A Trust is a contractual agreement between three parties that is not protected any particular way by the Constitution of the United States of America, which doesn't even remotely deal with the ability to create trusts. Indeed the State of Louisiana was admitted to the Union in 1812 and certainly had no trust law. In fact when Paul Tulane was thinking of leaving his huge fortune to found a university in New Orleans, he demanded the state create a charitable trust vehicle so his fortune would not end up in the debacle of litigation as happened to John McDonough, who left a huge fortune to establish schools in New Orleans and Baltimore, Maryland.

As for trusts, the parties consists of the settlor or grantor (nobody...and I mean nobody...uses the word "creator"), trustee and beneficiary. If the trust's beneficial interest is physically represented by certificates, the beneficiary would also be a certificate holder). An inter vivos trust (a trust you set up while you're still around with the living) is by definition a contract, which could be a set of documents which allow for the restructuring of a business or an estate providing the benefiticary of the trust many tangible benefits.

WHAT IS A PURE TRUST [ or Pure Trust Organization]?

The Supreme Court of the united States of America in the case of Hecht v. Malley, 265 U.S. 144 (1924), held that a Pure Trust Organization could be properly taxed as an association and subject to corporate income tax.

The so-called pure trust organization" is simply a contract between individuals in trust form that mimicks the structure of a corporation, except that the shareholders do not have control over the trustees, who are real principals. Why anyone would want to give actual control without recourse to a third party is beyond me. Thus when you set up a real pure trust organization to "regain" control (to the extent you did not have it before the inception of the pure trust), you would be jumping from the frying pan and into the fire.

Our pure trust friends tell us "It is executed by a third party, which has the same Constitutional rights as an individual," whatever the hell that means. "Executed" just means "signed."

A Pure Trust following the Massachusetts model of the late 19th Century when corporations could not own property in other states, pure trust organizations were set up to have certain specific attributes which HAD TO be present.  The most important of which was that the Beneficiary can have no ownership-control over the Trustees or the trust asset. This kept the relationship from being classified as a partnership by the courts. Structuring a contractual agreement in this manner keeps your name from ever appearing on the Trust document. Of course the trustee has a certificate register that has your name on it, unless an incompetent moron is in charge of document preparation. As long as the individual maintains complete integrity and does not use the Trust for abusive or illegal purposes, a pure trust organization provides some limited degree of privacy, but is income-tax and estate-tax neutral. Neither does it necessarily afford liability insulation for the assets you put inside. In fact, it most certainly would provide no asset protection whatsoever.

As for freedom from unwarranted search and seizures, and refrainment from self-incrimination, everyone supposedly has those rights without setting up a trust. How a trust provides you with constitutional rights must be based on an arcane point of law with which I am unfamiliar.

A Pure Trust Organization uses many terms as do other types of trusts. For example, a Pure Trust can be termed:

"intervivos or living" because it is established during the lifetime of the settlor, rather than at his death. 

"irrevocable" because once it has been set up, the settlor has no power to change his mind and revoke the trust . 

"active" rather then "passive" because the trustees have actual duties to perform in administering and conserving the trust estate. 

"nonreversionary" because the settlor (or his estate) does not get anything back when the trust terminates. 

"simple" (income distributed currently) or "complex" (income can be accumulated).

A PURE TRUST IS:

* probably not governed by common law for its existence, since your state probably has a trust code. Remember, common law does not exist in the air. Even if your state allows the creation of a trust under common law, it is subject to state regulation to the same extent as a trust formed pursuant to statute. Who ever heard of the notion that a common law trust flew below the radar of state stature? Find me one case that supports such a stupid notion. A first-year law student who said something so stupid would get his brains bashed in.

* Easy to use.

* Adaptable for both personal and business use.

* Irrevocable, thus you can't pull a rip cord and parachute to safety if you don't like how it's turned out.

* A trustee whom you cannot fire controls your assets -- unless you don't want to follow the Massachusetts-type common-law pure-trust model (in which case, why all the pure-trust hoopla?).

* You permanently lose contol over the assets you transferred in.

* You receive unmarketable and thus practically worthless pure-trust certificates.

* Possibly involves an offshore trustee over whom it would be expensive for you to enforce a fiduciary duty.

* All assets can be exchanged into the TRUST with a minimum of effort and if you're a dumbell, you can do it without hiring an attorney.

* Maybe valid in some state, and maybe not. But once the trust is set up, it would certainly retain any validity it initially has even if you move from state to state.

THE PURE TRUST :

* In no way protects your personal, family and business interests from Lawsuits, Probate and Financial Disaster

* It does provide for control of assets. It gives you, as Managing Director, complete control over the Trust assets. But remember that a few lines up, we said that it was important in following the Massachusetts pure-trust model, that the beneficiary could not have control over the assets? Remember...no shell games allowed. What walks like a duck and quacks is a duck.

* Facilitates estate planning. It is not altered in any way by death, insanity, incapacity. Bankruptcy is another story. Your Pure Trust certificate would be part of the bankruptcy estate. Can you believe there are dummies who say otherwise, without any citation to legal authority whatsoever? Additionally, a pure trust is it subject to liability claimed by a third party, unless there is a statute or case law in your jurisdiction that says it is not.

* Does not allows you to become judgment-proof.

* Facilitates privacy not because a new identity is created, but because title is "buffered" to some extent. Disclosure under authority of law is required.
 

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