[Originally published in and © The Charles Arthur Newsletter. Reposted by permission.]
Geo. McCalip
Webmaster and Former Trustee
At the end of Beyond the Indenture Part 1 we promised to round out not only what you need to know about beyond what we have already covered, we will also have exciting news on how you can get these things for your Trust.
The IRS Lies
One of the first things you need to know is that the IRS is afraid that you will learn the truth about having a trust and knowing how to use it, and they will lie to try and stop you. I know that is a strong statement, and it deserves some proof.
Let’s start with the case bought on behalf of the IRS by the DoJ against Frank Ozak and Gwenn Wycoff, two of the coauthors of The Art of Passing the Buck, Vols. I & II. The main objective of the case was to get prior restraint (i.e., to ban the publication of the books). The IRS lied and claimed that the books promoted illegal tax evasion. Once Brian H Corcoran, Trial Attorney, Tax Division, USDoJ, and the Honorable Judge Jacqueline H. Nguyen actually read the books, they realized the claim by the IRS (to be polite) lacked credibility, consequently we still publish the books.
In my Declaration to the court, in response to the Preliminary Injunction, I called the IRS out on five points where they had lied to the court. The fifth point involved the Oath of Privacy. Per the Preliminary Injunction:
- The indenture agreements governing the trusts that Wycoff and Ozak create all require trustees and trust managers to keep private their trusts’s dealings unless permitted to disclose information by the the board of trustees. But they have also counseled their customers (in The Art of Passing the Buck and elsewhere) to incorporate an “Oath of Privacy” in the trusts they create, They falsely tell their customers that this oath allows persons with knowledge of trust business who have taken the oath to refuse to provide requested information about the trusts to federal agents and other Government personnel. (Lee Decl..¶ 21; Ex. B, Vol. II, p. 203.)
Per my response in my Declaration (following four other points on which I had called out their lies):
- My personal experience directly contradicts the court’s finding in number 22. The “Oath of Privacy” was reviewed by IRS Chief Counsel, SBSE, Kathryn Meyer in a meeting with Revenue Agent Susan Lee and other IRS employees. After the review, Chief Counsel Meyer informed the IRS employees present that I would not be able to answer certain questions. During the questioning by Agent Lee and the others, I invoked the Oath as I saw necessary and Chief Counsel Meyer asked the agents to either rephrase their question or ask a different question. On at least two occasions I actually answered by asking the Agent to please rephrase the question and suggested a rephrasing that I believed would let me give them the information they needed without violating the Oath.
- I believe that, Agent Lee, having been present at the meeting, and having been instructed on more than one occasion by Chief Counsel Meyer, is aware that my claims regarding the Oath are not false.
- Given the above, I believe that the court acted in good faith on documents provided by the Plaintiff and has been the victim of a fraud on the court.
I had an audio tape of the meeting that documented the statement in my Declaration. The IRS also had a tape of the meeting. On the other four points we had legal documents proving the IRS had lied to the court, and the IRS also had copies of the same documents, proving they lied knowingly.
You can find another example of the IRS lying about trusts on their website (https://www.irs.gov/businesses/small-businesses-self-employed/abusive-trust-tax-evasion-schemes-special-types-of-trusts):
Common law trust
Contrary to the claims of promoters, “common law trusts” no longer exist since all states now have statutes relating to the creation and operation of trusts.
This makes as much sense as saying that cars with internal combustion engines no longer exist since all states now license electric vehicles. And it is a direct attack on our right to contract as found in Article I, Section 10 of the Constitution.
This provides another example of the IRS knowingly publishing a blatant lie. The decision in U.S. v Wycoff and Ozak, which affirmed that common law trusts, as discussed in The Art of Passing the Buck, Vols. I and II, not only exist but are absolutely legal.
And Now For the Good News
Those of us who worked with Frank Ozak and Gwenn Wycoff understand the value of the work they did, and believe we need to make it available for posterity. Consequently, we take great pleasure in announcing The OWL Project (https://theowltrust.com). OWL stands for Ozak, Wycoff Legacy.
We started The OWL Project to preserve the work of Frank Ozak and Gwenn Wycoff, the two main coauthors of The Art of Passing the Buck, Vols. I and II. Our experiences with Frank and Gwenn over a period of decades proved to us how much they valued their privacy. All we really learned about them was their commitment to helping families build their legacies through the use of common law trusts.
They not only worked on setting up scores of trusts, but also gathered extensive experience by helping run them. Having worked with Frank and Gwenn as Trustees, we have come to appreciate the extent of their knowledge. We also realized that the two volumes of The Art of Passing the Buck fell short of both what they knew, and the knowledge necessary to run a trust.
Knowing that Charles Arthur Enterprises Trust had the Policies and Procedures, along with other intellectual property developed by Frank and Gwenn, The OWL Project negotiated an exclusive contract to market the information in order to make sure that future generations have access to it.
The Family Irrevocable Common Law Trust Package
Our package will offer an indenture base on the master indenture organized and rewritten for Frank Ozak and Gwenn Wycoff in 2006. It also includes the Policies and Procedures as described below.
