Thursday, April 18, 2013

Common Law and Business Trusts


Common Law and Business Trusts
Common Law and Business Trusts

Today, very few people know that they have a fundamental choice: to live their lives and conduct their businesses commerce) under common-law jurisdiction or under statutory jurisdiction. Common Law is the law of Creator, Prime, or Oneness which I believe the law of the Constitution was begun from. The other set of law is statutory law which is legislated by law set forth by different corporations.
Researching the roots of statutory law you will find its’ basis in vengeance, according to Oliver W. Holmes.  The basis of Common Law is contract so it figures that living a common law lifestyle requires a certain level of knowledge about communicating and understanding the concept of “value”.  In our society now people’s lifestyles are based on avoiding penalties and we allow politicians to do our thinking and bidding for us. Living in Common Law, which is to say, practicing it moment to moment provides a very different perspective on life. You have a choice to get tangled into invisible contracts or not because you have a keener awareness in the structure of a contract.

Most people ask me why do they need a business trust, or why do I use one. For me, I use a business trust because it reinforces that I am the Creator of my life. Simply put, as the Creator of my life I use a non incorporated business trust because it’s a pure trust, an organizational tool, that protects property, assets, and affairs during my journey here, along with distributing them after I am gone from this body to benefit the beneficiaries. 

To the degree at which you understand the differences between corporate law and the lawfulness of common law, is depth by which you see the benefits of a business trust. When all else fails, you need to do your research and due diligence to cultivate that understanding. You can learn about common law resources by clicking here. A business trust is an entity controlled by its Trustee(s) who are also in charge of distributing Trust assets to Trust beneficiaries (Trust Certificate Units).

Below are some common questions about a business trust and the court citations, where available in italics, to evidence the answers.

ARTICLE 1, SECTION 10 of the United States Constitution....
“No state shall pass any law impairing the obligation of contracts.” 

Q. What is a Trust?

A trust is, "An obligation arising out of a confidence reposed in the trustee, or person who has the legal title to property conveyed to him, that he will faithfully apply the property according to the confidence reposed; in other words, according to the wishes of the creator of the trust."


Q. What are the four essential elements to a valid legal trust of personal property?

here are four essential elements of a valid trust of personal property: (1) A designated beneficiary; (2) at least one designated trustee, who must not be the beneficiary; (3) a fund or other property sufficiently designated or identified to enable title thereto to pass to the trustee; and (4) the actual delivery of the fund or other property, or of a legal assignment thereof to the trustee, with the intention of passing legal title thereto to him as trustee.


Q. What type of law applies to a business trust, also known as a unincorporated business organization (UBO), or Massachusetts Business Trust (MBT)?

Business trusts are recognized under the term "common law trust".
88 American Law Reports 3d 704, citing Schumann-Heink v. Folsom 328 III 321, 159 NE 250, 50 ALR 485 (1927)

A pure trust is not subject to legislative control. The U.S. Supreme Court holds that the trust is created and its relationship comes under the realm of equity based upon the common law and is not subject to legislative restrictions as are corporations and other statutory entities or organizations created by legislative authority.
Croker v. MacCloy, 649 US Supp 39; and Elliott v. Freeman, 220 US 178.

The United States Supreme Court has acknowledged the Trust contract as a "pure or true" trust, citing the Hecht case in Navarro v. Lee. Hecht v. Malley 265 US 144 (1924) Navarro v. Lee 446 US 458 (1980)


Q. Can a business trust be used in commerce and personal affairs?

The trust contract is established by private parties, for personal purposes, is not registered with the state corporation commissioner to comply with statutes relating to incorporating and does not invalidate the trust organization. 
Hodgkiss v. Northland Petroleum Consolidated, 104 Mont 328. 67, P 2d 811

A business trust is a common law entity formed by contract, and thus, is not subject to the same types of state regulation as a corporation. 
Elliott v. Freeman, 220 US 178; and Crocker v. Malloy, 39 US 270.


Q. Are Certificate holders (beneficiaries) of a business trust able to have their Certificates taken from them using a legal process?

