When researching the non-grantor, irrevocable, complex, discretionary, Spendthrift Trust, be cautious of exaggerated claims in Google results. Some articles compare the strategies to "Russian Roulette" with the IRS, warning of costly trusts that may not withstand an audit. It's important to address these points and debunk the inaccuracies surrounding the Spendthrift Trust to provide a clear understanding.
IS A NON-GRANTOR IRREVOCABLE SPENDTHRIFT TRUST LEGAL?
This article acknowledges the trust's legality but suggests it may become illegal depending on its use with other trusts and charitable entities. It refers to the Abusive Trust Tax Evasion Schemes and Publication 3995 on recognizing illegal tax avoidance schemes found on the IRS website: www.irs.gov.com. The author claims that the warnings from the IRS are identical to the selling points used to promote these spendthrift trust schemes.
Let’s take these one at a time…
Dohn Thornton does not make or endorse the claim of "Put your money in a trust and never pay taxes again!" They focus on educating about legal tax reduction strategies without unrealistic promises.
Similarly, they do not assert that a charitable trust can eliminate income, providing accurate information instead. Dohn advocates for not paying taxes on capital gains, which will be explained further.
Personal expenses cannot be deducted, but the trust can cover expenses related to trust assets and support beneficiaries.
Dohn's company denies the claim that "The IRS does not want you to know about this" and highlights compliance with IRS regulations.
For clarity on IRS trust fraud issues, watch the video "The IRS Does Not Want You To Know About This" at https://youtu.be/jMWFc8P9EHQ
Red Flag #1:
The earlier discussion addressed the claim of "Put your money in this trust and never pay taxes again!" Dohn has never made such a statement and will not do so. Legitimate tax reduction strategies are available for trust clients without the trust needing to pay the mentioned 37% tax rate. More insights and clarification on Red Flag #1 will be provided later.
Red Flag #2:
The claim to deduct personal expenses as a discretionary trustee raises key considerations in this trust. It's important to distinguish between expenses related to trust assets and beneficiaries.
1. Assets: As this is an irrevocable trust, the assets are irrevocably sold through a Bill of Sale. Real property also requires a deed. The sale price is determined by the original acquisition cost minus claimed depreciation. Once the assets are in the trust, it covers all associated expenses.
2. Beneficiaries: The trust's governing instrument allows it to cover a wide range of expenses for beneficiaries, excluding entertainment. These include food, clothing, education, health, and wellness. However, there are certain expenses known as the "Four F's" (Food, Fashion, Fun, & Facelifts) that are not considered trust expenses.
Red Flag #3:
The article presents a complex strategy involving charitable trusts, foundations, and personal or family trusts to eliminate income. However, it is crucial to note that the trust being discussed does not align with these strategies. The trust primarily focuses on legal tax reduction and asset protection within its spendthrift or beneficial trust framework.
Red Flag #4:
The article claims that transferring assets to the Spendthrift Trust eliminates capital gains taxes, misinterpreting IRC 643(b) and extraordinary dividends. However, an official IRS document clarifies that extraordinary dividends refer to specific cases, not stock windfalls. For more details, watch the video "Why The Spendthrift Trust Is Legal" at https://youtu.be/GBDEnyIJEBY
Red Flag #1 – Part 2:
Placing money in this trust doesn't exempt from taxes. As a non-grantor trust, it must pay 37% on income exceeding $14,451 or distribute it to beneficiaries. The article's claim is incorrect.
Furthermore, the article falsely accuses the trust of illegal activities. The trust's tax return shows a balance of zero, accurately reporting expenses and passive income on the trust's 1041 tax return. While the trust doesn't eliminate tax obligations, legal strategies outlined in the tax code can significantly reduce taxes.
The History Of This Trust:
This trust has a longstanding history of over 70 years, with reputable law firms creating over 80,000+ trusts for clients. The significant number of tax returns filed for these trusts raises whether the IRS and the DOJ would have allowed them if the trust were illegal.
The non-grantor, irrevocable, complex, discretionary, Spendthrift Trust is unequivocally legal. Its tax strategies have undergone thorough vetting by the IRS and have been successfully implemented for over 70 years. For further information, it is recommended to contact Dohn directly at email@example.com or visit Dohn's YouTube page at www.youtube.com/@yourtaxsavingsbestfriend