Mid-Atlantic

Beware Of Abusive Trusts & Con Artists

Now We Will Take A Look At The Incomparable Ignorance Of Ginger Applegarth You Can Visit Her At: Moneycentral.Com

Notice that I show you the court cases and the law on everything I say. Don't take anybody's word unless they show the proof. Mid-Atlantic will always show you the law, because we are giving you the truth.  

If the Internal Revenue Service catches on while you're alive, you'll have to pay all of the back taxes, interest and penalties on income you didn't declare because you thought it belonged to the trust.

Answer:  How does she know this? Where does she get it? Certainly not from the IRS, they would never admit to that, and where is the law or IRS Codes to back her claim? I don’t see them, therefore, this is her opinion and it’s dead wrong. Here is the proof and the LAW: 

"One of the objectives of a ‘Business Trust’ 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 restrictions and regulations generally imposed by law upon corporations."13 am jur 2d, page 379, paragraph 51 

Well, based on the above from non other than the legal industry itself, the Pure Trust has the advantages of a corporation. Now would the above apply to a Corp., if you were a stockholder? Of course not, than it wouldn’t apply to a Business Trust, which is what a pure trust is. 2. She says: 

If you die before the IRS or creditors challenge your trust, your heirs will receive the unpleasant and unexpected news that, yes, all the taxes, interest and penalties you avoided during life will be taken out of your estate before they get a penny.

How does she know this? Where is the IRS Code for this? Where is the law to back this statement? Again, her opinion and she’s dead wrong again.

 Want proof? Here it is: Certificates are personal property and convey no interest in the trust property.Parker v. Mona-Marie Trust, 278 SE 321 

Dignity of contract can not be set aside because a tax benefit results either by design or accident Edwards v. Commissioner, 415 F. 2d 578, 582 10th Circuit (1969)                        

 A Pure Trust is not illegal if formed for the express purpose of avoiding taxation.Weeks v. Sibley, (D.C.) 269 F, 135       

Certificates are personal property and convey no interest in the trust property.

Parker v. Mona-Marie Trust, 278 SE 321  

If you set up a Pure Trust you are the certificate Holder, if the certificates convey no interest in the trust property then how can their be an estate tax after death or anything taken from you heirs as the case above states.  

Certificates in exchange are not taxable until a realized gain has occurredBumet v. Logan, 283 U.S. 404 (1931)  Certainly no gain occurs after your DEAD!   3. She says: 

 All the assets in your pure trust were really owned by you anyway, so they have to go through probate, creditors get a shot at them and they are subject to estate taxes.

This one is really dumb, everybody knows that even a Living Revocable Trust by-passes probate, and how could an irrevocable trust like the Pure Trust be subject to probate? This is laughable!

 According to the generally accepted view, that is, the "control test," the status of a Pure Trust for the purposes of determining the liability of the shareholders depends upon who has the power of control over the business and property of the Trust. If the ultimate power of control is vested in the trustees, who also hold the legal title to the trust property, the organization is treated as a True (Pure) Trust, rather than as a partnership, and the shareholders are not liable for the debts or contractual obligations incurred by the Trustees.American National Trust and Savings Association v. Scully (Ca 10), 92 KF 2d 97 (Law of Calif); Goldwater v. Oltman, 210 Cal. 408; Schumann-Heink v. Folsom, 328 111. 312; Commercial Casualty Ins. Co. v. Pearce, 320 111. App    

If the Trustees have the power and control, and legal title to the property is vested in them, than how can you own the property in the trust? You can’t, it’s owned by the trust, which is the Trustees, not you. That’s what these three cases above are saying. Do you want to believe her or the courts?    4. Now she says:  

Promise: Your pure trust will be completely exempt from taxes. You won't pay a gift tax when you transfer assets into the trust. The pure trust will never owe any income tax, and no estate tax will be imposed on the trust at your death

Fact: True! That's because your pure trust does not exist as a legal entity. It's not a trust, as the IRS explains: "A so-called pure trust is an arrangement that purports to create a separate entity without actually altering the taxpayer's control over the property or business transferred to the pure trust. Generally, the trust issues certificates that represent ownership of the trust...The pure trust may be treated as a sham for federal tax purposes depending on the trust terms and its actual operation. Therefore, the taxpayer who transfers property or business to the trust must report all the income earned by the trust and is liable for the taxes."

 She says the trust doesn’t exist, as the IRS explains, where does the IRS explain this? Why didn’t she show us the IRS explanation? Have you seen it? Look for it? Call the IRS? Ask them for that explanation. Well, here we go again, I will show you the law. 

