Creating The ONE TRUE Common Law Trust Aligned With The Divine

​

 

The following court cases are the results of many months of intensive study and research.  This outline list is but a few of the hundreds of court cases dealing with the Pure Business Trust Organization.  Most of the case law on the Pure Trust Organization was decided approximately 50 or more years ago, as they became more known and were becoming more widespread in their use by the wealthy.  These cases have with stood the test of time concerning the important legal aspects.  As the reader probably knows, the truly valuable court cases are older.  The longer a case remains without being overturned, the more solid is its legal basis and reasoning.  While the following cases are quoted more for the use of attorneys and CPAs to review some of the legal issues involved in statutory trusts versus business trusts, we believe the variety of cases below will offer those unfamiliar with tax laws at least some confidence in both the legality as well as the viability of unincorporated business trust organizations, known as the Pure Trusts.  To the non-professional, we again affirm that the business trust is viewed as being a different legal entity than the statutory trust.  The many laws and statutes which offer so much restriction of and requirements for statutory trusts generally do not apply to the business trust.  The reason, in a nutshell, is simple: the business trust or “pure trust” is really not a trust as much as it is a common-law contract functioning in the form of a trust.  As the government agencies, especially the IRS, became familiar with the business trust, they attempted to treat them as if they were statutory trusts subject to the many tax laws and legal restrictions to which statutory trusts were subject.  The early business trusts had to wage legal war against the IRS so we wouldn’t have to today.  For that we thank those business trust pioneers.

 

 

Valid and Legal Instrument

 

1.  Crocker v. Malley, 249 U.S. 223 (1924): The United States Supreme Court upheld the Massachusetts Trust as a valid legal entity.  In this case the court held that the trust organization was not an association, but was in fact a Pure Trust Organization      

 

.2.  Hecht v. Malley, 265 U.S. 144 (1924):  It is distinguishable from other express trusts, and these trust organization instruments are held to create "pure trusts" if  trustees are the principals and are free from the control of the certificate holders.   The Hecht R. E. Trust was established by the members of the Hecht family and was primarily a family affair, according to the United States Supreme Court.

 

3.  Schumann-Heink v. Folsom, 159 N.E. 250 (1927):  This type of trust organization is also sometimes referred to as a "common-law trust" because it finds its basis in the law of contract and does not depend upon any statute for its existence.

​

4.  Hill et al. v. Reynolds, 75 F.Supp. 408 (1948):  The character of the trust for income tax purposes is dependent upon the phraseology of the trust organization instrument (i.e., whether or not the instrument creates a "pure trust").

​

5.  Bouchard v. First Peoples Trust, 148 N.E. 895 (1925):  The Supreme Judicial

Court of Massachusetts stated that "the declaration of trust in the case at bar is different from any hitherto considered by this court" (not a statutory trust) and was a valid legal entity.

​

6.  Goldwater v. Qitmun, 292 P. 624 (1930):  The California Supreme Court stated that a business trust is lawful “in a state the statutes of which permit trusts to be created for any purpose for which a contract may lawfully be made."  (NOTE: This includes all states, as the U.S. Constitution forbids any State to enacts laws inhibiting the formation and execution of contracts for any and all legal purposes.)

​

7.  Smith vs. Morse, 2 CA 524:  “A Pure Trust is established by contract, and any law or procedure in its operation denying or obstructing contract rights, impairs contract obligation and is, therefore, violative of the United States Constitution.“

​

8.  Navarro Savings Assn. v. Lee, 446 U.S. 458 (1980):  “…a business trust is a citizen of every State in which its shareholders reside…”.

 

 

Non-Statutory in Nature

 

1.  Crocker vs. MacCloy, 649 US SUP. 39 at 270:  A Trust organization, consisting of a  U.S. Constitutional right of contract cannot be abridged.  The agreement when executed becomes a Constitutionally protected organization and not under the laws passed by any of the several legislatures.

​

2.  Elliot vs. Freeman, 220 US 178:  A Pure Trust is not subject to legislative control.  The United States Supreme Court holds that the Pure Trust Relationship comes under the realm of equity, based upon the common law, and is not subject to legislative restrictions as are corporations and other organizations by legislative authority.

​

3.  U.S. vs. Carruthers, 219 F2d 21:  "Concerning privacy, a Trust organization, created under the United States Constitutional right to contract, can not be abridged...The agreement, when executed, creates a Federal organization not under the laws passed by any of the several legislatures."

 

4.  Crocker v. Malley, 264 U.S. 144:  "The Pure Trust derives no power, benefit, or privilege from any statute".

​

5.  Smith vs. Morse, 2 CA 524:  A pure Trust is established by contract, and any law or procedure in its operation denying or obstructing contract rights, impairs contract obligation and is, therefore, violative of the United States Constitution.

