Banking Trust

[Rlynne]

I had heard from an individual a Trust could get commercial financing but I've never known anyone who has, do anyone know if what I was told is factual?

I realize a trust is an entity of it's own but can it borrow? A regular business could borrow funds but if the business lacked commercial credit one of the principles would have to secure it with their personal credit.

If you have a trust wouldn't a trustee have to secure it with their personal credit if it lacked commercial credit?

[fulltitle]

I had heard from an individual a Trust could get commercial financing but I've never known anyone who has, do anyone know if what I was told is factual?

I realize a trust is an entity of it's own but can it borrow? A regular business could borrow funds but if the business lacked commercial credit one of the principles would have to secure it with their personal credit.

If you have a trust wouldn't a trustee have to secure it with their personal credit if it lacked commercial credit?

#1. I dont see why a trust, corporation or otherwise ought not be able to borrow money.

#2 If the trust declaration or whatever foundational documents might underly the trust dont forbid placing the trust corpus/trust estate up as security for a loan then there you go.

#3 No a trustee wouldnt have to secure it with their own personal credit if the lender didn't require such. Its possible that an automobile in the trust estate could be utilized to secure a loan.

#4 I would suggest signing documents for the trust ", Trustee" or ", as Trustee" to avoid errant presumption that you are taking liability for the trust.

#5 Your inquiry is rather general and the specifics and variations may vary the reply. Keep in mind that making a trust "irrevocable" is likely key to it being not seen as a sham or alter ego of its settlor.

[mikah2k]

Rlynne,
Does the trust, which desires the loan, have any collateral?

Originally Posted by fulltitle

#5 Your inquiry is rather general and the specifics and variations may vary the reply. Keep in mind that making a trust "irrevocable" is likely key to it being not seen as a sham or alter ego of its settlor.

Each american-union-state-government is forbidden from exercising irrevocable trusteeship, and yet each such government can borrow.

[fulltitle]

Originally Posted by mikah2k

Rlynne,
Does the trust, which desires the loan, have any collateral?



Each american-union-state-government is forbidden from exercising irrevocable trusteeship, and yet each such government can borrow.

The (e)states? Perhaps somehow that makes the states 'grantor trusts'.

Evidently this information was not needed?

[REDCLOUD]

I had heard from an individual a Trust could get commercial financing but I've never known anyone who has, do anyone know if what I was told is factual?

I realize a trust is an entity of it's own but can it borrow? A regular business could borrow funds but if the business lacked commercial credit one of the principles would have to secure it with their personal credit.

If you have a trust wouldn't a trustee have to secure it with their personal credit if it lacked commercial credit?

I have held real estate for many years in various irrevocable trusts. I have repeatedly obtained mortgage loans secured by this real property in the name of the trust, only. Sometimes, I have been required to personally sign the loan agreement and sometimes I have not, depending upon the lending institution and my credit score. It is indeed possible for a business to operate as a trust, instead of as a corporation, partnership, or limited liability company. The most famous of these arrangements was the Broadmoor Hotel in Colorado Springs, Colorado. It was owned by a man named Spencer Penrose who transferred it to a trust in 1938 known as the El Pomar Foundation. It (The Foundation) later became a foundation when the 1954 internal revenue code was enacted. Trusts are of various types and may be charitable and tax exempt which was the case with this trust. the earnings from the Broadmoor Hotel accumulated as nontaxable for many years until the IRS challenged the status under what are known as the Unrelated Trade or Business Income Rules (UBIT). The Service Argued that the trust should have been filing an UBIT tax return in addition to its trust act return, or in conjunction with its trust return and paying tax on the earnings of the business. The service prevailed in the Broadmoor was spun out from the charitable foundation into an operating Corp., changing the way charitable trusts have operated ever since. The point being that this trust certainly obtained commercial credit, borrowed money, conducted business, and did all the things you associate with corporations operating an operating business. When you add this to the fact that the IRS rarely audits trust tax returns, the trust can be a very favorable method to use to conduct your affairs.

In addition, creditors have a very difficult time attaching any assets you possess that are held in trust. For this to occur, the trust should be irrevocable and not revocable. The trustee should be someone other than yourself. Anything held an revocable trust is the same as if you held it in your own name. This is why, so-called, "Pure Trusts", are basically useless, because the law surrounding irrevocable trusts is basically superseded it.

[Rlynne]

Originally Posted by mikah2k

Rlynne,
Does the trust, which desires the loan, have any collateral?



Each american-union-state-government is forbidden from exercising irrevocable trusteeship, and yet each such government can borrow.

No, there are no assets that I know of associated with the trust. Thank you everyone for your input.

[mikah2k]

Either you want a secured loan or an unsecured loan.
If you want a secured loan, then the trust should put up collateral. If the trust has not collateral, then the trust needs to be funded with collateral.

If you want an unsecured loan, someone will still put up collateral, but the collateral will be intellectual property or propriety information or rights/remedies or other intangibles. I am without knowledge of any arms-length unsecured loans are without some form of collateral.

I recently came across the first non-recourse unsecured loan paper(s) that I have seen. If a lender is willing to give you a non-recourse unsecured loan, then the lender is looking at getting something else.

Why does the trust want a loan? Perhaps the trust desires to pay for the living-expenses of its Settlor.

After filing a fictitious name (you can have the fictitious name created/owned by the trust), I saw much mail matter offers of funds (supposedly credit or loans) to my fictitious name. If those are true offers, a thing to do is to accept those offers (not the same as filling in an application and offering it to the "lender"), and record the acceptance into the public-records, and start drafting against those offers as letters of credit. Think of the offers (letters of credit) as being accounts, and the offeree is exercising rights contained in the agreement of the parties by drafting against the name of the offeror (as drawee).

Originally Posted by Rlynne

If you have a trust wouldn't a trustee have to secure it with their personal credit if it lacked commercial credit?

If your trust, or the fictitious name owned by the trust, is receiving offers of credit/loans, then the trust is credit-worthy. Why else would the trust or fictitious name receive offers?
Analogy and not an offer: if one is a beautiful woman, and men make offers to date that one, then the offers are proof that the one is date-worthy.

[Notorial dissent]

Redcloud, about the Broadmoor, it was and is the same corporation that Penrose founded in 1932, he transfered the stock he owned to the trust and they held it until they were forced to sell it off by the IRS. They then sold that same stock to another hotel company, admittedly for a good deal of money, and the hotel company now belongs to another company, but is still operating on its original charter. The hotel was owned by a trust, but was not a trust itself, it was always a for profit corporation.