageous beliefs give all religions and patriots a reason to die. By
keeping people riled up so they cannot think and do not have time to

properly educate themselves, those in power stay in power. Isolated in their
towers, these controllers separate themselves from humanity and thrive on
the chaos and destruction they create.
Redistribution of wealth is anathema to the dominant players of this world.
Therefore, putting ideas into the minds of the people that perhaps the status
quo is not permanent and that better nondominating ways are possible, will
not gain support from the well-oiled wealth.
A properly structured and managed Trust is good for the family—if morals
and ethics are instilled with business savvy. Yet, what if one after another,
these functional family groups hooked into each other? As one group
thrives, it fuels another. If one group fails, support comes from the network.
A simple idea, illustrated in Appendix D, shows how surplus is shared with
Beneficiaries and with other Trust groups.
Starting with our 
particular social 
reality, the 
education 
needed to get 
people to share 
and trust is a 
monumental 
task.
Appendix D displays the Callis Family Trust, which has both Beneficiaries
and Exchangers. One of the Exchangers is the Xenter Family Trust. The
amount of Trust Capital Units is not shown on this chart; we can assume the
Xenter Family Trust became an Exchanger in the Callis Family Trust for at
least 25 Trust Capital Units and, thus, became eligible to receive
distribution.
While the Xenter Family Trust is a Beneficiary of Callis Family Trust, the
P. L. Family Trust became an Exchanger in the Xenter Family Trust for 25
Trust Capital Units. It is eligible to receive a payout when Xenter Family
Trust has a surplus, or has a profit.

Wealth redistributes as it continues to pass from one Trust to another.
Managing this wealth requires educated Trust members. Thus, training and
mentoring are essential to the organization.
Some of the Trust Officers appear on more than one Trust, and on the
Abagail Sorrenson Family Trust. Janet Foulson, Grantor, appears as the
General Manager working with the Board of Trustees.
About the birds-eye view of the collective Family Trust group found in
Appendix D, the second illustration shows that some Trusts overlap, while
others do not. It is best to avoid too much overlap. The idea is to share the
wealth, not keep it in one pile. We saw in Chapter 6, where we discuss
tactics of the rich, how the right hand’s washing the left hand is not going to
help the overall situation–since there is no sharing of resources.
There is a story told that one of the large family organizations has a
Business Trust that shares its profits with a Charitable Trust. Then the
Charitable Trust gets services from the Business Trust. For example, when
the Charitable Trust needs a new building, it hires the Business Trust to
build it. The new building’s funding is the beneficial distribution just
received from the Business Trust and so is given back to the Business Trust
to construct the building. What is wrong with this picture? Charity? Does
not sound like it to us. This is much like a dog chasing its tail. The money
goes from one Trust to another and back.
To stop the attitude of hoarding, we need to restructure our consciousness.
To improve the other is to strengthen ourselves and secure our future, but
the way this Business Trust/Charitable Trust operates, the profits are not
shared. Kept within the same two pockets, they continually passed back and
forth. We wonder how many other games were played this way.
Starting with our particular social reality, the education needed to get people
to share and trust is a monumental task. The mountain of pain picked up by
simply being a child and enduring the average family and social strictures
that now exist, needs resolution. The grief and anger each person carries
goes back to birth, and many times even back to those controversial past
lives. We already come in fully loaded and charged, then deal with the
standard dysfunctional lives found in this wounded world.

By adapting a 
policy of shared 
wealth, paper 
money eventually 
disappears or 
changes its 
characteristics to 
something 
different.
This ideal of sharing is simply a dream, but one to be mulled over and
considered. Where are you on the sliding scale of getting along with others?
How would you rate yourself? Are you too angry to trust? Too fearful or
confused to tell the truth? Do you want to hurt others, or do you notice that
you do not necessarily want to hurt others, but you do anyway?
One of the worst problems is selfishness. Can you give to others? Does it
make you happy to know you help them?
You are just as guilty if you are on the other end of the scale. Do you
avoid arguments and sacrifice yourself to please others? This makes you a
liar, for you pretend to agree when you do not agree at all. Eventually, you
will do damage. All of these unresolved issues which drive you are in the
way of simply sharing a harmonious life with others.
It has been so long since “normal” occurred, that we can hardly remember a
time when it was not this way. If you search yourself, you will realize that
you innately know, deep inside, that at one time you did live at peace with
others.
These wheels (Trust groups) connecting to other wheels, in overlapping
circles are the ideal: a human family continuously sharing wealth and
knowledge while bringing up the “bottom.” The bottom consists of those
lacking support. This ranges from the homeless to the criminals.
By adapting a policy of shared wealth, paper money eventually disappears
or changes its characteristics to something different. It might be replaced by
other values. Shared wealth does not stop at the bank, nor begin there.

Spread through a Trust circle of ten or fifteen families there may be four
farms, eight businesses and twenty vehicles, while another Trust group has
other goods and services to share. We suggest a different way to view
government, communication and education.
Chinese children share. No one is special or a hero. In the West, we shun
such ideas, yet a cohesive and bonded group is far superior to any other
system. Taught from childhood to share and join in, the idea of working for
a living becomes obsolete, replaced by the idea that serving others is an
honor. What? Yes, it is natural for healthy people to want to support one
another. It is human. What would the world look like then?
Let us try a few ideas. Free energy becomes the norm, the deserts
cultivated, the forests well cared for, wild animals watched over and the
children safe.
This may be too gentle for you, especially the rugged individuals, but we
daresay the task of reclaiming the beauty of this world offers many
challenges. This will not be an overnight success. We need many
generations to achieve this vision.
Free energy 
becomes the 
norm, the 
deserts 
cultivated, the 
forests well 
cared for, wild 
animals 
watched over 
and the 
children safe.
What about cities? There would probably not be so many of them.
Transportation would be swift, smooth and focused on rapid public transit,
with “cars” being for local running about.
Now to the more specific and troubling matters of the Trust world.

Muddled Messes
If the Trust has enough cash flow to hire the finest administrative staff, and
the Trustees have become well trained over the years, this does not, in and
of itself, assure a smooth ride. The idea of an adverse Trustee assumes that
at some point the Grantor and the Trustees will come to a disagreement.
Whatever the disagreement is, the Trustees are on the side of the
Beneficiaries, while the Grantor has other plans in mind. For example, the
Grantor may want to earmark funds to buy an apartment building, but the
Trustees feel this is too risky because their duty is to ensure the distribution
to the Beneficiaries. Here, a Board of Trustees can come to shouting
matches. This, though, is not the worst disaster because it is, ultimately, a
healthy argument.
Where the real problems occur is in lack of attention to detail and endless
distraction. Trustees who do not care to review financials, but simply sign
documents in response to the request of either the Grantor or the
administrative staff, are usually dangerously unqualified for the job. This is
more likely to occur with Trusts that do not have a large cash flow. A sure
sign of lack of interest in new Trustees is when they come aboard, then
show no willingness to invest time or energy into learning to be good
stewards of the assets entrusted to them. Another sign is when they do not
charge for their time because they do not take the Trust seriously, and thus,
are not hands-on and focused. Such inattention can destroy your Trust.
Another problem is the Grantor keeps too much control, thus failing to train
Trustees by giving them assignments to sort out details and come up with
solutions.
Trustees need to be involved. Common behavior and signs of Trustees who
are not competent and thus not an asset to the Trust, Beneficiaries or the
Grantor are:
Fail to ask questions.
Appear only to sign checks
Not available to the Beneficiaries for advice.
Do not know the current financial trends.
Not aware of the cash flow.

Pay no attention to helpful information given to them, such as Policies
and Procedures, current news reports and books relating to Trust
matters.
Fail to set or attend Board of Trustees Meetings, or add to or edit a
Board of Trustees agenda.
The same can apply to a Protector141 in name only. He or she is never
updated and does not inquire about the status of the Trust. A Protector
should insist on attending at least one Trust meeting a year.
An Executive Secretary who has no skills can be the downfall of a Trust
group. Without computer talents, communication experience and the ability
to write a letter, the Executive Secretary can be more of a liability than an
asset. Someone in the Trust group must be able to write Minutes, and
Minutes must be properly written.
When teaching Trustees how to write Minutes, we are often shocked at the
results. From poor spelling and bad grammar to outrageous statements and
name-calling, we have seen it all. Remember that these documents may be
read by others and should reflect the values of the Trust. One of the greatest
problems lies in decisions made without a Board of Trustees meeting with
Minutes to give the Trustees authority to act accordingly. Often, several
months pass before anyone in the Trust group thinks that perhaps there
should be some documentation and authorization for activities. Minutes
save many Trusts. They record the history of decisions, as well as who
became ultimately responsible for the activity in question. The more
detailed the Minutes, the clearer the communication.
Poor or nonexistent communication is one of the biggest downfalls of a
Trust group. Untrained, uncaring and plain sloppy administration will get an
Irrevocable Common-Law Trust into more trouble than you can believe.
Any attack on a poorly managed Trust can bring it down.
The issues of Minutes and the abilities of the Executive Secretary may not
apply to the Irrevocable Statutory Trust.
If you care about the Beneficiaries, you will care about significant
administration protocols.
By the way, careless management in any organization eventually ruins the
business.

Disruptive Beneficiaries, Jealous Siblings
An entire Trust can be brought down by Beneficiaries who feel cheated, and
siblings who cannot tolerate a brother’s or sister’s success. The hateful can
drag a Trust into court many times, exhausting resources.
We previously covered dissatisfied Beneficiaries. Remember, it is not
money they lack but love and enough attention. The sibling problem is
more difficult because it is our parents, or the parents of our spouse, where
the issues remain unresolved, with whatever childhood matters have yet to
be settled.
One of the solutions of a disrupted Trust is for the Board of Trustees to turn
all assets over to charity, after which none of the Beneficiaries gets an
inheritance. This can be done if there is a provision in the Trust Indenture
giving the Board of Trustees this alternative.
Ph.D. in Trust Talent Needed
Another big downfall with a Common-Law Trust or an organization with
shares, units or other types of ownership division, is administration of the
Certificate Register. In the Common-Law Trust, the matter is even more
complex when applying reasonable distribution methods and procedures. In
training administrative personnel, it seems difficult for the mind to initially
sort out how to properly assign what are active and earned Trust Capital
Units and what remains inactive unless corpus is sold. We only touch on
this subject here. We will go into much greater detail in Volume II.
When a Trust is set up with distribution clearly expected, all else falls into
place, including competent Trustees and the administrative staff to support
them. From this flow the obvious protocols to set up the Trust Certificate
Register.
In scam Trusts, it is the Certificate Register that is misapplied. Instead of
properly assigning Trust Capital Units on Certificates to Beneficiaries,
Trustees, and Officers of the Trust group, all the Certificates go to the
Grantor. This immediately moves the Irrevocable Trust to the Grantor Trust
status, and thus the Grantor becomes taxable and liable.

Not So Rich
The big anomaly about the Common-Law Trust is that it does not take
oodles of money to create or keep. This applies only IF there is a cohesive
family unit that has taken the time to learn how to do it properly. A
Common-Law Trust can be run on as little as $20,000.00 profit a year when
the incentive includes the large potential to be gained. Few families, though,
can handle the administration needed to run a Trust this tightly, on so few
dollars.
With their different personalities and needs, including diverse goals, it may
feel impossible to train children to think about accounting, legal
applications and administration. This educational strategy takes planning
and strong leadership with everyone pitching in both knowledge and time.
Where there is a will, there is a way. We have known Trusts that during
some years had such scant cash flow that it seemed like the Trust lived on
fumes instead of money and in other years cash just dumped into the
checking account.
Cash Flow
For smaller Trusts, cash flow is often the issue. Volatile markets, and lack
of enough connections to strong and consistent investments, can prove to be
tremendous problems. So far, the most viable investments are businesses
and partnerships. Bear in mind, though, the current aggressive activities of
both the IRS and the SEC.142 Yet, if the long-range goals remain intact,
with the family and Board of Trustees cohesive, even these troubles resolve.
Although diversification of investments helps to relieve the greater
difficulties, through experience we find that even placing funds in over 20
investments may not lessen the troubles. This is the test, where the issues of
common goals and an encouraging group will make a Trust outlast the bad
times and the opposition.
Target
Some fear the Common-Law Trust may become a target for the IRS. This
has some small merit. Historically, such trouble came from two causes: The

first was inappropriately handling the 1041 tax return, and the second was
when a web site advertised the availability of Common-Law Trust services.
The results of the former have not been settled, other than to say the
Common-Law Trust we describe herein is fully acknowledged by the IRS
as Irrevocable and not “abusive.”143 The results of the latter contributed to
the content of this book and more so to Volume II. Having tested what
works and what does not work has given us many revelations about how
both the IRS and the courts handle Trust complexities.
There was a third incident, but the IRS dropped the pursuit. Although the
Employer Identification Number can tag a Trust, it cannot indicate whether
it is Common-Law or not.
The issue of handling challenges goes back to know-how, administration
skill and Trustee training.
Even if the IRS looks into a Trust, know ing the proper way to cope with it
quickly resolves the issue. As we said before, a Trustee who can go to an
IRS interview, fully informed of rights and jurisdiction, is worth his or her
weight in gold. We have seen this happen, and are pleased to report the
pivotal issue here is knowledge. Often, the IRS paperwork is in error and
can be corrected with a communication from a properly trained Trustee and
paperwork from the Trust.
This same knowledge applies to inquiries from the FBI and other agencies.
The Trustee needs to know what he or she can and cannot say. The main
strength here is that when the Trustee knows he or she is to protect the
Beneficiaries. The answers, carefully worded, are not the babbling of a fool,
where all spills out–as shown so often on television.
Even if the IRS looks 
into a Trust, knowing 
the proper way to 
respond has often 
been a great bonus. A 
Trustee who can go to 
an IRS interview, fully 
informed of rights and 

jurisdiction, is worth 
his or her weight in 
gold.
Once asked by a lawyer if we were involved in illegal activities, one of our
Trust members was astounded. The answer came, “What? You think we
would do that? No, we know one of these Trusts will land in court someday.
We do everything according to the letter of the law. We manage them
tightly.”
So, will you be a target of enforcement agencies? Assume that you will be
and run the Trust as though you need to argue your case before a judge.
Here lies the secret of knowing what to put into Minutes. If you think they
might someday become public, take care and be clear. Although at the
moment the odds are against your Trust’s getting tangled up with agencies
and courts, you still need to be vigilant.
If we frightened you, that is good. Now, you need to decide whether you
want to step forward, or remain in the safety of the cozy world of “the
system.”
Old Age
One of the most common problems with any inheritance issue is the mental
condition of the elderly. One reason for an Irrevocable Trust—they cannot
change their mind and give all their assets to strangers. Even with an
Irrevocable Trust, the elderly may try to change their minds, and here is
where the real conflicts arise with the adverse Trustee who works for the
Beneficiaries. Handled correctly, there will be no fear that mom or dad can
change his or her mind if unable to remember earlier decisions or, in the
event of remarriage, forget you are the Beneficiary.
The Mystery
We have revealed much, yet left a great deal unsaid, particularly the vital
details. What are the rules for creating Minutes? How is a Trust Certificate
Register set up? How is a Trust’s bank account opened? What are the
protocols for transferring or exchanging properly into a Trust? What do you

say to agents of the government? How do you keep the paperwork? How do
you keep your Trust current with recent laws?
You will find many answers in Volume II, and some of the answers come
only through connections, finding a magical mentor and study. Those
learning to become Trustees will gain much from sitting in on interviews
with government agents. This mentorship is what gives Trustees
confidence.
We found all the answers to make a Trust work correctly by piecing them
together from court cases and snips of experience here and there. Oddly
enough, the Internal Revenue Code holds much of the information, for it
was written when these Trust types were more often used.
The secrets to setting up a Common-Law Trust are out there, but you must
be well enough informed to recognize them when you see them.
The Journey Continues . . .
Volume I is but the primer. We invite you to get Volume II, designed for
those serious about having a Private Trust, for professionals and those who
want to know more.

