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(WCS). WCS held periodic meetings for its trust clients.
Speakers at those meetings discussed technical procedures for
administering WCS trusts.
James Becker (Becker) sold WCS products on commission.
Becker told petitioners they could rely on WCS staff to answer
any of their questions. Petitioners received and reviewed a WCS
document entitled “Trust Information and Instruction Manual” that
said that trusts made it easier to: (a) Protect financial
resources; (b) handle daily details and routine; (c) avoid delays
in settling a decedent’s estate; (d) reduce probate costs; (e)
reduce taxes; (f) protect privacy; (g) assure immediate
distribution of trust assets in a manner that is safer than
distributing those assets outside a trust; (h) provide flexible
forms of organization and operation to manage an individual’s
assets; and (i) provide opportunities for charitable giving. The
document described the tax advantages as follows:
One of the most useful advantages of a trust is the
reduction or elimination of income and estate taxes.
When a trust is constructed in a proper way, it gives
“income splitting” advantages. That is: money (passive
and portfolio income) earned by the trust is separated
from money that is earned by the person who gave the
property to the trust. For example, a taxpayer earned
$30,000 from their job and another $25,000 from passive
income making them pay taxes on $55,000. When they put
the passive income into a trust, the trust could pay
taxes on the $25,000 and the taxpayer would move into a
lower tax bracket. Dropping from the higher tax
bracket to the lower tax bracket offers a tremendous
savings. This is the advantage of “splitting income”.
The use of a business trust can eliminate self-
employment tax and trusts in general are allowed to
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Last modified: May 25, 2011