UltraTrust Irrevocable Trust Asset Protection

Author name: Rocco V. Beatrice

Mr. Beatrice Jr. is the Director of Estate Street Partners, LLC; a Boston-based, financial engineering consulting firm. Additionally, he is the Managing Member of Vertex Management Group, LLC; a Boston-based, financial and marketing consulting firm.

Asset Protection, Lawsuit

Frivolous Lawsuits & Asset Protection

/

Frivolous Lawsuits & Asset Protection PART 2: ASSET PROTECTION: GENERAL/LIMITED PARTNERSHIP, CORP CHAPTER “C”/CHAPTER “S”, LLC, TRUSTS          Watch the video on Frivolous Lawsuits & Asset Protection Like this video? Subscribe to our channel.     ASSET PROTECTION: Preserving the Life You Built   Asset Protection is the planned process for safeguarding your wealth from frivolous, baseless, also catastrophic legal claims. Often these attacks are opportunistic or illogical. They still have all of the power for dismantling of your lifestyle both at this time and also in the future.   You’ve worked hard. For something meaningful to build, you’ve climbed uphill, endured stress, and sacrificed. Everything you’ve built may vanish instantly lacking safety precautions. You would not be at any fault for this.   The contingency-fee legal system is among America’s industries that are growing fast. The U.S. has over 130000 law students in the pipeline it is home to 80% of global lawyers. These lawyers do not get paid, unless they happen to win a piece of what it is you own. They must win for payment.   Planning ahead, insulating well, and then staying many steps ahead, and not hiding anything, are all of what smart asset protection is about. Do not wait until after a crisis occurs for you to realize that your wealth is truly exposed.   Tell me whether you want this as a landing page intro or matched with a lead magnet such as “10 Threats to Your Wealth You Didn’t See Coming.”   The Lawsuit Epidemic: Why Asset Protection Is Critical   Remember the woman who was awarded $2.3 million after she spilled hot McDonald’s coffee on herself? The amount was later reduced—but not eliminated. The message was clear: juries can and do award massive sums, even in cases that seem absurd.   An employee, en route to a meeting, glances at his phone to call a coworker. In that split second, traffic shifts—and he crashes into another car, seriously injuring a 78-year-old woman. This exact scenario resulted in a $21 million judgment against Dykes Industries of Little Rock, Arkansas. The employee was simply doing his job.   Last year alone, Predator-Plaintiffs filed over 30 million lawsuits—that’s more than 82,000 per day. Many are career opportunists who file lawsuits knowing that the cost of legal defense is so high, a quick settlement becomes the default strategy—even when the claim is frivolous.   The threat is real. It’s no longer a matter of “if” but “when.” Protecting your wealth with a legal shield in place before disaster strikes is not optional—it’s essential.   Let me know if you’d like this converted into a high-impact webinar slide or a lead-in for your asset protection seminar.   How Opportunists Find Out You’re Worth Suing   Your financial life is now not private anymore. Each bank deposit with each brokerage transaction offers a remarkably detailed profile of each of your assets. Even your purchase history in addition to credit card swipe offers a profile about your interests, beliefs, and behaviors. This data within a lawsuit has the potential to be subpoenaed or examined and then be used against you.   Your life indeed, whether that you like it or not, is like an open book.   Financial privacy you have NO real.   This should not make you worry at all. It is, instead, simply the truth. Your bank accounts, phone records, credit reports, medical history, even your Social Security number are vulnerable. Anyone can get access to them with having the right tools at the ready or at the right price point.   America’s Privacy Problem   The United States has some of the weakest financial privacy laws in the world. Data about you is bought, sold, and traded daily—usually without your knowledge or consent. You can slow it down, but you can’t stop it.   In 2004 alone, over 9 million Americans had their identity stolen   8 million were sued, many in frivolous or opportunistic lawsuits   – For just a few dollars, online databases can reveal: – Your home address – Work history – Telephone activity – Even balances in brokerage and bank accounts   In stark contrast, many countries with strict bank secrecy laws forbid this level of access. In those jurisdictions, your financial life is shielded—accessible only under stringent legal conditions.   Your Digital Footprint is a Legal Liability   Even your computer—your “personal” device, as it is called—can betray you. It stores years of personal along with financial data. This includes spending patterns, also passwords, plus communications, and even browsing history. If that information falls into the wrong hands, it can do more than just embarrass you—it can be weaponized in court.   You’ve already lost control over your wealth and privacy if you’re not actively protecting it, the bottom line.   Please tell to me of whether you would want of this converted now to a lead magnet that’s entitled “Why Privacy is Dead—and What to Do About It.”   Identity Theft and Legal Liability: The New American Risk   Identity theft now represents America’s fastest-growing crime.   From more than 130 security breaches reported in 2005, over 55 million Americans were exposed to identity fraud’s risk. By the year of 2006, that number had exploded. More than 30 million of the Americans had data of theirs compromised in just about four weeks back then.   Just Look at This Timeline:   – May 22, 2006: 5 million military IDs exposed when a laptop was stolen from a U.S. Veterans’ Administration employee’s home.   – June 1, 2006: 3 million customers at risk after Texas Guaranteed Student Loan contractor loses equipment.   – June 6, 2006: 72,000 Medicaid subscribers affected when computers were stolen from Ohio’s Buckeye Community Health Plan.   – June 8, 2006: 65,000 YMCA members compromised after a stolen laptop in Providence, RI, containing sensitive financial and medical data.   – June 18, 2006: 970,000 individuals exposed following a burglary at