Glossary
Acceptance: An agreeing, either expressly or by conduct, to an act or offer
by another party. Conclusion of a contract, and the parties become bound by
that contract.
Active Trust: A Trust where the Trustees actively participate to preserve
and increase the Trust estate, as opposed to a Passive Trust, where the
Trustees merely hold title.
Administrator: A person the court appoints to manage the probate of the
estate of a person without a valid Will.
Adversary: Any individual who has a substantial economic interest in the
body or income of the Trust (or business), which gives him or her reasons
to act for personal best interests.
Adverse Trustee: An opponent to the Grantor. A Trustee who can disagree
with the Grantor and who has authority over him or her, otherwise the
Grantor is taxable.
Allodial: Free from the tenurial rights of a feudal overlord. The property
owner “owns” the property as opposed to Fee Simple, where the property
passes on to heirs, and is not owned. Allodial property is yours to do with as
you please. You own land from the center of the Earth to the center of the
sky, including all mineral rights.
Arm’s Length: When the Trustees has “independent interests” from the
Grantor. They are “unrelated parties each acting in his or her own best
interest” (see below), the Grantor has an arm’s length distance from the
Trust. This satisfies the legal requirements the Trust is for the Beneficiaries
and it is genuine. Compare the following from Black’s Law Dictionary Sixth
Edition:
Arm’s length transaction: Said of a transaction negotiated by unrelated
parties, each acting in his or her own self-interest; the basis for a fair market

value determination. A transaction in good faith in the ordinary course of
business by parties with independent interests. Commonly applied in areas
of taxation when there are dealings between related corporations, for
example, parent and subsidiary. Inecto, Inc. v. Higgins, D.C.N.Y., 21
F.Supp. 418. The standard under which unrelated parties, each acting in his
or her own best interest, would carry out a particular transaction. For
example, a corporation sells property to its sole shareholder for $10,000. To
test whether $10,000 is an “arm’s length” price, how much would the
corporation sell the property to a disinterested third party in a bargained
transaction.
Artificial: “Created by art, or by law; existing only by force of or in
contemplation of law. Humanly contrived. ‘Artificially’ drawn is a Will or
contract using apt and technical phrases and presents a scientific
arrangement.” (Black’s Law Dictionary, Fourth Edition).
Bank Trust: This refers to either a Trust held and governed by a bank, or in
a Common-Law Trust, a Management Trust that handles the money for
other Trusts in a bank account.
Beneficiary: A person named to have and hold the equitable interest in a
Trust estate; holders of the Certificates of Capital Units, who will receive
payments when the Trust so dictates.
Bequest: A gift of property made through a Will.
Capital Units: Stated on a Certificate is the amount of Units representing a
portion of the Trust corpus. The percentage of Units held allow the holder
to receive a percentage of corpus if it is distributed, and a percentage of
profit when allocated.
Certificates of Capital Units: Given in exchanged for property. The
number of Units representing a percentage of the Corpus is stated on the
Certificate. If the Trust ends, the CU holder receives that unit share of the
capital investment in the body of the Trust.
Certificates of Beneficial Interest: The Units held represent a percentage
of income distribution.
Chancery: Originally, kings heard cases personally but later delegated this
duty to the chancellor (secretary) whose power grew accordingly. The Lord
High Chancellor (or Lord Chancellor) is now “the highest judicial

functionary in England” (Black’s Law Dictionary 6th). Therefore,
“chancery” (a contraction of “chancellery”) originally meant simply the
office of a chancellor, but its own status changed into a court system as the
power and prestige of the chancellor increased. Now also known as a “court
of equity . . . which administers justice and decides controversies in
accordance with the rules, principles, and precedents of equity, and which
follows the forms and procedure of chancery; as distinguished from a court
having the jurisdiction, rules, principles, and practice of the Common-Law.”
In America, Common-Law and equity courts were merged by the Field
Code. For its guiding, the central principle of the code is that “distinctions
between actions at law and suits in equity and the forms of all such actions
and suits, heretofore existing, are abolished.” It substituted the “one form of
action for the enforcement or protection of private rights.” The Field Code
II Common-Law procedure in a Nutshell;
http://www.drbilllong.com/Jurisprudence/FieldII.html
Chattel: Every species (type) of property, movable or immovable, which is
less than freehold (freely held and owned).
Common Law: The part of law developed over time through court
decisions and court opinions, rather than by decree of statues or other
legislative acts, including those laws inherited from English old-time law.
Common-Law Trust: A Trust organization which is express, active, inter
vivos, irrevocable, and simple or complex; in which the Trustees hold full
fee simple title to the Trust assets in joint tenancy. The Beneficiaries of
which are the holders of Trust Certificate Units. A contract in the form of a
Trust.
Community Property: Undivided interest in real or personal assets owned
and gained during marriage by spouses; owned by the two of them. By
agreement between the spouses, community property can be nullified by
transfer from one spouse to another.
Complex Trust: A Trust that may pay out both principal and the Trust
corpus. The opposite of a Simple Trust which needs a specific amount to be
paid to one Beneficiary each year. The Complex Trust allows the Trustees
to decide what, if, and how much is disbursed or kept by the Trust and
taxed to the Beneficiaries.

Conservator: A protector and guardian whose business it is to enforce
certain statutes and legal agreements. Not a Trustee, but someone appointed
from the outside to arbitrate an estate.
Consideration: Regarded as the equivalent return given or suffered by one
party for the act or promise of another. Essential to the force of a contract.
Something offered, something accepted, that is consideration.
Contract: An agreement in which a party undertakes to do or not do a
particular act. Elements of a written contract are: 1) parties competent to
contract, whose names appear in the writing, 2) the subject matter of the
contract, or a clear statement of what is to be done or not done, 3) lawful
and valid consideration; and, if made of mutual promises, then a clear and
explicit statement of what each party promises to do or not to do, 4) assent
of the parties, which is evidenced by signatures.
Conveyance: The instrument by which an act of property transference
happens, usually in writing. Bill of Sale, Deed, etc.
Corpus: The body and capital assets. The property in the Trust. The Trust
principal.
Corpus Juris Secundum, Literally, “second body of laws,” following the
Corpus Juris of Roman law. This borrowing further underscores the
tendency of the current courts to refer to Rome for guiding principles.
Creator: The One who creates a Trust, settles the initial funding to the
Trust, and invites the Trustees, same as Settlor, Grantor, and Trustor.
Decedent: The person who has died.
Declaration of Trust: An agreement outlining the duties and bonds of the
Trustees to serve the Beneficiaries per the wishes of the Grantor. A contract
in Trust form. Also known as a Trust Indenture. See Indenture. The
acknowledgment in which the Creator and the Trustees declare the Trust to
exist, taking title to property for holding and sign agreements to do so; what
a bank would see for opening accounts. It declares the fiduciary set up of
assets, and what is filed with the county. See Trust Document and Trust
Indenture.
Deed: Documented proof of ownership of property. Usually filed with the
county.

Disclaimer Deed: Used in community property states to deny a spousal
claim to property. Similar to a Quit Claim Deed.
Devisee: The person who receives a gift or real property by a last Will and
Testament.
Enfeoffs: To invest with a feudal estate or fee.
Estate: All property owned by a person at death. This includes both real
and personal property.
Express Trust: A Trust expressly set up by a Grantor, as opposed to a Trust
settled by a Will or implied, and thus, created by a court.
Equity: “That part of the law which, having power to enforce discovery. It
“Administers Trusts, mortgages, and other fiduciary obligations.” It also
manages and adjusts Common-Law rights where the courts of Common-
Law have no machinery and “supplies a specific and preventive cure for
Common-Law wrongs where courts of Common-Law only give subsequent
damages...As old rules become too narrow, or are felt to be out of harmony
with advancing civilization, a format is needed to gradually enlarge and
adapt to new views of society. To carry out this on a large scale, without
ignoring existing law, is to introduce, by the prerogative of some high
functionary, of a more perfect body of rules, discoverable in judicial
conscience. It stands side by side with the law of the land, yes overriding it
in cases of conflict, as on some title of inherent superiority, but not claiming
to repeal it. Equity is such a body of rules.” (Black’s Law Dictionary,
Fourth Edition)
Equity, courts of: Administers justice according to the system of equity
and according to a specific course of procedure or practice.
Equity Trust: A Living Trust that holds property for a family or individual
who is a Beneficiary.
Executor: A person named by the Testator in a Will to manage the estate.
Fair market value (F.M.V.): The agreed value of the item when placed in
Trust (or received by a taxpayer). The price when the transfer or exchange
happens. This can be the appraised value or the agreed value, as there are
some items that have no fair market by their nature. This dollar value sets
the basis for whether the property increases or decreases in value from the

date of the transfer or exchange. (See Commissioner vs. Marshman, C.A. 6
7279 F 2d 27 (1960)
Family Trust: A Living Trust or Grantor Trust used to pass ownership of
property and avoid probate. It may not avoid estate taxes. After Grantor
dies the Trust becomes a Testamentary Trust.
Fee: In law, an estate of inheritance in land, either absolute and without
limit to any particular class of heirs (fee simple). It can also be limited to a
particular class of heirs (fee tail); an inheritable estate in land held of a
feudal lord on condition of performing certain services; a territory held in
fee.
Fee Simple: Absolute title and authority to use and dispose of property in
whatever way one may wish. It is without limits to use and who may
receive the estate: Trustees of Common-Law Trusts have this title to the
assets of the Trust.
Feoffor: One who enfeoffs or grants a fee.
Fiduciary: From the Latin meaning to “Trust.” I Trust you. A person in a
position of trust, responsibility, and confidence. Usually applying to matters
of money and property and is based on trust.
Fiefdom: The domain controlled by a feudal lord or organization controlled
by a dominant the person or group.
Foundation: An organization (corporation or Trust) holds assets for a
purpose, instead of for others (Beneficiaries). The income and assets are for
charitable and gifting purposes for undetermined specific uses.
Guardian: A person with legal control and responsibility for a minor child
or an incompetent adult.
Grantor: The person who grants and gives over the initial funding to set up
the Trust. Same as Creator, Settlor or Trustor.
Grantor Trust: Any Trust set up by a Grantor for his benefit. He or she
controls the funds and assets during his or her lifetime. The funds and assets
of this Trust pass to others named in the Trust at death of the Grantor.
Because of the benefit and control, the Grantor or Settlor is taxed on the
income, per the Internal Revenue Code (IRC).

Heir: 1) A person who is legally entitled to inherit, through the natural
action of the law, another’s property or title on the other’s death. 2) Anyone
who receives property of a deceased person either by Will or by law. 3) A
person who appears to get some trait from a predecessor or seems to carry
on in his tradition. Webster’s New World Dictionary, Second College
Edition (1974)
Heir Beneficiary: In the civil law, one who has accepted the succession
under the benefit of an inventory regularly made. Black’s Law Dictionary,
Revised Fourth Edition (1968)
Heir, Legal In civil law, a legal heir is the one who takes the succession by
relationship to the decedent and by force of law. Black’s Law Dictionary ,
Revised Fourth Edition (1968)
Indenture: A written contract binding a person to work for another for a
given time. An obligation to perform a duty.
Inter Vivos Trust: A Trust created during the lifetime of the Grantor. They
are “alive” together, as opposed to a Trust created from a Will at death.
International Business Corporation (IBC): A corporation incorporated
(formed) in an offshore jurisdiction.
Intestate: A person who dies without leaving a valid Will. The status of
having died without a valid Will.
Irrevocable Trust: Any Trust in which the Grantor keeps no power to
revoke or cancel the Trust agreement, and no power to have the assets
returned to him or her, as opposed to a Revocable Trust.
Joint Property: All property owned jointly with another party or parties.
Joint Tenancy: An undivided interest in property held by two or more
people, who all hold the same title and rights of possession, at the same
time, jointly, and under which the survivors take the entire interest. In a
Common-Law Trust arrangement, the Board of Trustees holds title in joint
tenancy to all Trust assets.
Joint-Tenancy Deed: The deed which stipulates that both husband and
wife (any two parties) own all the property together, not in halves.

Jurisdiction: A court’s right to hear and decide a case based on the
following: place, action and parties. All three factors must be met before an
action can advance.
Living Trust: A revocable Trust created and controlled by a person, whose
assets transfer at death, thus avoiding probate, but not taxes. Family Trusts,
Grantor Trusts, Estate Trusts, Reversionary Trusts, Preservation Trusts, etc.
A Trust set up while the Creator is alive.
Nonadverse party: Grantor’s father, mother, issue, brother or sister; an
employee; a corporation in which the Grantor has most stockholdings, and,
thus, voting control; a subordinate employee of a corporation in which the
Grantor is the executive. IRC §672©.
Offshore Jurisdiction: Some examples of well-known offshore
jurisdictions are: The Bahamas, British Virgin Islands, Isle of Man, Belize,
Antigua, The Turks and Caicos, Nevis and St. Kitts, Luxembourg, etc.
Offshore Trust: A Trust formed in an offshore jurisdiction.
Privilege: Benefits granted or allowed by a governing body. Exemption for
certain burdens, or preferred treatment. All privileges come with limits and
requirements. An IRA continues tax-free until a person reaches age seventy
when funds are removed and then taxed.
Probate: Procedures under court direction and supervision deciding
ownership to allocate estate and property either bequeathed by a Will, or
cases without a Will.
Pure Equity Family Trust: A Trust for holding, maintaining and
preserving assets.
Pyrrhic victory: “A victory won with staggering losses, such as that of
Pyrrhus (319-272 BC.), King of Epirus, over the Romans at Asculum in 279
BC.” (American Heritage Dictionary)
Quitclaim Deed: A legal instrument by which one transfers all of his or her
right, title and interest in real estate to another party without guarantees as
to what the right, title, or interest in the property is. A deed stating, “I quit
my claim to the property.”
Rebuttable presumption: “A presumption which may be rebutted by
evidence...it shifts the burden of proof.” Black’s Law Dictionary, Fourth

Edition. For our purposes, the term means the burden is on you to prove
you did not carry out some crime the government asserts you did.
Res: That which is held and reserved; the body, or the capital of a Trust as
opposed to the income or interest.
Reversionary Trust: Any Trust where the ownership of the Trust assets
goes back to the Grantor when the Trust ends.
Revocable Trust: Any Trust in which the Creator-Trustor may withdraw
personal property assets from the Trust and by it dissolve the Trust. A Trust
that performs under an individual’s control and discretion for this person’s
benefit with a right to cancel.
Rule against perpetuities: A rule in property law which restricts a
contingent grant or Will from vesting outside a certain period of time. If
there is a possibility of the estate’s vesting outside the period, regardless of
how remote, the whole interest is void, and is stricken from a grant. The
rule prevents people from holding assets indefinitely—a concept often
referred to as control by the “dead hand” or “mortmain.” That is, the
purpose is to “limit the Testator’s power to earmark gifts for remote
descendants.”[1] Some argue the rule also prevents the concentration of
wealth in society. When a part of a grant or Will violates the Rule, only that
portion of the grant or devise is removed; all other parts that do not violate
the Rule are still valid conveyances of property.
Settlor: The one who settles the assets to the Trust. Same as Creator or
Grantor.
Simple Trust: Required to pay out a specific amount to Beneficiaries each
year; all income, not part of the body.
Situs: “...the place where a matter is considered, for example, for
jurisdiction over it, or the right or power to tax it. Situs of a Trust means the
place of performance of active duties of a Trustee.” Black’s Law Dictionary,
Fourth Edition.
State: A separate country, foreign, for the federal government, the United
States of America is a separate corporation that allegedly manages the 50
states.

