Welcome, everyone to another abundance group, trusted advisor training. This is week nine. And we are going to continue on our business trust instructions. Today is Tuesday, August 16 2022. I don't know why I don't remember where we left off last week. Anybody have any memory of where we left off? Yes, last week.
I am showing week eight. But it looks like one of the last places we left off. I haven't here was an LLC Operating Agreement, which was the state of membership interest, partnership, interest and identification of manager was the last thing that we touched on.
Gotcha. Thank you. And I'm just trying to look, you did have those documents put up into the business trust folder, right.
I believe I did it last night. Yeah.
Make sure it's shared with me on both of my emails, because I'm having a hard time. Okay. And I wanted to let everybody else know. It was here.
Sorry, my computer's so slow today. It's like lightning fast every other day? Of course, of course.
Yeah, let's see, I'm just not seeing it for some reason. So know that. What I want to show you guys and I'm not finding is articles of formation are now up on the business trust folder, I just have to review them and make them available to everybody. But they will be there today, which is awesome. I'm so happy that we have articles information that can be done in a PDF form fill kind of way. So that's good operating agreement is there. And I'm about 60 or 70% done with turning the operating agreement into the operational roles. So just as a way of review, what we talked about our last call is setting up the business trust and starting the implementation of it. And that includes figuring out what the structure is going to be we've talked about that on first two calls, then who will the interest holder be that's the term for the beneficiary. And then when they get the trust instrument, they start out by executing the trust, opening a business Trust Bank account. And then we move into the part of what do we do next? Next is figuring out the divisions, I think to have to add this to it. Yeah, this is not in here yet. Figuring out what divisions they're going to need, and making sure that they actually set up there divisions. We just talked about this on the business trust all of what they need to set up a division. So it's a good idea to go through with the client, and actually make them give you a list of what are the businesses that they have now what kind of entities are they are the LLC is s corpse or C corpse and help the client figure out? What is it that they need to do with the business trust. In most clients, businesses, if they're a real estate investor, doesn't matter what kind of entity they're using. Now, if they have a business trust, they're gonna set it up so that each property is in a separate division of the business trust. They're also going to have a property management division in the business trust. If they're used to holding properties and LLCs. They're going to get rid of the LLC. This will save them some money. If they're used to doing it in land trusts. The divisions will get created by the decanting of the land trust to the division. We're gonna be doing a separate training on decanting of land trusts and personal property trusts to separate divisions within the business trust. That'll be in a couple of weeks. I will make sure that we add a link to it in week nine of the trusted advisor training rather than going through how to do that on this call. For any other kinds of businesses, though, if they have anything other than an LLC, they really should be modifying the business to turn it into an LLC. Or they are going to have a much higher tax liability than they need to have. If they have an S corp. The IRS says the primary shareholder in an S corp must have a W two salary that is equal to or greater than 20% of the net profit. The IRS expects that salary to be consistent with other people in similar professions on a W two income level. So it's got to be at that level or above. Well, once they have the trust set up, they don't need that w two income anymore. It for most clients is way more than they're going to need for food, fun and fashion. So have them reach out to the tax advisor team, which means Dave Phillips team or Susan obey. And they will help them to restructure the S corp and turn it into an LLC.
It's a weird process, there's more than one way of doing it. If the S corp started out as an LLC, the easiest thing to do is file what's called an IRS Form 8832, which basically says that they're revoking the S corp election, and choosing to be taxed as a limited partnership or partnership. In that way, we can make the personal trust a limited partner in the LLC. That turns it into being taxed as a partnership or limited partnership. Then we also have C corpse to contend with. A lot of people set up C corpse just because they don't know any better. But if they have a C Corp, it's subject to double taxation, meaning income and the C Corp gets taxed twice. It gets taxed once to the corporation and wants to the shareholder or owner. Well, that's goofy, that's way more tax than they've ever gonna need to take on having a business trust and a personal trust. With the C Corp. It's a little trickier, but you have filings that you can do with both the IRS and the state to convert a C Corp to an LLC. The secondary reason for modifying the C Corp or the S corp, and making it into an LLC is at inception of the trust. When they go to convey the assets from either an S corp, or a C Corp, to their personal trust or their business Trust, the IRS says it must be done at fair market value, it cannot be done at anything less than fair market value. If you're conveying from the S corp with a C Corp to a shareholder, well, that's not very much fun, because that means they're gonna get taxed on 100% of their gene at the time they have their trust set up. Nobody wants to do that. If we instead convert the S corp or C Corp to an LLC, then we don't have to worry about that. The LLC allows them to do an in kind distribution of equity. So the assets can get conveyed to them at bases. And then they can convey them to the trust either business or personal doesn't really matter for this purpose. As long as they're a beneficiary at the time of the conveyance and not the trustee at the time of the conveyance, then they can do it straightaway at basis and not have to worry about getting taxed on all of the gains that might be present. So that's just a short piece of what they need to be doing. We need to look at each entity and figure out what divisions they're going to need to create. I'm finding that most clients have at least two or more entities. I've had a few clients that I've had in excess of 80 entities. And let me tell you what a pain in the butt that can be. But you know that also means that they're likely to need more than the amount of hours that they got with their trusted advisor. And if they need more hours, they can get more hours they just have to pay for them. We do sell packages of time. If the time is my time 10 hours is five grand if the time is with a trusted advisor 10 hours is three grand and most of that goes to the trusted advisor week Keep 500 of it so that you guys have a way to be able to get to me to get an oversight on it. But the other 2500 Go to you. So if clients have a ton of entities, and they're going to need a lot of help with implementation, feel free to offer them a package hours, and then get with me or Shelby, so that we can get the billing out to the client, and then get the money over to you.