Asset Protection, Trusts

Asset Protection: General/Limited Partnership, Corp Chapter C, Chapter S, LLC, Trusts

/

Asset protection comparison & definitions of General Partnership, Limited Partnership, Corporation Chapter “C”, Corporation Chapter “S”, Limited Liability Companies & Revocable Trusts and Irrevocable Trusts. PART 2: ASSET PROTECTION: GENERAL/LIMITED PARTNERSHIP, CORP CHAPTER “C”/CHAPTER “S”, LLC, TRUSTS   Read PART 1: ASSET PROTECTION: JOINT TENANCY, TENANCY IN COMMON, TENANCY IN ENTIRETY & COMMUNITY PROPERTY        Watch the video on Like this video? Subscribe to our channel.   THE CONCEPT OF ASSET PROTECTION includes the possibility of placing title in certain assets in the name of a less vulnerable spouse or other family members, or a legal entity. One should be very attentive in transferring title without an open invitation to a “fraudulent transfer” claim against the asset transferred as a result of the possibility of death by the spouse or a family member, or the possibility of a dissolute marriage, or even a court judgment.   Fraudulent conveyance has to do with transferring assets at less than the “fair cash value” thereby defrauding a potential creditor or the intentional divesting of assets which become unavailable for satisfaction of a lawsuit. Fair cash value means cash or near cash value at the time of transfer, not the price you paid for the asset. Example: you transfer your portion of your equity in your home to your wife for $100.00 and the fair cash value of your portion of the equity was $250,000 or you transfer title to your car to your brother for $10.00. The most common methods of holding assets by INDIVIDUALS:   Joint Tenancy Joint Tenancy with right of survivorship Tenants in Common Tenancy by the Entirety Community Property (Read part 1 “Asset protection with Joint Tenancy, Tenancy in Common, Tenancy in Entirety & Community Property”) LEGAL ENTITIES (Artificial person created by application of law):   General Partnership Limited Partnership Limited Liability Company Corporation under Chapter “C” Corporation under Sub Chapter “S” Revocable Trust (There are many Revocable Trust variations, since a Trust is nothing more than a Contract) Irrevocable Trust (There are many Irrevocable Trust variations, since a Trust is nothing more than a Contract)   GENERAL PARTNERSHIP   A General Partnership is an association of individuals, collectively owning property or a business relationship of a collective group of individuals acting as a business unit/enterprise as a going business concern.   The worst way to hold any asset or to do business as a partner is a General Partnership. In my opinion, there’s absolutely NO advantage, whatsoever. It’s all negative. Each member of the General Partnership is liable for all potential liabilities of each of the other partners. In other words, an employee of the General Partnership causes an accident while on company business. Each of the Partners individually can be held 100% liable. The deeper pocket theory is he who has the most to lose will lose the most. NEVER do business in General Partnership or become a partner of a General Partnership.   LIMITED PARTNERSHIP   Limited Partnership is one or more General Partners and one or more Limited Partners. The General Partner(s) controls all actions of the partnership. The Limited Partners are the silent partners; the Limited Partners have no control. In certain cases the Limited Partnership has significant asset protection and tax advantages.   For example, in a Family Limited Partnership the Parents take the responsibility of day-to-day management as a 2% General Partnership (each Parent 1%) and retain 98% as Limited Partners. In each of the subsequent years, each of the General Partners (the Parents) gift each of their children an excluded gift tax amount of $12,000 (for the taxable year beginning 2006 and thereafter). Over time, the children will have a 98% interest in the Family Limited Partnership. However, the control of the Partnership remains in the hands of the General Partners (i.e. the Parents). This is a noteworthy tax-efficient way to transfer wealth from the Parents to their children tax-free.   Another tax advantage for Estate Taxes is the valuation of a minority interest as a Limited Partner due to lack of control or ability to sell a minority interest. A Limited Partner is a “Silent Partner” in the management and control and therefore, the Limited Partnership Interest has a discounted value, generally up to 40% as a minority interest, depending on the nature of the assets. Additionally, the Limited Partnership interest has a discounted marketability, up to 40%. Combined, minority interest and lack of marketability, for estate tax purposes it can be argued that the fair cash value of asset is diminished by as much as 80%. Aggressive? The IRS considers this type of discounting abusive.   For asset protection purposes, the Family Limited Partnership, for decades, has been considered the Cadillac of Unites States asset protection systems. By definition a Partnership is considered to be two or more persons.   ON FAMILY LIMITED PARTNERSHIPS   The more commonly recognized advantages for the Family Limited Partnership are:   Family Limited Partnership Asset protection. The creditor may not step into the shoes of the “Partner.” The only remedy for the creditor is the “charging order” obtained subsequent to litigation and judgment in favor of the creditor. A creditor who obtains a charging order is therefore liable for Federal Income Taxes on their pro-rata share of the partnership income even though the creditor may never be able to receive or collect the income. A major detriment to the creditor. Family Limited Partnership on Reduction of Federal Estate Taxes. You can make a lifetime of gifts under the gift tax rules ($12,000 for 2006 and forward) and still retain all the control. A reduction in taxable estate tax valuation by application of discounting for lack of marketability and minority interest.   The negative of Limited Partnerships is the “General” Partnership interest. If the General Partner loses a frivolous lawsuit to a creditor, the creditor controls the Partnership. The other negative is that Partnership interests go to Probate and are includible assets for the Estate Tax. This problem can be avoided

