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OFFSHORE AND ASSET PROTECTION GUIDE 2
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OFFSHORE AND ASSET PROTECTION GUIDE 2
TABLE OF CONTENTS
TRUST OVERVIEW..............................................................................5
CITIZENSHIP - INSIDER'S GUIDE TO INSTANT CITIZENSHIPS AND
SECOND PASSPORTS.......................................................................21
PERSONAL PRIVACY AND PROTECTION MAIL DROPS......................28
KEEPING UP WITH THE JONESES WILL STUNT YOUR GROWTH......35
GUIDE TO OBTAINING VITAL RECORDS BIRTHS, DEATHS,
MARRIAGES, AND DIVORCES...........................................................40
OFFSHORE ORIENTATION EXERCISE...............................................45
ALL YOU EVER WANTED TO KNOW ABOUT TRUSTS.........................58
A COMPARISON OF METHODS OF DOING BUSINESS.......................62
CONTRACT TRUST - COURT CITES AND INTERNAL REVENUE CODE
..........................................................................................................63
VARIOUS STRATEGY DESCRIPTIONS...............................................70
MAYBE IT'S TIME FOR A BUSINESS TRUST!......................................75
MORE TRUST TOPICS.......................................................................81
THE BUSINESS TRUST: THE INTELLIGENT BUSINESS ALTERNATIVE
FOR THE SELF-EMPLOYED...............................................................87
CASES PERTAINING TO TRUSTS BUSINESS TRUST ORGANIZATIONS
AND THE CONTRACTUAL COMPANY.................................................96
EDUCATIONAL PURPOSES ONLY - TAX TIPS...................................100
PROSPER INTERNATIONAL LEAGUE LTD. - FREQUENTLY ASKED
QUESTIONS (FAQ'S)........................................................................102
SECRETS OF THE IRREVOCABLE PURE BUSINESS TRUST............114
AN INTRODUCTION TO THE BUSINESS TRUST (U.B.O.)..................120
OFFSHORE BUSINESS, FINANCE, AND CREDIT - THE SIMPLE WAY
........................................................................................................130
THE NEW COLOSSUS? OR PRIVACY: GONE WITH THE WIND?.......131
WORLDWIDE INVESTING: USING YOUR OFFSHORE BANK ACCOUNT
AS A SWORD...................................................................................135
OFFSHORE MUTUAL FUNDS: HOW DO WE TAX THOSE SUCKERS?
........................................................................................................138
A LAND PATENT...............................................................................140
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LAND PATENTS AND ALLODIAL TITLES...........................................169
INTERVIEW: CAROL LANDI ON LAND PATENTS AND TREATY LAW..188
HOW...WHERE ...TO OBTAIN CERTIFIED FEDERAL LAND PATENT
(FLP)................................................................................................203
LAND PATENTS, EJECTMENTS, AND ESTOPPEL.............................205
LAND PATENT STOPS BIDDING AT SHERIFF SALE..........................208
PROCEDURE TO FOLLOW IN THE ENFORCEMENT OF A UNITED
STATES LAND PATENT OR LAND GRANT.........................................209
MEMORANDUM OF LAW HISTORY, FORCE & EFFECT OF THE LAND
PATENT............................................................................................214
ALLODIAL AND LAND PATENTS TITLES...........................................246
LAND-MINE LEGISLATION...............................................................285
THE OATH THAT NULLIFIES.............................................................293
BIG BROTHER'S CON......................................................................296
THIS OVERVIEW OF THE INTERNATIONAL BUSINESS COMPANY AND
ASSET PROTECTION TRUSTS IS A LARGE AND DETAILED FILE.....305
ASSET PROTECTION TRUSTS - THE MODERN METHOD OF WEALTH
PRESERVATION...............................................................................320
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OFFSHORE AND ASSET PROTECTION GUIDE 2
TRUST OVERVIEW
NOTICE - This publication is designed to provide accurate and authoritative
information in regards to the subject matter covered. It is distributed with the
understanding that the publisher is not engaged in rendering legal, accounting,
or other professional services. If legal advice or other expert assistance is
required, the services of a competent professional person should be sought.
