https://vimeo.com/863755610?login=true

Executive Summary.pdf

Nexxess Trust Executive Summary

The Nexxess Trust is an extremely powerful instrument for those who use it correctly. It provides the ultimate asset protection, tax advantages, and invisibility of assets. To have complete asset protection, the Nexxess Trust must be irrevocable and non-grantor. We separate the settlor, or creator, from the corpus of the trust for specific reasons. When assets are irrevocably transferred to the trust, they may never revert to the one who is making the endowment or transfer. Once the very first asset is placed in the trust by the “settlor,” or “grantor,” the trust is said to be “funded” and becomes valid at that time. Under these terms and conditions, legal separation has occurred upon creation, and the corpus may not be breached by claimants of the settlor, the trustee, or anyone else.

The non-grantor designation exempts the trust from any alter ego status that brings into action the management or beneficial enjoyment by the settlor. If the creator of a trust has management of the corpus, or is a beneficiary of the same trust, the trust is characterized as a “revocable living trust.” Living trusts have limited benefits and lose most tax advantages and asset protections enjoyed by a spendthrift trust. Because the settlor of a Nexxess Trust “resigns” after the funding, there can be no ambiguity concerning alter ego claims or accusations of it becoming a grantor, revocable or living trust. Furthermore, any assets that go into our Trusts must go in through a contract or “bill of sale.” This ensures that the trustee isn’t then creating a “grantor trust” by giving or gifting assets into the trust, subsequently after creating the trust. All assets that go into this trust MUST enter through a contract or bill of sale, to ensure the legal structure of a “non-grantor” trust.

ChatGPT Summary

1. Nature of the Trust: The Nexxess Trust is an irrevocable, non-grantor trust. This means once assets are transferred into it, they can't be taken back by the person who created the trust (settlor).
2. Asset Protection: Assets in the trust are protected from legal claims against the settlor or the trustee. The trust’s structure, including a spendthrift provision, prevents creditors from accessing the assets.
3. Tax Benefits: The trust is structured to take advantage of certain tax codes. It avoids capital gains tax on investment gains that stay within the trust and are not distributed to beneficiaries.
4. Control over Assets: While the trust holds assets, control over their distribution lies with the trustee. This allows for strategic financial planning and asset management.
5. Legal Compliance: The trust is designed to comply with various legal frameworks and tax codes to ensure its legitimacy and effectiveness.
6. Discretionary Terms: The trustee has the discretion to distribute assets to beneficiaries, but is not obligated to do so. This discretion is a key feature for asset protection and tax planning.
7. Limitations: There are strict rules about what can be considered income to the trust and how it can be handled. These rules are meant to comply with tax laws and avoid being classified as an abusive tax scheme.
8. Legal Precedence and Acceptance: The trust is based on established legal principles and has been used successfully in various cases. However, it’s important to note that its use and interpretation can be complex and may vary depending on specific circumstances.
9. Professional Oversight: It's crucial to involve legal and tax professionals in setting up and managing such a trust to ensure compliance and effectiveness.
10. General Utility: The Nexxess Trust is suitable for those seeking to protect assets, minimize tax liabilities, and maintain privacy over their financial affairs. It's important to understand all aspects and implications of the trust before setting one up.

The Nexxess Trust is written to comply with 8 different trust-law categories and governing laws or codes.

1. Scott on Trust Law.
2. The Restatement of Trusts.
3. The Internal Revenue Code.
4. UTC-The Uniform Trust Code.
5. UPIA- The Uniform Prudent Investor Act.
6. UCC-Uniform Commercial Code
7. Statute of Frauds. And
8. The Rule Against Perpetuities.

Compliance to these 8 categories was done so that the trust corpus would be protected from turnover orders by any court or judge and be separate from legislative control or actions. To serve the beneficiaries of the trust and protect the corpus, the trust must be complex in structure, with terms and conditions that plainly and fully state the powers and limitations of the trustee(s).

Complex trusts are governed by terms and conditions that may not be altered or changed by the trustee(s); however, this is a good thing. Being complex, irrevocable, and non-grantor keeps the Nexxess Trust from any “alter-ego” claims by a possible creditor or potential “abusive trust scheme” claims by the IRS. Any grantor who creates a Nexxess Trust will also resign very soon after its creation, and he or she has nothing further to do with the trust ever again. This is a legal resignation, notarized, to ensure the validity of the non-grantor status.

The Spendthrift Provision of the Nexxess Trust is the primary critical element of the document. No spendthrift trust corpus may be penetrated to reach the assets of the corpus. Case law has upheld this for hundreds of years. No judge or court may issue a turnover order against any asset in a properly constructed spendthrift trust. There have been only two known exceptions to this rule:

1. Trustees must avoid fraudulent conveyance to avoid a judgment, but this only applies to a trust created after litigation has been filed, not before.
2. One judge has been able to reach the corpus assets to force someone to pay unpaid child support. Other than those two exceptions, Nexxess attorneys know of no other case law where a turn-over order was successful over a spendthrift trust from any judge or court in the United States.

The Discretionary terms and conditions of the Nexxess Trust are established to ensure the absolute and sole discretionary power of the trustee(s) in determining the distribution of the corpus assets to the beneficiaries of the Trust. If a trust agreement were to require the distribution of income and assets, as with a living trust, it would not affect the asset protection but would adversely affect the taxable structure of the trust for any taxable year such a distribution occurred.

The Nexxess Trust does not require distribution of passive income; therefore, the trustee(s) may use their discretionary powers to allocate all passive income to the corpus of the Trust if the trust agreement has the correct language, and the trustee correctly declares the income to principal, or corpus. The trustee may also distribute some assets to beneficiaries from corpus when the trustee wishes to do so or avoid asset distribution for as long as he or she wishes. This power is completely discretionary, and it must remain this way.

The Internal Revenue Code is explicit and clear regarding discretionary trusts, plainly stating that a fiduciary has the sole and absolute authority, under the terms of the governing instrument, to designate certain forms of income to remain in corpus (deferred). That is, if the trust document allows this and the trustee so declares that any or all passive income as extraordinary dividends or taxable stock dividends, and that designation is paid to the corpus of the trust and is not subject to distribution, then this is not income to the trust according to §643b.

It’s extremely important to understand that the income must NOT be active, ordinary, or earned income to comply with the IRC text, and the income must be non-anticipated, so the nature or character of the income does not change as it is declared “extraordinary.” This is the most confusing part for most CPAs, for them to accept income to be “declared” to be extraordinary when, in most cases, it wouldn’t normally be. However, this is why §643b explicitly states 3 separate times, “…under the terms of the governing instrument and applicable local law….” because trustees can be given authority to do this by the trust document. Unfortunately, the CPAs literally refuse to read the document. This is where we lose many CPAs because, for some reason, they have a hard time believing that the trust document can have this much authority to simply declare certain types of income to be “extraordinary,” but this authority is given in the code itself in §643b. If the unanticipated nature of the income doesn’t change, and it remains non-guaranteed income, and the trust document says that the trustee has the authority to allocate to corpus this type of income, then that is exactly how it works.