Estate Planning, Trusts

Beneficiary of a Trust

/

What is a beneficiary of a trust? Describes basic categories of the exercises of the beneficiaries’ rights, two main categories of sequential interests of a beneficiary, the two beneficiaries from the trustees perspective.      Watch the video on Beneficiary of a Trust Like this video? Subscribe to our channel.   A beneficiary of a trust is someone or something legally allowed to gain benefits from a trust like income, principal, or property as the trust document defines. Trustees have a duty toward acting in beneficiaries’ best interest and beneficiaries hold enforceable rights legally and fiduciarily.   Your Trust’s core purpose is for the Beneficiary. Your spouse as well as children and also grandchildren or charitable entities of any kind are meant to benefit from the assets of the trust.   Beneficiaries are with no legally limited number. A Grantor can actually be just like a beneficiary. The aim gets stopped if that occurs. Trusts should be irrevocable. The Grantor gains some real advantages by the giving up of ownership asset protection avoidance of probate elimination of estate taxes and very rare tax benefits. If anyone retains control, that risks making the trust revocable as well as placing it under court jurisdiction.   The duration of a trust depends on what its legal location is. Many states as well as countries follow the Rule Against Perpetuities because it requires a defined end to the trust. However, the strength of your trust feels an impact directly when you select a jurisdiction, whether domestic or foreign. FAPTs provide a unique form of security. That protection is superior. U.S. judgments in general do not have any authority overseas so that FAPTs are much more secure in more high-risk situations.   Categories of the Beneficiary of a Trust   There are two primary trust structures governing how beneficiaries exercise their rights:  Bare Trust (Simple Trust): Beneficiaries of a Bare Trust hold full rights to both income and capital. They also control the trust’s administration, directing the trustees, who serve only to execute their instructions. Ownership is effectively in the hands of the beneficiaries.  Express Trust: Here, the trustee has clearly defined roles and authority outlined in the trust deed. An Express Trust may be either: o Inter Vivos Trust – Established during the Grantor’s lifetime. o Testamentary Trust – Activated upon the Grantor’s death via their will.   Sequential Beneficiary Categories: When trusts involve multiple stages of interest—often with tax implications—two main beneficiary types arise: Vested Interest Beneficiaries (Tenants for Life): These beneficiaries hold rights to the property during their lifetime only. Upon death, their interest terminates and cannot be transferred or inherited. Contingent Interest Beneficiaries (Remaindermen): These individuals inherit once the prior interest ends. For example, if “John has the property for life, then it goes to Sarah,” Sarah is the remainderman. Trustee Perspective: From the trustee’s role, beneficiaries fall into two categories: Fixed Beneficiaries: Have a predetermined right to income or capital. Discretionary Beneficiaries: Entitlements are left to the trustee’s discretion, based on the trust deed’s guidance. The Trust Contract   A Trust document—your legal contract—can vary in form from just a basic three-page outline up to a detailed collection containing exhibits and clauses. Trust planning gains strength from simplicity. Administration in structure more complex is more difficult.   Anything of value can be included within trust assets: your primary residence, investment portfolios, additional properties, or your business interests. What you choose for contribution is the only limit.   Most trusts obtain a federal Employer Identification Number now. They do also file their own tax returns here. Based on the trust’s structure, beneficiaries’ distributions are taxable. The type of the assets that are involved also determines the taxability.   A trust acts as a business entity yet is a private legal deal involving the Grantor, Trustee, and Beneficiaries. Because trusts formally lack a legal identity like LLCs or corporations, outside parties often hesitate to engage in a direct way. For this reason, many trusts do own LLCs, or corporations, or they own partnerships as a means to ease business dealings that have legal clarity plus recognition.   Understand These Important Facts About Trusts:   A Trust is a legal form for ownership where your appointed independent Trustee manages assets. This structure separates control from benefit completely. The assets are not yours legally and you cannot control them. That distinction provides protection now.   The IRS recognizes various trust types as well as legal structures, and each does serve distinct purposes, such as the preserving of wealth, protecting people from lawsuits, eliminating probate, and avoiding estate taxes. A trust, when it is structured in a proper way, is one of the most powerful of legal tools for the transferring and the safeguarding of wealth.