Certificate holders of a Trust Contract enjoy an even greater immunity from personal liability than is accorded to stockholders of corporations.
Goldwater v. Oltman, 210 Cal 408, 292 P624, 71 ALR 871


Q. What are typical duties and responsibilities of a Trustee?

A. They accept the initial gift or conveyance of property on behalf of the organization and acknowledge the delivery of all property specified on Schedule "A".
B. They agree to conduct the organization's affairs in good faith, in conformity with the terms and conditions set forth in this contract and its inherent trust provisions.
C. They agree to exercise their best judgment and discretion to conserve and improve the property of the trust estate in accordance with decisions of the Board of Trustees as set forth in the organization's minutes.
D. They agree, upon final liquidation of the trust estate, to distribute the assets to the existing certificate holders as their contingent rights may appear.
ADMINISTRATIVE PROVISIONS: The Trustees, and their successors, may hold administrative offices within the organization, and may singularly or collectively exercise authority granted by the Board of Trustees in the management of company affairs. They are herein authorized to exclusively manage, administer and control the trust estate without the consent of certificate holders. The following specific terms and conditions apply:
A. The Board of Trustees shall be at least one (1) in number, and may be increased as deemed necessary in the manner set forth above.
B. A Trustee may resign or be removed from the Board, with or without cause, by a resolution of the Board of Trustees determined by a majority vote or by a mandate of a court of competent jurisdiction.

C. In the event of death, removal from the Board, or resignation of a Trustee, the vacant position shall be filled by a successor Trustee, if preappointed, or the remaining Board of Trustees may appoint a successor by unanimous vote. Should the entire Board of Trustees become vacant, upon proper application by a qualified party, a court shall appoint one Trustee who, after accepting the appointment, shall in turn appoint a second Trustee, and they may jointly appoint others as provided in the manner set forth above.
D. The signing and acknowledging of this contract by any Trustee or Trustees shall constitute the Trustees' collective acceptance of this contract and its trust provisions and the Trustees' acknowledgment that this organization's property and assets are vested in fee simple in the trust estate without any further act or conveyance by the Board of Trustees. The Trustees as discretionary fiduciaries shall hold legal and equitable title to all assets.

E. The Board of Trustees may provide for meetings at stated intervals without notice, and special meetings may be called at any time by one or more Trustees upon three day's written notice. At any regular or special meeting, a majority of the Trustees shall constitute a quorum for conducting business, provided affirmative action may only be had upon a majority vote of the Trustees, whether present or absent, except that in a special meeting called for a special purpose the majority present may affirmatively act in emergency matters. A telephone or fax vote shall be a valid vote.

F. Any resolution of the Board of Trustees shall be deemed within the Board's power so long as the resolution is not inconsistent with this organizational document and any amendments thereto.

G. The Trustees shall be controlled by this document as amended and future resolutions of the Board of Trustees. All meetings and resolutions shall be recorded in a company minute book.

H. The Trustees shall keep proper records and accounts as the Board of Trustees deems necessary for the proper management of the trust estate.

I. The Trustees shall not be required to individually assume liability for loss of company assets while acting in good faith on behalf of the organization, or for any act or omission of any other Trustees, agents or employees. They shall, however, be liable for their own breach of good faith if such breach is established in a court of competent jurisdiction. If a Trustee shall for any reason suffer a personal loss while providing good faith service to the trust, the Trustee shall be reimbursed for such loss from the trust estate.

J. The Board of Trustees, at the expiration of the term as set forth herein, shall wind up company affairs and terminate the company operations, making final distribution as provided. If the organization was recorded publicly, the Trustees shall file with the Recorder a notice of termination; and the Trustees, thereupon, shall automatically be discharged, provided final administration and distribution was made in accordance with the terms and conditions of this agreement. Otherwise, a court of equity may be invoked to review and correct any tort or error.

K. When there are no longer trustees and beneficiaries the Manager will have the right to dissolve the trust by following the procedures in “J”.

TRUSTEE POWERS: The Trustees shall have general common law powers over the company and the trust estate herein, and may do anything any citizen may lawfully do in any state or country. Specifically, but not by way of limitation, they shall have all rights, authority and power as follows:

A. To compromise or abandon any claims arising out of, in favor of, or against the company and its trust estate, and the Trustees' good faith decision in that regard shall be binding and conclusive on all parties.

