The Common Lawyer

Brent Allan Winters    

Attorney & Counselor at Law 

 

Asset-Protection Trusts 

—A Common Lawyer Comments—

Brent Allan Winters

An asset-protection trust is drafted to (1) erect a hedge against predatory litigants—whether government bureaucrats or other opportunists—determined to steal your property and to (2) avoid probate, with its destruction of your privacy and wasting of your estate in attorney's fees and probate costs. Below I discuss asset-protection trusts designed to protect firearms from predatory litigation and confiscation, called a Gun Trust; and then follow up with a discussion of general principles applicable to all asset-protection trusts.

Gun Trusts

A Gun Trust[1] is a species of the asset-protection trust drafted to protect firearms from government confiscation and predatory litigants. Drafted aright and obeyed, a Gun Trust fills two purposes: (1) sure transfer of firearm ownership to the use of an heir, in such a way as to avoid government confiscation of firearms and (2) avoidance of probate, with its destruction of your privacy and wasting of your estate in attorney's fees and probate costs.

Some State governments and even the federal government are now considering legislation, which would allow confiscation of a deceased person's firearms, pending a bureaucrat's arbitrary determination, concerning whether the deceased person's family members are trustworthy to possess firearms. Although the courts have yet to shake out whether this draconian policy will allow confiscation of firearms impressed with a trust, recent trends in trust law indicate that such entrusted firearms titled in the name of the trust will be exempt from seizure. In all events, and regardless of all other trends, the benefits of placing firearms in a well-drafted trust outweigh any alleged disadvantages.  

As with the asset-protection trust—or any other trust—, it is not the Gun-Trust document itself that causes the Gun Trust to stand up to a court challenge, but is rather the Trustee's tenacious obedience to the instructions of that trust document. The trust document standing lone is a dead letter, without legal force—no more than a dry and dis-spirited skeleton of words—, until the trustee obeys it. In fact, the duty of a trustee is well summed up in two actions: know the terms of the trust document and obey them. Indeed, as it is said, one cannot obey that which one does not know.  

Simply put, the Gun Trust is used to combat the evil empire's most-recent attack against your Second-Amendment-protected, common-law right (old Anglo-Saxon for duty) to keep and bear firearms, that is, confiscation of firearms upon the owner's death, claiming the firearms may fall into the hands of dangerous family members. But with a properly drafted Gun Trust, such firearms can pass to a successor trustee without government seizing them.

  

Gun Trusts are drafted to win the benefits of entrusting firearms in the name of a common-law trust. Gun Trusts are also used for firearms subjected to strict federal and State regulations. But Gun Trusts may be use to handle all other kinds of firearms as well. Bottom line: Gun Trusts can make it easier to handle firearms both before and after the owner’s death—and may prevent surviving family members from inadvertently going afoul of a claimed law.

Types of Firearms Held in Trust

All firearms—as also any property, whether personal or real—may be held in trust and advantages can be realized from settling a trust. Gun Trusts, however, often are used for firearms regulated by two federal laws: the National Firearms Act of 1934 (NFA) and that law's revision, Title II of the Gun Control Act of 1968. Such regulated firearms are often called NFA or Title II firearms, which include machine guns, silencers, short-barreled rifles, and short-barreled shotguns (including sawed-off shotguns), grenades, to name some.

NFA requires that firearms subject to it have a serial number assigned and be registered with the federal Bureau of Alcohol, Tobacco, Firearms and Explosives, most often called the ATF or BATF. It is unlawful to own a firearm subject to NFA that is not already registered with the ATF. In fact, you cannot register it. Only the registered owner of such firearms can  lawfully—according to present policy—possess and them. To transfer such a registered firearm to another person, the owner must get ATF approval and pay a $200 tax ($5 for some firearm accessories).