Tenants in Common: An undivided interest in property held by two or
more people in common. There is no right of survivorship; an individual’s
interests passes to heirs, not to survivors.
Testamentary Trust: Any Trust set up by a Will, Grantor or Living Trust
which does not take effect until the death of the Grantor.
Testator: A person who sets up a Will.
Transfer: An act by which the property of one person vests in another,
whether by sale, gift, exchange, or otherwise.
Statutory Trust: Granted into creation by the laws of a state or government
and subject to all laws and stipulations of that granting body. It is, therefore,
open to scrutiny and invasion of rights and property by the granting body.
Trust Document: The full written contract of the Trust, complete with
names, terms, Minutes, letters of acceptance, schedules of assets, Certificate
Units, etc.
Trust Indenture: Also known as a Declaration of Trust or Grant of Trust.
The fundamental document to codify the Grantor’s purpose for settling the
Trust. It defines its internal procedures, sets the limits about what it may
and may not do, and forms permanent instructions to, and the sworn duty
of, the Trustees.
Trustee: The person or entity appointed or elected to conserve, protect, and
manage the assets or properties transferred to a Trust.
Trustee Fees: A Trust must have Trustees who will govern the assets in the
Trust for the Beneficiaries. The fees are paid yearly.
Trustor: Same as Grantor, Donor, Settlor, or Creator.
Undivided Interest: Synonymous with Undivided Right. “An undivided
right or title, or a title to an undivided portion of an estate. Owned by one or
more tenants in common or joint tenants before partition. Held by the same
title by two or more people, whether their rights are equal as to value or
quantity, or unequal.” This applies to those married, groups and a Board of
Trustees. See Black’s Law Dictionary, Fourth Edition.
United States: ...includes the Commonwealth of Puerto Rico, the Virgin
Islands, Guam and American Samoa. 26 CFR 170.59 Meaning of

Terms.121(e)(2).
United States of America: A corporation managing the several (50) states
and separate from the United States. Diversified Metals Products v. T-Bow,
Civil No. 93-405. E-EJL, United States Answer and Claim, United States
District Court of Idaho.
Venue: The area (usually defined as a county or parish) in which an action
occurs which results in legal proceedings; the area from which a jury is
drawn and where the trial is held.
Void: Canceled, of no legal force or effect, useless. A voided contract or
Trust means it is no longer in effect or valid.
Warranty Deed: A legal instrument to transfer all right, title and interest in
real estate to another. At the same time, it makes certain legally enforceable
guarantees, including the fact of said person’s full title to the property, and
said person’s right to convey the property.
Yellow journalists/journalism: “Journalism that exploits, distorts, or
exaggerates the news to create sensations and attract readers. [Said to be
short for Yellow Kid Journalism, an allusion to the ‘Yellow Kid’ cartoons in
the New York World, noted for sensationalism and vulgarity.]” The
American Heritage Dictionary of the English Language, Houghton Mifflin
Company, Boston, 1976.

Appendix A
Understanding Jurisdiction
by: Anonymous
The Apprentice and the Quakers
An Oath
In all of history there has been but one successful protest against an income
tax. It is little understood in that light, primarily because the remnants of
protest groups still exist, but no longer wish to appear to be
“antigovernment.” They do not talk much about these roots. Few even
know them. We need to go back in time about 400 years to find this
success. It succeeded only because the term “jurisdiction” was still well
understood at that time as meaning “oath spoken.”
“Juris,” in the original Latin meaning, is “oath.” “Diction” as everyone
knows, means “spoken.” The protest obviously did not happen here. It
occurred in England. Given the origins of our law are traced there, most of
the relevant facts in this matter are still applicable in this nation. Here is
what happened.
Printing Presses
The Bible had just recently been put into print. To that time, only the
churches owned copies, due to the extremely high cost of paper. Contrary to
what you have been taught, it was not the invention of movable type that
led to printing this and other books. That concept had been around for a
very long time. It just had no application. Printing wastes some paper. Until
paper prices fell, it was cheaper to write books by hand than to print them
with movable type. The handwritten versions were outrageously costly,
procurable only by those with extreme wealth: churches, crowns and the

nobility. The wealth of the nobility was attributable to feudalism. “Feud” is
Old English for “oath” The nobility held the land under the crown. But
unimproved land itself, save to hunter/gatherers, is rather useless. Land is
useful for farming. So that is how the nobility obtained wealth. No, they did
not push a plow. They had servants to do it. The nobility would not sell
their land, nor would they lease it. They rented it. Ever pay rent without a
lease? Then you know that if the landlord raised the rent, you had no legal
recourse. You could move out or pay. But what if you had no way to move
out? Then you’d have a feel for what feudalism was all about.
Servitude and the Oath
A tenant was not a freeman. He was a servant to the (land)lord, the noble.
In order to have access to the land to farm it, the noble required the tenant
kneel before him, hat in hand, swear an oath of fealty and allegiance and
kiss his ring (extending that oath in that last act to the heirs of his estate).
That oath established a servitude. The tenant then put his plow to the fields.
The rent was a variable. In good growing years it was very high, in bad
years it fell. The tenant was a subsistence farmer, keeping only enough of
the produce of his labors to just sustain him and his family. Rent was
actually an “income tax.” The nobleman could have demanded 100% of the
productivity of his servant except ... under the Common-Law, a servant was
akin to livestock. He had to be fed. Not well fed, just fed, same as a horse or
cow. And, like a horse or cow, one usually finds it to his benefit to keep it
fed, that so the critter is productive. Thus, the tenant was allowed to keep
some of his own productivity. Liken it to “personal and dependent
deductions.”
Journeymen
The freemen of the realm, primarily the tradesmen, swore no such oaths nor
owed such fealty. They knew it. They taught their sons the trade so they had
also be free when grown. Occasionally, they took on an apprentice under a
sworn contract of indenture from his father. His parents made a few coins.
But the kid was the biggest beneficiary; he would learn a trade. He would
never need to become a tenant farmer. He would keep what he earned. He
was only apprenticed for a term of years, most typically about seven. The

tradesmen did not need adolescents; they needed young men strong enough
to pull their own weight. They did not take on anyone under 13. By age 21
an apprentice would have learned enough to practice the craft. That is when
the contract expired. He was then called a “journeyman.” Had he made a
journey? No. But, if you pronounce that word, it is “Jur-nee-man.” He was
a “man,” formerly (“nee”), bound by oath (“jur”). He would then go to
work for a “master” (craftsman). The pay was established, but he could ask
for more if he felt he was worth more. And he was free to quit. Pretty
normal, eh? Yes, in our society that is the norm. But some 400 years ago
these men were the exceptions, not the rule. At some point, if the
journeyman was good at the trade, he would be recognized by the market as
a “master” (craftsman) and people would be begging him to take their
children as apprentices, so they might learn from him, be come journeymen,
and keep what they earned when manumitted144 at age 21! The oath of the
tenant ran for life. The oath of the apprentice’s father ran only for a term of
years. Still, oaths were important on both sides. In fact, the tradesmen at
one point established guilds (means “gold”) as a protection against the
potential of the government’s attempting to bind them into servitude by
compelled oaths.
When an 
apprentice became 
a journeyman, he 
was allowed a 
membership in the 
guild only by 
swearing a secret 
oath to the guild. 
He literally swore 
to “serve gold,” and 
only gold.
When an apprentice became a journeyman, he was allowed a membership
in the guild only by swearing a secret oath to the guild. He literally swore to
“serve gold,” and only gold. He swore he would work only for pay! Once

so sworn, any other oath of servitude would be a perjury of that oath. He
bound himself for life to never be a servant, save to the very benevolent
master: gold! (Incidentally, the Order of Free and Accepted Masons is a
remnant of one of these guilds. The Masonic oath is a secret. The Masons
would love to have you think the “G” in the middle of their logo stands for
“God.” One obvious truth is that it stands for “GOLD.”)
Joint Resources
Then the Bible came to print. The market for this tome was not the wealthy.
They already had a handwritten copy. Nor was it the tenants. They were far
too poor to make this purchase. The market was the tradesmen—and the
book was still so costly that it took the combined life savings of siblings to
buy a family Bible. The other reason the tradesmen were in the market was
they had also been taught how to read as part of their apprenticeship. As
contractors they had to know how to do that! Other than the families of the
Super-Rich (and the priests) nobody else knew how to read.
Swear No Oaths
These men were blown away when they read Jesus’ command against
swearing oaths (Matt. 5: 33-37). This was news to them. For well over a
millennium they had been trusting the Church—originally just the Church
of Rome, but now also the Church of England—that had been telling them
everything they needed to know in that book. Then they found out that
Jesus said, “Swear no oaths.” Talk about an eye-opener!
Imagine seeing a conspiracy revealed that went back over 1000 years.
Without oaths there would have been no tenants laboring for the nobility
and receiving mere subsistence in return. The whole society was premised
on oaths; the whole society CLAIMED it was Christian, yet it violated a
very simple command of Christ! And the tradesmen had done it, too, by
demanding sworn contracts of indenture for apprentices and giving their
own oaths to the guilds. They had no way of knowing that was prohibited
by Jesus! They were angry. “Livid” might be a better term. The
governments had seen this coming. What could they do? Ban the book? The
printing would have simply moved underground, and the millennium-long

conspiracy would be further evidenced in that banning. They came up with
a better scheme. We now call it the “Reformation.”
In an unprecedented display of unanimity, the governments of Europe
adopted a treaty. This treaty would allow anyone the State-right of founding
a church! The church would be granted a charter. It only had to do one very
simple thing to obtain that charter. It had to agree to the terms of the treaty.
Buried in those provisions, most of which were totally innocuous, was a
statement the Church would never oppose the swearing of lawful oaths.
Jesus said, “None.” The churches all said (and still say), “None, except ...”
Whom do you think was (is) right?
Black Hats and the Quaker Rebellion
To show their 
absolute displeasure 
with those who had 
kept this secret for 
so long, they refused 
to give anyone in 
Church or State any 
respect.
The tradesmen got even angrier! They had already left the Church of
England. But with every new “reformed” church still opposing the clear
words of Christ, there was no church for them to join—or found.
They exercised the right of assembly to discuss the Bible. Some of them
preached it on the street corners, using their right of freedom of speech. But
they could not establish a church, which followed Jesus’ words, for that
would have required assent to that treaty which opposed what Jesus had
commanded. To show their absolute displeasure with those who had kept
this secret for so long, they refused to give anyone in Church or State any
respect. It was the custom to doff one’s hat when he encountered a priest or
official. They started wearing big, ugly black hats, just so the most myopic
of these claimed “superiors” would not miss the fact the hats stayed atop

their heads. Back then the term “you” was formal English, reserved for use
when speaking to a superior. “Thee” was the familiar pronoun, used among
family and friends. So they called these officials only by the familiar
pronoun “thee” or by their Christian names, “George, Peter, Robert,” etc.
We call these folk “Quakers.” That was a nickname given to them by a
judge. One of them had told the judge that he would better, “Quake before
the Lord, God almighty.” The judge, in a display of irreverent disrespect
replied, “Thee are the Quaker here.” They found that pretty funny, being
such a total misnomer (as you shall soon see), and the nickname stuck. With
the huge membership losses from the Anglican Church—especially from
men who had been the more charitable to it in the past—the Church was
technically bankrupt. It was not just the losses from the Quakers. Other
people were leaving to join the new “Reformed Churches.” Elsewhere in
Europe, the Roman Church had amassed sufficient assets to weather this
storm. The far newer Anglican Church had not.
Tax Without Jurisdiction
But the Anglican Church, as an agency of the State, cannot go bankrupt. It
becomes the duty of the State to support it in hard times. Parliament did so.
It enacted a tax to that end. A nice religious tax, and by current standards a
very
Absent their oaths establishing this servitude, 
there was “no jurisdiction.” And they were right.
low tax, a tithe (10%). But it made a deadly mistake in that. The Quakers,
primarily as tradesmen, recognized this income tax as a tax “without
jurisdiction,” at least so far as they went. As free men, they pointed out that
they did not have to pay it, nor provide a return. Absent their oaths
establishing this servitude, there was “no jurisdiction.” And they were right.
Despite laws making it a crime to willfully refuse to make a return and pay
this tax, NONE were charged or arrested.
That caused the rest of the society to take notice. Other folk who had
thought the Quakers were “extremists” suddenly began to listen to them. As

always, money talks. These guys were keeping all they earned, while the
rest of the uninformed, thinking this tax applied to them, forked over the
prescribed 10%. Membership in the Anglican Church fell even further, as
did charity to it. The taxes were not enough to offset these further losses.
The tithe (income) tax was actually counterproductive to the goal of
supporting the Church. The members of the government and the churchmen
were scared silly. If this movement continued to expand at the current rate,
no one in the next generation would swear an oath. Who would then farm
the lands of the nobility? Oh, surely someone would, but not as a servant
working for subsistence. The land would need to be leased under a contract,
with the payment for that use established in the market, not on the unilateral
whim of the nobleman. The wealth of the nobility, their fat purses, was
about to be greatly diminished. And the Church of England, what assets it
possessed, would need to be sold off, with what remained of that Church
greatly reduced in power and wealth. But far worse was the diminishment
of the respect demanded by the priests and officials. They had always held a
position of superiority in the society. What would they do when all of
society treated them only as equals?
Anarchy
The Quakers began to use the term “anarchy.” But England was a
monarchy, not an anarchy. And that was the ultimate solution to the
problem, or so those in government thought. There is an aspect of a
monarchy that Americans find somewhat incomprehensible, or at least we
did two centuries ago. The Crown has divine right, or at least it so claims.
An expression of the divine right of a Crown is the power to rule by
demand. The Crown can issue commands. The King says, “Jump!”
Everyone jumps.
Why do they jump? Simple. It is a crime NOT to jump. To “willfully fail (a
familiar term) to obey a Crown command” is considered to be a treason,
high treason. The British Crown issued a Crown command to end the tax
objection movement.
Did the Crown order that everyone shall pay the income tax? No, that was
not possible. There really was “no jurisdiction.” And that would have done
nothing to cure the lack of respect. The Crown went one better. It ordered