Access to those documents now.
Thank you, thank you, let me go see.
They're called one. Formation, yay for me. So here's the articles of formation. And this is getting turned into a PDF form fill, I just need to go through and make sure that it's all 100% The way that we want it. For now know that this document is actually in the clients trust binder when they get their business trust. So once you know what divisions the client is going to need to create, how do you create a division? First thing that happens is articles of formation get completed? Articles of formation, what I have up on the screen. And you know, Ben, this is a document that we're going to refer to on so many calls. After Shelby turns it into a form filled PDF, I will have her create abundance group.com forward slash articles to redirect to the PDF version of the articles of formation, because people are going to use that a lot. Yeah. Then the other document, I'm gonna go through this in just one second. The other document you put up there was which one Ben?
Declaration of term renewal, I think, Oh, yeah. I think those are the only two.
Yeah, this is the other document that got put up there. Which is exactly what Ben just said, a declaration of term renewal. And this is really for the overall business trust, as opposed to the divisions. But know that this is there. And it's basically a way for people to renew their business trust every 21 years. So I will get those documents taken care of for you. But for now, I do want to go through the articles of formation, and then want to show you the divisional certification of trust. And the operational rules that I'm working on will be done. I'll go through those on the next call. Those are the three documents that are needed for every single division. Dave Phillips, who heads up the tax team is working with Julie Barish. To help create some automation that will make it easy for clients that have lots of divisions that they're going to need created. So that they'll be able to create articles of formation, divisional certifications of trust and a basic operational rules through an automated system Davis putting together and Dave will then be the one that they would reach out to you to get that. But the document is pretty straightforward. The settlers name goes in there, the initial trustee in the business trust is called the founding trustee. The name of the trust goes in there and the date the trust was created. We then insert the division name in several different places in here. We also named the division of trustees in the articles of formation. We put in the office address for this division. You know, some clients may have different addresses for different divisions. We then have summary of business summary of business is exactly what it sounds like. What is the business going to be doing? No matter what it is, let's say it's a real estate investing division. You would say the division is in is in the business of real estate investing and all other lawful business activities always end with and all other lawful business activities. I may even add that into the template just so that no He forgets that.
And the reason for it is businesses by their nature change. And because they change, it's not unlikely that businesses may have something else that they do down the road. That wasn't anticipated at the time the articles of formation were created. Well, if you're pigeon holed as a real estate investing business, and you decide you want to go do something else, like real estate, investing education, you don't want the division to be trapped and unable to do that, because the articles of formation didn't allow it to. So even in an articles of organization in something like an LLC, you're going to have a catch all at the end of the summary of what kind of business it is. It then asks for initial capitalization and sources of capital. And that's very literal. So if the personal trust is conveying a property to a division of the business trust, then the source of capitalization is going to be the name of the personal trust, and the value or basis of that asset is the capital that's being contributed. So we want to make sure that you show that right in the articles of formation, simply because we need to know who the interest holders are going to end up being and anyone contributing capital becomes an interest holder. The situs is still going to be these United States of America, principal place of administration, it's a good idea to be in South Dakota, but if a client wants something else they can. Even if they put some other address, it's a good idea under governing law to make the governing loss date be South Dakota, it's the most favorable to the business trust. And then it gets signed by the trustee and notarized each trustee should sign so there's multiple notaries simply because there's multiple trustee blanks, there's only one just divisional trustee then only one signature gets put on the form. But it's that straightforward. It's nothing, you know, really hard. Yes,
I apologize for interrupting the one that we looked at yesterday in the trust binder did not have the notary acknowledgments.