Estate Planning, Trusts

Trust Protector: The Powers and Responsibilities of a Trust Protector

/

What is a trust protector? What are the duties and powers of a trust protector? Trust Protector can be someone close to family or your accountant, CPA or lawyer.    Watch the video on Trust Protector: The Powers and Responsibilities of a Trust Protector   Like this video? Subscribe to our channel.   When presenting potential clients with different asset protection options, systems, and strategies, one of the questions asked is if I would be willing to act as their Trustee. Yes, I reply but only as a temporary basis and with a resignation letter. The temporary basis allows me to act quickly without fanfare and time consuming communications between the assets and their financial goals.   As an alternative, my answer is, “No, I don’t want to serve as a Trustee, but I will gladly offer my services as the Trust Protector.” The role of a Trust Protector takes up less of my time and I can educate the Trustee in his day-to-day responsibilities.   What’s a Trust Protector?   In offshore Foreign Asset Protection Trusts the role of “Asset Protector” is a standard. Offshore countries have extensive networks of Trust Companies specifically designed to accommodate the implementation of Trust Agreements with ready Trustees. The election to have a Trust Protector, who is usually a United States Person, is a normal offshore business transaction.   Although in Foreign Asset Protection Systems the role of the Trust Protector is a standard, domestically in the United States, only a few states have a legally recognized the dual existence of Trustee and Trust Protector. Those states are Alaska, Delaware, Idaho, South Dakota, and Wyoming.   The power of the Trust Protector is derived from the Trust Contract. The Agreement sets forth the dual function of the Trustee and the Trust Protector. While the Trustee can be a bank or trust company, or other financial institutions, the Trust Protector is usually a person close to the family, a CPA, accountant, or lawyer who is already the family consigliore.   The Trust Protector’s Powers   The Trust Protector’s powers can take any form, limited only by the wishes of the Grantor(s) and their imagination. Generally, the powers granted the Trust Protector are:   Ability to remove or replace the Trustee. Often this is the only power granted to the Trust Protector. In cases where the Trustee is a corporate body (bank, trust company, insurance company, or professional trustee) if the Trustee is unresponsive or not performing to the Trust Agreement for the benefit of all Beneficiaries, or changes in management, or investment choices, the Trust Protector can fire and replace the Trustee, at will, without explanation to the current Trustee. Ability to change the Trust’s situs to take advantage of law changes or necessary steps to act in the best interest of beneficiaries if they move from low tax states to high tax states, i.e. from California or New York (high tax states) to New Hampshire, or Nevada (low tax states) or changes in laws occurring long after the initial implementation of the Trust Agreement. Ability to resolve deadlocks between co-trustees or in squabbling between the Trustee and/or Beneficiaries. Ability to control spending over a certain amount. This level of control is significant if disbursements of the Trust are in excess of pre-arranged amounts requiring two signatures of the Trustee and the Trust Protector i.e. in excess of $10,000. Ability to veto distributions to Beneficiaries. Before distributions are to occur the Trust Protector may want to investigate the financial stability of the Beneficiaries. For example, if the beneficiary is being sued, The Trust Protector may withhold distributions, or the Beneficiary is undergoing divorce proceedings, or the Beneficiary may be too young, is under duress, mentally incompetent, unable to manage, or otherwise unavailable. The Trust Protector can override/veto the Trustee and withhold distributions temporarily or permanently make other arrangements such as buy the assets necessary for the benefit of the Beneficiary (buy a house, a car, sign a rental agreement, but have the Trust own the assets, make loans or make other provisions. Ability to veto investment decisions. This checking and balancing of investment decisions are based on the Trust Protector’s experience, prudence, and the Trust Agreement guidelines in protecting the assets for the Beneficiaries. Ability to sue and defend lawsuits against the Trust assets. The fiduciary duty of the Trustee and The Trust Protector as to save the assets of the Trust, at any cost, for the benefit of all classes of Beneficiaries. Ability to terminate the Trust. If in the opinion of the Trust Protector there are insufficient funds or the cost of administration is greater than available cost/benefit, the Trust Protector may terminate the Trust, as for example, if all beneficiaries have received their distributions based on age (over the age of 21) and there’s one minor beneficiary currently 10 years old, and there aren’t enough assets to administer the Trust for the next 11 years, the Trust Protector has the power to make the final distribution and terminate the Trust. Trust Protector’s Role   The Trust Protector’s role is created by the Trust Agreement to add an additional layer of protection and is usually a person most familiar with the Grantor’s long-term financial and personal goals. A Trust Protector usually is the balance of power between the Trust Agreement, the Trustee, The Grantor, and the Beneficiaries.   Neither the Trustee or the Trust Protector should be a family member, nor anyone related to the family by blood or marriage. Both positions should be independent of each other acting in the long-term interest of the beneficiaries.