"A Pure trust is non-statutory. The court holds that the trust is created under the realm of equity under common law and is not...created by legislative authority."Croker v. MacCloy, 649 US Supp 39 

A Pure Trust is a contractual relationship in trust form.Berry v. McCourt, 204 NE 2d 235 (1965)  

A Pure Trust may apply to a Court of Equity for an action of declaratory judgment to establish the meaning of an intent of indenture.Dunbar  v. Refield, 61 P 2d 744 

How can an entity apply to a court of equity that doesn’t exist? Are you laughing yet? 

She says: IRS explains: "A so-called pure trust is an arrangement that purports to create a separate entity without actually altering the taxpayer's control over the property or business transferred to the pure trust. Generally, the trust issues certificates that represent ownership of the trust...The pure trust may be treated as a sham for federal tax purposes depending on the trust terms and its actual operation. Therefore, the taxpayer who transfers property or business to the trust must report all the income earned by the trust and is liable for the taxes."

  

See the bold red part above, here she contradicts herself, yes it could be a sham, depending on the trust terms and its actual operation. That one is true. But then she goes on to say; Therefore, the taxpayer who transfers property or business to the trust must report all the income earned by the trust and is liable for the taxes."

 Has she seen every Pure Trust in America? How can she say none of them are operated properly, and the terms are wrong?

She’s really starting to get STUPID here. 

It is established by legal precedent that Pure Trusts are lawful and valid business organizations.Reeves v. Powell, 267 SW 328 (1924)  

The Pure Trust doesn’t exist? Well the courts don’t agree with her. 

5. Now she says: 

The pure trust has no tax requirements because it doesn't exist as a separate legal entity. It's as if I decided to set up an account with my nickname "Ginger," instead of my legal name "Virginia." Same person, same Social Security number. I can't get a separate Social Security number for Ginger Applegarth because I am not a separate person or legal entity from Virginia Applegarth, as handy as that would be at times.

The above three cases I have shown you before, prove the Pure Trust exists and is a separate legal entity from those who compose it.

In the case of the United States National Bank of Omaha vs. Andrew Kaminski, Civil Action # 77 cv. 1830, District court of Jefferson County, Colorado, June 17, 1980, the bank alleged that Kaminski owed them $20,000 dollars. When he had no personal assets to seize after they obtained judgment, they tried to seize the assets of an Equity Pure Trust that Mr. Kaminski had set up a few years before. The bank's action failed and they were unable to penetrate the trust. Look the case up; don’t take my word for it. Here is another one: 

To further illustrate how creditors or the IRS cannot penetrate a Trust that has been established by the Exchanger at a time when he was personally solvent, the case of Mr. John M. King is an example.  In 1969 oil entrepreneur John M. King was worth 300 Million Dollars. In September 1971, he became involved in bankruptcy proceedings. Despite personal bankruptcy that began in June 1971 Mr. King testified thereafter that he and his wife and four children still lived in an elegant, walled estate in a Denver suburb and had the use of vacation places in Palm Springs and La Jolla, California, as well as property in Vale, Colorado and Maui, Hawaii. He was able to do this because although his personal assets were currently tied up in bankruptcy court, Mr. King had, according to him, given 80% of his assets to various Trusts, which he had established several years prior, for the benefit of his children. Thus, when creditors with claims of 42 Million dollars, including 5.3 Million dollars allegedly owed to the IRS, tried to collect, they discovered they could not penetrate the trusts that held these former assets. This proves that a Pure Trust, properly established, is a separate legal entity from the Exchanger, and the assets that have been placed in this Trust are immune from seizure. 

Well boys and girls, I think we destroyed the credibility of this idiot.I know that may sound like crude name calling to some of you, but IT IS THE TRUTH.  

Another case they show is: AEGIS TRUST PRINCIPALS AND OTHERS INDICTED IN $68 MILLION
TAX FRAUD CONSPIRACY FOLLOWING NATIONWIDE UNDERCOVER INVESTIGATIONRegarding domestic trusts - known as "common law business organizations," "business trusts," and "CBOs" - the Vallone indictment alleges that the defendants and their associates conducted seminars and distributed Aegis promotional materials to recruit clients. After selling trusts and trust management services to these clients, they assisted in hiding clients' income in various trusts and in transferring the clients' businesses, homes, and other assets into trusts, or to bank accounts corresponding to trusts. They further counseled their clients in making it appear on trust tax returns that the clients had passed their business income through a series of trusts which ultimately paid little or no taxes. Many clients allegedly were given falsely notarized trust documents, and in some cases, clients were given trust documents that were backdated, enabling them to benefit from the purported tax advantages before the date that the trusts were actually purchased from Aegis.The defendants allegedly designed the trusts by naming Bartoli and Parker or another Aegis attorney as nominal trustees. At virtually the same time, or even before, a client transferred assets and/or income to a trust, the Aegis attorney resigned and appointed the client as the new trustee, effectively giving the client management and control of the assets in the trust and the trust's bank accounts, as well as the full use and benefit of the income that was assigned to the trust.