Other federal laws also apply to NFA firearms. For example, the Firearm Owners Protection Act has outlawed, since 1986, the manufacture of machine guns; and only those manufactured before 1986 may be lawfully purchased. State laws may further restrict firearms subjected to NFA regulations. For example, both California and Illinois have outlawed silencers, machine guns, automatic weapons, short-barreled shotguns, and other firearms, saying these are especially dangerous.

Benefits of a Gun Trust

A Gun Trust can avoid not only some of the federal transfer requirements but also brings other advantages as follows.

A Gun Trust can protect firearms from predatory litigants in the event of lawsuit against the owner of firearms. A proper Gun Trust is drafted to erect a hedge against predatory litigants—whether government bureaucrats or other opportunists—determined to confiscate or otherwise steal your firearm. But further, some State governments and even the federal government are now considering legislation, which allows confiscation—by unwarranted breaking and entering, searching and seizing—of a deceased person's firearms, pending a bureaucrat's arbitrary determination, concerning whether the deceased person's family members are trustworthy to possess firearms. Although courts have yet to shake out whether this draconian policy will allow confiscation of firearms impressed with a Gun Trust, recent trust-law trends indicate that entrusting a firearm titled in the name of the Gun Trust will exempt it from seizure. In all events, and regardless of all other trends, the benefits of placing firearms in a well-drafted trust outweigh any alleged disadvantages.  

A Gun Trust enables more than one person to possess and use the entrusted firearm. If you name more than one person trustee of your firearm, each trustee will have the right to possess and use the entrusted firearm, because each trustee is a joint legal-title holder of that firearm. Thus also, without a NFA registered firearm being in trust, only the single registered owner can possess or use it.

A Gun Trust keeps the gun in trust, even after the current owner’s death, avoiding the NFA transfer requirements. If you settle a trust upon a firearm—as is said impress a just upon the firearm—, titling it in the trust's name, you can also arrange that trust to continue after your death. The trustees and beneficiaries of the trust will then have whatever rights you grant them, by the terms you have drafted into the trust agreement. As to NFA-regulated firearms, because these firearms stay in trust after your death, the NFA-required transfer procedure is avoided. Consequently, the inheritors you designate in the Gun Trust avoid (1) having to pay the $200 transfer tax, having to file an ATF transfer form, (2) having to obtain permission from a local chief law-enforcement officer (CLEO)—such permission often like pulling hen's teeth, an impossible quest—, and (3) having to get fingerprinted and photographed.

A Gun Trust helps the executor of your estate. The executor of your estate—the person responsible after your death for gathering your assets, paying your debts, and distributing what is left—may not be familiar with the rules governing ownership and possession of firearms subject to NFA—and any local requirements. Consequently, an executor could unwittingly violate criminal laws by transferring a firearm without going through the required procedure, transporting or shipping the firearm to a State that prohibits it, or giving it to a person a statute prohibits from owning it. Indeed, the federal Gun Control Act of 1968 makes possession of firearms unlawful for certain persons. For instance, law prohibits possession of certain firearms, under certain circumstances, to (1) one having been convicted of a felony or of a domestic violence misdemeanor, (2) one having been prohibited by a restraining order from harassing an intimate partner, (3) one using a controlled-substance unlawfully, (4) and an illegal alien—to name just some of the restrictions. When, however, a firearm is titled in the name of a Gun Trust, each trustee is under orders—drafted into the trust agreement—to never allow the entrusted firearm to come into hands of a person, to whom law prohibits possession.  

A Gun Trust avoids probate. Firearms held in trust need never go through probate at your death, thereby avoiding unnecessary public scrutiny of your affairs, compromising your family's privacy.

A Gun Trust avoids possible future restrictions on gun transfers. Legislators, both State and federal, are now considering legislation forbidding (1) the leaving of certain firearms—and even all firearms—to immediate family members or other heirs (2) an owner to transfer firearms during his life. If such legislation passes, holding firearms in trust may well avoid its limitations.