that every man shall swear an oath of allegiance to the Crown! Damned
Christian thing to do, eh? Literally!
...the prisons of 
England filled with 
adolescent females, 
serving the life 
sentences for their 
dads. Those lives 
would be short.
High Treason
A small handful of the tax objectors obeyed. Most refused. It was a simple
matter of black and white. Jesus said “swear not at all.” They opted to obey
Him over the Crown.
That quickly brought them into court, facing the charge of high treason. An
official would take the witness stand, swearing he had no record of the
defendant’s oath of allegiance. Then the defendant was called to testify,
there being no right to refuse to witness against oneself. He refused to
accept the administered oath. That refusal on the record, the court instantly
judged him guilty. It took all of ten minutes. That expedience was essential,
for there were another couple hundred defendants waiting to be tried that
day for their own treasons against the Crown.
Children Starved
In short order the jails reached their capacity, plus. But they were not filled
as you would envision them. The men who had ten minutes were not there.
Their children were. There was a “Stand-in” law allowing for that. There
was no social welfare system. The wife and children of a married man in
prison existed on the charity of Church and neighbors, or they ceased to
exist, starving to death. It was typical for a man convicted of a petty crime
to have one of his kids stand in for him for 30 or 90 days. That way he

could continue to earn a living, keeping bread on the table, without the
family’s having to rely on charity. A man convicted, though, of more
heinous crimes would usually find it impossible to convince his wife to
allow his children to serve his time. The family would prefer to exist on
charity rather than see him back in society. But in this case, the family had
no option. The family was churchless. The neighbors were all in the same
situation. Charity was nonexistent for them. The family was destined for
quick starvation, unless one of the children stood in for the breadwinner.
Unfortunately, the rational choice of which child should serve the time was
predicated on which child was the least productive to the family earnings.
That meant nearly the youngest, usually a daughter. Thus, the prisons of
England filled with adolescent females, serving the life sentences for their
dads. Those lives would be short. There was no heat in the jails. They were
rife with tuberculosis and other deadly diseases. A strong man might last
several years. A small girl measured her remaining time on earth in months.
It was a Christian holocaust, a true sacrifice of the unblemished lambs.
(And, we must note, completely ignored in virtually every history text
covering this era, lest the Crown, government and Church be duly
embarrassed.) Despite the high mortality rate the jails still overflowed.
There was little concern that the daughters would be raped or die at the
brutality of other prisoners.
Criminals Set Free
The other prisoners, the real felons, had all been released to make room.
Early release was premised only on severity of the crime. High treason was
the highest crime. The murderers, thieves, arsonists, rapists, etc., had all
been set free. That had a very profound effect on commerce. It stopped.
There were highwaymen afoot on every road. Thugs and muggers ruled the
city streets. The sworn subjects of the Crown sat behind bolted doors, in
cold, dark homes, wondering how they would exist when the food and
water ran out. They finally dared to venture out to attend meetings to
address the situation. At those meetings they discussed methods to
overthrow the Crown to which they were sworn! Call that perjury! Call that
sedition! Call it by any name, they were going to put their words into
actions, and soon, or die from starvation or the blade of a thug. Here we
should note that chaos (and nearly anarchy: “no Crown”) came to be, not as

the result of the refusal to swear oaths, but as the direct result of the
governmental demand that people swear them! The followers of Jesus’
words did not bring that chaos; those who ignored that command of Christ
brought it.
Children Released
The Crown soon saw the revolutionary handwriting on the wall and ordered
the release of the children and the recapture of the real felons, before the
government was removed from office under force of arms. The courts came
up with the odd concept of an “affirmation in lieu of oath.” The Quakers
accepted that as a victory. Given what they had been through, that was
understandable. However, Jesus also prohibited affirmations, calling the
practice an oath “by thy head.” Funny that He could foresee the legal
concept of an affirmation 1600 years before it came to be. Quite a
prophecy!
American Colonies Founded
When the colonies opened to migration, the Quakers fled Europe in droves,
trying to put as much distance as they could between themselves and the
Crown. They had a very rational fear of a repeat of the situation. That put a
lot of them here, enough that they had a very strong influence on politics.
They could have blocked the ratification of the Constitution had they
opposed it. Some of their demands were incorporated into it, as were some
of their concessions, in balance to those demands. Their most obvious
influence found in the Constitution is the definition of treason, the only
crime defined in that document ...
The remainder of this article deals with federal income taxes which are
beyond the scope of this book.
We found the complete article at:
http://www.chrononhotonthologos.com/lawnotes/index.html

NOTE: Editing of the original article has been done to provide clarity.

Appendix B
Statutory Trusts
This is not a complete list of Statutory Trusts, and we recommend
discussing the particulars with Trust trained professionals. Much of the
information from this list has been taken from Irrevocable Trusts, Third
Edition by George M. Turner, published by West Group.
Trust
Name Description
Accumulation
Trust
Describes the application of throwback rules to a Trust
that accumulates undistributed funds from one year to
the next.
Charitable
Remainder
Uni trust
Income Beneficiaries get a fixed percentage of the fair
market value (F.M.V.) of the corpus, with F.V.
recomputed annually. Be sure to review Private Let- ter
Ruling 9120016.
Charitable
Annuity Trust
Income Beneficiaries get annual payment equal to at
least 5% of original value of the corpus.
Children’s
Trust
Gifts can be given to children.
Crummey
Trusts, (a life
in surance
Trust with a
Applicable to gifts of a future interest as a gift of the
present interest and hence have it qualify for the an
nual gift tax exclusion.

Crummey
provision)
Dynasty
Trust, also
known as
Legacy
Trusts, Mega
Trusts, Super
Trusts
To provide for Beneficiaries who extend to multiple
generations. This is the Trust most closely designed to
the Irrevocable Common-Law Trust.145
Educational
Trusts with
Use of Gift
and Lease
Arrange ment
How education of family members can be accom
plished through a series of transactions to shift in come
from parent-taxpayer ... to children ... in a lower tax
bracket
Generation
Skipping
Trusts
Using a series of Trusts for the benefit of the chil dren.
This takes into consideration the various capa bilities,
weaknesses, and strengths of each child and allows
each to keep his or her financial affairs segre gated as
much as possible.
Life
Insurance
Trusts
Purchase life insurance products through a technique to
minimize both income taxation and estate taxation at
death. Not applicable to term insurance.
Medicaid
Trust
Established for the benefit of a senior citizen accept ing
Social Security Benefits who is entitled, generally on
the basis of medical and financial need, to the benefits
of a government program. It allows addi tional funds to
go into a Trust to allow for a small supplemental
income to the recipient, and the Benefi ciary is the
State or the federal government, unless the Beneficiary
is also disabled.
Public
Charitable
A nonprofit Trust organization formed per Internal
Revenue Code Section 501(c)(3).

Trust
Rabbi Trust Members of a synagogue provide a retirement benefit
for the Rabbi.
Special Needs
Trust
Primarily for disabled or dysfunctional children. Ba
sically, the same principles apply as for the Medicaid
Trust.
Sprinkling or
Spray Trusts
Combined with other Trusts where the Trustee is given
authority to make distribution of income and/ or
principal among Beneficiaries using discretion
considering the particular needs of the individual.
Term Trusts
Transfer the income taxation on earnings to a Benefi
ciary in a lower tax bracket for a term of no less than
ten years
Testamentary
Trust
The assets of a Will are turned over to court appointed
Trustees through an act of Probate per the terms of the
Will.

Appendix C
Conspiracy, Fraud ... and Treason
On May 23, 1933, Congressman Louis T. McFadden brought formal
charges against the Board of Governors of the Federal Reserve Bank
system, the Comptroller of the Currency and the Secretary of United States
Treasury for numerous criminal acts, including but not limited to,
conspiracy, fraud, unlawful conversion and treason.
The petition for Articles of Impeachment was thereafter referred to the
Judiciary Committee and has yet to be acted on.
Remarks in Congress, 1934
The quotations are from several speeches made on the Floor of the House of
Representatives by the Honorable Louis T. McFadden of Pennsylvania. Mr.
McFadden, due to his having served as Chairman of the Banking and
Currency Committee for more than 10 years, was the best posted man on
these matters in America and was in a position to speak with authority of
the vast ramifications of this gigantic private credit monopoly. As
Representative of a State which was among the first to declare its freedom
from foreign money tyrants it is fitting that Pennsylvania, the cradle of
liberty, be again given the credit for producing a son that was not afraid to
hurl defiance in the face of the money-fund. Whereas Mr. McFadden was
elected to the high office on both the Democratic and Republican tickets,
there can be no accusation of partisanship lodged against him. Because
these speeches by Congressman McFadden are set out in full in the
Congressional Record, they carry weight that no amount of condemnation
on the part of private individuals could hope to carry.
The Federal Reserve-A Corrupt Institution

“Mr. Chairman, we have in this Country one of the most corrupt institutions
the world has ever known. I refer to the Federal Reserve Board and the
Federal Reserve Banks, hereinafter called the Fed. The Fed has cheated the
Government of these United States and the people of the United States out
of enough money to pay the Nation’s debt. The depredations and iniquities
of the Fed have cost enough money to pay the National debt several times
over.
“This evil institution has impoverished and ruined the people of these
United States, has bankrupted itself, and has practically bankrupted our
Government. It has done this through the defects of the law under which it
operates, through the maladministration of that law by the Fed and through
the corrupt practices of the moneyed vultures who control it.
“This is an 
era of 
misery, 
and for the 
conditions 
that 
caused 
that 
misery, the 
Fed are 
fully liable.”
“Some people think the Federal Reserve Banks are [part of the] United
States Government institutions. They are private monopolies which prey
upon the people of these United States for the benefit of themselves and
their foreign customers; foreign and domestic speculators and swindlers;
and rich and predatory money lenders. In that dark crew of financial pirates
there are those who would cut a man’s throat to get a dollar out of his
pocket; there are those who send money into states to buy votes to control
our legislatures; there are those who maintain international propaganda for
the purpose of deceiving us into granting of new concessions which will

permit them to cover up their past misdeeds and set again in motion their
gigantic train of crime.
“These twelve private credit monopolies were deceitfully and disloyally and
foisted upon this Country by the bankers who came here from Europe and
repaid us our hospitality by undermining our American institutions. Those
bankers took money out of this Country to finance Japan in a war against
Russia. They created a reign of terror in Russia with our money in order to
help that war along. They instigated the separate peace between Germany
and Russia, and thus drove a wedge between the allies in World War. They
financed Trotsky‘s passage from New York to Russia so that he might assist
in the destruction of the Russian Empire. They fomented and instigated the
Russian Revolution, and placed a large fund of American dollars at
Trotsky’s disposal in one of their branch banks in Sweden so that through
him Russian homes might be thoroughly broken up and Russian children
flung far and wide from their natural protectors. They have since begun
breaking up of American homes and the dispersal of American children.
Mr. Chairman, there should be no partisanship in matters concerning
banking and currency affairs in this Country, and I do not speak with any
[hesitation].
National Reserve Association Bill
“In 1912 the National Monetary Association, under the chairmanship of the
late Senator Nelson W. Aldrich, made a report and presented a vicious bill
called the National Reserve Association bill. This bill is usually spoken of
as the Aldrich bill. Senator Aldrich did not write the Aldrich bill. He was
the tool, if not the accomplice, of the European bankers who for nearly
twenty years had been scheming to set up a central bank in this Country and
who in 1912 had spent and were continuing to spend vast sums of money to
accomplish their purpose.
“We were opposed to the Aldrich plan for a central bank. The men who rule
the Democratic Party then promised the people that if they were returned to
power there would be no central bank established here while they held the
reins of government. Thirteen months later that promise was broken, and
the Wilson administration, under the tutelage of those sinister Wall Street
figures who stood behind Colonel House, established here in our free

Country the worm-eaten monarchical institution of the “King’s Bank” to
control us from the top downward, and from the cradle to the grave.
“The Federal Reserve Bank destroyed our old and characteristic way of
doing business. It discriminated against our 1-name commercial paper, the
finest in the world, and it set up the antiquated 2-name paper, which is the
present curse of this Country and which wrecked every country which has
ever given it scope; it fastened down upon the Country the very tyranny
from which the framers of the Constitution sought to save us.
President Jackson’s Time
“One of the greatest battles for the preservation of this Republic was fought
out here in Jackson’s time; when the second Bank of the United States,
founded on the same false principles of those which are here exemplified in
the Fed, was hurled out of existence. After that, in 1837, the Country was
warned against the dangers that might ensue if the predator interests after
being cast out should come back in disguise and unite themselves to the
Executive and through him acquire control of the Government. That is what
the predator interests did when the came back in the livery of hypocrisy and
under false pretenses obtained passage of the Fed.
“The danger the Country was warned against came upon us and is shown in
the long train of horrors attendant upon the affairs of the traitorous and
dishonest Fed. Look around you when you leave this Chamber and you will
see evidences of it in all sides. This is an era of misery, and for the
conditions that caused that misery, the Fed are fully liable. This is an era of
financed crime and in the financing of crime the Fed does not play the part
of a disinterested spectator.
Misleading Public Opinion
“...The Aldrich bill...was a copy, in general a translation of the statues of the
Reichsbank and other European central banks. One-half million dollars was
spent on the part of the propaganda organized by these bankers for the
purpose of misleading public opinion and giving Congress the impression
there was an overwhelming popular demand for it and the kind of currency
that goes with it, namely, an asset currency based on human debts and
obligations. Dr. H. Parker Willis had been employed by Wall Street and

propagandists, and when the Aldrich measure failed—he obtained
employment with Carter Glass, to assist in drawing the banking bill for the
Wilson administration. He appropriated the text of the Aldrich bill. There is
no secret about it. The text of the Federal Reserve Act was tainted from the
first.
“The Fed Note is 
essentially 
unsound. It is the 
worst currency 
and the most 
dangerous that 
this Country has 
ever known.”
“A few days before the bill came to a vote, Senator Henry Cabot Lodge, of
Massachusetts, wrote to Senator John W. Weeks as follows:
‘New York City,
December 17, 1913
‘My Dear Senator Weeks: Throughout my public life I have supported all
measures designed to take the Government out of the banking business. This
bill puts the Government into the banking business as never before in our
history.
‘The powers vested in the Federal Reserve Board seem to me highly
dangerous especially where there is political control of the Board. I should
be sorry to hold stock in a bank subject to such dominations. The bill as it
stands seems to me to open the way to a vast inflation of the currency. I had
hoped to support this bill, but I cannot vote for it because it seems to me to
contain features and to rest upon principles in the highest degree menacing
to our prosperity, to stability in business, and to the general welfare of the
people of the United States.’ Very Truly Yours, Henry Cabot Lodge.
“In eighteen years that have passed since Senator Lodge wrote that letter of
warning all of his predictions have come true. The Government is in the