I'm aware we're fixing that. Okay. All right. I think the articles of formation should be notarized.
Okay. Because what we looked at yesterday didn't, I'm aware. Okay, I'll be quiet.
Don't you think they shouldn't be notarized? Actually,
personally, I do too. And I was surprised that they weren't. Yeah.
See example, though. Since that's the example though, do we need to be entering the notary blocks to that? Or do they need to be pulling that from this folder?
Know what we need to do is what I mentioned yesterday, once this gets put up on the business trust folder, on the document that goes in the trust binder, in red, we're going to put a note that this is an example. For the most up to date articles of formation in PDF form fill, go to abundance group.com forward slash articles. Got it? And we're going to do that in red, Julie. So that nobody thinks that the document in the trust binder was meant to be used in its current form. Okay, which I think solves the issue. Right? Yeah. The other document that's needed for each division is the divisional certification of trust. And that's exactly what it sounds like it is. It's a certification of trust for a specific division. In order to get it to have the power that it needs to have, it's going to talk about the inception date of the overall business Trust, the name of the business Trust, the name of the settler, its founding trustee at initial trustee founding trustee. It talks about the type of trust that it is, then goes into names of the overall trustees have the business Trust, the tax ID number of the business trust. Now, in this case, I really think I should modify This part to the EIN number can be an EIN number for the overall business just as long as the division doesn't need its own EIN number, but there will be times where it will. So I'll modify that when we get off the call so that they can pick and choose which one they need. Next, we have the division of the business trust named blank. And I'll make this blank be longer. And set division has an inception date of blank. That's whatever the data is on the Articles of formation. The authorized divisional trustees are name of trustee address of trustee name and Trustee address of trustee. And I will leave three blanks in here rather than to just because there's three blanks in the other template
then the divisional trustees have or have not filed a fictitious name application. So they just checked which box applies. And if they have filed it, what state did they file it in? What county what city? That's important because in some locations, it's not filed at the state it's filed at the city.
Then, down at the bottom, we have the names of each known current beneficiary of the division. Now, I had a discussion with someone about this yesterday, because in the trust, they're not called beneficiaries. They're called interest holders. However, in the certification of trust, the reason that I call them beneficiaries and not interest holders, is because if you think about what your divisional certification of trust is likely to be used for, let's say it's opening a bank account for the division. Is the bank going to know what an interest holder is? If we call them an interest holder? We have so many other issues with banks, I think it will confuse them. Like Likewise, if the division is going to own property in Pennsylvania, where there's a transfer tax, and there's an exemption as long as there's no change in beneficial interest. If we use the name interest holder in the divisional certification, and it goes to the recorders office and they see interest holder. Well, I don't see any beneficiary on here. And I don't want people to have to explain that. The trust instrument makes clear that the interest holders in parentheses are beneficiaries. It's a different name for it. Recently, Galena, asked me about a book that she had found in PDF format online. And it's a free ebook. It's called the concise Handbook of trusts. And it is one heck of a read. Not done with it yet. I'm about halfway through. You'll find it at abundance group.com forward slash concise handbook, abundance group.com forward slash concise handbook. If you want to have a better understanding of Express trusts, ours is an express just read the concise handbook on page 11. It talks about why we would name them interest holders instead of beneficiaries. And I did not read the book before I created the trust. So I was blown away when I read that. But by calling them interest holders, because it isn't an express trust it actually gives power that otherwise wouldn't be there. And it's explained on page 11. I'm thinking about adding an extra week to the trust advisor training at the end of the course that will add that week and it's going to be an opportunity for us to discuss that handbook. It is that big of a deal. I really love what is Then, and I think it'd be very educational for everyone. Anyway, that's why I'm calling them beneficiaries and not interest holders. Then we have successor divisional trustees. You know what I just realized Ben, in the articles of formation. We named the trustees but we don't name successor trustees Oh, yeah. Right, except back now.
I'm sorry, you set for that. Link. That's Ford slash concise handbook. The link isn't broke is broken. So I'm sending it to Shelby. But can you say one more time what it was for?
Yeah. Let me just make sure that I give you the wrong thing. I gave this to Shelby not that long ago.
Abundance group.com forward slash concise handbook. I'm going to send it to you on chat button. Got it?
For everybody else, I don't put it in chat. Just so you guys have it. I'm gonna give you the rollin everybody, just up on Google Drive. Go
which Google Doc, are you looking for Scott?
I put the link to it. That's all looked after.
