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Has our Spendthrift Trust ever been challenged by the government and was it successful? 

Trust Law is not subject to any Federal, State or Local court and no judge or court may issue a turnover order against a Spendthrift Trust. The Benson Financial Spendthrift Trust is sold, by a certified and contracted distributor, appointed by a licensed attorney, as a legal document; the Spendthrift Trust is created for the client by the Attorney unlike others who sell illegal documents or trusts by those who are not certified distributors or licensed attorneys. The IRS examined our Spendthrift Trust for compliance. A former District Director purchased one for himself. We have prosecuted vigorously those who have infringed on our Copyrighted Trust and prevailed in Federal court each time even when the defendants claimed invalid, it was found valid. The Federal cases are sealed.

 

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What is the difference between Tax Evasion and Tax Avoidance?

-Tax Evasion is the deliberate non-payment or underpayment of tax through illegal means: Underreporting income, Claiming credits you're not legally entitled to, Concealing (illegally hiding or fraudulently conveying) financial or personal assets, Claiming residency in another state, Using cash extensively, Claiming more dependents than you have, Maintaining a double set of books for your business.

-Avoidance of tax is not a criminal offense. Taxpayers have the right to reduce, avoid, or minimize their taxes by legitimate means. One who avoids tax does not conceal or misrepresent but shapes and pre-plans events to reduce or eliminate tax liability within the parameters of the law.

 

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Who benefits from these structures the most?

It used to be said that only the ultra-wealthy, high net-worth, ultra-high net-worth, or the rich & famous could use trusts the way we structure them; creating "trust fund babies", generational wealth and multi-generational wealth. But in reality, this is exactly what our financial system wants you to believe. So, who can benefit? As a lower threshold entry:

• Businesses who generate $300k+ in revenue and pay more than $20k in taxes annually.

• 1099 employees who earn $300k+ gross income and pay more than $40k in taxes annually.

• W2 employees (households) who earn $150k+ gross and paid more than $30k+ in taxes annually.

• Investors who paid or had to take strategic deductions to offset or defer $30k+ in taxes.

• Anyone deriving their income from passive investments who paid/owed $30k+ in taxes.

Anyone below these thresholds can still benefit from restructuring with us, especially if you foresee that your income or taxes will significantly increase in the next few years. We can help you prepare for the future.

 

 

What is a "Trust Fund Baby"?
A "trust fund baby" refers to someone who benefits from a trust fund established by their parents or guardians, often associated with wealth and privilege. It can carry a negative connotation, suggesting someone is spoiled, entitled, and doesn't have to work. While some trust fund beneficiaries may live lavishly, many work and manage their own lives, and the stereotype doesn't accurately reflect everyone with a trust fund.

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Is it legal to use a Spendthrift Trust to avoid or reduce taxation?

Yes. There are Supreme Court cases that shaped laws which protect the use of Spendthrift Trusts for both tax avoidance, reduction and asset protection.

• Weeks v. Sibley DC 269F. 155, Edwards V. Commissioner. 415 F. 2d, 532 10th Cir. (1969) and Philips v. Blanchard 37 Mass 510, the courts ruled that "a Spendthrift Trust Organization is not illegal even if formed for the express purpose of reducing or deferring taxes."

• Edison California Stores, Inc. v McColgan. 30 Cal 26472.183 P2d 16. ruled that “persons may adopt any lawful means for the lessening of the burden of income taxes”

• Pursuant to Narragansett Mut. F. Ins. Co. v. Burnhamun 51 RI 371, 154 a 909, “It is not an evasion of legal responsibility to take what advantage may accrue from the choice of any particular form of organization permitted by law.”

• The Department of the Treasury, IRS Handbook for Special Agents §412, Tax Avoidance Distinguished from Evasion states; "Avoidance of Taxes is not a criminal offence. Any attempt to reduce, avoid, minimize, or alleviate taxes by legitimate means is permissible.”

 

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Are Trusts expensive to set up and/or maintain?

“Expensive” is a relative term. While our services vary from client to client depending on the complexity of their: income streams, business structures and variety of assets, some clients may find that our services and products to be inexpensive due the perceived and received value, whereas others may find it not suitable and therefore potentially expensive for them.

