Business Trust Company

Asset Privacy & Anonymity

If you’re wondering if there’s a reason to get a business trust, read on and discover the advantages why.

Private and Powerful

Are you searching for anonymity with your new or existing business? Save precious time and money. Stop dealing with fickle bureaucrats. Many people experienced with the most common business organizations — corporations, LLCs and partnerships have had enough. Savvy investors have moved on for many reasons…

Here is what you can get with a Business Trust – eliminate secretary of state registrations, filing fees, franchise taxes, resident agent and government permission!

It is recognized in all states as a valid and legal form of business organization with the right to do business, hold and convey real estate, contract with others, and enforce its rights in court.


Applications & Solutions

  • Inheritance Protection
  • Import Export Nominee
  • Financial Settlements
  • Inventors & Patents
  • Self-Directed IRA ROTH
  • Strategic Banking or Brokerage
  • Business Identity Theft
  • Cryptocurrencies
  • Professional Corporations
  • Cannabis Growers
  • House Flippers
  • Property Management
  • INC/LLC Replacement
  • Prenup Agreement Substitute
  • Offshore Companies and Banking
  • Bearer Shares Investing

Benefits for You

A Business Trust combines the best features of a corporation, LLC and partnership all in one. Yet it’s less hassle – no secretary of state registration, no fees, no franchise taxes, no resident agent, and no state permission. It can operate in California or any of 49 states nationwide. And your Business Trust is completely private.

Many successful business owners are looking for a fresh alternative to government sponsorship. It’s exactly what happened to us. After years of operating corporations and LLCs we found the Business Trust solution. It relieved us of many hassles to organize a low profile investment management company. You save time and money too.

Low Profile Privacy

Unlike a registered corporation, LLC, partnership, or statutory trust – your business trust is totally off the public radar screen. It has no secretary of state filing requirements. It does not appear in any public online database. This means your business assets, bank accounts, name, address and owners are invisible to outsiders. They’re “unlisted.”

Worldwide Acceptance

Read the European or Asian WSJ, FT or Reuters financial news and you’ll see Business Trusts used extensively in Singapore, the United Kingdom, Australia, South Africa, and India. As these are often registered public investment companies they apply a different purpose to their mission. However, the fundamental trust/trustee/shareholder architecture is essentially identical to those who prefer a privacy purpose.

A Business Trust is recognized as wholly, valid and legal form of business organization, with the right to do business, hold and convey real estate, make contracts and enforce its rights in court.

Personal versus Commercial Trusts

Living Trusts are designed for estate planning. They fit within the category of “Personal Trusts” whose purpose is to conserve and distribute wealth. Business Trusts are designed for doing business. They fit within the category of “Commercial Trusts” whose purpose is to operate a for profit business.

United States History

Long ago the Massachusetts Bay Colony Corporation was afforded a government monopoly. Political cronies only. A law was passed that prevented other corporations from holding property and engaging in business. Without liability protection of a corporation, investors were unwilling to risk debtors’ prison and their wealth on a single venture. Thus Business Trusts were invented.

Business Trusts originated in England several centuries ago. They were called Unincorporated Joint Stock Companies in late 1680. American investors imported this trust concept for business operations because of the limited liability and protection for investors. This is also called ‘entity shielding.”

We see the state of Massachusetts as the foundation for business trusts in the United States. Rockefeller’s infamous Standard Oil was a maze of business trusts. His vertical integration was smart but also a problem.

The name “Sherman Anti-Trust Act” of 1890 is misleading. More accurately it should read ‘Anti-Competition Act’ because it attacked monopolies, cartels and trusts. Later on the “Clayton Antitrust Act” of 1914 sought to prevent anti-competitive practices such as price fixing. In both cases the underlying issue was not the business organization itself. It was the owner’s behavior.

Since 1940 in the United States, mutual funds such as Vanguard organized as Business Trusts. Their industry holds trillions of dollars of assets. Rockefeller’s infamous Standard Oil was a maze of business trusts. In the 1960’s real estate investment trusts (REIT) became popular and remain so today. You can find WalMart Business Trust is in the news too.

In America many professionals — including most lawyers — have little experience or understanding of business trusts. None of the leading casebooks on business organizations or business associations cover the business trust. Law school curriculum is focused entirely on personal trusts and estates for wealth transfer. There are few references to a trust structure for operating a business. None of them advocate strategies for asset privacy.

Property is conveyed to the trustees to be held, managed or invested for the benefits of one or more beneficiaries. These beneficiaries often hold freely transferable shares unless restricted by the trust declaration. Often these trusts are organized using Massachusetts law because they have extensive case history.

“…a business trust is a citizen of every State in which its shareholders reside…” Navarro Savings Assn v. Lee – No 79-465 United States Supreme Court (1980)

Like the other kinds of trusts described on this site, business trusts have a long history. In our litigious and open internet society they are becoming an increasingly popular way for successful investors to operate with superior privacy.

Taxes

Federal and state authorities retain the power to tax the income of any business in your chosen domicile. However, with a Business Trust you have great flexibility in how you are classified.