Gotcha. Okay, so where were we. So that is the successor divisional Trustees has been added to the articles of formation. And that's an important thing to have in the certification. Because especially for bank accounts and brokerage accounts, they need to know if something happens to the divisional trustee. Who is it that they're supposed to deal with. So it has to be listed in the certification, but we need someplace else like the articles of formation to have them named in the first place. And then it just gets executed by each trustee. And it does get notarized Same with the normal certification of trust. That's that document. I don't have an operational rules set yet that I can share. But as soon as I do, I will let you guys know. Essentially, it is just what you see on an operating agreement. It's no different. So expect it to just be a fill in the blank version of an operating agreement. It's exactly what it's gonna look like no other new information in it. So that's what happens with doing the divisions within the business trust. The only other piece that happens within the business trust at inception and implementation is doing what's called the professional services agreement. You'll find that professional services agreement in the accounting folder
where did it go?
Thought it was in the accounting folder. Template dash
I gotta
find it today, move it to the business trust folder and forget. Here it is, it is in the business trust folder, professional services agreement. If they're keeping any of their entities, then they need to create a professional services agreement between the entity and the specific division that's going to be charged with conducting the business on behalf of the entity. For now, let's assume that it's an LLC rather than any other kind, as I really do want most clients to get rid of anything other than an LLC format. And basically what this is going to do is it's going to make the division of the business trust be the one operating the business on behalf of the entity. So let's assume for a moment that we have a carwash. Well, what happened in that instance is, monies would still get paid by customers to the carwash in the LLC. The LLC is going to take care of payroll, going to take care of expenses under the professional services agreement 95% of the net after payroll and after expenses, literally will belong to that division of the business trust responsible for operating the carwash. So, client should look at last year's tax return, figure out what the net profit of the cat of the carwash business was. And 95% of that is what's going to go on the professional services agreement. So the agreement is dated inception date of the division. The name of the contractor receiver of services is the LLC, the address city state zip and tax ID are all the info for the LLC. It then goes on to say hereafter blank trustee and blank trust is just the trustees name of blank business trust in there, we should have a modify the document there'll be blank division of blank business trust and then it will then say the business trust hereinafter the independent contractor. Now therefore, the parties here to agree as follows the service provided blank shall contract with the independent contractor. So the name of the LLC goes in there, they are contracting with the independent contractor which is the division and the independent contractor shall serve blank, which is the name of the entity again upon the terms and conditions hereinafter set forth Turman extension, whatever the inception date is of that division is what goes in paragraph number one first blank and shall continue in effect on a continuous basis. Until termination or suspension of duties by blank. That's again the entity's name. Certain completion reports and inspection shall be conducted by name of the entity again. Then in paragraph two, the name of the entity in connection with the services outline of again name of entity. All three blanks in the number two paragraph are all the name of the entity which shall be creates PDF form fills. She usually sets it up so that when they fill it in one place, it fills it in in all places. So they won't have to retype the name of the entity in each place. Paragraph three is again the name of the entity. paragraph four. The name of the entity shall paid to the independent contractor for his or her services. somes outlined in Schedule A. Schedule A is just a blank document. And all it's going to say is the fee in paragraph four
is as follows. Pick the amount, pick the frequency under the professional services agreement. I usually recommend doing it monthly, but clients can do it monthly or Weekly or quarterly, I do not want them doing it annually, it's gonna make a lot of trouble if they do weekly, monthly or annually what firms are weekly, monthly or quarterly, whichever is easiest for the client. And it just goes on schedule it. indemnification provision in paragraph five, independent contractor agrees hereby to indemnify and hold harmless the name of the entity. Paragraph six is again going to have the name of the entity and all three spots. Same thing with paragraph seven. That is a non disclosure non compete agreement, all the blanks end up being the entity. And then at the very bottom, and with this we're have blank be executed in its name and the independent contractor here under so it's the name of the entity, then first is the signature of the entity. And that would be by either a manager or a president. And then signed by the trustee. This document does not get notarized. And then there is a blank Schedule A that they can use to insert the amount of the payment. And that's it.
Gina in one section, it said the venue was in Texas.
Oh, boy,
what was the last paragraph? If you're looking entire agreement is courting just Texas law that has
to be fixed. Thank you. Thank you. I will make sure it happens. Ben, can you tell Shelby to fix that for me? Yep. It's the last line in the nondisclosure agreement on page two.
The entire agreement. Next paragraph says Texas State law.
Yeah, gotta fix that too.