Estate Planning, Irrevocable Trust

Trustee of a Trust

/

About the Trustee of a Trust. What is the accountability of a Trustee and how the Trustee relates to the Irrevocable Trust? What are the Fiduciary Relationship of the Trustee? What’s a Trust Protector?       Watch the video on Trustee of a Trust Like this video? Subscribe to our channel.   The Trustee is the guy who manages your Trust assets. Great care should be taken in your selection of your Trustee. The Trustee is bound by the Trust document (contract) and he has a duty to protect Trust assets for the Beneficiaries. The independent Trustee manages the Irrevocable Trust that hold legal title to Trust assets and exercises independent control.   The Trustee can be your lawyer (worst person you would ever want to trust), your accountant, best friend, or anyone you trust who’s not a relative by blood or marriage. You may have more than one Trustee, but I do not recommend it. I usually recommend a Trustee and a Trust Protector in all cases of $500,000 or more.   Accountability of Trustee   The law imposes strict obligations and rules on trustees including a duty to account for any benefits the Trustee may have gained directly or indirectly from a Trust. This goes beyond fraudulent abuse of position by a Trustee.   There is a basic rule that a Trustee may not derive any advantage directly or indirectly from a Trust unless expressly permitted by the Trust; for example, where he is a professional Trustee and the Trust provides specifically for a right to make reasonable charges for services. However, full disclosure of the basis and amount of charges is required.   Trustee of an Irrevocable Trust   The Trustee of an “Irrevocable Trust” has sole discretion over Trust assets. Your selection of your Trustee must be a carefully planned decision. The significant item to remember is that an “Irrevocable Trust” gets the assets completely out of your (the Grantor’s) name and in return you get:   Complete asset protection Elimination of probate Elimination of estate or inheritance taxes In certain cases a tax deduction for the assets contributed to the Trust And finally, under certain conditions other uncommon tax benefits not otherwise available   Examples of Irrevocable Trusts:   Ultra Trust® Medallion Trust® Vertex Trust® Charitable Remainder Trust Charitable Lead Trust   Duty of Trustee is to Obey Trust Document for Benefit of Beneficiaries   The most important rule relating to the duties of a Trustee is that requiring them to obey the directions in the Trust deed both with regard to the interests of the Beneficiaries (i.e. who is entitled to what) and with regard to the administration of the Trust (managing the Trust property). Trustees are also subject to very strict standards as to the way in which their powers and discretions may be exercised.   Fiduciary Relationship of Trustee   The courts regard a Trust as creating a special relationship which places serious and onerous obligations on the Trustees. Thus the law regards the special “Fiduciary” relationship of a Trust as imposing stringent duties and liabilities on the person in whom confidence is placed – the Trustees – in order to prevent possible abuse of that confidence. A Trustee is therefore subject to the following rules: No private advantage – A Trustee is not permitted to use or deal with Trust property for private direct or indirect advantage. If necessary the court will hold him personally liable to account for any profits made in breach of this obligation. Best interests of Beneficiaries – Trustees must exercise all their powers in the best interests of the Beneficiaries of the trust. Act prudently – Whether or not a Trustee is remunerated he must act prudently in the management of Trust property and will be liable for breach of Trust if, by failing to exercise proper care, the Trust fund suffers loss. In the case of a professional, the standard of care which the law imposes is higher. Failure to exercise the requisite level of care will constitute a breach of Trust for which the Trustee will be liable to compensate the Beneficiaries. This duty can extend to supervising the activities of a company in which the Trustees hold a controlling interest.   Trust Protector   In cases of substantial assets, you may add one other safety measure, “the Trust Protector.” The Trust Protector’s sole function is to hire and fire Trustees, at will and without explanation. Grammar notations: please note that I have capitalized words such as Grantor, Revocable Living Trust, Trust, Beneficiary, Trustee for easier reading and emphasis on these words. Grammatically, they should be in lower case.  

Estate Planning

Grantor Trust-What is it?