Making (Settling) a Gun Trust

Although a Gun Trust has all the indispensable elements of any common-law trust—without which our law will not recognize the trust—, it's unique property (firearms) requires special features be drafted into the Gun-Trust agreement, rendering it different from other trusts.  For example, the popular revocable living trust is used like a will, allowing its settlor (creator) to leave his assets to whom he pleases at death. Such a simple living trust allows one's appointed trustee to transfer trust assets to one's heirs without going through probate court, thereby saving one's family time and money (lawyer's fees) after one's death. Shortly after one's death—once the trustee as distributed entrusted assets to those persons the trust designates—, such a living trust often ends. Because a so-called living trust is simple, some set up living trusts on their own, using a do-it-yourself instruction book and filling out the trust forms it provides.

By contrast, however, requires special consideration in its drafting because, for instance, it may have more than one trustee, be intended to last for more than one generation, and must take into account State and federal firearms laws.

  
[1] A Gun trust can also be drafted as an National Firearms Act Firearm Trusts, most often called a NFA Firearm Trusts.  

The 

Common-Law Trust: Its Resilience & Power 

—A Common Lawyer Comments—

Brent Allan Winters

Resilience is the power to recover quickly from difficulties; resilience is toughness. It is said that ancient Anglo-Dane institutions exhibit remarkable resilience. This saying is nowhere truer than it is, respecting the common-law trust—and even more so since this Anglo arrangement of duties and benefits has arrived in America, where it is called the Anglo-American trust and common-law trust. One well-known trust-law treatise writer says that to most men and even lawyers, the trust's arrangement of persons, property, title, and interests appears as mysterious as the Trinity.

The trust is a creature of our common law, having brought equity into its service and under its standard; and, as such, the trust reflects this characteristics of our common law: at times appearing messy. Indeed, at first glance, the trust looks like a hodgepodge of ad hoc duties and benefits, but it is not. In fact, the trust details, in consonance, a working of legal interests (burdens of the entrusted property) and equitable interests (benefits of the entrusted property); all the while weaving two of our common law's five facetsagency (fiduciary duty) and contract (non-fiduciary duty)into a self-strengthening, formidable bastion of law for protection of private property.[1]

Trust lawyers agree: the common-law trust—indeed there is no other kind except at common law—is arguably the most handy, adaptable, all-around useful, and fruitful feature of our common-law tradition. Only common-law countries recognize the common-law trust; and legislative efforts to end its use—beginning with King Henry VIII pushing his Statute of Uses (Older English for Statute of Trusts) through Parliament—have fallen flatter than a flitter. Although Henry meant his Statute of Uses to end the common-law trust; and although it is now enacted, with sleight variations, throughout common-law jurisdictions—, including 49 States of our 50 United States—; our common-law courts nevertheless, both in England and now in the United States, have, from earliest days, interpreted this Statute so as to strengthen, not weaken, the ingenious arrangement of fiduciary, equity, agency, and contract law called the common-law trust.

All experience teaches that liberty is impossible without the law's protection of private property. And no other feature of our common law frustrates plundering of private property anymore than does the Anglo-American trust. By baptizing principles of equity into the service of our common law, English lawyers have delivered into life this arrangement of relationships they first dubbed the use but now call the common-law trust.

This fruitful arrangement called the trust has remained our law of the land's (common law) bulwark of private property against the law of the city's (civi law) vicious and unrelenting subversion: the ever-elusive encroachments of the evil empire's chameleon-like devices of tyranny, chief of which are the many faces of the corporate state with its off-shoot corporate creatures, claiming quickened personhood  from the State and the right—though no more than mere fictional creatures of the State—to hold title to (own) property. 