Visual certification. Okay, so that should bring us up to
once we have all of our divisions set up. Next thing we do is what are we going to do with assets. If the client is a real estate investor, or a speaker, author, Coach infopreneur, membership site owner, SAS platform owner, or somehow has patents, copyrights trademarks, with licensing income, intellectual property income, and real estate income, they are the only two kinds of assets that can be held directly in the business trust. For anything else, it's got to be held in the personal trust. And that goes back to what we talked about, at the beginning in weeks one and two of our trainings where we need a lease agreement in place between the personal trust and the business trust in the division, so that we can convert active income to passive income. If they are doing short term rentals less than 31 days, the property needs to be held in the personal trust and not in the business trust, because as we've discussed, that's active income, not passive. So help the client figure out which trust is going to own the assets and have the liability it's as well so that they can then go about doing their conveyances. If it's going to be held in the business trust. It's same kind of conveyance. We've talked about this before. The tax team and I have been talking about the best way to do it when assets are going to be held by the business trust and not the personal trust. And it gets kind of complicated, honestly, in looking at how to do that, because ideally, clients want the demand note from the personal trust. If they put the asset in a division of the business just directly from wherever it is now. They're not going to have that demand No, allowing them to take money out of the personal trust as repayment of a debt. So what I recommend doing is Even for those clients that are going to put assets in the business trust, it might be a good idea to actually have a bill of sale, conveying it, first to the personal trust, and then another bill of sale conveying from the personal trust to the division of the business trust. That way, the client can actually get the value of the asset added to the demand note and the personal trust, so that they have more money that they can take out without negative tax implications. If that is done with real estate, technically, they need to convey to the personal trust and then the personal trust conveys to the division of the business trust. And most clients do not like the idea of having the deed going into the personal trust being recorded. But let's say the property is currently held by an LLC. If we have them go directly from the LLC to the business trust, then it really bypasses the personal trust, and they don't end up with anything on the demand note for that property. If instead we do the bill of sale from the LLC, to the client, a client to the personal trust, the personal trust to the division of the business trust, then technically, there needs to be a deed for each bill of sale, the LLC to the client, the client to the personal trust, the personal trust, to the business trust, all of which would need to be recorded. Dave and I are concerned that if we do it in any other way, and we do say one deed going from the LLC directly to the business trust, but then have separate bills of sale at each step, so that we get the value of the demand increased. We're concerned that it could create issues in the event of an audit.
Especially if the auditor goes and checks title of the property and sees that it went directly from the LLC to the business trust. I honestly don't have a good workaround for that. I'm still investigating it, I probably will talk to several tax attorneys. I will discuss this on an upcoming business trust call. Because it is an issue that we have with a bunch of clients right now. Especially those that have already had income flowing into their personal trust from the real estate transactions with deeds that weren't recorded, that have now set up business trusts and want to put the property in the business trust. If we don't record the deed, putting it into the personal trust, and only record a deed from the original owner to the new division of the business trust that could create issues if it's ever audited. Now, how likely is it that the 1040 one's going to get audited for that tax year, and it was not super likely. But as you've heard me say, I am extremely risk averse. I want to plan for the worst eventuality always. And I don't want to position clients in any way shape or form that could get them in trouble or invalidate their trusts. So I'll keep you posted on that. Nonetheless, we got to get the assets set up. However it's gonna happen. For the moment, let's assume the assets are all gonna be held in the personal trust, then the only thing that needs to happen is setting up of an equipment and intellectual property lease between the personal trust and the new division of the business trust. That equipment and property leased or equipment and IP lease I should say, is in the conveyances folder. It is under template dash, equipment and IP lease agreement. So we have equipment and IP lease agreement made effective on blank. That's the date in the articles of formation for that division. By and between blank as the lessee business. That's the name of the division of the business trust and blank lessor Trust, which is going to be the name of the personal trust. The agreement of the parties is as follows. On paragraph one where you list the equipment and services subject to lease, I typically say see Exhibit A and then I have a list of all of the assets as well as next to the asset on another column, the amount of the lease that's attributed to that asset. I'll explain that when I get done with going through the document, because it's, it's an interesting way of looking at it. Payment Terms, let's see shall make blank monthly payments of blank, and they'll be due on the first of each month the client is going to be the one that determines how much of a lease payment to make, it can be up to 70% of the net profit. It's not a hard fast use 70% of the net profit, it's, you really have to have the client figure out how much of a lease payment they're gonna set it up for. So technically, that professional services agreement that put 95% of the net after payroll and expenses into the business trust 70% is going to be 70% of the total net profit. So if we have 95%, going into the business trust that is going to be 25%. Leftover out of that, it will convert that whatever the amount of the lease payment is from being active business income to the division to being passive income to the personal trust, which can therefore be tax deferred. The remaining 25% is still going to end up in the personal trust. But it's a way to get a tax mitigation to happen on active income.
