This is general trust information that has been gathered from various legal sources and is not intended

to be offered as a document created by Trusts Unlimited LLC The purpose of this article is to inform you of the various factors and issues concerning trusts so that you may make an informed decision as to whether a trust may be of any benefit in your life. Statutory v. Non-Statutory The first and most fundamental issue that one needs to understand is the distinction between a statutory trust and a non-statutory trust. A non-statutory trust is generally referred to as a common law trust. Statutory trusts are those, which like corporations, are established by and through a law created by the legislature of your state. Such trusts are imbued by the legislature with certain "financial advantages" (e.g. exempting certain property from State taxation of one form or another). However, such trusts are 100% within the regulatory control of the State. If the legislature were to change its mind tomorrow and withdraw the trust's financial advantage, they would be doing nothing wrong and you would have no recourse. When you place property in a statutory trust, you are in effect saying to the legislature, "I agree that this property is within the State's jurisdiction and it would be really great if you'd treat me fairly in the future". Placing one's property within a statutory trust also makes that property ripe for administrative levy and/or seizure in the event that a tax agency makes a claim against the person who established the trust, or against the trust directly. Conversely, common law trusts are not created by legislative fiat, but are created in the realm of Equity and under a Citizen's unalienable right to contract. "A pure Trust is non-statutory. The Court holds that the Trust is created under the realm of equity under common law and is notcreated by legislative authority." Croker v. MacCloy, 649 US Supp 39 [A contractual organization is] "created under the common law of contracts and does not depend upon any statute for its existence." 156 American Law Review 28 It is important to know and understand that an organization (such as a common law trust), which has not been created under State authority, generally cannot be regulated, and most State laws (written to effect corporations) have no legal force upon such an organization. We say that such a trust cannot "generally" be regulated, because we wish the reader to understand that there are certain activities that are inherently subject to State regulatory control [e.g. hauling toxic waste on the highway] and if a common law trust were to engage in such an activity, then it would be subject to State regulatory control. Another advantage of a common law trust is that the trust possesses the same rights, privileges and immunities (speaking in Constitutional terms) as the trustee.

"The fact that a business trust is not regarded as a legal entity distinct from its trustees, if a true trustmay result in this advantage to the trust, which a corporation does not possess: The trust consists of individualswho are Citizens, and who, therefore, are entitled to certain rights and immunities such as those guaranteed by the privileges and immunities clauses of the Federal Constitution, which do not apply to Corporations." Morrissey v. Commissioner of Internal Revenue, 296 US 344 (1935) This is an important concept that translates into important real-life benefits. Most "organizations" are statutory fictions and are subject to virtually every law on the books. They are also obligated to open their "books and records", upon demand, to allow the government to explore whether or not some violation (of a virtually endless list of laws) has occurred. Statutory entities may also be prohibited from activities from which a Citizen with unalienable rights cannot be prohibited. Common law trusts are not bound by laws controlling the actions of corporations. Common law trusts are not bound by "public policy" decisions of the legislature that are masquerading as "law". Common law trusts need not open their books to anyone unless ordered to do so by a true judicial warrant issued by an appropriate court. Common law trusts may freely engage in any activity that any American Citizen may engage in (provided that the trustee is a Citizen of a state of the Union). "These trusts - whether pure trusts or partnership - are unincorporated. They are not organized under any statute; and they derive no power, benefit, or privilege from any statute." Hecht v. Malley, 68 L ed 949 So What Does One Use a Trust For? Trusts are used primarily for four purposes: Protection of assets Generational preservation of assets The conduct of business Privacy

[Editor's Note: For the balance of this article, the word "trust" shall mean a common law trust, unless otherwise indicated.] Privacy - Common law trusts can provide privacy in a manner that no statutory entity can. Whenever the State is a party to a business arrangement, such as establishing a corporation or other statutory entity, the State requires the particulars from all the associated parties and that information becomes a part of the public record and is generally accessible. By contrast, a common law trust is traditionally held in the strictest privacy, with no one but the settlor and the trustee knowing all the details of the trust and the identities of those involved. Generational Preservation of Assets - Many people would prefer to avoid a situation in which inheritance taxes would be owed on property after their death. By

placing property (real or personal) in a Family Preservation Trust, the "owner" of the property (the trust) never dies, and therefore no "inheritance" takes place. Despite the fact that the property belongs to a trust, current and future generations of family may make unfettered use of the property under the terms of the trust. This form of trust arrangement should always be an irrevocable trust (which will be addressed shortly). Protection of Assets - We live in a society that is increasingly complex. Legislatures are pumping out laws faster than the average Citizen can keep track of them, while at the same time recourse to the courts to solve every little grievance is on the increase. We know that there are laws firms in existence today that conduct research to see what companies are in the best financial position to be sued. Add to that a government that is hungry for any excuse (lawful or otherwise) to seize one's property and this is likely the most precarious time in American history for a Citizen to own property of any significant value. For these reasons and others, Americans are now protecting their assets through trusts on an ever-increasing basis. Done correctly, a settlor may retain the use and benefit of the property while no longer being the actual owner. This form of trust arrangement should always be an irrevocable trust (which will be addressed shortly). Revocable v. Irrevocable All trusts, common law or statutory, come in two flavors - "revocable" and "irrevocable". Revocable means that the trust can be readily dissolved and the property within the trust reverts to the sole ownership of the "grantor" (the former owner). These trusts are often referred to as a "Grantor's Trust". Such trusts do not afford much asset protection. In most cases, the law considers such trusts to be little more than an "alter-ego" of the grantor. Many courts have declared revocable trusts to be nothing more than a "dba" of the grantor. Irrevocable trusts offer the strongest asset protection possible. Like a corporation, irrevocable trusts are considered a separate legal "person" from the settlor and/or the grantor(s). Irrevocable trusts generally exist for eternity - or until some specified event occurs, requiring the termination of the trust. However, unlike a corporation, a trust may exercise all the rights, privileges and immunities of the trustee. If the trustee is a Citizen of a state of the Union, that's a significant advantage over other business forms. It should be understood that property conveyed into an irrevocable trust becomes the sole property of the trust and will generally not be returned to the previous owner. Once property is conveyed into trust, it is "held in trust" by the trustee and administrated in the best interest of the trust, in accordance with the trust indenture. This is one of the essential reasons that property within such a trust is so secure there can be no claim made that the property still belongs to the former owner (grantor).