Unincorporated Business Organization Trust

UBOT is:

1) an organization created and managed by ''trustees" for the benefit and profit

of Beneficiaries who hold or may acquire transferable trust certificates. Trust

certificates provide individual holders evidence of interest in the Trust estate

(assets/income).

2) a powerful entity by which individuals may combine their resources to operate

a business for profit without the inherent liabilities of a partnership or the

double taxation of corporations. A UBOT. can preserve privacy; protect

assets against judgments and lawsuits.

3) often called a "Common-law Trust" but this phrase is not descriptive of any of

the peculiar characteristics of such organizations. The basis for the

terminology "Common-law Trust" is that they are created under the common

law of contracts and does not depend upon any statute for its existence. See

the United States Constitution, Article 1 Sec. 10, Clause 1.

4) brought into being by two basic documents: a Declaration of Trust and a Trust

Indenture. These two documents make all the provisions of who is who and

who is responsible for what, relative to the Trust activities.

5) A great way to avoid tax liabilities of a business, or trust transactions, until

money or assets are distributed to the beneficiaries.

Since the Trust Indenture is a contract between the creator and the trustee, the

indenture controls the activities, powers and responsibilities of those who administer the

Trust. No one has legal authority to change its provisions except those so authorized by

the indenture.

The benefits of a UBOT are:

1) Privacy

2) Limited liability

3) Not subject to probate

4) No state or inheritance taxes

5) Minimize and/or avoid income taxes

6) Maximize depreciation

7) Reduce capital gains tax

8) Separate investment program

9) Protect Assets against Creditors

9 Basic Aspects of the UBOT

1) A UBOT is formed by contract between the parties setting forth the purposes, terms and conditions.

2) A UBOT is a legal entity and an artificial individual, with rights almost equal to a natural person (a human being), able to own property and conduct business like a natural person. It is irrevocable and no one has any reversionary right to its assets.

3) The UBOT's assets are owned and its business activities managed by the trustees who accept such responsibility as fiduciaries on behalf of the beneficiaries.

4) The beneficial interests are divided into Capital Units, evidenced by the issuance of Trust certificates conveying to the holder the limited rights to receive their pro-rate share of any distributions of income or assets that may be made by the trustees.

5) The Capital Units are personal property which conveys neither legal title to the property nor any voice in the management of the business or the selection of trustees.

6) A UBOT is subject to taxation on its distributable net income. The beneficiaries are only taxed on what they receive.

7) The assets of a UBOT are never subject to probate or estate tax because as an artificial person it never dies.

8) The Capital Units become void upon the death of the holder and, thus, have no value to be subject to estate tax or probate.

9) The life of a UBOT can be extended as deemed advisable or terminated at any time by the trustees in accordance with the Trust Indenture (contract).

Statutory Trust vs. Common Law Trust?

A statutory trust is a legislatively created and regulated entity. Statutory Trusts derive their existence from, and is governed and regulated by statutes by which it must conform.

Constitutional Trusts are derived from Constitution in the form of 'contract'. This right of contract is derived from The United States Constitution, Article I, Section X, which states: " No state shall, pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts" (Ex post facto law is defined as 'done or made afterward', from the thing done afterward').

Constitutional Trusts are created and operate under the Law of Contract established through the United States Constitution. The essential elements of the Law of Contract are absent in the creation of Statutory Trusts, but are present in the creation of Constitutional Trusts. 

The essential elements are:

1) Two or more parties at 'arm’s length' (not blood related);

2) An offer by one of the parties, and acceptance by the other party;

3) Consideration in the form of money or money's value;

4) All confirmed 'tied together' by a meeting of the minds or the understanding of the two involved parties; 5) Contract is signed willingly by both parties