By contrast, the main spring of the common-law trust's power is that it is not a person—much less any corporate creature (creation of) of the State—; but is, rather, an arrangement of relationships between and among persons and property. And since only persons, not relationships, are able to own property, a trust owns no property; but rather because the trustee (or trustees if more than one) hold legal title to the entrusted property, he—not the trust—is owner.[2]

To sum up: our common law of nature says, he who has the power to give has also the power to take.[3] The strength of the common-law trust is that the state gives neither the power to create the trust nor the wealth to fund it. Bottom line, the state contributes nothing to the trust; not being a creation (creature of) the state, the state has no power to take from it. Indeed, the foremost duty of those parties to it is not to the state but to the trust settlor's terms of duty, respecting its entrusted property. Indeed, the trust, unlike the corporation, owes its creation and enforcement not to the state but to its parties: its settlor (trustor) creates the trust by entrusting property ownership and control to a trustee; the trustee and beneficiary enforce the settlor's terms of that entrustment: the trustee by obeying the settlor's terms of trust; the beneficiary by ensuring the settlor obeys those terms.  

Because the common-law trust is a promise (undertaking) the law will enforce,[4] it is said to be a species of contract. Indeed, the settling of a trust is an undertaking—not only of its settlor (truster) but also of its trustee(s)—and, as such, constitutes a commitment or promise. But in addition, because the trust is an arrangement of private commitments, requiring neither power nor permission of government, it is a private contract. Accordingly, once the commitments of a common-law trust are established or settled, our United States Constitution bars any State legislature from altering these obligations of contract.[5]

 
[1] In addition to tort, writes Professor Rounds, our [common law] legal system does not have two fundamental private legal relationships. It has four, notwithstanding what the scholars may say: They are the agency, contract, property (legal interest), and the trust [legal & equitable interests]. There are four because four are needed. No one [facet] is sufficiently elastic to encompass another without turning into the other. They are facets of the legal gem we loosely call the common law.  See further generally Brent Allan Winters, Excellence of the Common Law, § 5.4.3 (discussing the five facets of the gem we call our common law).
[2] As Edward Coke infers in his Institutes, such plundering of private property is always by government, whether by direct government force or by indirect government-sanctioned force, that is, allowance). In all events, such plundering—often justified under the political ruse called transfer of wealth to the poor—only can occur where government has a practical monopoly of force; and all such monopolies, says Coke, are against the liberty of the individual and against the common law.
[2] In our common-law tradition, only persons can own property. And our law, as it now is, recognizes two kinds of persons: (1) non-real, intangible, government-created fictional, faceless persons—bodiless, boneless, and bloodless;  having neither mind, will, nor emotion—called corporations (Latin for body); (2) real, tangible, God-created persons with faces—warm-blooded bodies with bones; having mind, will, and emotion—called humans, sons of Adam & etc. The first is by the false decree of men; the second is by the real creation of God.
[3] Our law of nature's God accords: Job 2:21 (the Lord gave, and the Lord hath taken away). From time out of memory, true law has held that the one having power to lend has also the power to take back. In the depths of his calamity, Job declared of his former possessions: “The Lord gave; then the Lord took. The name of the Lord shall become the most blessed.” Job 1:21.  Job affirms the right of the lender to also take away that which he has lent. As such, our law declares that those governing cannot separate the individual from his God-given rights: no man granted these rights; hence, no man can ever take them away. See U.S. Declaration of ‘76, para. 2. See further Brent Allan Winters, Common Lawyer's Bible, Job 1:21 and note accompanying the words the Lord gave, and the Lord hath taken away
[4] Adapted from lecture, Professor William H. Henning. Professor Henning's exact definition of contract at common law is as follows: a promise the courts will enforce. No definition of contracts puts it any more neatly.
[5] See U.S. Const., art I, sec. 10, cl.1 (No State shall...pass any...Law impairing the Obligation of Contracts). See further generally Brent Allan Winters, U.S. Constitution & Declaration of  '76: A Common Lawyer Comments Clause-By-Clause (expounding our Constitution's Contract Clause).