(From a Declaration of Principles jointly adopted by a Committee of the
American Bar Association and a Committee of Publishers and Associations.)
What Is A Trust?
A Trust is a Contract in which the Settlor (or Creator, or Trustor, or Grantor)
transfers property (real, personal or both) to one or more Trustees to be held
and/or managed for one or more Beneficiaries.
There are many types of trusts in use today for a variety of reasons. There
are "Short-Term Trusts", "Simple Trusts", "Complex Trusts", "Clifford Trusts",
"Crummey Trusts", "Revocable Inter-Vivos Trusts", "Section 2503(b) Trusts",
"Alimony Trusts", "Foreign Trusts", "Life Insurance Trusts", "irrevocable Inter-
Vivos Trusts", "Testamentary Trusts", "Pourover Trusts", "Generation-Skipping
Trusts" and the like.
This document is concerned primarily with what is termed a "Pure Trust",
basically because of the advantages it has to offer over the other types of trust.
This type of trust can be termed "intervivos" or "living" simply because these
terms apply to any trust which is established during the lifetime of the Settlor,
rather than at his death. It is also termed "irrevocable", because once it has been
set up, the Settlor has no power to change his mind and cancel the trust
organization. It is termed "active" rather than passive because the trustees have
actual duties to perform in administering and conserving the trust estate. It is
termed "nonreversionary" because the Settlor does not get anything back when
the trust terminates. It can be either "simple" (income distributed currently) or
"complex" (income can be accumulated).
Where Do Trusts Come From?
Trusts have had a long history of usage. Plato used a non-profit trust to
finance his university in Greece about 400 BC. Trusts were known in Roman law
as well. In England, trusts were in use as early as the 11th century, and by the
15th century, were being enforced by the Courts of Chancery. In England, many
burdens and conditions fell upon the holder of legal title to real estate. For
example, the lord of the land was entitled to relief or money payments when the
land was passed on to an heir of full age. The lord was given the right to claim
wardship fees when the son of the former owner was a minor. The lord was also
entitled to aid or tax money to pay for the marriage of the lord's daughter or the
knighting of the lord's eldest son. In addition, the owner of the land was usually
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prohibited from selling the land or dividing it among his children or grandchildren.
If the owner of the land was convicted of a crime, he forfeited all he owned to the
lord or the king, thereby leaving his family impoverished. These are some of the
major restrictions. There were nearly 100 other taxes and limitations on the
ownership of land.
It was to avoid these restrictions that trusts were first created in England.
They were designed to avoid the application of these rigid laws by allowing the
Settlor to vest legal title in a trustee on behalf of a wife, son, daughter or other
person as beneficiary. It had many advantages, including that it could be kept
secret. Trusts were also used early in English history to allow religious
organizations to use property charitably bestowed which would otherwise not be
able to be enjoyed due to certain restrictions against land ownership by
churches and religious organizations. The English also used (and still use) trusts
to avoid probate of an estate.
What About Here In The United States?
Pure trust organizations arrived in America with the colonists. The first pure
trust of record here was drafted by the famous attorney and patriot Patrick Henry
in 1765, 24 years before the adoption of the- Constitution, for Governor Robert
Morris of the Virginia Colony, who was a prominent financier of the American
Revolution. Known as the North American Land Company, this pure trust is still
in operation today, over 200 years later.
In 1804, William Bingham, a man reputed to be the richest American when
the thirteen colonies won independence, started a pure trust for his vast estate.
At one time, the truss owned two million acres in Maine that sold about the time
of the Civil War. Besides being a very large landowner, Bingham was a Senator
from Pennsylvania of the Second United States Congress. The trust was
terminated by the trustees in 1964, after some 160 years of operation. It was
terminated because of the multiplication of beneficiaries (total 315) and the sale
of the last properties involved. Throughout the years, the income from property
or proceeds from the sale of the land was distributed to the beneficiaries. At the
time of liquidation, it had no termination date. It was not affected during its period
of existence by the death of its Creator, or Settlor, or by succeeding Trustees,
probate procedures, or death transfer taxes.