banking business as never before. Against its will it has been made the
backer of horse thieves and card sharps, bootleggers smugglers, speculators,
and swindlers in all parts of the world. Through the Fed, the riffraff of every
country is operating on the public credit of the United States Government.
Machinery
“Meanwhile and on account of it, we ourselves are in the midst of the
greatest depression we have ever known. From the Atlantic to the Pacific,
our Country has been ravaged and laid waste by the evil practices of the
Fed and the interests which control them. At no time in our history, has the
general welfare of the people been at a lower level or the minds of the
people so full of despair.
“The people who have thus been driven out 
are the wastage of the Fed. They are the 
victims of the Fed. Their children are the new 
slaves on the auction blocks in the revival of 
the institution of human slavery.”
“Recently in one of our States, 60,000 dwelling houses and farms were
brought under the hammer in a single day. 71,000 houses and farms in
Oakland Count, Michigan, were sold and their erstwhile owners
dispossessed. The people who have thus been driven out are the wastage of
the Fed. They are the victims of the Fed. Their children are the new slaves
on the auction blocks in the revival of the institution of human slavery.
The Scheme of the Fed.
“In 1913, before the Senate Banking and Currency Committee, Mr.
Alexander Lassen made the following statement: “The whole scheme of the
Fed with its commercial paper is an impractical, cumbersome machinery–is
simply a cover to secure the privilege of issuing money, and to evade
payment of as much tax upon circulation as possible and then control the
issue and maintain, instead of reducing interest rates. It will prove to the
advantage of the few and the detriment of the people. It will mean

continued shortage of actual money and further extension of credits, for
when there is a shortage of money people have to borrow to their cost.
“A few days before the Fed passed, Senator Root denounced the Fed as an
outrage on our liberties. He predicted: ‘Long before we wake up from our
dream of prosperity through an inflated currency, our gold—which alone
could have kept us from catastrophe—will have vanished and no rate of
interest will tempt it to return.’
“If ever a prophecy came true, that one did.”
“The Fed became law the day before Christmas Eve, in the year 1913, and
shortly afterwards, the German International Bankers, Kuhn, Loeb and Co.,
sent one of their partners here to run it.
“The Fed Note is essentially unsound. It is the worst currency and the most
dangerous that this Country has ever known. When the proponents of the
act saw the Democratic doctrine would not permit them to let the proposed
banks issue the new currency as bank notes, they should have stopped at
that. They should not have foisted that kind of promises to pay namely, an
asset currency, on the United States Government. They should not have
made the Government [liable on the private] debts of individuals and
corporations, and, least of all, on the private debts of foreigners. “As
Kemerer says: ‘The Fed Notes, therefore, in form, have some of the
qualities of Government paper money, but in substance, are almost a pure
asset currency possessing a Government guarantee against which
contingency the Government has made no provision whatever.’
“Hon. L.J. Hill, a former member of the House, said, and truly: ‘The are
obligations of the Government for which the United States received nothing
and for the payment of which at an time, it assumes the responsibility:
looking to the Fed to recoup itself.’
“If this United States is to redeem the Fed Notes, when the General Public
finds it costs to deliver this paper to the Fed, and if the Government has
made no provisions for redeeming them, the first element of unsoundness is
not far to seek.
“Before the Banking and Currency Committee, when the bill was under
discussion Mr. Crozier of Cincinnati said: ‘The imperial power of elasticity
of the public currency is wielded exclusively by the central corporations

owned by the banks. This is a life and death power over all local banks and
all business. It can be used to create or destroy prosperity, to ward off or
cause stringencies and panics. By making money artificially scarce, interest
rates throughout the Country can be arbi trarily raised and the bank tax on
all business and cost of living increased for the profit of the banks owning
these regional central banks, and without the slightest benefit to the people.
The 12 Corporations together cover and monopolize and use for private
gain—every dollar of the public currency and all public revenue of the
United States. Not a dollar can be put into circulation among the people by
their Government, without the consent of and on terms fixed by these 12
private money trusts.’
“This is a life 
and death 
power over 
all local 
banks and all 
business. It 
can be used 
to create or 
destroy 
prosperity, to 
ward off or 
cause 
stringencies 
and panics.”
Private Credit Corporation
“In defiance of this and all other warnings, the proponents of the Fed
created the 12 private credit corporations and gave them an absolute
monopoly of the currency of these United States—not of the Fed Notes
alone-—but of all other currency! The Fed Act provided ways and means
by which the gold and general currency in the hands of the American

people could be obtained by the Fed in exchange for Fed Notes—which are
not money—but mere promises to pay.
“Since the evil day when this was done, the initial monopoly has been
extended by vicious amendments to the Fed and by the unlawful and
treasonable practices of the Fed.
Money for the Scottish Distillers
“Mr. Chairman, if a Scottish distiller wishes to send a cargo of Scotch
whiskey to these United States, he can draw his bill against the purchasing
bootlegger146 in dollars and after the bootlegger has accepted it by writing
his name across the face of it, the Scotch distiller can send that bill to the
nefarious open discount market in New York City where the Fed will buy it
and use it as collateral for a new issue of Fed Notes. Thus the Government
of these United States pay the Scotch distiller for the whiskey before it is
shipped, and if it is lost on the way, or if the Coast Guard seizes it and
destroys it, the Fed simply write off the loss and the government never
recovers the money that was paid to the Scotch distiller.
Bootlegging
“While we are attempting to enforce prohibition here, the Fed are in the
distiller business in Europe and paying bootlegger bills with public credit of
these United States.
“Mr. Chairman, by the same process, they compel our Government to pay
the German brewer for his beer. Why should the Fed be permitted to
finance the brewing industry in Germany either in this way or as they do by
compelling small and fearful United States Banks to take stock in the
Isenbeck Brewer and in the German Bank for brewing industries?
“Mr. Chairman, if Dynamit Nobel of Germany, wishes to sell dynamite in
Japan to use in Manchuria or elsewhere, it can draw its bill against the
Japanese customers in dollars and send that bill to the nefarious open
discount market in New York City where the Fed will buy it and use it as
collateral for a new issue of Fed Notes while at the same time the Fed will
be helping Dynamit Nobel by stuffing its stock into the United States
banking system.

“Why should we send our representatives to the disarmament conference at
Geneva while the Fed is making our Government pay Japanese debts to
German munitions makers?
“Mr. Chairman, if a German wishes to raise a crop of beans and sell them to
a Japanese customer, he can draw a bill against his prospective Japanese
customer in dollars and have it purchased by the Fed and get the money out
of this Country at the expense of the American people before he has even
planted the beans in the ground.
“Mr. Chairman, if a German in Germany wishes to export goods to South
America, or any other Country, he can draw his bill against his customers
and send it to these United States and get the money out of this Country
before he ships, or even manufactures the goods.
“Mr. Chairman, why should the currency of these United States be issued
on the strength of German beer? Why should it be issued on the crop of
unplanted beans to be grown in Chile for Japanese consumption? Why
should these United States be compelled to issue many billions of dollars
every year to pay the debts of one foreigner to another foreigner?
“Was it for this that our National Bank depositors had their money taken out
of our banks and shipped abroad? Was it for this that they had to lose it?
Why should the public credit of these United States and likewise money
belonging to our National Bank depositors be used to support foreign
brewers, narcotic drug vendors, whiskey distillers, wig makes, human hair
merchants, Chilean bean growers, to finance the munition factories of
Germany and Soviet Russia?
For the remainder of this article go on line at: 
http://www.freedomdomain.com/redemption/mcfadden1.html

Appendix D

Wheels Within Wheels Collective Overview

Appendix E
Trust Choices

Appendix F
Reasonable Skill
Reasonable skill: “Such skill as is ordinarily possessed and exercised by
persons of common capacity engaged in the same business or employment.
Mechanics’ Bank v. Merchants’ Bank, 6 Metc. (Mass.) 13, 26.” The legal
system makes liberal use of an indefinite but assumed standard of
reasonableness. (Black’s Law Dictionary) effort at defining the slippery
concept “reasonable” is “(f)air, proper, just, moderate, suitable under the
circumstances.... Thinking, speaking, or acting according to the dictates of
reason. Not immoderate or excessive, being synonymous with rational,
honest, equitable, fair, suitable, moderate, tolerable.”
The same source sees “reason” as “a faculty of the mind by which it
distinguishes truth from falsehood, good from evil, and which enables the
possessor to deduce inferences from facts or from propositions.” The
reverse of negligence is “reasonable care,” defined in Black’s Law
Dictionary as “that degree of care which a person of ordinary prudence
would exercise in the same or similar circumstances.” Words like
“average,” “ordinary,” “competent,” “prudent” and “diligent” show up
again and again in the definitions of such terms as “reasonable and probable
cause,” “reasonable belief,” “reasonable diligence,” “reasonable doubt,”
“reasonable skill,” etc.

Appendix G
Definition of United States
There are three meanings of the United States
The federal corporation located in the District of Columbia, identified
as the United States of America and often referred to as United
States.147
The collection of 50 states.
Territories governed by the federal government.
At one time, before the 14th Amendment, citizenship was established in
each particular state. There was no such classification as federal citizen, or
U.S. Citizen. The term Federal Citizen came into existence with the 14th
Amendment. It originally referred to black slaves, who did not have a
citizenship in reference to the state. These people became a rich source of
taxation, for they had to pay for the privileges of becoming citizens and
having access to the courts.
To get Social Security, you must claim to be a U.S. Citizen, which is a
fictitious status. By voluntarily agreeing to become a U.S. Citizen, though,
you become taxable.
The issue of citizenship has been so lost in the legal quagmire, and
deliberately obscured by the over-eager tax authorities who get a large
chunk of your paycheck, that to oppose that thinking, no matter how legally
correct you may be, is a battle. Absent the battle, though, states and citizens
alike become ever more enmeshed in federal regulations.
The following references found in the Internal Revenue Code define the
term State:
1. The term “State” means the District of Columbia, the Commonwealth
of Puerto Rico, Guam, and American Samoa.148

2. The United States is located in the District of Columbia.149
3. The term “United States” when used in a geographic sense includes the
District of Columbia, the Commonwealth of Puerto Rico, Guam, and
American Samoa.150
4. This statement does not include, nor mean the 50 States.151
Further issues of definition and a discussion of the Article II Courts and
territories start on the next page.
SUMMERS v. U S, 231 U.S. 92 (1913): It is established that the courts of
the territories may have such jurisdiction of cases arising under the
Constitution and laws of the United States as is vested in the cir- [231 U.S.
92, 102] cuit and district courts, but this does not make them circuit and
district courts of the United States.
UNITED STATES v. BURROUGHS, 289 U.S. 159 (1933): Where a
statute uses this or similar language to define the jurisdiction of a court such
a court is authorized to try statutory actions declared to be cognizable by
district courts, as if the tribunal were in fact a district court of the United
States. And the same rule is applicable to appellate proceedings. Compare
In re Cooper, 143 U.S. 472, 494, 12 S.Ct. 453; Hine v. Morse, 218 U.S. 493
, 31 S.Ct. 37, 21 Ann. Cas. 782; Federal Trade Commission v. Klesner, 274
U.S. 145, 154 , 47 S.Ct. 557; United States v. California Coo perative
Canneries, 279 U.S. 553, 558 , 49 S.Ct. 423. But vesting a court with ‘the
same jurisdiction as is vested in district courts’ does not make it a district
court of the United States. This has been repeatedly said with reference to
territorial courts. Reynolds v. United States, 98 U.S. 145 , 154; Stephens v.
Cherokee Nation, supra, page 476 of 174 U.S ., 19 S.Ct. 722; Summers v.
United States, 231 U.S. 92, 101 , 34 S.Ct. 38.
REYNOLDS v. U.S., 98 U.S. 145 (1878): As to the constitutionality of the
Poland Bill. Rev. Stat., sect. 5352. Undoubtedly Congress, under art. 4, sect.
3, of the Constitution, which gives ‘power to dispose of and make all
needful rules and regulations respecting the territory or other property
belonging to the United States,’ and under the decisions of this court upon

it, may legislate over such territory, and regulate the form of its local
government. But its legislation can be neither exclusive nor arbitrary. The
power of this government to obtain and hold territory over which it might
legislate, without restriction, would be inconsistent with its own existence
in its present form. There is always an excess of power exercised when the
Federal government attempts to provide for more than the assertion and
preservation of its rights over such territory, and interferes by positive
enactment with the social and domestic life of its inhabitants and their
internal police...By sect. 1910 of the Revised Statutes the district courts of
the Territory have the same jurisdiction in all cases arising under the
Constitution and laws of the United States as is vested in the circuit and
district courts of the United States; but this does not make them circuit and
district courts of the United States. We have often so decided. American
Insurance Co. v. Canter, 1 Pet. 511; Benner et al. v. Porter, 9 How. 235;
Clinton v. Englebrecht, 13 Wall. 434. They are courts of the Territories,
invested for some purposes with the powers of the courts of the United
States. Writs of error and appeals lie from them to the Supreme Court of the
Territory, and from that court as a territorial court to this in some cases.
Mandel v. The Boston Phoenix, Inc., No. 05-1230 (1st Cir. August 03,
2006) Summary judgment on the issue of status in a defamation case is
vacated and remanded where there was insufficient evidence in the record
with which to determine plaintiff’s status. Denial of defendants’ motion for
judgment as a matter of law is affirmed.
http://laws.lp.findlaw.com/1st/051230.html
HOOVEN & ALLISON CO. v. EVATT, 324 U.S. 652 (1945) The term
‘United States’ may be used in any one of several senses. It may be merely
the name of a sovereign occupying the position analogous to that of other
sovereigns in the family of nations. It may designate the territory over
which the sovereignty of the United States ex- [324 U.S. 652, 672] tends, or
it may be the collective name of the states which are united by and under
the Constitution. 6
United States v. Lexington Mill & E. Co., 232 US 399, pp. 409. (1914) “We