 

Incorporated Church = Corpse not Corpus  

—A Common Lawyer Comments—

Brent Allan Winters

The most fundamental of our God-given freedoms—called fundamental rights—is freedom of association. Freedom of speech from our pulpits and from or courts is at once both the beacon (sign) and the fact (reality) that freedom lives. Incorporation is an act of government. Accordingly incorporation of a church association not only puts that association within the jurisdiction and power of the government, but it also allows government, held James Madison, to violate our U.S. Constitution's First-Amendment Establishment Clause. Indeed, a corporation is a creature or creation of government, a government franchise granting a measure limited liability in exchange for government control. But further, because an incorporated church a government franchise, purporting to help one sect of religion but not all sects, it therefore further establishes a religious sect. Thus does church incorporation violate the Establishment Clause. 

Church Incorporation and 501(c)(3) Status

One lawyer, having listened to Brent's 10-part audio series Corporations and Church Incorporation (found on the "Media" page of this website), responded as follows:

So, a church need not go 501(c)(3); I agree. But you say do not incorporate your church.

He then asked,

How then does the church hierarchy have limited liability?

Brent's Answer: The liability problem is best solved using the trust: trustees hold legal title (called ownership) to church property; church members and those to whom these members minister, hold beneficial title. Trust law of 49 States (except Louisiana, which is not a common-law jurisdiction but a civil-law jurisdiction and thus has no trust law), settlement of a trust creates no corporate fiction or entity to hold property title because the trustee(s) hold title. Indeed, as a matter of law, only the sovereign (the State) can create a fictional corporate body and grant  limited liabilityto it. A trust, however, is not a corporate creature of the State but is an arrangement of relationships among persons and property. An individual trust creator, called a settlor (not settler), creates the trust relationship and does so by either declaring himself trustee of property to which he already holds title or by transferring property title he holds to another individual to serve as trustee. Simply put, he either entrusts the designated property to himself or entrusts it to another, but in either case, he does so for the benefit of a named beneficiary or beneficiaries.

To be sure, although the IRS says that for tax purposes a trust is a corporate entity vis-a-vis the IRS; it remains, nevertheless, not an entity but an arrangement of relationships respecting persons and property vis-a-vis all others. In all events, since a true church is not taxable (whether incorporated or un-incorporated), the IRS's claim that a trust is an entity does not matter. Case in point: the little country church where your writer grew up was un-incorporated (as were most churches back then) and a couple of church members served as trustees, holding title to the church property. A few States have passed legslation allowing un-incorporated churches to hold property as a mere "associations"—a new idea that might spread. Such an association method of holding property title, however, should be suspect because it requires acceptance of a legislative concession, which is tantamount to a privilege (license) from government.

In Sum

Legal title (ownership) to all church property (hard assets: buildings, real property, equipment, vehicles) should be entrusted—by trust indenture well drafted and duly executed—to chosen church members appointed as co-trustees, pursuant to a well-drafted and considered trust document, to hold the church property for the benefit of church members and those to whom they minister.

Arguably, the common law of trusts limits trustees' liability at least as much as corporate law—if not more so—to this extent: Trustees have no liability as long as the paper trail pertaining to entrusted property always reflects—in such a way as to keep the dealings of all others with the church on notice—that trustees are acting only in their capacity as trustees and not in their personal capacities; further, that creditors may look only to the church property for satisfaction of debt. As long as all persons dealing with the Church are notified of these trust requirements, trust law limits trustee's liability. But even beyond that, our common law limits if not bars lawsuits against Churches and there officers.

The common law of trusts also limits beneficiaries' liability in that beneficiaries have no liability as long as beneficiaries (church members and those to whom they minster) have no say in the care and maintenance of church property. This follows the Bible's pattern in that church members are not to shoulder the burden of church property so that they remain unencumbered, enabling their ministering to others to remain unfettered and free. 

Thus, much as law limits corporation liability to its assets and as each shareholder's liability is limited to the amount of his investment, so also a church elder's or member's liability—since they hold no title to the church's property—is limited to the assets of the church.