Maintaining the Trust is relatively inexpensive compared to other tax filing fees.

We offer many avenues and opportunities for financing; we want to serve and help as many families, businesses and investors as we possibly can.

The main take-away should be "does the value outweigh the initial investment?". A phone call with us will help you to make that decision.

 

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Is our Spendthrift Trust legally compliant?

Yes. Our Trusts are compliant with:

-Scott on Trust Law

-Internal Revenue Code 643

26 USC 643: Definitions applicable to subparts A, B, C, and D

-Constitutionally protected under Article 1 Section 10 - the Right to Contract without interference

 Overview of Contract Clause | Constitution Annotated

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Will establishing a trust reduce or eliminate income taxes or self-employment taxes.

The safe short answer to this is “We can’t answer that question”.

“Why?”, you ask. Well, what type of Trust are we looking to establish? Irrevocable? Revocable? Spendthrift? Cook Island? Living Trust? Family Trust? DST? Dynasty Trust? Offshore Trust? There are over 50 types of Trusts and each has its specific and limited capabilities. And any one of them can easily be used incorrectly. Most attorneys who establish trusts for you, don’t include teaching you how to use them in their price and will charge you an astronomical hourly rate when you want education.

BUT, establishing and implementing our Trusts, and filing taxes as we advise, absolutely will provide tax benefits.

 

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Can you transfer your income into a trust, thus eliminating income taxation on that income?

No. You cannot transfer your income into a trust and then claim non-taxable income. That’s the textbook definition of evasion.

We will guide you on how to redirect your cash flow. There is actually a difference.

If you own a business, we help you restructure your cashflow so that money is paid INTO a Business Trust (instead of your LLC, SCorp, CCorp, etc) as a pass-through entity initially. Profits are then transferred to your Beneficial Trust by means of Extraordinary Dividends [§643(a)(4)], then you spend money out of your Beneficial Trust as either Trust Expense or Non-Trust Expense. You are only taxed on income you receive (not income received into the Trust) as a k1 distribution from the Trust.

The Beneficial Trust is not taxable, it is essentially an escrow account.

 

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Will I retain complete control over my income and assets with the establishment of a trust.

Mostly, Yes.

Upon establishment of your Spendthrift Trust, all assets will be sold to the Trust and held, you will be issued a Promissory Note for the cost basis value of all assets (a legal “IOU” from the Trust to you), and all assets now belong to the Trust.
Regarding income, “control” is a tricky word. If you are a W2 income earner, your income is paid to you, the employee, by your employer. There’s no way around that. You can, however, reduce your taxable income up to 60% (IRC170). There are obviously other ways to reduce your taxable income by funding “Qualified Retirement Accounts” ex. IRA, 401k, 403b, etc, but we’re focusing on trusts and income.
If you’re a 1099 income earner, business owner (LLC, SCorp, CCorp) you do maintain complete control over your income and how it’s taxable.

When the Trust is established, a Grantor (typically one of our staff), will establish your Trust, assigning you a Trustee (manager and fiduciary) to the trust where you now maintain control of the assets within the Trust at your discretion (for the benefit of the Beneficiaries and/or successor Trustee [next in line]). Not all trusts are built where you have control over the assets once they're transferred into it. However, ours is. YOU own nothing, but YOU control everything.

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What is the likelihood of an IRS audit?

• 1%-3% of Small businesses (LLCs and Sole Proprietorships) that generate more than $100k on an annual basis are more likely to be audited and those known for underreporting income, keeping poor records, and overstating deductions/expenses: Businesses such as restaurants, convenience stores, bars and clubs, and thrift stores are also at a higher risk of being audited because they regularly receive or make cash payments.

IRS Small Business Audit: How Likely Are You to be Audited? - Wiztax 

• Estate and trust income tax returns (Forms 1041) have an audit rate of approximately 0.1% (These are trusts bound by legislative law).

• We have only experienced ONE audit in 100,000 clients, and the result was “no change”.

 

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If this is such an amazing tool, why doesn’t everyone have one?

• Lack of Awareness: Many people, even those with financial advisors, have never heard of these tools. The strategies aren’t typically taught in schools, and many traditional financial planners stick to more conventional advice, often avoiding advanced strategies like trusts or Infinite Banking. Their unawareness doesn’t constitute illegitimacy of our practices.