are not at liberty to construe any statute so as to deny effect to any part of
its language. It is a cardinal rule of statutory construction that significance
and effect shall, if possible, be accorded to every word. As early as in
Bacon’s Abridgment, 2, it was said that‘a statute ought, upon the whole, to
be so construed that, if it can be prevented, no clause, sentence, or word,
shall be superfluous, void, or insignificant.’ This rule has been repeated
innumerable times.” Justice Strong,
Mookini v. United States, 303 U.S. 201 (1938) The term ‘District Courts
of the United States,’ as used in the rules, without an addition expressing a
wider connotation, has its historic significance. It describes the
constitutional courts created under article 3 of the Constitution. Courts of
the Territories are legislative courts, properly speaking, and are not District
Courts of the United States. We have often held that vesting a territorial
court with jurisdiction similar to that vested in the District Courts of the
United States does not make it a ‘District Court of the United States.’
Reynolds v. United States, 98 U.S. 145 , 154; The City of Panama, 101 U.S.
453 , 460; In re Mills, 135 U.S. 263. 268 , 10 S.Ct. 762; McAllister v.
United States, 141 U.S. 174, 182 , 183 S., 11 S.Ct. 949; Stephens v.
Cherokee Nation, 174 U.S. 445, 476 , 477 S., 19 S.Ct. 722; Summers v.
United States, 231 U.S. 92, 101 , 102 S., 34 S.Ct. 38; United States v.
Burroughs, 289 U.S. 159, 163 , 53 S.Ct. 574. Not only did the promulgating
order use the term District Courts of the United States in its historic and
proper sense, but the omission of provision for the application of the rules
to the territorial courts and other courts mentioned in the authorizing act
clearly shows the limitation that was intended. (See also Longshoremen v.
Juneau Spruce Corp., 324 U.S. 237; Reynolds v. U.S., 98 U.S. 145, 154;
McAlister v. U.S., 141 U.S. 174; U.S. v. Burroughs, 289 U.S. 159, 163 )
This is where two elements must be considered: First, the “United States
District Court” is a territorial court (Balzac v. Puerto Rico (1922)), where
the “District Court of the United States” is the first-level Article III court of
the United States (Mookini v. United States (1938)). Second, the “United
States” is the proper principal of interest in courts of the United States other
than territorial courts, where the “United States of America, ss, President of
the United States” is the principal of interest in insular possession territorial

courts (see judicial provisions for Puerto Rico & the Virgin Islands in Title
48 of the United States Code). (Other cases using this case: GLIDDEN
COMPANY v. ZDANOK, 370 U.S. 530 (1962); LONGSHOREMEN v.
JUNEAU SPRUCE CORP., 342 U.S. 237 (1952); STAINBACK V. MO
HOCK KE LOK PO , 336 U.S. 368 (1949); ROY SYLVESTER PARROTT
v. GOVERNMENT OF THE VIRGIN ISLANDS UNITED STATES
COURT OF APPEALS FOR THE THIRD CIRCUIT No. 99-3688
ROY SYLVESTER PARROTT v. GOVERNMENT OF THE VIRGIN
ISLANDS UNITED STATES COURT OF APPEALS FOR THE THIRD
CIRCUIT No. 99-3688 The District Court’s power originates under Article
IV, S 3, which authorizes Congress to regulate the various U. S. territories.
See Binns v. United States, 194 U. S. 486, 491 (1904) (recognizing
Congress’s plenary power to define institutional relationships in territories).
Congress exercises this authority through the Revised Organic Act, which
serves as the Virgin Islands constitution. See 48 U.S.C. SS 1541-1645 (West
1987 & Supp. 2000); Brow, 994 F.2d at 1032. As such, the Revised Organic
Act is also the source of authority for the Virgin Islands Legislature. See 48
U.S.C. S 1574(a). It is through the Revised Organic Act that Congress
authorizes the local legislature to grant the Territorial Court its jurisdiction.
See 48 U.S.C. S1611(b). Consequently, both the Territorial Court and the
District Court derive their respective jurisdictional grants from the same
sovereign -- namely, Congress, exercising its authority under Article IV, S
3.
As a result, the District Court does not derive its jurisdiction, as do other
federal courts, from Article III. See United States v. George, 625 F.2d 1081,
1088-89 (3d Cir. 1980).11 Nor has the District Court previously been
treated...
[I]n a federal Territory and the Nation, as in a city and a State, “[t]here is
but one system of government, or of laws operating within [its] limits.” City
and State, or Territory and Nation, are not two separate sovereigns to whom
the citizen owes separate allegiance in any meaningful sense, but one alone.

United States v. Wheeler, 435 U.S. 313, 321 (1978) (internal citations
omitted). Moreover, “vesting a territorial court with jurisdiction similar to
that vested in the District Courts of the United States does not make it
a‘District Court of the United States.’ ” Mookini v. United States , 303 U. S.
201, 205 ( 1938). See also Barnard v. Thorstenn, 489 U.S. 546, 551-52
(1989) (holding that Supreme Court lacked supervisory power over District
Court of the Virgin Islands because that court was not an Article III federal
district court). Before the created by act of Congress, under the power to
make rules and regulations respecting the territory belonging to the United
States given by Article IV, section 3 of the Constitution, but is not a court of
the United States created under Article III, section 1. 625 F.2d at 1088-89.
MCALLISTER v. U S, 141 U.S. 174 (1891); These cases close all
discussion here as to whether territorial courts are of the class defined in the
third article of the constitution. It must be regarded as settled that courts in
the territories, created under the plenary municipal authority that congress
possesses over the territories of the United States, are not courts of the
United States created under the authority conferred by that article...For the
reasons we have stated it must be assumed that the [141 U.S. 174, 185]
words ‘judges of the courts of the United States,’ in section 1768, were used
with reference to the recognized distinction between courts of the United
States and merely territorial or legislative courts.
Bonds v. Tandy, No. 05-60478 (5th Cir. July 19, 2006) 21 U.S.C. section
877 limits petitions for judicial review to those litigants with Article III
standing and who are also arguably within the zone of interests of the
Controlled Substances Act (CSA). A petition for review of the Drug
Enforcement Administration’s denial of a waiver application that would
have allowed a pharmacy to hire petitioner is dismissed for lack of
jurisdiction. http://caselaw.1p.findlaw.com/data2/circs/5th/0560478cv0p.pdf

Appendix H
Metaphysics and Wealth
We believe the following article explains, in a way that nothing else does,
the real reasons not only why a belief in reincarnation to this day remains
largely suppressed in the West, but why the Irrevocable Common-Law
Trust, despite its myriad advantages, financial clout, tax benefits, and
proven track record in asset protection and growth, remains untaught and all
but unknown. You see, and we know this will seem outrageous and bizarre,
the Super-Rich do not want the people at large to know about their financial
super weapon and key means for ensuring not merely their dominance and
dominion in the here and now, but in lifetimes to come!
Many members of what the ordinary people may term the Super-Rich,
despite all their denials and carefully cultivated appearance of worldliness,
are deeply involved with and schooled in the esoteric and the occult.
Through magickal (as distinguished from stage “magic”) means, many
members of the Super-Rich believe that they can “manipulate the system”
such that lifetime after lifetime, they will reincarnate into the same
powerful families where, thanks to the power of Trusts, they will find
themselves equipped with every conceivable advantage as they ceaselessly
pursue their self-aggrandizement and relentless accumulation of power. The
Bohemian Club,152 and Skull and Bones,153 are but two organizations that
thrive on hidden mysteries. The esoteric point of view provides a belief in
the continuation of the soul, thus through their initiations they believe they
can control nothing less than the placement of it from one incarnation to the
next.
Perhaps what we should be doing is setting up our next game plan. That is
the true purpose of the Irrevocable Common-Law Trust. Not to leave the
assets for the Beneficiaries, but to leave them for yourself. When you come
back, you want to be well positioned.

This fascination with the occult is reported and demonstrated by
documentary film maker Alex Jones. He infiltrated the Bohemian Grove,
videotaped and wrote of his shocking discoveries there. This included robed
world leaders and their worship of an enormous owl representing
Moloch.154
At the bottom of the web page are still photos of Bohemian Grove, a free
video trailer includes links to order the full video. Here you will also find
other links regarding this and similar subjects.
You may think we are not exactly “right in the head,” about all of this, so
we refer you to our next startling moment in the following article titled,
“The Origins of Reincarnation.” We think it will become perfectly clear to
you, why the rich are so eager to renew the perpetual contract to hold the
Trust money in a safe place.
Please note the spiritual slant in the following article is not part of our point
of view. We feel the vivid overview of religious history and a belief in the
system of rebirth, though, offers a deep insight into why the rich may look
to the Trust system as a way to preserve wealth through the ages. Oddly,
though, this perpetual birth cycle is precisely why the Empress Theodora
instigated the destruc tion of this belief. Only through the tangled web of
evolution has the subject been so twisted. Her desire to avoid judgment
resulted in suppressing the belief in reincarnation and this has proved much
to the advantage of those who hold power.
The article is only in part. Footnotes explaining the people ,or other side
information have been omitted.
Origins of Reincarnation155
A Political and Religious History by Chris Populi
Despite efforts by traditional Western religions for 1,200 years to deny its
existence, reincarnation has not gone away. Instead, it provokes increased
interest among all religions.

Why such persistent denial? Incredible as it may seem, reincarnation’s
rejection was ordered by a pagan empress.
Soul is older 
than body. 
Souls are 
continuously 
born over 
again into 
this life. 
Plato (427- 
347) B.C.
Reincarnation is not a new subject. It dates back to time immemorial. The
Vedas, Krishna, Buddha, the Zendavesta, the Cabala, the Book of the Dead,
etc., all spoke of man’s many rebirths. Socrates and Plato mention it
(rebirth) in their teachings.
Shakespeare, Emerson, Thoreau, Thomas Huxley, William James,
Benjamin Franklin, and many others believed in it.
Often, those interested in reincarnation have read case studies in the books
of Dr. Ian Stevenson, in which children vividly recollect their previous
lifetimes.
In the highly publicized book, The Search for Bridey Murphy, Morey
Bernstein reports the case of a Pueblo, Colorado housewife who, when
placed under hypnotic regression, vividly described the town, shops, and
many townspeople from her previous life in Ireland as a lass named Bridey
Murphy–facts the Colorado housewife could not have known.
Unfortunately, the idea of reincarnation met with such disbelief in 1956,
that after a few years the book fell into oblivion. People were not prepared
for such avant-garde ideas.
Author and teacher Origen (185-254 AD), a Roman Catholic Church father,
spoke about reincarnation. He explained that man needs successive lives to
correct the apparent inequities of human condition. Early Church leaders

respected and endorsed his teachings, which were based on Plato’s
teachings.
According to the Greek Orthodox Church, which branched out of the
Roman Church:
When man is dead, he always lives; when our terrestrial
existence ends, we must wait, because we will return to it again.
Edgar Cayce, one of America’s best known psychics, says that
reincarnation is not a theory; it is a practical collection of ethical laws
affecting men’s morality. His readings unquestionably accept it.
The Gospels According to Spiritism by Allan Kardec, who founded
Spiritism in 1860 states:
The entry of spirits into the physical life is necessary so as to carry out
God’s purposes. The activities they are compelled to perform help them
develop their intelligence. God, being sovereignly just, treats all His
children equally.
Many distinguished modern scientists and universities now study
reincarnation and are scientifically proving its existence. Among them are
Ian Stevenson and Dr. Raymond Moody.
The “New Age” has presented much interesting research in this area. In
Brazil, countless bestsellers, allegedly based on real life stories, cover two
and three lives of the characters.
Why the Roman Catholic Church Rejects
Reincarnation
Despite its acceptance by many respectable religious and illustrious
masters, including Jesus, many westerners and traditional religions
stubbornly deny reincarnation.
According to Edgar Cayce on Reincarnation, by Noel Langley, Pageant of
the Gods, by John Forrow, Secret History, by Procopius and Leon Denis,
and to Brazilian Spiritists in general, Byzantium’s Emperor Justinian (483-

565 A.D.) was pressured by his wife, the powerful and wicked Empress
Theodora, to banish reincarnation from the Scriptures.
The ruthless Theodora, who wielded immense power, ordered anyone who
opposed her insatiable ambitions to be eliminated. She also exerted great
control over her emperor husband.
Theodora did not like the idea of reincarnation. Through its mechanical
laws of cause and effect, the imperial titles and prestige of her and her
husband would have to be expunged after death. She wanted instant
deification.
Furthermore, the humiliation of being judged like a common, delinquent
spirit, and then to take later incarnation based on rectifying the
consequences of her many thousands of crimes, were too much for
Theodora to accept.
...Byzantium’s 
Emperor 
Justinian (483- 
565 A.D.) was 
pressured by his 
wife, the 
powerful and 
wicked Empress 
Theodora, to 
banish 
reincarnation 
from the 
Scriptures.
Though Justinian at first endorsed reincarnation, Theodora convinced him
otherwise. Fearful of his own crimes, he surrendered to Theodora’s
pressure. Anyone who dared to oppose her nefarious plans against
reincarnation found sudden death.
Through Theodora’s constant instigation, Justinian pressured the Church of
Rome for years to approve the so-called Anathemas. These Anathemas

would banish belief in the pre-existence of the soul and of reincarnation
from the Scriptures, as well as from all the teachings of Origen’s that
confirmed reincarnation.
Pope Agapetus and then his successor Pope Silverius, tried to convince
Justinian not to impose such Anathemas. Both found an early and sudden
death–apparently executed through Theodora’s henchmen.
As a successor to Pope Silverius, who was sent into exile where he
expediently died, Theodora appointed his assistant, Bishop Virgilius, as
Pope, in hopes that he would agree with her anti reincarnation ideas. He did
not.
When Theodora died in 548, Justinian continued pressing Pope Virgilius.
To force his consent to the Anathemas, he held him prisoner for eight years.
In 553 A.D., Justinian summoned an Ecumenical Council at
Constantinople, ostensibly to approve an old, harmless law, called the “Two
Edict” (see Catholic Encyclopedia), but actually it was to approve the
Anathemas. Justinian controlled all 159 Greek bishops, Pope Virgilius
refused to attend the council because he was denied an equal number of
Roman bishops; only six were allowed to attend.
By order of the irreverent pagans, Justinian and Theodora, the Anathemas
against reincarnation and against Origenism were approved by the
Constantinople Ecumenical Council. A short time later, under suspicious
circumstances a greatly embittered Pope Virgilius died.
One of the Anathemas reads:
Whosoever shall teach the pre-existence of the soul and the
strange opinion of its return to earth, to him be anathema.
Apparently the Anathemas were never approved by the Roman bishops, nor
signed by the Pope, who only approved the “Two Edict.
Erasing references to reincarnation from the Scriptures, along with all of
Origen’s teachings, became the infamous task fo Emperor Justinian.
Increased Control of the Roman Catholic Church

After Justinian’s death in 565 A.D. the teachings of Origen could have been
reinstated safely into the Scriptures. Why weren’t they? The Church of
Rome and its bishops had never approved of the Anathemas.
In Reincarnation, The Phoenix Fire Mystery, Joseph Head and S.L.
Cranston explain why reincarnation was so offensive to “defenders of the
faith.” The implicit psychology of reincarnation may be the best
explanation:
The believer in this teaching tends to be responsible for his own progress
and salvation. Such a person has no need of priests, and little regard for
external dead-letter observance, rite or conformity.
The devices (such as the confessional) of a redemption conferred by
institutional authority were, to believers of evolution through rebirth:
transparent, fraudulent or false. Hence, the persecution over the many
centuries while dogmatic religion remained in power.
According to Emmanuel channeled through Chico Xavier in Emmanuel,
and to Emmanuel and to Denis in Death, the following transpired:
At first it was convenient for the Roman Church not to do
anything regarding reinstating reincarnation into the Scriptures
because to ignore it [reincarnation] facilitated its [the Church’s]
temporal control.
After Emperor Focas consolidated the power of the papacy in 607 A.D., the
Church gained considerable political and spiritual power, exerting increased
influence not only over the masses, but also over the emperors.
Temporal power gained acceptance, and the pagans who converted into
Christianity began to gradually adapt the rituals and pomp of the emperors
for their papal ceremonies, and from pagan rituals for their liturgy. Slowly
they abandoned the simplicity and humility of the early Christians. Jesus,
who did not possess even a rock upon which to rest his head, never used
temples, but chose nature to convey his teachings.