One of the outstanding examples of the Pure Trust is the Mesabi Trust,
which owns the reserves of the famous Mesabi iron deposits in Minnesota. This
Trust receives the royalty payments from iron deposits -- then distributes the
royalties to the holders of Mesabi's certificates of beneficial interest. Mr. Arnold
Hoffman, then president of the Mesabi Iron Company, transferred the assets of
the company to a Pure Trust -- then announced in the Wall Street Journal on
March 14, 1961, that the Commissioner of the Internal Revenue had ruled that
the Trust would not constitute an association of persons taxable as a
corporation. The shares of beneficial interest are traded daily on the New York
Stock Exchange.
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Edward H. Hines, a multimillionaire building supplier, established a $12
million trust in 191C, and he headed his business until his death in 1931. His
two sons, Ralph J. and Charles, succeeded the elder Hines as Trustees of the
trust and retained trusteeship of their father's trust after a court fight instituted by
two nieces, a sister, and a nephew, all seeking to break the trust by claiming that
the administration of the family estate had been erroneous. The court ruled that
the Pure Trust was not an erroneous method of managing the assets, and in fact
was a valid and legal arrangement for the estate. Ralph J. Hines, the eldest son
and head trustee, died in 1950, and again the family assets in the Pure Trust
were not disturbed by estate and inheritance taxes. The younger brother,
Charles, subsequently became the head trustee, handling the trust for many
years. The Edward H. Hines Lumber Company (A Trust) is still operating today,
preserved for future generations intact.
Another example of the Pure Trust used for a family estate is that of the
Joseph Kennedy family. Joseph Kennedy, father of John F. Kennedy, originally
established a Pure Trust to own the famous Chicago Merchandise Mart. The
Kennedy family is known to maintain several other Pure Trusts for tax shelter
purposes as well. One such trust was reported with the caption: "Kennedy
Divides Merchandise Mart", Chicago Tribune, March 22, 1947. "A trust
agreement in which Kennedy's wife, Rose f. Kennedy, and a long time friend and
associate, John L. Ford, joined as trustees of this trust, and formed several
years before, helped materially in distributing ownership in this Thirty Million
(30,000,000) Dollar Merchandise Mart, among members of his family. It is said
that many of these trusts are domiciled in the Fiji Islands of the South Pacific."
William Waldorf Astor created a Fifty Million (50,000,000) Dollar trust estate, by a
conveyance to trustees, recorded in New York, August IS, 1919;, and saved his
heirs several million dollars which would have gone for probate costs and death
taxes, had the estate been distributed by the court instead of trustees.
The Rockefeller family has used various kinds of trusts as a means of
maximizing privacy. Before his death in 1937, John D. Rockefeller tucked much
of his fortune into about 70 trusts for his descendents. The vast web of individual
and group funds represent assets of considerably more than One Billion Dollars.
Nelson A. Rockefeller and his generation are believed to be reducing their
personal holdings by the creation of still more trusts for their own grandchildren
and greatgrandchildren. It has been reported to one source that there are "well
over 100 and perhaps 250 individual Rockefeller trusts" by now. Many of these
trusts are known to be Pure Trusts to place the funds beyond the reach of the
high cost of probate.
H. L. Hunt, the Texas oil billionaire, is reported to have paid $75,000 for the
setting up of the first Hunt family Pure Trust. Hunt then formed at least 25
additional trusts. The trusts seem to follow the names of the Hunt family
members, such as the following:
1. Ruth Ray Hunt Trust Estate - this trust owns a large percentage of the
Hunt Oil Company, estimated to be worth in excess of One Billion Dollars.