In addition to the Indenture and the Policies and Procedures, you also need other documents related to the trust (e.g., The Oath of Privacy, contracts for anyone hired to work for the trust from janitorial staff to Trustees, Trust Certificates and the register, etc). Along with all of this you will need the training on how to make it work for your trust. We intend to offer this as a complete package, the Family Irrevocable Common Law Trust Package, with a projected availability date of April, 2025.
Given that it takes at least $1 million, and preferably $2 million or more of income producing assets in the corpus of a trust to make it truly functional, we believe the package justifies a price of $20,000. This price will also, hopefully, get client invested enough to put forth the effort to make the trust work. The price includes at least ten hours of on demand, online training, and five hours of person to person supplemental training, with additional supplemental training available at rates TBD.
Policies and Procedures
Think of Policies and Procedures as the owner’s manual/quick reference guide to your trust. Imagine having the benefit of decades of experience from dozens of trusts. The OWL Project Trust has negotiated an exclusive license to make these available for your Trust.
While the package includes 175 Policies and Procedures, and over 450 pages, we have it organized so you can find the information you need quickly. In many cases you will also find examples or samples to help you understand just how to apply the particular policy.
For those who already have a trust set up with an indenture, but do not have Policies and Procedures, we will have a full set of Policies and Procedures available later this month for $3,000.
If you are not sure your trust should buy the Policies and Procedures, we will give you the first four for free:
- PP001 documents your Trust’s acceptance of the full set of Policies and Procedures, with the exceptions set forth in PP002.
- PP002 instructs you on how to edit or exclude any Policy and Procedure not appropriate for your Trust.
- PP003 tells you how to write a Policy and Procedure should you need to cover a situation not included in the Policies and Procedures as delivered.
- PP004 has the Style Sheet for writing a Policy and Procedure.
Do you think you can write the Policies and Procedures your Trust needs? Feel free to try it. We will gladly send you the first four Policies and Procedures for FREE. With PP003 and PP004 you will have everything you need to write your own Policies and Procedures, except the experience necessary and the time required.
Keep track of the experience cost, as well as the billable time. Alternatively, you can purchase the full set for less than $17.15 each. You can spend years learning the hard way how to properly manage your trust, and probably making some expensive mistakes in the process. Or you can order a copy of Policies and Procedures, personalized for your trust. Consult your tax professional to verify that this qualifies as a tax deductible expense.
To sign up for notification when the Policies and Procedures become available (including the first four for free), register today (https://theowltrust.com/policies-and-procedures/). If we already have them available by the time you read this, the link will take you to the Policies and Procedures page.
If you are interested in the Family Irrevocable Common Law Trust Package, we would suggest that you begin by purchasing and familiarizing yourself with the Policies and Procedures. We will credit the full $3,000 toward the $20,000.
The Business Trust
A business trust is easier to set up and run than a corporation, offers the same protection from individual liability, and far more privacy. In California it legally avoids the $800 annual tax to the Board of Equalization (https://www2.deloitte.com/content/dam/Deloitte/us/Documents/financial-services/us-fsi-california-ftb-says-ric-business-trusts-do-not-owe-minimum-franchise-tax.pdf). Is it any wonder that in setting up The OWL Project as a business, we decided to use a business trust? But we did not want to use just any business trust. We wanted specific things in the trust, so we opted to draft our own indenture.
We had the person who, in 2006, organized and rewrote the master indenture for Frank Ozak and Gwenn Wycoff use his copy of that rewrite as the basis for our indenture. While he was editing and adapting the indenture to work as a business trust, he also included features to make it a Socially Responsible Business Trust™.
What is a Socially Responsible Business Trust™?
- From the indenture:
A socially responsible business makes decisions based on more than immediate bottom-line considerations. Other factors that weigh in include: - Our ethics, especially as reflected in how our decisions effect the points listed below.
- Transparency for our shareholders, therefor we shall base shareholder distributions on gross revenue, not net.
- Our impact on the environment, both locally, and globally, through both our supply chains and product distribution and use.
- The financial stability of our employees, their families, our community, and society at large.
- The health and welfare of our employees, their families, our community, and society at large.
- Our ability to help people grow and develop, starting with our employees and contractors, and then extending to their families, our community, and society at large.
- Contributions we can make to the arts, including such programs as those encouraging and supporting younger artists.
- The satisfaction of our customers with both our products and our business practices.
Once he completed the draft of the indenture, we had it reviewed by the legal team who had worked with Frank Ozak and Gwenn Wycoff to win the case brought against them by the Department of Justice on behalf of the IRS. Following that we had the Head Editor for The Art of Passing the Buck, Vols. I and II join the legal team for a point by point review of the indenture. In short, we did it right.
Obviously you might want the point about “Contributions we can make to the arts” changed to fit your personal preferences, and/or those of your shareholders/investors. No problem.
We project that we will have the Socially Responsible Business Trust™ available by February, 2025 as a package that includes the indenture, Policies and Procedures specifically for the Socially Responsible Business Trust™, and training, at a price of $5,000. Knowing that some startups might not have that kind of money, will plan to offer a limited number of “Angel Deals” where we provide the complete package in exchange for an equity position.
Check back for more on the Socially Responsible Business Trust™, the Family Irrevocable Common Law Trust Package, and the Policies and Procedures at https://theowltrust.com.