Business Trusts have no special distinction in the Internal Revenue Code. Just like LLCs, pay attention to “Check the Box” Form 8832. You’re taxed as – an individual, partnership, or corporation.

The standard corporation is Subchapter “C” and you may optionally elect “S” as needed. With passage of the 2017 tax law many investors prefer the 21% corporate tax rates for a C.

C – ideal for investors seeking fringe benefits and long term capital gains.
S – for those seeking maximum cash flow.

Double taxation chatter can be misleading. It really depends upon your objective – capital gains or income plus various types of deductions.

If you’re applying for a loan with an S corporation, the underwriter will request both your personal and corporate returns. If you use Subchapter C, they only want your personal return.

Because the business trust structure is NOT a statutory entity in California, you are exempt from paying the annual $800 franchise tax to the Franchise Tax Board.

For more information on federal tax classifications see Treasury Regulations 301.7701-4(b) for more details

And unlike other trusts described on this site, a Business Trust can file Chapter 7 and 11 of the Bankruptcy Code

More Economical

Establishing your Business Trust is less costly and easier than a corporation or LLC. Over the years it requires far less paperwork, zero state fees and fewer legal requirements. It gives you greater flexibility and offers excellent tax options.

Corporations and LLCs are paperwork-intensive, and can take weeks to fully set up. Naming conflicts occur. With these organizational models you incur ongoing fees, filings and disclosures with the secretary of state in whatever state(s) you do business. Over ten years these mandatory obligations can easily cost you $15,000 in expenses. Plus add in the value of your personal time to maintain the organization.

Your Business Trust avoids all of these state regulatory hassles and expense. You get privacy along with money and time savings. It’s a triple combination.

Corporate Veil Compliance

In exchange for compliance with state rules and regulations of the corporation and LLC models, companies are granted certain statutory protections. But should it fail to follow any of the many requirements to the letter, the so-called “corporate veil” (liability protection provided by the legal entity) is pierced. This can render the partners, directors, and stockholders unprotected and personally liable for debts of the organization.

More painful is a tax audit. If during audit the IRS or your State tax authorities request your records and discover you failed to maintain the veil, they can disallow all business deductions and recast income to personal tax rates – years back to inception. This could be devasting.

Insurance claims are subject to denial if your Corporation or LLC fails to respect the veil. Imagine settling that big lawsuit out of your own pocket.

Your Business Trust has no corporate veil or paperwork requirements. It operates with a minimum of state regulation. The participants – trustees and beneficiaries possess a great many benefits and safety protections. It remains a prudent business practice to keep basic records according to the original trust agreement.

No Resident Agent

States require Corporations and LLCs to maintain a “resident agent” for legal service. The agent resides in the state where the company is chartered and is required by law to accept legal papers served upon the corporation or LLC. Lawyers like the resident agent requirement because it makes it easy for them to sue your corporation or LLC.

Business Trusts do not have resident agents. They do they have address requirements. Attorneys eager to sue a private business trust has an uphill battle to climb. First they must locate and identify the current trustees. How many states are there in the USA? It’s difficult, expensive and time consuming. It’s never our job to make it easy for them.

Reduced Liability for Shareholders

You get limited liability with a business trust. This includes protections for the persons who operate the business (trustees) and those that get the financial benefits (shareholders).

In the conventional corporation structure, the stockholders are the de facto legal owners of assets. The officers are agents of the stockholders. This can cause liability. Although a stockholder of Google is unlikely to have problems, in a small corporation they are at greater risk because of state compliance issues.

In a Business Trust, the trustees are the legal owners of assets. They are not agents of the shareholders. Yet they do have a fiduciary responsibility to the shareholders. Provided that the trustees manage the business without interference, the shareholders liability is little to none. This single fact alone is important to many people.

Personal creditors, civil judgments or tax liens of a Trustee or Beneficiary never attach to Business Trust assets.

Corporate stockholders as owners can sue the officers or directors for performance issues. Trust shareholder are not owners and cannot sue the trustees for performance issues. This might be to your advantage. It is one reason mutual funds prefer the business trust structure.

Greater Financial Flexibility

In the corporate structure, the company may only pay dividends to stockholders. With the Business Trust, the Trustees may distribute dividends, return of capital, profits, or none to the shareholders. This offers you greater flexibility for cash management.

Dissolution

A business trust is easy to dissolve or terminate. In contrast a corporation or LLC requires another public filing document with the Secretary of State. Your business trust simply liquidates the assets.

Investors

Any business organization can have investors. Corporations have stockholders. LLCs have members. Business Trusts have shareholders.

If you choose to have investors securities laws may apply. It doesn’t matter what type of organization. Securities vs organization are two separate issues.

Miscellaneous

A few states such as Delaware offer Statutory Business Trusts. They are primarily designed for corporate finance and required if a public traded company. They are registered with the Secretary of State. They are not designed for privacy.

Remember, the statutory trust and corporation are both artificial persons created by the state having no rights. Your non-statutory common law Business Trust is a natural person, with all the rights of an individual. Depending upon the type of business you operate, you may need a local business license.