The IRS rule says that you need to look at the assets and determine what a fair market value lease amount would be. If it's a vehicle, it's not a new vehicle, it's a used vehicle. So how much of a lease payment would that vehicle justify, client should really go out and do some research and not just pick a number out of thin air. Likewise, if it was, say, a dental practice, the value of all of the equipment has to be figured out. In order to figure out what a good amount is to use for the lease payment, I find it to be way easier to look at each individual asset to come up with the dollar amount. And what I usually do is I have the client go out and do research on every single asset that's under the lease agreement, figure out what the average lease payment might be for that type of asset, and then add all of the numbers up. When we add all the numbers up, as long as it's less than 70%, I'm totally fine with it. If the numbers get added up, and it looks like it's 100% of the net profit, I would tell the client figure out how to get it to be reduced. Because to do 100% is not going to fly on an audit, I'm certain of that. So it's important that it's a realistic amount and not overly inflated. If the only assets the client has are a computer, a desk and a chair, and they're making, let's say, what's an easy number of years, $240,000 a year $20,000 A month. Well, that computer that desk in the chair, they're not going to be able to justify a $14,000 lease payment, which would be 70% at 20 grand. If trust was ever audited, there's just no way. So the easy way to add value that can get them up to that number 14,000 a month on a $20,000 gross or $20,000 net profit, getting it to a $14,000 lease payment is to look at the intellectual property. And again, we've talked about this 34 Five ways of valuing intellectual property. Even if the only hard assets are a desk, a computer in a chair, they have a customer list. They probably have a prospect list. And they more than likely have an operating manual even if it's just in their hat. And those intellectual property items have value. Do they have a website? Do they have a domain name? What else do they have that they can add into the intellectual property bundle and nine times out of 10 When we look at the eye pee with hard assets is going to give us a number that's over 70%. So we then limited to the 70%. If that makes sense, I do recommend that the equipment and IP lease be done monthly. If a client really wanted to, they could do it quarterly. The lease terminates on December 31 of each year, regardless of when it started, the address of where the equipment will be gets put into paragraph four. And then the trustee of the business trust signs, just the of the personal trust signs. First, let's see of the business trust sign. Second, it's done in front of a witness. It's a very simple straightforward document, make sure that they attached that exhibit A, that has the list of all of the assets with lease amounts. Wow, that was a very loud
helicopter.
Okay, so once they've got that done, the assets should all be in the business trust by them. If they do need help in closing entities, that's not something for trusted advisors. That's something for tax advisers. So have them reach out to the tax advisor. The one thing you want to make sure the client doesn't do, it is not a good idea for them to do payroll out of any division or out of the overall business trust. Payroll means that you're acting as a fiduciary on behalf of governmental agencies. And that's just not something that shouldn't be done in any kind of trust, it should always be done in an entity. Now, there are services that act as the withholding agent. If they use one of those services, ADP is one of them that offers that type of service. If they want to use that type of service, then I am totally fine with the Division of the business paying for the payroll so that everything just flows through the division and doesn't need an entity that only because it there's a service that they're using, that is acting as the fiduciary to the government agencies rather than the division of the business trust acting in that capacity. Next, the same is true with sales tax sales tax should always be done in an entity and never in the business trust or a division. Now business licenses, you know, there are so many different kinds of business licenses, some can be done within the business trust structure, others cannot. In California, a liquor license cannot be done in a business Trust has to be done in an entity. Doctors, Lawyers account other types of professional designations, some states will allow them to be done in a business trust, some states will not. That's up to the client to figure it out. If all else fails, it can suggest that the client look for a company that specializes in helping people with that type of license. Even here in Florida, I have a restaurant owner that I'm working with, they're probably going to be setting up nine total trusts because there's three partners, and they own a dozen plus restaurants. But their liquor license is crucial to their overall business. So they didn't know the answer to the question. I certainly didn't know the answer to the question. And they found someone that helps Florida restaurants with getting liquor licenses. And they put that person in touch with me so we can have a conversation. And she was able to determine that Aaron, Florida, they can do business directly out of a business trust and still have the liquor license issued to the division of the business Trust, which is awesome. But I don't think that's going to be the norm. So it's the client's responsibility to figure out what's going on with licensure. Can it be done in the business just directly or do they still need an entity just for that purpose?
Okay
next
Actually, that's it on business trusts instructions, I will update these instructions more to make them more consistent with what I just talked about. Because they started out as business trusts instructions for the old trust, not for the new business trusts that is abundance group. So it didn't have divisions in it. It didn't have a lot of the way that we do things today. I will get that updated in the next couple of days for everybody. What questions do you have about implementing business trusts? It's not as hard as it sounds. Anybody?
Okay, well, I guess I must have done a good job then.
Yeah, just a lot of info stuff that I'll end up going over again, I'm sure.
