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ArticlesThe following articles will, hopefully, help you understand more about inheritance andopen your eyes to a better way to handle these matters.

The Living Trust Dilemma

nheritance !cam

Loss of nheritance

"hat s #our "ill, Trust or $%& 'issing(

 )o *ontest( )ot+

'arriage -ow to et %etter esults without a 0renup

etting #our 1air !hare

!tructuring of 0artnerships and Trusts

The %ig 2mpty !pot: -ow To 1ind 3ualified Trustees

Trustee %aby !teps

etting the Trust !tarted

ood to o

%eneficiaries who nherit

Trusts one %ad+

4 "arrior to the 2nd

Living Trust 1unding

Like 'inds

eneration !kipping Trusts

!tate and 1ederal ealities

'inutes and llusions

*reating $seless Trustees

CHARLES ARTHUR ENTERPRISES

3435 OCEAN PARK BLVD, SUITE 10!""#

SANTA $ONICA, CA %0405&#1#' 54!"1((

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T)e Bi* E+t- S.t/ H. T. i2

6li7ie Trsteesby Charles Arthur  

i2i2* Trstees#ou need reliable Trustees to operate your *ommonLaw Trust legally. "here do youfind these Trustees( f you are not ultra rich, you have to create them. There is noofficially recogni6ed school for Trustees, as they need a Trust through which to learn.2xperience is the best teacher, so those with a good business background are the most7ualified and offer the best place to start. Those who have several different types of business experience usually have a savvy and canny sense of how to respond to unusualsituations.

Those holding a license of any kind owe allegiance to whomever issued the license, soare probably not the best candidate as Trustees. &ne of our Trustees had 89 obs in ;9years. -e is familiar with ust about any kind of bluecollar ob, as well as a wide rangeof investments. -e has extensive management experience, although he hates the subectof accounting+ The *oTrustee gets that ob+

%ecause at least one Trustee needs to be 4dverse, with no relationship to the family, theother Trustee can be a family member, though we have had no luck with this particularaspect. That family member is too emotionally involved,.and cannot be relied upon tostudy the law, or have much interest in the family business. This is a position where thosewith graying or white hair may be your best candidates as Trustees.

P6-+e2t t. TrsteesThe other problem is paying Trustees. n small Trusts ust starting out with no seriouscash flow, the Trustees in training may be willing to work for <=>.99/hr. %ecause theTrustees are responsible for building up the Trust assets and cash flow, they get anincrease when there is enough money to warrant greater funds for them. !ince theTrustees are in charge of the checking account, they are the ones who decide? Trustees'$!T increase Trust assets no less than =@ a year to 7ualify for such increasedcompensation. The whole point is that as the Trust thrives under their hands, so do theTrustees. deally, prospective Trustees should have independent means of support, sincethis allows them the time and economic freedom to focus on learning about theTrust?.how it works and the handson running of it.

O2e S)6re $626*e+e2t TrstThe best way to start a *ommonLaw Trust with limited funds is to oin others who areinterested. There would be one 'anagement Trust, but only one %usiness Trust for eachof the contributors. This keeps assets separate per family, and oins the Trustees. f thereare three families, there are three Trustees, a different combination for each Trust. f the!ettlor ATrust.*reatorB, in this case, wants to be a Trustee, that !ettlor is a Trustee to one

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of the other two Trusts. The !ettlor is not 7ualified to be an 4dverse Trustee on his or herTrust, but in can be part of the overall decisionmaking process for the group. n thisformat, assets can be pooled as leverage by the Trustees to get the better deals, and because of the uni7ue system of Trust *apital $nits discussed in 4rt of 0assing the %uckColume , and explained in detail in Colume , although assets are shared, the earned

cash flow is separated automatically.

Li+ite 2i2*8 N. Pr.9le+

4 Trust can also be started by exchanging for Trust *apital $nits marketable talents,knowledge bases, intellectual properties and more to create a uni7ue product which willnow be produced in the Trust instead of exchanged into the Trust. f a group of peoplecomprehends how Trust *apital $nits work, the group members can all easily contributeand share the proceeds when payday comes.

