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Trusts Why do we need them?
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Most
people associate trusts with charities and foundations,
structures set up to provide for the poor, the
underaged, or people or concerns that cannot
take care of themselves. Actually trusts are
a structure the ultra-wealthy created to protect
their assets.
The
Problem In
our society, unfortunately the way things are
set up, ownership is a liability. Trusts allow
control without ownership and assets without
liability. In the past any Tom, Dick or Harry
can do an asset search on the Internet for a
$100 and determine what you own and what you
potentially are good for.
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Today
this compounded with identity theft, phishing, pharming,
and similar criminal schemes which are rampant, it
makes sense to keep valuable assets out of one’s
personal name or from being reported under one’s
social security number or other identifier.
Thus
if you are on record as owning a company, a business
or real estate you are a prime candidate for being
the target of a frivolous lawsuit. What the litigant
is extremely well aware off is the fact that you would
rather pay off a fraudulent claim than get dragged
through a lengthy and costly court proceeding.
Fact:
The concept of direct ownership is a middle class
value that does not really serve us - we, in our middle
class thinking, want ownership because we think we
will have control and the use of things. However with
ownership is attached taxes, licenses, permits, registration
and other responsibilities which can not only be annoying
but burdensome. Furthermore you are open to lawsuits
and levies which can take it all away from you. Apparently
every 30 minutes in North America someone is being
sued, the risk of being sued being proportional to
how much you owe. Do you want that risk?
Knowing
that all you have built up in your family, your company
or your estate is prone to liability is not a comforting
thought so the question one might ask is how do I
divorce myself from all liability and still retain
control?
This
reminds me of Nelson Rockefeller's famous statement
to paraphrase, "I control everything but own
nothing". Divorce yourself from ownership and
you divorce yourself from liability.
The
solution is to use the traditional approach of
the ultra wealthy using IBC's, Corporations &
Trusts. This makes use of the fact that rather than
operate as a person you operate your affairs using
corporations and trusts that you create and therefore
control from a distance. A corporation interfaces
with local and offshore jurisdictions in doing business.
The trust receives the assets generated by the corporations
and IBC's it owns and as such is a depositor of wealth.
Companies like persons can also be sued but with a
trust your assets are legally protected.
In
a typical trust, equity or assets are moved into the
trust by whoever sets up the trust - the settlor.
As such since the trust owns the assets the assets
are protected in the sense that since no one has ownership
there is no liability. The management of the trust
is governed by "Trustee(s) - 1 or more parties
who are entrusted by the settlor to manage the trust
on the behalf of third parties who stand to benefit
from the trust. This third group, otherwise known
as beneficiaries, as they are not tied to the management
of the trust nor are they owners of the assets, have
no responsibility. As such they benefit from the assets
in the trust but are protected from liabilities that
might otherwise exist if the assets remained in the
corporation(s) or IBC(s) or in their personal ownership.
Caution
however must be exercised here as federal state and
provincial legislation are constantly changing certain
transfers to trusts and types of trust have been voided.
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