And again, and again. Yeah, exactly. Been I keep having trouble accessing the links to review these.
Yeah, I'm trying to figure that out. Okay. I'm noticing that on my side, too. Okay. By the template dash equipment and IP lease agreement that you were just showing, yeah, shows that the access, if you want a general access as anyone with the link, but if I go into, so you have to get off the viewers. But if I go to my Google Drive, and go to that same folder, that version that you showed doesn't exist. It's old versions. Really? Yeah. And I'm trying to see. See, it's showing up now for me, but I just shared it with myself. It's like it's not in the folder.
Well, that's interesting. Yeah.
Trying to figure it out.
So when that happens, usually, I go to the whole folder and share up there. And anyone with the link is a viewer. And then we're receive it. I noticed on this one. For some reason. It's looking like anyone with the link can not just view but comment. I don't know why. So I'm going to save it as a comment or then change it to a view. See comments and suggestions. That strange. Say that a good Julie. See if you refresh yourself. Julie, can you see that file? Template dash equipment and IP lease agreement? It's in a PDF format?
I haven't that word. Oh, hold on.
There's a couple other versions in there too. Do you want me to keep those in there?
If you would give me the address again, please.
It's in the conveyances folder. And you're looking for a file called template dash equipment, an IP lease. And it's the PDF format that we're looking for. And Ben, the reason I left the original documents in there is because some people have had issues and like needed a bigger line to put something in. So at least they have access to the original Word document if they need it. Okay,
yeah, that makes sense.
Even if I just type in equipment, I don't get anything. I'm in conveyances and then I just type equipment and it comes up with a description. Residential lease. Oh, no, that's a different and instructions for personal trust.
I see it on my end. Dana. It says that it just was updated. 1:08pm
Okay, because I did just update it. So that's good. At least you see it. Do you
see? Just trust folder?
Truly. Yeah.
I'm sorry. Do I see it were
in the business trust folder.
Okay, I'm in conveyances right now.
That's where I was just showing it from business.
Okay, important links for trust.
It's template dash equipment underscore IP lease agreement?
I don't I do not see it.
You know, it's because it's in the actual conveyances folder itself, not the business trust folder.
Oh, there is one in the business trust folder too.
Yes, I don't see that one on my side. There is some in there. But it's not the same version that you were just going over.
This one looks like it's the same.
That was different. There was a gap in between the heading and the top equipment was centered in the Texas smaller.
It is a different file. Yeah,
the one that says equipment underscore RP lease is in the business trust folder. And that's dated January 4. The other one where it says equipment and P lease agreement?
And that's in the overall conveyances. Yeah,
yeah. And the conveyance, it's there.
I don't know why. I will look into why Julie can't see it. That's very strange.
All I see is if I go into the business trust, all I see is a sample.
You don't see all the other documents I have on the screen right now.
Hold on, I don't do my list. I do bind by name, a chain and go by last modified. Let me try that. And here's the template for equipment lease is what I have in the in the business trust.
If I go into the document, yeah.
No, I have other documents in there. But that I that's the only all the way at the bottom, you see the one down there. This one template sample. That's the only one I see in mind. Let me let me see if I look again here. I've got assignment as template assignment assignment bill of sale. I'm actually in conveyances. Now.
That's not in the conveyances folder either for you.
I don't see it at all. No, you're so strange.
On our next call, Julie, you want to get on a zoom and see if we can figure out what's going on. Yeah, it looks like everybody should be able to get to it. At least once a day, somebody has to text me and say I need access to the blah, blah, blah. And it's because they're trying to open the PDF on Google Drive and type into it. And it's not letting them just so everybody knows tell the clients, they cannot change the documents directly on Google Drive. Otherwise, they're changed for everybody that comes after them. I need to download it to their hard drive first. And once it's in their hard drive, they can make changes to it all they want and save them on their hard drive. But they cannot do that in the main Google Drive. They could copy everything over to their own Google Drive that they could do and then edit in their own Google Drive but they cannot just edit it directly.
Got it been
very strange. Okay, what do you guys taken away today? Amazing.
