Irrevocable Trust vs Sole Proprietor

The American Dream is something that most Americans strive for in our everyday lives.  Most Americans want to have a nice, healthy family, a car, and a home for their children and a comfortable income.  Most of us have been told that owning a home, a vehicle, and other luxuries in your name was the way to go.  Sometimes owning your own home or other assets as individuals, in your own name, in The United States leaves you vulnerable in several key areas. These areas for example, may include lawsuits, higher taxes, and having less control over your life.  If we learned to have control over our assets instead of ownership, there would be less lawsuits, we'd pay fewer taxes, and have more control over our lives.

America is a world leader in lawsuits. In today’s society, no one is exempt; lawsuits are filed for any and all reasons under the sun. Having assets in your own name leaves you vulnerable to vultures... "opportunist" looking for someone to sue. "A way to protect assets from lawsuits is to set up a trust" ⁽¹⁾. There are many types of trusts available. A trust removes you from your assets while maintaining full control of them. The financially affluent in America have done this for years to protect their assets.

There are several types of trusts, one type is a family trust which you would put your home inside this trust and it has its own separate EIN number for tax purposes. Second is a business trust where you would put your business inside of this trust and also has its own separate ein number. Third would be a charitable foundation," where you would put the money you donate in this foundation up to 30% of your adjusted gross income you make, you can donate it to your foundation" ⁽⁴⁾. Fourth is a mini-auto trust is where you would place your automobiles inside this structure.
Fifth would be a unit trust Man power trust and that is where the employees of your business would go under that structure. Sixth would be a mini trust leisure and that is for things such as: boats and planes and other types of recreational vehicles. Finally you have a unit trust rentals this is for secondary residences and rental properties or vacation homes. These structures," can protect you from lawsuits and losing a lot of your assets and business set backs" ⁽²⁾.
A mini trust auto is a good example to use show how it can protect you from a lawsuit and losing all of your assets. By placing all of your cars within this trust this separates the cars from other assets and incase of a car accident followed by a lawsuit because your car is in a mini-trust auto all the plaintiff could do is sue the automobile and the insurance policy that was involved in the accident all the other assets that you own are protected because they are in the other structures.
Paying taxes is one of the things dreaded by most Americans. It seems like the more money that you make the more that you get taxed. How can a individual get ahead if they always have to pay so much money in taxes. The answer is a individual will never get ahead but if you are a trust instead of a individual you only have to pay 3% in taxes a year after all the deductions were made for your expenses that year.
Most Americans know about the 1040 tax form. The 1041 tax form is the one that most Americans don't know about it. "If you have a irrevocable complex trust or dynasty trust you can fill out a 1041 tax form instead of a 1040" ⁽⁵⁾. This can reduce your tax liability down to 3% every year.
You can write off things that are illegal for you to write off on a 1040 tax form. You are able to write off your cable bill, medical bills, food, light, gas, car payments, childcare, these are just a few examples of the write offs that you get. Having a trust you also have a charitable foundation within that structure which means, "you can donate up to 30% of the adjusted gross income that you made for the year to your foundation " ⁽³⁾. Which it can actually be to yourself meaning you can donate money to yourself and reduce your tax liability.
Having a trust gives you control that you just don't have as an individual. A person would be the trustee over that trust which means they can dictate how that trust is going to operate. The trustee can decide who the beneficiaries of that trust are going to be. The trustee can decide whom and when its successor can run those assets after the trustee dies. There is no probate with a trust those assets stay within the trust and goes to whoever the trustee assign them too. "Since there is no probate because of the assets being in a trust you don't have to pay taxes which is from one half to two thirds off all the assets being taxed and given to the government" ⁽⁴⁾ . A will doesn't protect you from paying this costly tax.
Instead of having things in your name and owning them it is a much better deal to have things in a trust and run them. Having things in a trust saves you from losing the things that you have worked hard for to someone in lawsuit and allows you to leave them to your family and loved ones. Operating within a trust gives you more money by reducing your tax liability down to three percent taxes. Having a trust gives you more control over where your assets are going and to whom instead of to the government by paying the death tax. Your assets now go to the beneficiaries of your trust that you picked and decided to leave them too to take over your family legacy.

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<sub>SOURCES

1. " Does a Trust Make Sense?" www.money.cnn.com/pf/201/lessons/21/page5.html
2. Carruthers, Peter. "Want To Protect Your Stuff? Put it in a trust! www.bizland.com.za./articles/legaltrusts/.htm
3. Kefer, Scott. "Charitable gift shop options." October, 1998. www.physicianNews.com/finance/1198.html
4. Sears, Steven. www.searsatty.com
5. www.irs.gov</sub>