MASTERS TRUSTS VS 1031 EXCHANGES
IRS CODE AND LEGAL COMPLIANCE CLICK HERE
BASIC TRUST EXECUTIVE SUMMARY CLICK HERE
MASTER'S CHARITABLE TRUST VS FOUNDATIONS CLICK HERE
MASTER'S TRUST VS COMMON LAW TRUST CLICK HERE
In 1999 specialized terms and conditions for Irrevocable Spendthrift Trusts were created that were unique in that for the first time a control position was placed within the trust format that would allow a selected person to govern the actions of a trustee and the conduct of the beneficiaries. These trusts meet the requirements of the IRS, the concepts of the late Professor Austin Scott of Harvard Law School, the foremost authority on trust law and the codes and relevant statutes of the legal system.
The trust documents were copyrighted, beginning in 1999 and completed in the year 2000. Additional documents have been copyrighted in 2012. The Copyrights are exclusively sold through Masters Copyrights LLC in Houston, Texas. On request, Masters Copyrights LLC can assist in arranging legal services, tax preparation, and legal consultations.
The copyrighted trust provides asset protection, since the trust assets are generally exempt from a turnover order from any court of law or judge when created and used properly*.
Generally, when funds or endowments are properly conveyed to a trust, there are no tax consequences to the party contributing the funds or endowments, the beneficiaries, or to the trust itself. The funding/endowment is called a capitalization that is called the corpus of the trust. When assets, cash or property are distributed to a beneficiary of the trust, it is not a taxable event for the trust. All capitalization or endowments, and capital gains, extraordinary dividends, real estate transactions and stock dividends realized in an irrevocable discretionary trust are not considered income to the trust when allocated to the corpus.
The Internal Revenue Code states this plainly saying;
Internal Revenue TITLE 26, Subtitle A, CHAPTER 1, Subchapter J, PART I, Subpart A, Sec 643 (a)(3),(4),(7) and (b) states: “(3) Capital gains and losses. Gains from the sale or exchange of capital assets shall be excluded to the extent that such gains are allocated to corpus and are not (A) paid, credited, or required to be distributed to any beneficiary during the taxable year, or (B) paid, permanently set aside, or to be used for the purposes specified in section 642(c). Losses from the sale or exchange of capital assets shall be excluded, except to the extent such losses are taken into account in determining the amount of gains from the sale or exchange of capital assets which are paid, credited, or required to be distributed to any beneficiary during the taxable year. The exclusion under section 1202 shall not be taken into account. (4) Extraordinary dividends and taxable stock dividends For purposes only of subpart B (relating to trusts which distribute current income only), there shall be excluded those items of gross income constituting extraordinary dividends or taxable stock dividends which the fiduciary, acting in good faith, does not pay or credit to any beneficiary by reason of his determination that such dividends are allocable to corpus under the terms of the governing instrument and applicable local law. (7) Abusive transactions The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this part, including regulations to prevent avoidance of such purposes. If the estate or trust is allowed a deduction under section 642(c), the amount of the modifications specified in paragraphs (5) and (6) shall be reduced to the extent that the amount of income which is paid, permanently set aside, or to be used for the purposes specified in section 642(c) is deemed to consist of items specified in those paragraphs. For this purpose, such amount shall (in the absence of specific provisions in the governing instrument) be deemed to consist of the same proportion of each class of items of income of the estate or trust as the total of each class bears to the total of all classes. (b) Income for purposes of this subpart and subparts B, C, and D, the term "income", when not preceded by the words "taxable", "distributable net", "undistributed net", or "gross", means the amount of income of the estate or trust for the taxable year determined under the terms of the governing instrument and applicable local law. Items of gross income constituting extraordinary dividends or taxable stock dividends which the fiduciary, acting in good faith, determines to be allocable to corpus under the terms of the governing instrument and applicable local law shall not be considered income.”
Because of these key factors and the characteristics, our special copyrighted (intellectual property) Spendthrift Trusts have now become the preferred entity for asset protection and tax planning. The copyrighted trust provides tax advantages and ease of management that meets the requirements and standards necessary to enjoy these advantages.
COPYRIGHTED SPENDTHRIFT TRUSTS CHANGE STRATEGY
The old strategy of leveraging cash gifts in irrevocable trusts, shifting or reducing the value of assets, and the implementation of programs to take advantage of income and estate tax deductions for gifts to charity have become antiquated and often ineffective. Estate planning specialists stress that there are two types of taxpayers: informed and uninformed. The less informed you are, the more taxes you pay as a general rule. The uninformed are vulnerable to claims of liability and the informed are protected and often immune to claims of liability against effecting property and assets. Spendthrift Trusts can reduce the burden of taxes, deter claims and limit liability.
INVESTMENT AND CONFIDENTIALITY
Trustees have unique powers allowed by law with a properly created trust allowing investments in real or personal property of any nature.
