I heard that if the Trust pays the taxes on the profits earned, then when it is dispersed, it is not taxed again. Is this true? We don’t want any issues with the IRS.
Ah well, this indicates that you have not read the trust eBook. The seriousness, sincerity, and thoroughness of your questions show that you are determined to create a perfect arrangement . . . and so if you are that dedicated and that determined, you should at least take a few hours and read the eBook. It is available in the trust section of the website for download as a pdf.
You will not have any issues with the IRS (and for clients in other countries, this applies to your tax agencies too) if you understand the Natural Law Trust (NLT) correctly and if you set it up and operate it correctly. One of the biggest mistakes you could make is to get a Natural Law Trust and engage even in one communication with the IRS about it. The only exception is the application for the EIN, which is for banking purposes only. So the IRS will know of the existence of the name, and one or two facts, but nothing more. Most of the information about who the officers are, what the assets are, and what is being done with them, is unavailable to the IRS and is never disclosed to them.
So whatever you have heard, did not apply to the NLT. It must have been some other trust you were referring to. The NLT has no paying or filing requirements, as clearly explained in the eBook. “The only rights you have, are the rights you know you have.” Let that sink in until it is crystal clear.
If you were to file a return for an NLT and pay, even once, then you are stuck with that relationship for the rest of the life of the trust. Observe this truth and guide your actions accordingly.
Again, read the eBook, and especially read the tax section and the FAQs. Then hopefully both your confusion and your worries will completely evaporate. We’ve been involved with these trusts since the 1980s, so we have over three decades of proven experience, with thousands of clients. Not one single problem with the IRS has occurred, ever, with any of these trusts – – but again, on the condition that the client using and operating the trust understands the trust’s right to privacy – – and operates it accordingly. The good news is, “operating it accordingly” is actually about 100 times easier than operating it in compliance with the overwhelming myriad of statutory regulations and tax rules.
[The preceding Q&A were published in the 10-04-18 and the 11-02-18 BIC newsletters]