/

What is a Grantor Trust? How does a Grantor Trust relate to the Trust contract? Grantor Trust – What is it?   A Grantor Trust is a type of legal entity that someone creates through a trust contract so that it protects, manages, as well as preserves wealth usually for heirs or charities. A trust is known as an “artificial legal person” in legal terms, so it is indeed a separate entity. The trust holds all assets under the instructions that are laid out by the creator of the trust.   How does a Grantor of a Trust relate to the Trust Contract?   Watch the video on Grantor Trust-What is it? Like this video? Subscribe to our channel.     0Who Is the Grantor?   The Grantor (also called the Settlor or Trustor) is the individual who initiates and funds the trust contract. This person transfers ownership of assets into the trust to be managed by a Trustee, for the benefit of one or more Beneficiaries—such as a spouse, children, grandchildren, church, or nonprofit entity.   A trust must specify:   Who the parties are (Grantor, Trustee, Beneficiaries) What assets are being transferred When and under what conditions distributions are made Where the trust is governed (legal jurisdiction) Why the trust exists (asset protection, tax planning, legacy) How a Grantor Relates to the Trust Contract   The Grantor is the initiating party to the trust agreement—much like a signer of any other binding contract. Once executed, the Trust Deed becomes the formal instrument that governs the trust. It outlines the terms, rights, restrictions, and duties of both Trustees and Beneficiaries.   A Trust vs. a Will   While a will transfers assets upon death, a trust transfers assets during the lifetime of the Grantor, offering the benefit of avoiding probate, reducing taxes, and protecting wealth from potential legal or financial threats. The Trust Deed functions similarly to a will—but with much more flexibility, privacy, and long-term control.   The Three Elements of a Trust Document   Every trust is built on three core elements:   Grantor Trustee Beneficiaries   Who Is the Grantor?   The Grantor—also called the Trustor or Settlor—is the person with the wealth. They’re the legal owner of assets being transferred into the trust. These assets may include:     Personal residence or real estate Business or partnership interests Investment portfolios or retirement accounts Any asset of monetary value The Grantor’s motivation? To remove assets from personal ownership for one or more of the following goals:   Asset protection & wealth preservation Lawsuit risk reduction Elimination of probate (“probate jail”) Avoidance of estate taxes Tax advantages or deferral benefits Grantor vs. Non-Grantor Trust   If the person who initiates the trust is also the one funding it, it’s a Grantor Trust. If someone else initiates it, it’s a Non-Grantor Trust. Legal semantics? Maybe. But the distinction matters for tax treatment and control. Revocable vs. Irrevocable Trusts If the Grantor keeps control over the trust assets, it’s a Revocable Trust. If they give up control, it becomes Irrevocable.   Here’s a simple way to think about it:   A Revocable Trust is like the neighborhood kid who brings his own ball to the basketball game. Everything’s fun—as long as he’s in charge.   The moment he doesn’t like the rules? He grabs the ball and goes home. Game over.   That’s what happens in a Revocable Trust—the Grantor controls the game. In an Irrevocable Trust, control is legally surrendered—often in exchange for greater asset protection and tax benefits.   Grantor Retains Control in Living Revocable Trusts   When the Grantor retains control, as in a Living Revocable Trust, it may appear to offer convenience—but it can ultimately destroy your estate in the event of: A lawsuit, A serious illness, or The rising costs of elderly care.   Also known simply as the Living Trust, this structure is designed from the Grantor’s point of view to eliminate the probate process—but at a dangerous cost.   Probate vs. No Probate   Assets held in a trust: Avoid probate Assets not held in a trust: Go through probate—even if there’s a will While that sounds helpful, the Living Revocable Trust is severely flawed for those seeking real asset protection or estate tax relief.   Why It Fails for Wealth Preservation   Most Grantors don’t realize that this trust offers zero protection from: Frivolous lawsuits Estate taxes Creditors or long-term care liabilities   In fact, any asset total over $675,000 renders the Living Trust virtually obsolete. Why? Because the Grantor retains ownership and control—and courts know it. That makes your assets fully exposed and completely reachable by litigators, government agencies, or predators.   There is no tax advantage. No wealth shield. No preservation benefit.   Why I Don’t Recommend Living Revocable Trusts   Let me be blunt:   I believe the Living Trust is a sham, sold to unsuspecting clients by professionals chasing recurring fees. Every time the Grantor wants to amend the trust, the attorney steps in—and so does another bill.   That’s why I tell my clients:   “Don’t just walk—RUN.”   Next Steps: What to Consider When Creating a Trust   Want real protection and long-term results? Explore irrevocable trust strategies that insulate assets, reduce tax liability, and preserve your estate across generations.   For the Grantor: A Note on Estate Taxes   There’s ongoing debate in Washington over the future of estate taxes. House Ways and Means Chairman Bill Archer has stated he’s working to “gradually phase out” the death tax over the next decade. As Archer puts it:   “Death by itself should not trigger a tax.”   Yet, current estate tax rates still range from 37% to 55%—with only Japan taxing more heavily at 70%. By comparison:   Germany: Max rate 40% Australia & Canada: No estate tax at all   The Real Cost of Dying in America   When you factor in federal and state taxes, along with:   Probate costs Legal, accounting,