“…a business trust is a citizen of every State in which its shareholders reside…” Navarro Savings Assn v. Lee – No 79-465 United States Supreme Court (1980)

We Are Your Business Trust Source

A business trust is the best ‘new old’ way to operate in 2020. Combine it with corporations, LLCs, realty land trusts, and your living trust. 

Comparison: Business Trust vs. Corporation

Advantage / Disadvantage Corporation Business Trust
Simple and Swift Setup
Avoids naturalization in each state where you do business
Avoids Secretary of State Registration
Avoids Resident Agent Requirement
Avoids public disclosures
Invisible to Public Online Databases
Taxed As Individual, Partnership or Corporation
Exempt Franchise Tax in California
Avoids annual paperwork filings
Avoids annual fees in each state where you do business
Avoids annual meetings of shareholders, trustees, officers
Avoids statutory fees
Avoids Personal Liability of Shareholder

For More Details Go to the Business Trust Comparison Page


After you’ve decided a business trust is right for you – click below

Business Trust Seminar


Summary – Your Choice

Before the internet, traditional business organizations were okay. But everything about privacy changed with technology. Meanwhile the government demands more and more from business owners.

Your option now is to still do business, but without bureaucrats. Save yourself tons of paperwork, fees and taxes. Use a Business Trust. And keep privacy under your control.


Business Trust vs. LLC

Benefits of Operating an LLC versus a Business Trust

Are you now ready to formally organize your business? You have several choices and many people think about a corporation or LLC. But there’s a superior alternative, upgrade to a Business Trust.

Only the Business Trust gives you anonymity for the business itself. You can get all of the tax benefits of a corporation and liability protections of an LLC. You also avoid the hassle of government fees and filings, resident agents, and most of all – unlisted status.

Yes

Reduced Personal Liability Risk

Business Trust: Yes! This is an enormous benefit. Any enterprise operated as a business trust is separate from your personal affairs. Liability is contained within the business trust.

LLC & Corps – Sort of.

Personal liability is limited per state regulations and code. However, these government sanctioned entities must remain in compliance with annual secretary of state filings and fees. Any omissions can invalidate statutory protections and leave you personally liable.
Yes

Personal Asset Safety

Business Trust: Yes! Business assets are legally isolated from your personal assets.

LLC & Corps – Yes, but…

Unless you comply with all LLC/Corp Secretary of State formalities, your other personal assets are at risk.
Yes

Privacy of Ownership and Organization

Business Trust: Yes! There’s no public record of your personal name, address, Trustees, or of the business trust itself.

LLC & Corps – No, Sorry

Corporations and LLCs are listed in the secretary of state database, and in each state they register. Directors and Officers full name and address is required per CA regulations.
Yes

Simple to Establish

Business Trust: Yes! Your Business trust is simple to setup.

LLC & Corps – Not really.

Somewhat complex because of name reservation, government filing fees, reporting requirements, application approvals, waiting periods and often delays.
Yes

Operates in All 49 States

Business Trust: Yes! You can immediately conduct business in all 49 states.

LLC & Corps – Yes, but…

You need to register with the Secretary of State and maintain a Resident Agent in each state.
Yes

Zero Statutory Setup Fees

Business Trust: Yes! Business Trusts pay zero setup fees to the Secretary of State.

LLC & Corps – No, sorry.

Corps and LLCs must pay setup fees to the Secretary of State before than can legally conduct business.
Yes

Zero Statutory Annual Fees

Business Trust: Yes! There are no annual fees paid to the Secretary of State.

LLC & Corps — No, sorry.

Corps and LLCs must pay fees annually or biennially to Secretary of State.
Yes

Streamlined Reporting

Business Trust: Yes! There’s no required reporting or filing with Secretary of State!

LLC & Corps — No, sorry.

Corps and LLCs must meet all reporting and filing requirements with Secretary of State.
Yes

Tax Filing Options

Business Trust: Yes! You get Individual or Partnership by default, or elect Corporate classification.

LLC & Corps – Yes, but…

LLC: Yes, select Partnership, Corporate or Personal filing. Corps: Only Corporate.
Yes

Swift Setup

Business Trust: Yes! Your Business trust only takes a few hours to setup.

LLC & Corps – Not really.

Somewhat long because of name reservation, government filing fees, reporting requirements, waiting periods and often delays. Generally, it takes a month to complete everything.
Yes

Financial Flexibility

Business Trust: Yes! Your organization can make distributions or withhold them anytime.

LLCs and Corps – Yes, but…

Corporations can only distribute dividends. LLC makes distributions based upon initial agreement.
Yes

Franchise Taxes

Business Trust: None in most states including California. Instantly save $800 per year.

LLCs and Corps - Yes

Each and every Corporation or LLC must pay $800 per year in California or have their charter suspended.
Yes

Public or Private

Business Trust: Only the insiders know about your business. To all outsiders, your business trust is unlisted and private.

LLCs and Corps - Yes

All state chartered Corporations and LLCs are public information. They are listed in multiple databases online for anyone to see.
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