Well, if they did what it says above, I can see why they went to jail.After being Trustees, they then appointed the clients who were the exchanger’s trustees, so they controlled the trust. Can’t do it, anyone who has a Trust with Mid-Atlantic knows we don’t do that.

As part of the conspiracy, the defendants allegedly helped their clients claim false deductions on the trusts' federal tax returns. These deductions included such ordinary living expenses as household utility expenses, repairs and lawn maintenance costs for the clients' personal residences, which had been designated the "world headquarters" of the trusts. Other allegedly false deductions included the cost of college tuition for the clients' children, under the guise that the children would become directors of the trusts in the future. The defendants also helped clients claim false charitable deductions on trust returns, purportedly for money given to legitimate charities. Such false deductions included the costs of vacations taken by Aegis clients to places such as Hawaii, under the guise that, during their vacations, the clients were looking for legitimate charities to which to donate money. In reality, the charitable trusts established by defendants for their clients were simply additional entities under the control and management of the clients, which served as vehicles for the clients to invest or spend their untaxed income, according to the indictment.

Again, if they did the above, it’s not right. How can you claim false deductions on a Pure Trust tax return. A Pure Trust doesn’t file a tax return, unless you are both the exchanger and the trustee, if so, then it’s not really a Pure Trust, it’s a Grantor Trust. So they messed up. And these guys were using lawyers, shows you what they know.As far as utilities and lawn maintenance on the home if it’s in a Pure Trust, and if you are paying the Trust rent, these are your obligations, not the trusts. It doesn’t say the home was in the trust, because it says personal residence. I think what they were doing is using trust funds to pay these things, thinking it was deductible because of the trust, and the home was actually still in their name. Ludicrous! Well I heard enough of this case, I would have put them in jail also. This says nothing bad about the Pure Trust.    

                        I also changed the above because it’s a lie, and I can prove it

                       Just with my clients.

Internal Revenue Service
Criminal Investigation DivisionSummary of Abusive Trust Schemes Introduction In the last few years the Internal Revenue Service Criminal Investigation (CI) has detected a proliferation of abusive trust tax evasion schemes.  Currently, there are two prevalent fraudulent schemes being promoted:  the "domestic scheme" and the "foreign scheme."  The domestic scheme involves a series of trusts that are formed in the U.S., while the foreign trust scheme is formed offshore and outside the jurisdiction of the U.S.  The trusts involved in the schemes, either foreign or domestic, are vertically layered with each trust distributing income to the next layer.  The result of this layered distribution of income is to fraudulently reduce taxable income to nominal amounts.  Although these schemes give the appearance of the separation of responsibility and control from the benefits of ownership, these schemes are in fact controlled and directed by the taxpayer.These schemes are often promoted by a network of promoters and sub-promoters that may charge $5,000 to $70,000 for their packages.  This fee enables taxpayers to have trust documents prepared, to utilize foreign and domestic trustees as offered by promoters, and to use foreign bank accounts and corporations.  In some instances, tax return preparer services are also made available.Basic Trust Taxation To understand fully the trust schemes offered today, it is important to focus on some basic trust taxation rules.  A trust is a form of ownership, which is controlled and managed by a designated independent trustee that completely separates responsibility and control of assets from the benefits of ownership.  The IRS recognizes numerous types of legal trust arrangements, and they are commonly used for estate planning, charitable purposes, and holding assets for beneficiaries.  The independent trustee manages the trust, holds legal title to trust assets, and exercises independent control.

This is absolutely correct and this is the way we do the Pure Trust. The IRS here is not agreeing with Quatloos at all. All income a trust receives, whether from foreign or domestic sources, is taxable to either the trust, the beneficiary, or the taxpayer unless specifically exempted by the Internal Revenue Code (IRC). 

This is true for most trusts, but if a Pure Trust is done right, the Pure Trust has no tax filing requirement. But and money distributed to any person or entity who is a taxpayer that person or entity must file and pay the tax only on what they receive from the trust. If this was written by the IRS they are speaking generic here, so they can fool you.