Asset Protection

Legal nightmares: Asset Protection Strategies

/

Everyone has either experienced or know of someone who went through a financial nightmare:   The frivolous lawsuit   Fueling these frivolous lawsuits are contingent fee lawyers. Quite simply, a contingent fee lawyer is your financial nightmare. Your assets can evaporate before your very eyes. His objective is to squeeze all he can out of you. Right, wrong – it does not matter. When he goes in front of a judge he will do and say anything to intimidate you to settle. Most likely, you will be intimidated and you will settle, because either way it’s going to cost you. An Irresponsible or Problematic Business Partner   You are in business. Your partner has become problematic. You fear the obvious.   Partners are jointly and severally liable for all legal and financial obligations of the partnership and for all wrongful acts of any partner acting in the ordinary course of partnership business.   The Slip and Fall   You are a young doctor with a young family, you just started your own practice. What if? Employees, patients, slip and fall,…but you carry liability insurance, you say.   Liability insurers have two (or three, in some jurisdictions) major duties: 1) the duty to defend, 2) the duty to indemnify, and (in some jurisdictions), 3) the duty to settle a reasonably clear claim. After the initial defense, the insurer has three options, to: (1) seek a declaratory judgment of no coverage; (2) defend; or (3) refuse either to defend or to seek a declaratory judgment.   Irresponsible or Unruly Children   Your under-age children are irresponsible, uncontrollable, in and out of trouble with the law.   A person who is responsible for the death of another may be liable under civil law, criminal law, or both. In the civil liability context, the basis of which is tort law, parental liability for the acts of minor children takes two forms: vicarious tort liability and, parental responsibility statutes hold parents criminally liable when their children commit acts of juvenile delinquency.   What if you go away for a weekend? You tell your under age kids that you and Mom will take the weekend to some not too distant site, you’re leaving Friday afternoon and returning late Sunday night. You instruct your kids: no friends at the house, no drinking, no partying. You will call to check-in, here’s the number where we will be, and of course we will have our cell phone.   Parental civil liability is imposed by most states, by statute when children are not, or cannot be, financially responsible.   See ARIz. REv. STAT. § 12-661 (1999) (“any act of malicious or willful misconduct of a minor…shall be imputed to the parents or legal guardian having custody or control…”); CAL. CIV. CODE § 1714.1 (Deering 1999) (“Any act of willful misconduct of a minor…shall be imputed to the parent or guardian having custody or control .. . “); ILL. CaMP. STAT. ANN. 740 115/1 (West 1999) (“The legislative purpose of this Act is…to compensate innocent victims of juvenile misconduct that is willful or mali-cious; and…to place upon the parents the obligation to control a minor child…”); N.Y. GEN. OBLIG. LAw § :3-112 (McKinney 1999) (”The parent or legal guardian, other than the state, a local sodal services department or a foster parent, of an infant over ten and less than eighteen years of age, shall be liable…where such infant has willfully, maliciously, or unlawfully damaged…”); TEx. FAM. CODE ANN. § 41.001 (West 1999) (“A parent or other person who has the duty to control…the negligent conduct of the child if the conduct is reasonably attributable to the negligent failure of the parent…or…the willful and malicious conduct of a child who is at least 12 years of age but under 18 years of age. “)   source: //ultratrust.com/legal-code/where-are-the-parents-parental-criminal-responsibility-for-the-acts-of-children.pdf   The First Children and the Second Divorce   You’re in a rocky second marriage. You are constantly putting out fires. You are waiting for her to take half and wondering if your child from your first marriage will get anything.   What is the best asset protection solution?   Do any of these, sound familiar?   Protecting your assets from a frivolous lawsuit or any other contingent fee professional can only be accomplished through a timely implementation of an “irrevocable Trust, with an independent Trustee” Period. For added protection you elect to have an “independent Trust Protector.”   Most people, like you, procrastinate. They know the risk but fall short on implementation. Sound familiar? You will not act until it’s too late.   “Fraudulent conveyance” is the primary risk when you try to move assets in a crisis situation. It’s too late, says your lawyer. A judge will undo any of your planning, and your lawyers will unlikely help you because he will become a civil conspirator and possibly lose his license to practice.   Is your lawyer, right? Can he lose his license? It depends on the circumstances.   The critical part not taught in school, is avoidance of the fraudulent conveyance claims by potential past, present, and future (not yet born) creditors.   What they overlooked was that the movement/repositioning of any assets…relies on the theory of a “fair” “exchange.” You give me $100 I give you back $100, that’s the “exchange.”   I perfected the “method of exchange” to AVOID fraudulent conveyance, civil conspiracy, avoiding the trigger of income taxes, resulting in the elimination of probate, elimination of estate taxes, elimination of Medicaid and state recovery of Medicaid, avoidance of the Generation Skipping Tax, Tax deferral and tax-free wealth accumulation, reduction of frivolous lawsuits, eliminate ex-spouses, your business partners, greedy and clever lawyers with their contingent-fee clients, and put monkey wrenches into the legal system to make them spend money. Finally: dictate from your grave the distribution of your assets. …. Oh, YES. It’s been tested.   When our Ultra Trust® is combined with the method of exchange, it’s the best you can do without having to go offshore.