2. Caroline Hunt Sands Trust Estate - this trust is estimated to be worth at
least One Hundred Million Dollars.
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OFFSHORE AND ASSET PROTECTION GUIDE 2
3. Ray Lee Hunt Trust Estate - this trust bought the Jefferson Dallas Hotel
in downtown Dallas, Texas. Ray Hunt called the purchase by his family's trust
an excellent investment according to the Dallas Morning News. The entire
transaction was kept secret because the City of Dallas wrote off $21,491 on real
estate taxes owed on the Hotel a few weeks before it was revealed that the Hunt
family interests were involved.
4. Nelson Bunker Hunt Trust Estate.
5. Ruth Jane Hunt Trust Estate.
6. Helen Hunt Kreiling Trust Estate.
7. Swanee Hunt Trust Estate.
8. Hassle Hunt Trust - this trust is involved in the new exploratory oil drilling
efforts in the Permian Basin of West Texas and Southwestern New Mexico.
Some persons who claim to have been close to the Hunt family estimate
that there may be as many as 200 Hunt family trusts now in existence. The
recent death of H. L. Hunt will not effect any of these trust estates, as this family
has arranged their affairs so as to increase the estate generation after
generation, rather than see the estate cut to shreds by the high costs of probate.
Even Ronald Reagan has established a trust. Set up in 1966, the "Ronald
Reagan Trust" has enabled him to receive sizable tax advantages. In some
years since it was established, Mr. Reagan paid no taxes at all, while
maintaining a magnificent living standard.
These are but a few of the many family estates that are preserved
generation after generation through the use of the Pure Trust organization,
Okay, So I'll Consider A Trust, Doesn't The IRS Attack Trusts?
The Internal Revenue Service is nothing more than a collection agency for
the federal government. As a collection agency, it attempts to collect as large of
sums as possible from taxpayers. To that end, the IRS is constantly trying to
discourage people from doing anything that might have the effect of saving tax
dollars, as the more you pay, the better it is for the IRS. However, there is
nothing sinister, evil, immoral, or illegal about paying as little as the law allows
you to pay in taxes. A judge highly respected for his legal opinions and often
quoted, Judge Learned Hand, had this to say on that subject, in the case of
Helvering v. Gregory, 60 F.2d 809. "Anyone may arrange his affairs so that his
taxes shall be as low as possible; he is not bound to choose that pattern which
best pays the Treasury; there is not even a patriotic duty to increase one's taxes.
Over and over again courts have said that there is nothing sinister in so
arranging affairs as to keep taxes as low as possible, everyone does it, rich and
poor alike and all do right; for nobody owes any public duty to pay more than the
law demands. Taxes are an enforceable extraction, and not a voluntary
contribution."
Unfortunately, the IRS is not above using every technique in the book to
collect as much in taxes as possible and will not give out information that would
help people to reduce their tax burdens. They intentionally give out press
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releases that seem to indicate that certain tax-saving devices are in some way
illegal or a sham, to deliberately mislead and confuse the uninformed public, and
thereby frighten people into a poor tax posture, i.e., paying more than they really
have to pay in taxes. These and numerous other less subtle abuses of the
American public led former IRS Commissioner T. Coleman Andrews to write his
expose on why the IRS should be dissolved. Printed in the April 22, 1956 edition
of the American Weekly, the article was entitled "Let's Abolish The Income Tax!"
Because trusts do have a potential for tax savings, they quite often become
targets of these techniques as well. Take the example of a Montana doctor who
established a trust and then requested that the IRS audit him each year. After
audit, the IRS did not issue a statutory Notice of Deficiency indicating that more
taxes were due. The doctor then requested that the IRS issue a ruling about the
trust. After meeting with the doctor's attorney, the IRS did indeed issue a ruling.