The Vatican lavishness, its sumptuous churches, and its
ostentatious ceremonies are a reminder of the polytheistic
dissipation of the Roman society... “Emmanuel”
The Church’s control over the masses was maintained through the fear of
hell and eternal damnation. Such beliefs provided a tremendous source of
income for the Church and the states. Through payments of penitence,
tithes, celebration of masses, and fees for absolution and the deliverance of
“sinner,” the Church maintained its increased control over the state and the
people for 1,200 years, starting in 607 A.D., until declaring the Pope
infallible in 1870.
The Inquisition Persecutes Believers in Reincarnation
According to Dr. Bezerra de Menezes in Dramas of Obsession, to
Emmanuel and Denis in After Death, and to Emmanuel, after the Crusades
ended, which were wars of conquest to take the Holy Land from the
Muslims in the XI, XII and XIII centuries, the feared and ignoble
Inquisition (1231-1820) began.
Also called the “Holy Calling,” the Inquisition was established by the
papacy to punish “heretics,”–people who believed in an afterlife, in
reincarnation and in the occult, threatened the universal control of the
Church.
The papacy proclaimed such beliefs to be the work of the devil, witchery
and heresy. Those accused of heresy were sent to gloomy dungeons to be
tortured into recanting or killed if unwilling to do so. Unfortunately, fears of
prosecution and damnation became inculcated in the minds of most
westerners. Throughout the centuries their deep subconscious mind became
conditioned.
If everyone could be saved by being reborn in another body, the Church
would lose its main excuse to save sinners from eternal Hell and damnation.
Priests would lose their prestige and the Church its source of income.
According to Hand and Cranston:

After the Renaissance, the iron hand of the “holy” Inquisition
descended over most of Europe, and for several centuries heretic
hunting on the part of the masses and clergy alike raged with an
unparalleled fury. It sent to the stakes as sons of Satan hundreds
of thousands of brave, freethinking Christians.
Gradually the night of enslavement over the human mind came to an end.
But as to reincarnation, the supposed curse against preexistence of A.D.
553, followed later by the indefatigable work of the Inquisitors, proved
exceedingly effective. Reincarnation was now dead to the masses of people
in the West. Henceforth, and until the latter half of the nineteenth century,
only among philosophers, writers and a few daring theologians was the
doctrine to be quietly welcomed.
Despite being a religious court, the Inquisition was based on civil powers.
The clergy and the state, in collusion, also found a great source of wealth by
confiscating the properties and assets of those condemned of heresy.
Reincarnation was part of the Jewish dogmas, being taught under the name
of resurrection. They believed that man could live again.
Referring again to The Gospels According to Spiritism:
The most vicious persecutions of the Inquisition occurred in Italy, Portugal
and Spain. According to Dr. Menezes, it was a good excuse to get rid of
enemies. The most persecuted heretics were the Jews because they
possessed most of the wealth. Their financial power was even greater than
that of the nobility.
Many Jews were given the chance to convert to Catholicism. To save their
families, most did. But through the extraction of tithes, gratuities, permits
and fees to “save” their souls, they were relentlessly persecuted and
exploited.
Inquisitors did not bother with the mystic beliefs of the independent gypsies
or the Moors because they were of a lower class and had no money.
However, lest we be self-righteous about the Catholic Church, through the
laws of reincarnation, many of us may have condemned others through the
Inquisition, only to suffer its persecutions in later reincarnations.

Reincarnation Is One of the Many Laws of the
Universe
Man is reborn into the physical world hundreds of times. Such a sequence
of existences is called reincarnation. Jesus to Nicodemus, a ruler of the
Jews, said, “Truly, truly, I say to you, unless one is born again, he cannot
see the Kingdom of God,” John 3:3.
Spiritism, Emmanuel and in Denis in After Death and Emmanuel in
Emmanuel teach that God is not careless, nor unjust, nor irresponsible nor
biased; He does not dispense blessings and punishments at random or
indiscriminately. The Universe and its beings are ruled by perfect and just
laws.
Reincarnation can explain the reasons for all injustices, birth defects,
mental retardation, deformities and handicaps, unavoidable accidents and
life reverses, etc. These are most likely the result of past existence misdeeds
—and chance may play a part, too.
God’s Perfect Laws—Causes of Afflictions
St. Augustine said, “According to the divine justice, in this world cannot
exist an unfortunate individual that has not deserved his misfortune.”
Denis feels the theory of reincarnation is far more preferable than the idea
that God created some of us poor, others rich, some with physical or mental
handicaps, or with incurable diseases, while others are born healthy,
intelligent and wholesome. And none of them performed any good deeds or
misdeeds to deserve their good or bad fate.
Spiritism teaches that on each reincarnation man gradually acquires
knowledge, wisdom and responsibility. His bodily shape is also perfected.
He confronts his errors on the extra-physical world and attempts to rectify
them in the school of hard knocks of the physical world. He also
consolidates his intellectual, moral and spiritual achievements, as well as
his good inclinations to the physical body–unfortunately, sometimes his bad
tendencies as well.
God’s Laws are Just and Infallible

As the days of my terrestrial life end, I shall wait, because I
shall return to it again.156
Again, Denis and The Gospels According to Spiritism by Kardec explain
that man never escapes the consequences of his faults, because he is
controlled by perfect and never-failing laws. Such laws are known for
millennia by Eastern religious schools as the Laws of Cause and Effect and
of Karma.
Jesus warned us, “That which we sow we shall reap.”
The above article continues, exploring more of the spiritual side of
reincarnation. Should you want to read the entire article, please write the
publisher.

Index
1041
Abusive
Accountants
Adverse Party
Adverse Trustee
Allodial
American National Bank
Annual Fee
Arm’s Length
Assessed
Association
Bank Secrecy
Bankers
Bankruptcy
Benjamin Franklin
Betts
Bill of Rights
Bloodline
Bogert
Brother
Business Expenses
CFR
Chancery
Charitable Trust
Charity
Chattel
Colonies
Combinations
Community Property
Copyrights
Corporation Sole
Corpus Juris Secundum
Credit Card
Declaration of Trust
Deductible
Divorce
Doctor
DPAHC
Duration
EIN
Employee

Employer Identification Number
Enforceable
England
Equitable Title
Estate Planning
Estate Taxes
Family Estate
Family History
Federal Reserve Bank
Fee Simple
Fiduciary Fee
Fiefdom
Firstborn
Forced
Full Title
Gift Tax
Good Faith
Grantor Trust
Gross Estate
Hawaii
Inherit
Initial Funding
Intestate
Investigation
Joint Property
Justinian
King
K1
Legal Title
Lewis Cass Payseur Trust
Liabilities
Licenses
Living Trusts
Massachusetts Trust
Medicare
Mentor
Minimize
Monopolies
Monopoly
Mortmain
Motivation
No Contest Clause
Nonadverse
Oath of Privacy
Obligation of Contracts
Offshore Trust
Passthrough
Patent
Permission
Perpetuities

Petition
Pope
Power to Revoke the Trust
Privilege
Progeny
Promissory Notes
Puerto Rico
Pure Trust
Registration
Remaindermen
Right to Contract
Rome
Rule Against Perpetuities
Separate Legal Entity
Sister
Social Security
Sole Proprietorship
Sovereign
Standard Oil
Stock Certificates
Subpoenaed
Substance of Transaction
Substantial Adverse Interest
Tax Benefits
Tax Consequences
Tax Havens
Trust Corpus
Trustee Fees
US Constitution
US Supreme Court
UBO
United States of America
Vote
Ward
Warranty Deed

The Art of Passing the Buck
Volume II Trust Blueprints
Volume I covered what and why.
Volume II distills decades of Trust experience to tell you how to:
Structure your Trust properly
Transfer assets into your Trust
Educate heirs and Beneficiaries in the proper use of your Trust
Make your Trust successful
Create effective Minutes
Properly issue and exchange Trust Certificates—explained in detail
Avoid legal problems—you don’t want a scam Trust
Deal effectively with governments and financial institutions
Includes Sample Formats and Forms
For more information visit:
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Or contact:
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818-574-6122

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Review of your existing Trust Indenture
Trust Mentoring on how to:
Organize your Trust
Choose a Protector
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Keeping your Trust up to date
Making your Trust successful
Lectures and Classes
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Trust Woes and What To Do About Them
For more information, contact:
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818-574-6122
trustservices@passingbucks.com

1 James Mathers, The Constitutional Common-Law Trust, Renaissance
Publishers, Tulsa, OK (1997)
2 Richard L. Grossman, Justice for Sale: Shortchanging the Public
Interest for Private Gain; Alliance for Justice, 1993; reviewed in The
Workbook, Vol. 18, No. 3 Fall 1993
3 Glen Halliday “The Truth about Trusts,” AntiShyster News Magazine,
Volume 7, No. 1, Pg. 39
http://famguardian.org/PublishedAuthors/Media/Antishyster/V07N1-
TheTruthAboutTrusts.pdf
4 Liz PullIiam Weston, Los Angeles Times, “Two Trustees Would Protect
Estate,”, Section C3, Money Talk, September 3, 2000
5 A Living Trust is when the Grantor remains as the Trustee and can
change the terms of the Trust during his or her lifetime. There will be much
more about this in following chapters.
6 A Testamentary Trust is created by the Testator through a Will. He or she
sets the terms of the Trust to be created and names a Trustee, or a Trustee
can be court appointed.
7 Adask, Alfred, “Divide and Conquer,” AntiShyster News Magazine,
Volume 7, No. 4, pg. 220.
8 U.S. Constitution, Article 1, Section 10.
9 Jon Daugherty, “Improperty,” Report: Eminent-domain abuse
widespread,” World Net Daily, April 22, 2003
www.worldnetdaily.com/news/article
10 There are certain restrictions when a Trust owns a business. This is
covered later in this book.
11 IRC §301.7701-4(a) Trusts
12 Darling v. Buddy, 1 S.W. 2d 163, 58 A.L.R. 493 (1927).

13 People Magazine, Payday or Mayday? May 17, 1999, p.128.
14 Jean Strouse, Morgan American Financier, Random House, New York
(1999)
15 Black’s Law Dictionary, Second Edition, 1910
16 Genesis 25:29-33
17 George Gleason Bogert, The Law of Trusts and Trustees, Section 2,
West Publishing Co, St. Paul, MN (1984) p. 15
18 “... religious men should not enter into the fees of any without the will
and licence of the lords in chief of whom these fees are held immediately.”
http://www.yale.edu/lawweb/avalon/medieval/mortmain.htm
19 Bogert, ibid., p. 15
20 Agnes Strickland, Lives of The Queens of England from the Norman
Conquest, Volume XVI, Chapter viii, p. 208, George Barrie & Sons,
Philadelphia, 1903.
21 Strickland ... Throughout the many successive reigning monarchs,
English subjects also learned to stay out of the way of the king or queen’s
progress through the countryside, as the royal armies had the habit of raping
and pillaging both land and people. When residents of towns close to the
ruler discovered the retinue was traveling, they fled before the ravaging
armies.
22 Columbia Encyclopedia, Second Edition, Columbia University Press,
New York, 1950, p. 1326.
23 Capital Strategies, “Brief History of Pure Trusts”,
http://www.wealth4freedom.com/wns/trusthistory.htm
24 (“... Give me liberty or give me death”), Revolutionary War-era
governor of Virginia, passionate opponent of the U.S. Constitution,
advocate of the Bill of Rights and a wealthy speculator in land.

25 Hon. E.R. Ridgely, (D-Kans.), AntiShyster News Magazine, “Title
Wars,” Vol. 8, No. 2, p. 20.
26 See Glossary.
27 Michael Parenti, Democracy for the Few, St. Martin’s Press, Inc., NY,
1983, p. 80.
28 See Black’s Law Dictionary, Sixth Edition definition of Trust for a
further description of these “Trusts.”
29 Psychological operations.
30 Frederick Lundberg, The Rich and The Super-Rich, Lyle Stuart, Inc.,
New York (1968), out of print.
31 Arthur R. Hogue, Origins of the Common-Law, Liberty Press,
Indianapolis, Indiana (1966), p. 126-127
32 Ibid., p 93
33 Jack Salzman, David Lionel Smith, Encyclopedia of African-American
Culture and History, Cornel West, Editors, Volume 5, Simon & Schuster
and Prentice Hall International, New York, “Slavery,” p. 2464
34 Alex Christopher, Pandora’s Box, Pandora’s Box Publishing, Spokane,
Washington, 1993, p. 50
35 People Magazine, “Payday or Mayday?” May 17, 1999, p.128.
36 Lundberg, The Rich and the Super-Rich, p. 210
37 The Federal Reserve Bank document of major stockholders lists the
following who own 100% of the primary stock: Rothschild Bank of London
and Berlin, Lazard Freres Bank of Paris, Israel Moses Seif Bank of Italy,
Warburg Bank of Hamburg and Amsterdam, Lehman Brothers Bank of
New York, Kuhn Loeb of New York, Chase Manhattan Bank of New York.