• Perceived Complexity: Trusts, specifically our Spendthrift Trusts, can seem intimidating. The legal jargon, setup process, and ongoing administration might deter people, even though the benefits far outweigh the complexity when properly implemented. In reality, maintenance is less compared to an LLC or and SCorp.

• Misinformation or Skepticism: There’s a lot of skepticism around strategies that promise tax benefits or asset protection. And rightfully so, Google has made available ALL information, good bad, correct, incorrect, which anyone can blog about, or write misleading articles, and many of those without proper credentials or even selling a different product. And if you’re not aware, Google’s return algorithm begins with paid ads first, then goes by popularity, location, page loading time, relevance… but not necessarily how true the information is. Many assume that some of these structures or strategies are “too good to be true” or only available to the ultra-wealthy, which isn’t the case.

• Upfront Costs and Maintenance: Setting up our Spendthrift Trust(s) requires an upfront financial commitment. Depending on your financial position, it could be “expensive”, or for people who are unfamiliar with the long-term benefits might balk at the initial cost. We help you understand VALUE vs COST and show you how inexpensive it can be for you when used and structured correctly.

• Misaligned Financial Advice: "Traditional" CPAs and Financial Advisors often recommend what they know, what they’re allowed to promote, sell, and advise on, and what aligns with mainstream strategies. If an advisor isn’t well-versed with Infinite Banking or Trusts, they may not even mention them as options. Some Advisors, Lawyers, Attorneys and CPAs have gone as far as to attempt to discredit the use of Spendthrift Trusts through fear tactics, clouding of facts, inciting confusion all in their own fear of losing business.

• Cultural and Habitual Norms: Most people are conditioned to follow traditional financial paths, typically “qualified retirement plans”🔗 - 403(b)s, 401(k)s, IRAs, and basic estate planning. Breaking away from the “norm” to adopt something like a Spendthrift Trust or Infinite Banking often requires a mindset shift and to begin investing in assets that aren’t taxable.

• Perceived Exclusivity: Some believe these strategies are only for high-net-worth individuals. While it’s true that trusts can be especially beneficial for wealthy families, they’re not exclusive to them. There is some inherent exclusivity; this is not for everyone.

• Legislation and Misuse Concerns: There’s a fear that laws might change, or the government might scrutinize these strategies. However, the laws that are in place to protect Trusts literally took an act of Congress and are supported by Supreme Court cases. While Spendthrift Trusts and Infinite Banking are entirely legal, misuse or misunderstanding can create anxiety.

 

Can you get in trouble for moving assets into a Trust?

The short answer is, yes, it is possible, but if done correctly, as we teach and guide, no.

The real question is, “how do you move assets into a trust legally?”. To help answer this question we need to define what makes the transfer of assets a red-flag, or questionable.

“Fraudulent conveyance is the transfer of property to avoid paying a debt or to delay or hinder a creditor. It's also known as a fraudulent transfer.”🔗

What are the penalties for Fraudulent Conveyance? The creditor can sue to void the transfer, or the bankruptcy court can reverse the transfer.

Some examples would be: a business owner sells valuable assets to a family member for a fraction of their value, a debtor transfers a bank account to a friend but continues to use the funds, a debtor gives away all their assets, a debtor owns a vacant lot that they inherited from their mother. They then convey the vacant lot to a friend who secretly agrees to return the vacant lot after the creditors give up.
HOW TO TRANSFER ASSETS LEGALLY.

Use a Reasonable Timeframe: Avoid transferring assets during pending lawsuits, collection actions, or when creditors are actively pursuing claims. Transfers made when no legal or financial issues are imminent are less likely to be scrutinized.

Transfer Assets Correctly: We provide the documentation and guidance for this process.

Real Estate: Deed the property to the trust, ensuring proper documentation and title transfer. Bank Accounts: Open accounts in the trust’s name or rename existing accounts.

Stocks/Bonds: Update ownership records through your broker or financial institution.

Business Interests: Amend ownership documents (e.g., operating agreements, stock certificates).

Personal Property: Prepare a formal assignment document for valuable personal property.