And in Addition

  1. Illinois and California have the strongest trust law on these points.
  2. The next-best are Arkansas, Massachusetts, Missouri, New York, and Rhode Island.
  3. Thus far, suits for clergy malpractice have found no traction in our courts.
  4. The biggest case in modern times respecting clergy malpractice has been McNally -v- MacArthur (1985); the California Supreme Court deep-sixed it. See following New York Times article: http://www.nytimes.com/1985/05/17/us/judge-dismisses-clergy-malpractice-suit-on-coast.html

 

Our Constitution Settles a Common-Law Trust

(not a civil-law corporation)

—A Common Lawyer Comments—

Brent Allan Winters

Although many liken our Declaration of ’76 to articles of incorporation and our Constitution to corporation by-laws, the better view is that in fact our Declaration of ’76  is a common-law complaint to be decided, if necessary, in trial by battle; and our Constitution settles a common-law trust. Indeed, the analogy to the idea of a corporation, being Babylonian in origin and Roman in development—a faceless façade, designed to enable the powers-that-be easier domination and control of a people—is foreign to the common-law first principles our Declaration of ‘76 and Constitution both rest on and affirm. Bottom line: attempts to make analogy of our Declaration of ’76 and Constitution to corporate law is as unnecessary to understanding these writings as it is dangerous in applying them: unnecessary because the principles of common-law trusts govern these documents—not by analogy but in fact—; dangerous because use of Roman law encourages the doctrines and devises of imperial control of persons, and thereby of their property.

The grievances of which our Declaration of ’76 complains have been decided, according to the demands of common-law due process through trial by battle, in America’s favor. And by this result the right accrued to the Americans to settle the peace between them and the British in separation from Britain and their nation affairs in trust.

Accordingly, our Constitution, by the words of its Preamble, settles a perpetual common-law trust by declaration, its settlors declaring themselves initial trustees, while providing for the process of appointing successor trustees in the body of the trust document. In fact, our Constitution's Preamble provides the three certainties indispensable to the settling of a common-law trust: (1) certainty of intent to entrust rights in property (or property in rights) for the benefit of another (2) certainty of rights in the property (property in rights) entrusted, enabling clear identification and distinction from other property; (3) certainty of beneficiaries of the entrusted property.

First, certainty of trust intent is seen in the Preamble’s words do ordain and establish this Constitution for the United States of America. Second, certainty of entrusted rights in property (property in rights) is seen in the words tosecure the Blessings of Liberty. Third, certainty of identity of the beneficiaries is seen in the words to ourselves and our Posterity: those People of the United States then ratifying our Constitution and those People of the United States coming after them.

Further, in addition to the foregoing three indispensable certainties to the validity of a common-law trust, the settlors of this trust cinch its stability by articulating the trust purpose: to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty; and by identifying the trust settlors: We the People of the United States. At bottom, the People comprises the then-members of the Militia of the several States, those having ratified our Constitution.

The initial trustees of this trust are the settlors by their agents, the signers of our Constitution, who have provided for the appointment of successor trustees in the body of the document called our Constitution.

Finally, and of no mean importance to the continued force of this national trust, is the duty of the beneficiaries—every wit as necessary to the trust achieving its purpose as is the duty of the trustees to obey the trust indenture, called, in this instance, our Constitution—: to enforce the trust, that is, to insure that the trustees fulfill their charge under the terms of the written trust indenture (our Constitution), according to the common law of trusts.

Indeed, because Americans, under the terms of this trust indenture, are joint owners of the beneficial title our Constitution bespeaks, the common law of trusts binds each one under a duty to protect this interest against all enemies, whether foreign (as a member of the militia of the several States by force of arms) or domestic (as a member of the Jury by force of independent judgment).  And not to be overlooked, by protecting the legal title of the trustees, beneficiaries protect their own equitable title because neither title can continue without the other.    

  


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