A lot of reading to do. And then some
really serious guys. The Lena brought that concise handbook. Jimmy. I'm gonna go pull it up real quick. Does work now. It does. Awesome. Thank you, Ben. Galina brought that Jimmy because she wanted my opinion about whether or not the book was hard. Well, you know what? I don't think it's actually that hard. Now she's got language issues, right? English is not her native language. But just look at this first page right here. Just basics. They have this little diagram on it, and we'll even blow it up a little creating a trust by act of a party. You can either have an implied just earn a Express trust. Ours is an express trust. An Express trust can be oral, it can be written, ours is written. You can also have creation of a trust by act of law, which means it's a statutory trust. And that means there are two types are resulting or a constructive, that has nothing to do with our trust. Ours are all express written Trust, which means their contracts. And if you read this section under trust basics, that's exactly what it's saying. The basic difference between one created by Express act of a party and one created by an implied act of a party is that the former is stated fully in language oral or written, while the latter is inferred solely from the conduct of the parties. That's not that hard to understand. That's pretty straightforward. The thing I love about this handbook is it gives us so many footnotes, the footnotes are at least half the content of the book. And these footnotes are phenomenal. So one of the quotes, as is expressed trusts put the legal estate entirely in one or more persons, while others have a beneficial interest in an out of same but are neither partners nor agents. So we just take that sentence, express just put the legal estate entirely in one or more persons, while others have a beneficial interest in and out of same. So who holds the legal estate
that's the trustees. Symbol adequate common law right? Any person or group of persons sui juris may exercise. The trustees issuing certificates of beneficial and capital interest divided into shares, as well as issuing bonds and other obligations as freely as they open a bank account, have a passbook and drawn circulate checks, or make whatever contractual relations are allowed to persons as a natural right. I jump down here to the footnotes. footnotes are really interesting, Mr. Chandler lucidly brought to the attention of the Massachusetts Tax Commission, the MIS application of the term voluntary association to the Express trust, it is well settled that the term association for income tax purposes taxable as a corporation embraces business trusts and what Congress did not intend to embrace, within the term of association was a pure Express trust. That is a trust of traditional pattern where property is conveyed by will deed or declaration to a trustee. Okay, that's pretty straightforward stuff. But it goes into the declaration of trust, meaning the instrument that constitutes the trust, what is it? How does it work? Lots and lots of footnotes, like I said, then the corpus, what is it? It's the body of the trust, meaning the property being held in trust for the beneficiaries? The very subject matter of the declaration. It goes into trust sort of certificates, meaning certificates of beneficial interest, then it goes into trustee basics, who can really trust the how can they get out of office powers and duties of trustees, and I learned some stuff under the power and duties of Trustees, which was really amazing. The duties especially, we talked about the powers of the trustee, but the trust instrument itself does not talk about the duties of the trustee. And I actually think we're gonna add the duties. But duties can sometimes beam plied. But as this book makes clear, in the event, but there's any ambiguity in an express trust, it is left up to the courts to decide how to iron out the ambiguity. Well, I'd rather not have any ambiguity and I not like to leave anything just to being implied. I want my rulebook to give me all the rules in clear concise language, black and white. So I think I am going to put that section on duties into the trust instrument that goes into it. The privileges and liabilities of the trustee. That was really interesting. And authorized representatives, meaning they can issue a Board of Trustees. They can hire consultants, attorneys CPAs, then it goes into the differences between an express trust and a corporation. This was fascinating when it comes to business trusts. Go read that section ASAP. Anyway, I'm not going to go through the whole book. But as you can see, it has lots of stuff that has direct application to what we're talking about. And the power of the common law trust after reading this. In my mind, it's even more powerful than I already knew it was. This is something you can freely share with clients. I don't mind that at all. I was very grateful to Galina for bringing it to me, because I certainly have not run across this before. She heard about it in a podcast she was listening to. Anyway, any other takeaways, just one more.
Eyes, the takeaways are the most important part of our call. Honored next call. I really want takeaways.
So takeaway is we have a lot more reading to do what it takes I'm taking away from now.
Don't make it feel hard. It's hard. Okay. I think I have somebody I'm sending over to you, Doug, for fidelity managed account.
Oh, that'd be wonderful. Thanks so much.
I'll keep you posted.
We're still working on Susan. She's still working a lot of things out.
Okay. That's good. It's anyway, takeaways are really important, because it tells me whether you got what I was trying to convey. So feel free to give me good takeaways. And it's not about being right. If the takeaway is not exactly what I wanted you guys to get. It's an opportunity for me to help further what your takeaway was. So in the next call, would it be helpful for me to bring a newer client or two in so that we can use them as an example and guide them on what to do from an implementation standpoint?
That would be great. Yeah,
that'd be sounds great.
Okay, we'll find a couple of newer business trust clients and we will do exactly that together next to it, we'll be back tomorrow for our advanced personal trust call. Friday. I'm not certain I'm going to be up to it. I'm having another stem cell treatment and a secondary procedure as well on Thursday. So we'll see how I feel. to it. I'll be here. If not, Shelby will send out an email and say she was not coming. Have a great rest of the week if I don't talk to you. Thank you. Great. Bye, everybody. Take care.