​

6.  13 Am Jur 2d, pg 379, Paragraph 51:  "One of the objectives of Business Trusts is to obtain for the Trust associates most of the advantages of corporations, without the authority of any legislative act and with the freedom from the restrictions and regulations generally imposed by law upon corporations."

 

  

Exchange of Property

 

 1.  Burnet v. Logan, 283 U.S. 404:  The United States Supreme Court ruled that if property received in exchange has no fair market value, it does not represent taxable gain to the recipient.  Hence, trusts can exchange trust certificates for property received without the exchange being taxable to either the exchanger or the trust.

​

2.  American National Bank of St. Joseph v. U.S., 92 F.Supp. 403 (1950):  "Market value" for the purpose of internal revenue law, is the price at which a seller willing to sell at a fair price and a buyer willing to buy at a fair price (both having reasonable knowledge of the facts), will trade.

​

3.  C.I.R. v. Marshman, 279 F.2d 27:  The gain is measured by the fair market value of the property received, not by the fair market value of the property transferred.  The trust certificate had no established value and therefore specific gain could not be established.

 

 Gift Tax Considered

 

1.  Palmer et al. v. Taylor et al., 2699 S.W. 996 (1925):  The organization of the

common law (business) trust was held not unlawful.  Subscription to stock in common-law trust was held to be not a gift but an investment.

​

2.  Tyson v. Commissioner, 146 F.2d 50 (1944):  Gift tax applies only to transfers by gift with less than full and adequate consideration.  Exchanges with a business trust that involved a trust certificate could not be viewed as a gift.

​

3.  Est. of Anderson, 8 T.C. 706(A) (1947):  Even bad bargains in a genuine business transaction are held not to result in taxable gifts.  Where the value of the stock was in excess of the consideration, the transfers were made in the ordinary course of business and are not subject to gift tax.  (Leon Jaworski argued this case against the IRS.)  

​

 4. Scanlon v. Commissioner, 42 U.S. Board of Tax Appeals 997 (1970):  No gift tax applied when the property was transferred to a disconnected and isolated entity, where consideration was not lacking.

 

 

Estate Tax Considered

 

1.  Old Ken Bank & Trust Company v. U.S., 430 F.2d 392 (1970):  Federal estate tax is an excise on transfer of interests in property which occurs as a result of death.   (Note:  Interest in property is transferred to the Pure Trust Organization before death.  Therefore, estate taxes cannot be involved.)

​

2.  Second National Bank of New Haven v. U.S., 422 F.2d 49 (1970):  The rationale of federal estate tax is not a levy on property of the estate, but on transfer at death.

​

3.  Babb v. U.S., 349 F.Supp. 792 (1972):  Property interest terminating on or before death is not a property subject of federal estate tax.

​

4.  Igleheart v. Commissioner, 77 F.2d 704 (1935):  The measure of estate tax is the value of all the property owned by the deceased at the time of his death.  (Note:  Property that is owned by the Pure Trust Organization cannot be included in a deceased estate.)

​

5.  MaCaughn v. Fidelity Trust Company, 34 F.2d 443 (1929):  The transfer tax is determined by the value of property or interest transferred at the decedent's death.   (Note: Property is transferred to a Pure Trust before death.)

​

6.  Shaw vs. Paine, 12 Allen (Mass) 293:  "A Trust, for probate avoidance, is a lawful, irrevocable, separate legal entity."

 

Taxation in General

 

1.  Hellmich v. Hellman, 18 F.2d 239 (1927):  Treasury Department regulations,

construing laws relating to taxation, are not conclusive.  Doubts in taxation statutes are resolved in favor of the taxpayer.  Courts also, if possible, avoid interpreting tax statutes to result in injustice

​

2.  Raymond Pearson Motor Company v. Commissioner, 246 F.2d 509:  Taxpayers are not required to continue that form of organization which results in the maximum tax.

 

Rule Against Perpetuities

 

1.  Liberty National Bank & Trust Company in New York v. New England Investors, Inc., 25 F.2d 493:  Such trust organizations do not come within the rule against perpetuities, having no application to such a trust organization.

​

2.  Baker v. Stern, 216 N.W. 147:  Such a trust organization in personality does not fall within the condemnation of the rules where it is terminable at any time by the trust indenture articles.  Legal and beneficial interest is vested immediately, and the rule against perpetuities does not apply to business trusts.

 

This document was prepared from a number of publications available on the topic, as well as from extensive research. 

 

These documents, parts 1-5, were prepared for you by WTPT Solutions to assist you to the knowledge of an Unincorporated Business Trust Organization, UBTO.  It is meant to give you a simple, easy, light education to those wishing to explore the UBTO and choose to take back their authority and live a different lifestyle.  As we have stated many times the UBTO is not just a document, the document is worthless without the implementation of your Divine Authority and living in it.   WTPT Solutions and its officers DO NOT offer Legal or Financial advice in any way.  It is up to the individual to obtain the knowledge needed to implement their UBTO correctly and all that lifestyle encompasses. 

​

​