However, the ruling did not discuss the doctor's type of trust at all. In fact, it was
carefully worded to sound as close to that type of trust as possible, without
actually applying to it. The IRS deliberately discussed a trust with obvious
defects, which did not exist in the doctor's trust at all. There was no way that the
ruling could be applied to the doctor's trust. However, the IRS immediately sent
press releases to newspapers all over the country with the catchy line "IRS
Closes Loophole On Family Trust", a classic example of this technique of using
the press to mislead and misinform the American Public.
Unfortunately, the IRS has only a very few people who really understand
Trusts at all. If you should choose to set up a trust, this could work either way.
I.E., the particular office in charge of examining your trust return might do nothing
with It at all, which is what they should do, assuming of course that the return is
correct. However, this ignorance in trust matters might lead someone in that
office to question the return, especially if the agent is one of the over-zealous
types who likes to try to intimidate people. However, this possibility is not unique
to trusts. This can just as easily happen regardless, as the increasing complexity
in the tax laws has made it impossible for anyone to know everything there is to
know about taxes. Obviously, if no one knows all there is to know about taxes,
this means that everyone is ignorant about some areas of the tax law. It is this
ignorance that makes efficient and even-handed operation of the IRS impossible,
and most certainly leads to abuses.
Couldn't I Get My Bank To Set Up My Trust And Be The Trustee?
A very large number of trusts today are set up by and run by banks. Some
people seem to be quite happy with this arrangement, but in order to do it that
way, you have to be willing to totally trust the bank's ability to manage your
assets. Most banks will insist on having full control over the assets, including the
power to sell and invest them as they see fit, all without any input from you or
your experience in managing these assets in the past. In addition, if the bank
should choose bad investments, and lose all of the trust's assets, it would be
extremely difficult, if not impossible, to hold the bank accountable for its judgment
in making those investments.
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With the Pure Trust, you have the ability to choose those individuals whom
you feel are trustworthy and qualified to handle those assets you have worked
so long and hard to accumulate.
What About An Attorney To Help Set Up The Trust?
It is not easy to find a competent attorney who knows about Pure Trusts and
who would be willing to assist you in setting one up. The reason for this is that
the business of probate makes up an extremely large portion of the legal
profession's source of income. It certainly is not profitable for lawyers to put
themselves out of the probate business. Many lawyers have turned down
judgeships to remain probate attorneys. Probate attorneys are very well paid,
especially in terms of the amount and the difficulty of the work involved.
When Norman Dacey wrote his book How To Avoid Probate, he was fought
every inch of the way by the American Bar Association who tried unsuccessfully
all the way to the Supreme Court to prevent the publication of the book. As well
as denouncing the probate racket, Mr. Dacey claimed that less than I% of all
attorneys understand the intervivos or living trust.
When those attorneys who do understand Pure Trusts try to share their
knowledge with other lawyers, almost without exception, they will take the
information and use it for themselves, but never share it with their clients. They
just do not want to lose the probate business.
Ask your financial advisor that you trust, if he knows of any attorneys who
would be willing to assist you in setting up a Pure Trust.
Why Must The Trust Be Irrevocable?
A revocable trust is one in which the Settlor can change his mind and
cancel the whole deal, thereby taking back all assets placed into the trust.
Unfortunately, a revocable trust provides no protection of the estate from future
claims against the Settlor. Say for example that someone sued you for no
reason at all, but due to inexperience, lack of knowledge on your part, or
perhaps even incompetent legal advice, they obtain a judgment against you
personally. If you had set up a revocable trust, the judgment creditor could force
you to revoke the trust to allow him to get at those trust assets to satisfy his
judgment, regardless of how the judgment was obtained in the first place. Since
the purpose of the trust is to preserve and enlarge the estate, you would not
want this type of attack to be able to diminish the assets of the trust.
In addition, if you revoked the trust and got the assets back, you have
gained nothing in probate savings at all. Even if you die before the trust expires,
in some jurisdictions, the value of the revocable trust estate is placed in your
estate for probate and tax computations. Under federal law, the value of a
revocable trust is placed in your estate for federal estate tax purposes.
To maximize the benefits of a trust, it should be irrevocable.
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