B. To manage, invest and reinvest the trust estate, or any part thereof, in any kind of property or venture which men of prudence, discretion and intelligence consider for their own account, without being restricted to investments which are ordinarily permitted by law or customarily used for trust funds, and without restrictions as to the duration of this organization. Specifically included, but not by way of limitation, are real estate, collectables, gems, art works, precious metals, corporate obligations of every kind, preferred and common stock, commodities, mutual funds and trust funds.

C. To open, maintain and close bank and thrift accounts of every kind, and conduct all monetary affairs of this trust.

D. To sell at public or private sale for cash, credit, or cash and credit, and upon such terms and conditions as the Trustees may deem proper.

E. To sell, grant, convey, mortgage, option, rent, lease or pledge all trust estate assets, real, personal or mixed, in such manner as deemed appropriate.

F. To borrow on or encumber the trust estate without restriction, and to make loans with or without security. All borrowed funds shall immediately become a part of the trust estate.

G. To allocate capital gains and/or dividends to trust principal as may be deemed appropriate or advantageous to the trust estate.

H. To register company property in the name of the company, a fictitious trade name of the company, a Trustee or nominee so long as company ownership of such property can be clearly demonstrated.

I. To make distributions in cash or in kind and to assign values to such property according to the Trustees' best judgment.

J. To accept additions to the trust estate by deed, will, assignment, exchange, gift, grant, insurance proceeds or any other methods deemed acceptable to the Trustees. The Trustees are further authorized to honor any buy-sell agreements extant as to any property or interest held in trust.

K. To elect and remunerate officers from the Board or elsewhere as deemed appropriate or expedient. To hire and remunerate employees, agents or contractions. To incur and pay the ordinary and necessary expenses of administration, including, but not limited to, legal fees, accountant's fees, Trustee fees, brokerage fees, consulting fees and the like, and to allocate all the expenses and receipts between principal and income as the Trustees shall deem proper.

L. To give proxies, to deposit securities with and transfer title to committees representing securities holders and to participate in voting trusts, reorganizations and other transactions involving the common interest of security holders.

M. To open margin accounts with securities firms and commodities traders and to buy, write or trade in options, commodities, and to make short sales. The Trustees shall be empowered to hold securities in their own names, the name of a nominee, in street name, or unregistered in such condition that ownership will pass. The Trustees shall incur no liability to the company for any loss. Further, any securities firm or commodities traders may rely on this document and the trust provisions herein in respect of a Trustee's authority without making further inquiry.

N. The Trustees are expressly authorized to hold, manage and operate any company property, or business or enterprise. The profits and losses, if any therefrom, shall be chargeable respectively to the trust estate.

O. The Trustees are authorized to pay all taxes out of the trust estate, and have complete discretion, power and authority to make any decisions or elections that would effectively minimize such taxes.

P. The Trustees may expressly delegate one or more of their powers to any other person or persons as may be deemed expedient for the management of company affairs, and may revoke such delegation at any time by written notice delivered to such persons.

Q. The Trustees, by a majority vote, may change the domicile of the company with or without cause if they deem such change will protect or benefit the trust estate.

R. The Trustees, by unanimous vote, may make amendments to this contract and declaration and take such other consequential actions as they deem necessary or appropriate to protect the integrity of the organization and to insure the organization will continue to function and be administered in the best interest of certificate holders and in the manner intended.

S. The Trustees, by majority vote, may at any time and at their sole discretion wind up company affairs, terminate this organization and make distributions of the trust estate to certificate holders as provided herein.

My intention is that this article has helped you better understand the nature of a business trust.

Blessings, Steu

NOTE: This article in intended to be educational. Establishing a business trust is not a solution for everyone. This article does not attempt to explain all the details of establishing and managing a business trust. Readers should consult a qualified and professional legal representative to resolve their legal issues.

1 comment:

  1. Hello Steu, Your explanation is outstanding. I've been successfully establishing Bus. Trusts these past 25 yrs. for many hundreds of people. Regrettably, most attys & banks haven't the faintest notion of a Bus. Trust, let alone how they differ from a typical statutory one. I'd be pleased to send you my 11 page explanation, IS A BUSINESS TRUST RIGHT FOR ME? Jim Jenkins, Seattle, WA
    Jimscd@Comcast.net 425-788-2666

    ReplyDelete