Probate requirements for wills often result in making a public record of the terms and distribution requirements of the will. Trusts however are not filed and are not on any public register. Legal Trusts are registered with the IRS through an EIN number. While the legal trust must file a 1041 tax return each year, it remains confidential as it is not public record.
WHAT IS AN IRREVOCABLE TRUST AND
WHAT ARE ITS TAX ADVANTAGES?
When you create a trust, you decide whether the trust will be revocable or irrevocable. A revocable trust can be changed or even dissolved by the Creator at any time. An irrevocable trust, however, can never be changed. The consideration, property or assets, you put into it must stay there. The property and assets are managed by the trustee. The Master’s Spendthrift Trust utilizes a Compliance Overseer© to ensure that the trustee fulfills its fiduciary duties. The Compliance Overseer Office© is unique to Master's Copyrighted Trusts. Why, then, choose to make your trust irrevocable? The answer is simple: Potential tax advantages and legal protection from all liability. If set up properly irrevocable trusts do not pay taxes on capitalization and endowment and are generally beyond the reach of creditors and judgments with limited exceptions. Conversely, revocable trusts offer no tax benefits at all and may be reached by creditors to satisfy judgments. If you want lots of flexibility, poor tax consequences and no legal protection, make your trust revocable. But if you want good tax consequences and legal protection, you must forego flexibility and form an irrevocable trust instead.
SPENDTHRIFT TRUST REQUIREMENTS
To enjoy the benefits of the Spendthrift Trust mentioned above, it cannot be altered, changed, modified or revoked after its creation in any manner whatsoever. Any contributions or endowments to the trust are irrevocable. The Settlor/Grantor or Trustee may never be a beneficiary of the Trust. The Settlor/Grantor can never have day-
SPENDTHRIFT TRUST ORGANIZATION
The best time for estate planning and asset protection is NOW… before you need it. A Spendthrift Trust Organization provides the surest and safest road to freedom, providing you tax advantages, asset protection, privacy and estate planning. By transferring assets into a properly structured Spendthrift Trust Organization, the Trustee can maintain complete control of the trust assets without the inherent liabilities. Assets "held in trust” are generally not effected by bankruptcy, divorce, lawsuits, liens, levies or death.
A "Trust" is defined by Black's Law Dictionary “as right of property, real or personal, held by one party for the benefit of another.” The trustee(s) hold the legal and equitable title to the property for the benefit of the beneficiaries. Although the trustees hold the property title, they do not own the property. The trustee(s) is/are designated the management authority for the Spendthrift Trust Organization.
The beneficiaries also do not own the property but they enjoy the benefits, proceeds and profits of it. This is called the "beneficial interest” in the Spendthrift Trust Organization. The "beneficial interest" is contractually non-
Property held by a properly structured contract in the form of a Spendthrift Trust Organization is generally protected from tax liens, levies, and seizures, lawsuits, divorce claims and bankruptcy. The Spendthrift Trust Organization is not liable for the debts of the trustees or the beneficiaries and the assets held by the trust generally cannot be seized to satisfy their debts*. Further, the trustees and beneficiaries are not liable for the debts of the Trust Organization.
“Trust property cannot be held under attachment nor sold upon execution for the trustees personal debts” Hussey v. Arnold 182 U.S. 461, 21 S. Ct.645
The fact that the trustees hold the property does not mean that the trustees own the personal property. Trust property cannot be held under an attachment nor sold upon the execution of trustee's personal debts. Trustees and beneficiaries cannot be held liable for debts incurred by the trust. If in fact, a trust has been created, the certificate holders are not liable on the obligation incurred by the trustees or managing agents appointed by the trustees. Hussey V. Arnold 70 NE 87: Mayo V. Morin, 24 NE 1083.
Pursuant to 695.30(a) of the CPC for the State of California and similar Civil Procedure Codes of other states; "property of the judgment debtor that is not assignable or transferable is not subject to the enforcement of a money judgment”.
STATE ACTIONS ENHANCING FUNDAMENTAL TRUST LAW
All the states have enacted legislation generally confirming that the interest of a beneficiary under a trust is not subject to execution or attachment by his creditors. There are also many decisions of state court supporting this concept. We have not found any to the contrary.
One of the most fundamental American rights is our "right to financial privacy”. Although Spendthrift Trust Organizations are subject to certain Federal Tax Id requirements to conduct banking, the privacy of the Spendthrift Trust Organization is still kept intact. An individual’s financial affairs are maintained in total privacy and paper trails to the individual are virtually eliminated.
PLAN ESTATES AND ASSET PROTECTION BEFOREHAND
The best time for estate planning and asset protection is NOW, before a crisis overtakes you. The Spendthrift Trust Organization provides a sure and safe road to freedom providing the ultimate in tax advantages, asset protections, and privacy. Spendthrift Trust Organizations have been one of the best-
* There are limited exceptions to being protected from creditors. It varies from state to state. For example, a statute in Texas allows a court to garnish child support payments from a spendthrift trust.