38 Jeffrey Sparshott, The Washington Times, “Agricultural Subsidies
Targeted,” December 08, 2003,
http://www.washtimes.com/business20031207-114046-8545R.htm
39 Timothy A. Wise, “Identifying the Real Winners From U.S.
Agricultural Policies,” GDAE Working Paper No. 050-07 (Updated June
2006), The Global Development And Environment Institute (GDAE), Tufts
University, Medford, Massachusetts.
40 AFL-CIO News, “Bush Buddies Get No-Bid Contracts While Workers
Get the Shaft,” September 14, 2006,
http://www.aflcio.org/aboutus/ns09142005a.cfm
41 Common Dreams News Center, “Halliburton Handed No-Bid Iraqi Oil
Firefighting Contract,” March 25, 2003,
http://www.commondreams.org/headlines03/0325-11.htm
42 Michael Dobbs, Washington Post, “Halliburton’s Deal Greater Than
Thought, August 28, 2003, http://www.truthout.org/docs_03/082903B.shtml
43 Pat Gerber, Common Dreams News Center, “Another Scandalous No-
Bid Contract Makes Us Look Like Fools,” May 23, 2003,
http://www.commondreams.org/views 03/0526-07
44 Yochi J. Dreazen, The Wall Street Journal, “US: No-Bid Contracts Win
Katrina Work,” September 12, 2005 http://www.corpwatch.org/article.php?
id=12620
45 Sarah Anderson and John Cavanagh, Policy In Focus, Policy Brief,
“Outsourcing: A Policy Agenda,” Volume 9, Number 2, April 2004:
http://www.fpif.org/briefs/vol9/v9n02outsource_body.html
46 Bill Moyers, NOW on-line magazine, “America and Jobs,”, Politics &
Economy, May 7, 2004: http://www.pbs.org/now/politics/outsource.html
47 The entire definition of “engaged in a trade or business within the
United States” becomes a game of words. “Within the United States” refers
to federal territories and not to any activity in the 50 states. See Appendix

for a definition of the United States and the United States of America per
the terms of the IRC and case law; Internal Revenue Districts outside of the
District of Columbia were abolished as a result of the IRS Restructuring
and Reform Act of 1998, 112 Stat. 685.
48 See Glossary for further definition of the Rule Against Perpetuities.
49 Robert T. Kiyosaki, Rich Dad, Poor Dad, TechPress, 1998
50 Ted Nace, Gangs of America, the Rise of Corporate Power and the
Disabling of Democracy, May 2003 draft, Berkeley, CA 94707 (510) 527-
6363, © 2003.
51 In Appendix A the history of the word “jurisdiction” is presented to
mean the place where one has sworn allegiance. In our current political
atmosphere it generally means the place where one agrees to the laws.
52 Clifton Beal, The Trust Bible: a Quick Guide and Preliminary
Understanding of Estate Planning, Xlibris Corporation, 2003,
www.Xlibris.com
53 Sanchez v. County of San Diego, No. 04-55122 D.C., CV 001-01467
JTM Opinion. Appeal from the United States District Court for the
Southern District of California, Filed September 19, 2006.
54 Your Federal Income Tax For Individuals, Publication 17, Catalog
Number 10311G, Part Two, Income, Section 13 Other Income, Estate and
trust income, Current Income required to be distributed, “ . . . you must
report your share of the distributable net income whether or not you have
actually received it.”
55 American National Bank of St. Joseph v. United States, 92 F. Supp.403
56 Brent Johnson, American Sovereign, “Pure Trust Organizations”:
http://www.americansovereign.com/article/article31.htm
57 David Horowitz, FrontPageMagazine.com, May 15, 2000, “March of
the Racketeers”: http://www.frontpagemag.com/Articles/Printable.asp?

ID2995
58 Brent Johnson, Ibid.
59 The Sixth edition of Black’s Law Dictionary lists more than 90 different
types of Trusts.
60 Evangelho v. Presoto (1998) 67 Cal.App. 4th 615, 79 Cal.Rptr.2d 146.
61 Commissioner of Internal Revenue v. Logan 283 U.S. 404 (1931).” No
tax is assessed on the conveyance of property to a corporation because the
exchange constitutes a tax-free trade and exchange for an unknown realized
gain or loss.”
62 See IRC § 501(c)(3).
63 Steve Maple, The Complete Idiot’s Guide to Wills and Estates, Alpha
Books, p. 208.
64 Rice v. Rockefeller, 134 NY 174, 31 NE 907 and State ex rel., Watson v.
Standard Oil Co., 49 Ohio St 137, 30 NE 279.
65 Commissioner of Internal Revenue v. Betts, C.C.A. 123 F.2d 534
(1941).
66 The blood relationship can be allowed in some cases. We cover this in
Volume II. An understanding of Trust Certificates is required before a
decision to put either a brother or a spouse in as a Trustee can be
considered.
67 Morton v. Commissioner of Internal Revenue, 109 F2nd 47, Jan 9,
1940.
68 IRC § 672 (a) through (d).
69 Marshall A. Oldman, High Court Resolves Care Custodian Issues in
Probate Code, Los Angeles Daily Journal, Focus, September 28, 2006, p. 7.
70 IRC §674 (b) and (d)

71 IRC 677(b)
72 IRC 675(4)B
73 Liz Pulliam Weston, “Abuse of power of attorney drains grandfather’s
funds,” Los Angeles Times, Money Talk Section C, page 3, October 29,
2006
74 See Appendix F for a definition of “Reasonable Skill.”
75 In re the Matter of The Honorable Grant L. Anderson, Pierce County
Superior Court, State of Washington, No. 96-2179-F. Item 2. Law Student
Trust Law Hornbook. [Excerpts from Bogert, Trusts (6th Ed., Hornbook
Series, Student Edition, West 1987), § 95 entitled “Trustee’s Duty of
Loyalty”:] Body Text, pgs. 341-344.
76 The discussion preceding the adoption of amendments to the Indenture
can be as important as the amendments themselves, or even more so, since
it reveals the Trustees’ thought processes. There is a direct parallel here to
legislative history in public law, i.e., “The background and events, including
committee reports, hearings, and floor debates, leading up to enactment of a
law. Such history is important to courts when they are required to determine
the legislative intent of a particular statute. . . .” [Legislative intent: “Such
is looked to when court attempts to construe or interpret a statute which is
ambiguous or inconsistent.”] (Black’s Law Dictionary, 6th)
77 We will cover the subject of Trust Certificates more in following
chapters and in Volume II.
78 See Glossary, Nonadverse Party
79 Braswell v. United States, 487 U.S. 99 (1988); Curcio v. United States,
354 U.S. 118 (1957
80 Arnold O. Ginnow and George Gordon, Corpus Juris Secundum,
Complete Restatement of the Entire American Law, West Law Publishing,
Volume 7, §4 (1980).

81 Ibid., Volume 7, §4, paragraph 2.
82 Black’s Law Dictionary, Fifth Edition.
83 As a close parallel, most state dental associations currently have the
power to pull the licenses of fully competent dentists whose consciences
compel them to warn their patients that so-called “silver” or “amalgam”
dental fillings actually consist of more than 50% highly toxic mercury by
weight. Such fillings are banned outright in Sweden.
84 Hale v. Henkel, 201 U.S. 43, 74 (1905).
85 Halliday, Glen, AntiShyster News Magazine,“The Truth About Trusts,”
Volume 7, No. 1.
86 Lundberg, Ferdinand, The Rich and The Super-Rich, Lyle Stuart, Inc.,
New York, NY, p.50
87 Lundberg, Ibid., p. 594
88 Los Angeles Times, “Cayman Islands Lifts Veil of Bank Secrecy,”
August 25, 1999
89 Robert Vamosi, Security Watch: “The Myth of Online Anonymity,”
posted on Battlefront.com General Discussion Forum, October 10, 2006,
www.battlefront.com
90 Designation of form of trust is not controlling; court will look to
substance of circumstances and not labels placed on them by parties,
Johnson v. Hychyk, 517 P.2d 1079.
91 There are, coincidentally, also dozens of types of ducks, classified by
ornithologists, appropriately enough, into “tribes.”
92 Enochs & Flowers v. Roell, 170 Miss. 44, 154 So. 299 (cited in Black’s
Law Dictionary, Fourth Edition).
93 Kusner v. First Pa. Corp., D.C.Pa., 395 F.Supp. 276, 281 (cited in
Black’s Law Dictionary, Sixth Edition).

94 220 U.S. 178, 31 S.Ct. 360, 55 L.Ed. 424. (1911)
95 Black’s Law Dictionary, 6th Ed.
96 Berry v. McCourt (204 N.E.2d 235)
97 Denmark Cheese Association v. Hazard Advertising Co., 59 Misc. 2d.
182.
98 John H. Sears, Trust Estates as Business Companies, Vernon Law Book
Company, Kansas City, MO, 1921. Reprinted by Lawbook Exchange Ltd.,
Union, New Jersey, 1999.
99 IRC §674(b)(8) and §674 (b)(5)(A), respectively.
100 Bruce Givner, Los Angeles Daily Journal “Court Refines Formula for
Family Limited Partnerships,” Focus section, May 3, 2005.
101 The Trustee holds a large percentage of the corpus of the Trust.
102 Morton vs. Commissioner of Internal Revenue, 109 F2nd 47, Jan. 9,
1940.
103 IRC §674(b)(3)
104 Your Federal Income Tax for Individuals, Publication 17, Catalog
Number 10311G, Part Two, Income, Other Income.
105 The “Remoteness of Vesting,” or the Rule Against Perpetuities used in
Statutory Trusts does not apply, as the Common-Law Trust is a viable
contract with an end date of 25 years or less. A detailed discussion
regarding this point is given in Volume II; also see Mega Trust or Dynasty
Trust which has gotten around the Rule Against Perpetuities, Appendix E.
106 This amount is subject to change. Check with a tax professional for
the current amount allowed.
107 Hodgkiss v. Northland Petroleum Consolidated, 104 Mont 328, 67 p
2nd 811.

108 Shirk v. City of Lafayette, 52 F. 857 (1892).
109 Arthur R. Hogue, Origins of the Common-Law, Liberty Press, p. 241.
110 Diversified Metals Products v. T-Bow Civil No. 93-405-E-EJL, United
States Answer and Claim, United States District Court of Idaho.
111 Dan Meador, Income Tax Dissension. “Who & What is the Internal
Revenue Service? History & New Evidence.” April 1, 2000.
112 Corpus Juris Secundum 20 § 1785.
113 H.R. 4005—Money Laundering Deterrence Act of 1998 and H.R.
1756—Money Laundering and Financial Crime Strategy Act of 1997 found
at:
http://commdocs.house.gov/committees/bank/hba49305000/hba49305_0f.ht
m
114 The burden of proof is shifted from the government to you. You are
guilty until you prove yourself innocent, which may take more time and
money than you realize.
115 Robert E. Bauman, Forbidden Knowledge, Agora International, Inc.
1998, p. 55
116 There are exceptions and other details concerning overseas earned
income. The issue is it is tied to your Social Security Number whether or
not you declare it, or use it with the foreign entity. Check with your CPA.
117 Racketeer Influenced and Corrupt Organizations (RICO) was enacted
by Section 901(a) of the Organized Crime Control Act of 1970, Pub. L. No.
91-452, 84 Stat. 922 (15 October 1970).
118 Cook v. Tait, 265 U.S. 47, 44 Sup. Ct. 444 (1924)
119 Per a CPA who is also a specialist in Trust accounting.
120 Los Angeles Times, “Cayman Islands Lift Veil of Bank Secrecy,”
August 25, 1999.

121 Los Angeles Times, “Cayman Islands Will Share Tax Information”,
November 28, 2001
122 Grace Commission Report, “President’s Private Sector Survey on
Cost Control, Volume I, January 15, 1984.
123 Eustace Mullins, The Secrets of the Federal Reserve, Bankers
Research Institute, Staunton, Virginia, 1991.
124 Appendix C introduces you to one article regarding this subject on the
Internet.
125 Briefly, IRS section 501(c)(3) states “organizations, including
churches and religious organizations, must abide by certain rules: Their net
earnings may not inure to any private shareholder or individual, they must
not provide a substantial benefit to private interests, they must not devote a
substantial part of their activities to attempting to influence legislation, they
must not participate in, or intervene in, any political campaign on behalf of
or in opposition to any candidate for public office, and the organization’s
purposes and activities may not be illegal or violate fundamental public
policy.”
126 Name has been changed for reasons of privacy.
127 The Reverend refers to 1998.
128 http://en.wikipedia.org/wiki/Corporation_sole
129 This amount is subject to change; check with your accountant.
130 Found in an Irrevocable Statutory Trust created by an attorney is the
following under section titled “To Make Payments and Distributions” (4)
By making expenditures directly for the benefit of the Beneficiary, the
Trustee shall not be required to supervise or inquir into the application of
any funds so paid or applied, and the receipt by the payee shall be full
acquittance of the Trustee. (Emphasis added).

131 Also as a reminder, a Trust Indenture is known as a Declaration of
Trust or any combination of the two terms.
132 Morton Freilicher, Estate Planning Handbook with Forms, Prentice-
Hall, Inc., Englewood Cliffs, N.J. (1970) p. 157-158 and IRC §674(b) and
(d).
133 Also known as ‘issue of the body.’
134 Check with appropriate accounting personnel to get current amount of
deduction.
135 123 F.2d 534, 41-2 U.S. Tax Case (Nov. 26, 1941)
136 The contract where the Trust Grantor and Trustees agree how the
Trust should be administered, who the Beneficiaries are, and any long-range
strategies for building the corpus of the Trust.
137 I.R.C. §675(4)B “A power to control the investment of the Trust funds
either by directing investments or reinvestments . . .”
138 I.R.C. §672(a) The term “adverse party” means any person having a
substantial beneficial interest in the Trust which would be adversely
affected by the exercise or nonexercise of the power he possesses respecting
a Trust. A person having a general power of appointment over the Trust
property should be deemed to have a beneficial interest in the Trust.
139 For convenience, we repeat this information: IRC §672© Related or
subordinate party... (1) The Grantor’s spouse if living with the Grantor;
(2) any of the following: The grantor’s father, mother, issue brother, or
sister; an employee of the grantor; a corporation or any employee of a
corporation in which the stock holders of the grantor and the trust are
significant from the point of view of voting control; and subordinate
employee of a corporation in which the Grantor is an executive.
140 California Government Code 12591

141 The person appointed by the Grantor to oversee the functions of the
Trustees. We devote a chapter to the functions of the Trust Protector in
Volume II.
142 Wall St. Roundup, “SEC Going Too Far on Crackdowns, Chamber of
Commerce Says,” from Bloomberg News, Associated Press, early 2006.
143 In addition, all exchanges of assets for Trust Capital Units were not
questioned.
144 “. . . releasing or delivering one person from the power or control of
another.” (Black’s Law Dictionary, Fourth Edition)
145 Clifton Beale, The Trust Bible, p. 118; George M. Turner, Irrevocable
Trust, Third Edition, 23 Dynasty Trusts.
146 Bootlegged whiskey.
147 Diversified Metals Products, Inc. v. T-Bow Company Trust, et al, 93-
405-E-EJL United States’ Answer and Claim, point 4. District of Idaho.
148 
IRC §3121, (e), (1)
149 
California Commercial Code §9307(h)
150 
IRC §3121, (e), (2)
151 
IRC §4612 (a) (4)
152 Fairness and Accuracy in Reporting, Inside Bohemian Grove: “The
Story People Magazine Won’t Let You Read,” December 1991:
http://www.fair.org/index.php?page=1489
153 Alexandra Robbins, Secrets of the Tomb: Skull and Bones, the Ivy
League and the Hidden Paths of Power, Bay Back Books (2002); Kris

Millegan (editor), Fleshing Out Skull & Bones: Investigations into
America’s Most Powerful Secret Society, Trine Day; New Edition, October
1, 2004; Antony C. Sutton, America’s Secret Establishment: An
Introduction to the Order of Skull & Bones, Liberty House Press, Billings,
Montana, 1986
154 Http://www.prisonplanet.com/alex_jones_tell_his_story.html
155 Reprinted, with minor editing, from Perceptions magazine (out of
print), Spring 1994
156 The writer attributed this quote to Job. We were unable to verify it.