Estate Planning, Trusts

What’s a Trust? Grantor, Trustee, Beneficiary

/

ULTRA TRUSTâ„¢ – What’s a Trust? A “TRUST” is nothing more than a “CONTRACT.” The purpose of a TRUST is to create an “Artificial Legal Person” to protect, hold, and manage your private wealth for the benefit of your heirs. As in any contract, someone must initiate the contract (Grantor or Trustee). The contract (trust agreement) must specify the who, what, where, when, why, and other conditions. Finally, the contract is for the benefit of someone or something (beneficiaries: wife, children, grandchildren, church, other charitable organizations, etc.) Trust concept The concept of a trust was first used in Anglo Saxon times and is a contractual arrangement whereby property is transferred from one person (The Grantor) to another person or corporate body (The Trustee) to hold the property for the benefit of a specified list or class of persons (The Beneficiaries).      Watch the video on What’s a Trust? Grantor, Trustee, Beneficiary   Like this video? Subscribe to our channel.   page_title   Although a trust can be created solely by verbal agreement it is normal for a written document to be prepared which evidences the creation of the trust (the Trust Deed), sets out the terms and conditions upon which the trust assets are held by the Trustees and outlines the rights of the Beneficiaries. In essence, a trust is not dissimilar to a will except that assets are transferred to trustees during lifetime rather than those assets being transferred to executors on death. The trust deed is analogous to the deed of will.   There are three elements to the “trust” document: Grantor Trustee Beneficiaries 1. The “Grantor” The person with the money or assets. The owner of the asset(s). The grantor’s motivation is to get asset(s) out of his name for either some or all of the following: Asset protection/wealth preservation Reduce potential frivolous lawsuits Elimination of the “probate jail process” (see definition, below) Elimination of estate taxes To gain some tax benefit or some other tax deferral benefit If the “Grantor” initiates the trust (contract), it’s called a “Grantor Trust,” otherwise it’s called a “Non-Grantor Trust.” If the “Grantor” wants to retain certain control over his asset(s), it’s called a “Revocable Trust” otherwise, it’s an “Irrevocable Trust.” Revocable / Irrevocable has significant asset protection and tax differences.   “Revocable,” is like the kid next door that brings the ball to play basketball with the other kids. Everything is fine, as long as he makes the rules, and he makes the rules as he goes along. If you don’t agree, he takes the ball and goes home. Ball game over.   Living Trusts are outright dangerous.   The Living Trust can destroy your estate in the event of a lawsuit, serious illness, or elderly care. One name given to a “revocable” trust is the “Living Trust.” The sole purpose of the Revocable Living Trust is to “eliminate the probate process.” Assets in a trust, avoids probate Assets NOT in a trust goes to probate with or without a will The living Trust is outright dangerous for asset protection, wealth preservation, and estate tax elimination. It’s obsolete for assets greater than $675,000. With the Living Trust the owner of the assets retains significant power over his wealth and will NOT insulate assets from the lawsuit explosion. There’s absolutely no tax benefit, no asset protection and no wealth preservation benefits with the “Living Trust.” I DO NOT RECOMMEND THE “LIVING TRUST.” if you have one, reconsider your financial goals. (See my final word about trusts, below)   Personally, I think the “Living Trust” is a sham perpetrated on you by shameless professionals out to extract more than just one fee. Don’t just walk, run!! Various tax proposals are being bandied about, including House Ways and Means Chairman Bill Archer who says that he’s “pushing” to “g r a d u a l l y phaseout” the death tax within the next 10 years. “Death by itself should not trigger a tax” says Chairman Archer. Currently, estate taxes vary from 37% to 55%. Only Japan has a higher rate of 70%. Germany takes a maximum of 40%, while Australia and Canada, take nothing.   When you add-up your federal, state, probate, legal fees, accounting fees, appraisal fees, administrative and executor fees, and etc. fees, ……. it could easily cost you 70 to 80% of your estate. You can avoid these unwanted results with the Ultra Trustâ„¢ or the Medallion Trustâ„¢.   NOTE: The new 2001 tax PHASE-IN for estate taxes, changes absolutely nothing. The estate tax is the only voluntary tax. The new laws have added confusion. You can avoid the voluntary estate tax by simply engineering an irrevocable trust. 2. The “Trustee” The trustee is the guy who manages your trust assets. Great care should be taken in your selection of your trustee.   The trustee is bound by the trust document (contract) and he has a duty to protect trust assets for the beneficiaries. The independent trustee manages, holds legal title to trust assets, and exercises independent control.   The trustee can be your lawyer (worst person you would ever want to trust), your accountant, best friend, or any-one you trust who is not a relative by blood or marriage. You may have more than one trustee. I usually recommend two trustees in all cases of $500,000 or more.   Accountability of trustee   The law imposes strict obligations and rules on trustees including a duty to account for any benefits the trustee may have gained directly or indirectly from a trust. This goes beyond fraudulent abuse of position by a trustee.   There is a basic rule that a trustee may not derive any advantage directly or indirectly from a trust unless expressly permitted by the trust, for example, where he is a professional trustee and the trust provides specifically for a right to make reasonable charges for services. However, full disclosure of the basis and amount of charges is required.   The trustee of

Scroll to Top