T)e Beilere Trstee"e strongly recommend having two Trustees for support and to keep an eye on each

other, but a successful Trust can function, and even thrive, with one good Trustee, itdepends on the support system and how the Declaration of Trust is structured.

f there are two or more Trustees, the one initially brought in is called the 1irst Trusteeand has powers above and beyond the additional *oTrustees. "e have learned the hardway this must be so. 4s the !ettlor exchanges for Trust *apital $nits his or her assets intothe Trust, the Trustees often feel bewildered and overwhelmed. etting Trustees to reali6ethey are legally responsible, and thus *4) ask 7uestions because it is their -T, isusually the first hurdle. "hile the Trustees struggle with gathering all the data and gettinga grip on responsibilities, the !ettlor must instruct the Trustees, who are reallyapprentices for the first several years, until the Trustees can get a good rein on the Trust.The next biggest problem the maturing Trustees face is to get the !ettlor to let go, and ust do his or her Trust ob, whatever aspect of Trust duties he or she is best at, or take along vacation.

The !ettlor must encourage the Trustees to keep up with banking policies, read courtcases, and be uptodate on changing laws or other events surrounding the particularassets in the Trust, such as real estate.

Trstee!Be2e7ici6r- Rel6ti.2s)i:

f the !ettlor is involved with the Trust, the %eneficiaries, usually, the children, continueto go to him or her for money. The !ettlor must now refer these re7uests to the Trustees,who decide, per the instructions in the Trust ndenture, or Declaration of Trust, how to

handle each situation. Therefore, it is critical when created the Trust law, thendenture/Declaration, to set guidelines for the Trustee priorities when dealing with%eneficiaries.

&f course, if the !ettlor is still available, he or she can consult with the Trustees on whatto do. There are certain retained powers the !ettlor can keep A!ee 4rt of 0assing the%uck, Colume B, and this %eneficiary re7uest may fall into one of those categories for the!ettlor to handle.

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Trstees; Res.2si9ilities

Trustees are legally responsible for all Trust involvement, but are )&T personallyresponsible unless they violate the Trust ndenture or Declaration of Trust. The assets belong to the %eneficiaries, who have use or get a cash flow through disbursement, but

do not hold legal title. This setup is known as Divided Title. The duties usually cared for by the Trustee are legal and financial. t is best if one of the Trustees can do theaccounting or take responsibility to manage whomever is doing the accounting. Legalmatters and interface with any government belong to the Trustees. They handle all taxes,such as payments to counties for property taxes, business taxes and any interface withthird parties about assets. This includes insurance policies. They make maor financialdecisions and monitor the cash flow. They are the &)L# ones who can sign contracts,and in this light, because Trustees sign on behalf of %eneficiaries, it is absolutelynecessary to read the 1)2 0)T.

$eeti2*s

%ecause the daily business of the Trust does not, necessarily, involve the Trustees, theycan get out of touch. This is remedied by 7uarterly %oard of Trustees 'eetings,depending on the cash flow. 4 %oard of Trustees 'eeting must happen at least once ayear for the Trust to remain a legal entity. 4s detailed in The 4rt of 0assing the %uck,Colume , keeping 'inutes is essential to a good running Trust, and preserves thehistory.

A Be2e7ici6r- Bsi2ess

The *ommonLaw Trust is an entity in business for the benefit of the %eneficiaries.ncreasing the cash flow is the prime function of the Trustees. !ince the *ommonLawTrust does not fall under the standard legal form of a business, it follows different

 paperwork procedures and is listed differently. t is formally called a Trust. This is a vitaldistinction. "hen filling out any forms, the Trustees must constantly remember to crossout or add the correct category? otherwise the Trust may fall into a taxable trap, whichcan happen when a particular tax or situation does not apply to a Trust. Trustees need toget in the habit of signing all documents as A)ameB, Trustee, or *oTrustee, as applicable.This ensures you are acting on behalf of the Trust, and not personally.

*harles 4rthur is the pen name for the group which authored The Art of Passing the

 Buck, Volumes I and II .