Corporation Sole Advantages and Benefits
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The following is a report of a discussion of Corporation Sole for
the financial services and asset protection Professionals
Recently, there has been a lot of information and misinformation passed around among estate planners and investment consultants regarding the Corporation Sole. Corporations Sole have been around for over 450 years, so they are not a "new kid on the block". Corporations Sole are used primarily for holding and passing the title for property belonging to a church, religious society, or charitable organization. Two examples of well-known Corporations Sole are the Brothers Winery and the Sierra Club. Because you will be asked about Corporations Sole, if you haven't already been asked, I'll share a little background information on Corporations Sole and you may be able to decide if or how they fit in with the estate planning strategies that you provide for clients. This discussion is the result of five years of studying Corporations Sole, and writing Corporations Sole for dozens of clients. In this learning curve, I have studied the documents written by most of the current Corporations Sole gurus. In various ways and to varying degrees, I find that there is a general lack of understanding of the historic usage of Corporation Sole, even among the so-called "gurus". There is also a lack of understanding of the statutes regarding Corporation Sole that results in most cases in giving away of the potential benefits gained by this unique form of corporation. People use corporations when they need a means of limiting liability. Normal Corporations are a creation of the state, and begin their existence on the date that the state incorporates them. Normal corporations owe their existence and allegiance to the government. Corporations "live" forever unless limited by their own Articles of Incorporations. Normal corporations require several officers, they have boards of directors, stockholders, annual fees, annual reports, and operate under many statutory regulations. People use trusts when they need a means of protecting assets. Trusts are used when one person entrusts another person with some valuable asset or a right. The asset or right must be sufficiently identified for title to pass to the trustee and title must actually pass to the trustee. The asset or right, therefore, belongs to the Trustee and is not returned into the ownership of the original owner [trustor] or a designated beneficiary until the trust terminates on a stipulated date. The reason why assets placed in trust are not liable for claims against the trustor or for taxes of the trustor is because the property really does not belong to someone else. Trusts are not perpetual and they are limited by statute to a certain number of years [20, 30, 99 years, etc.]. There are laws against perpetual trusts in virtually most, if not actually all, jurisdictions. Wouldn't it be nice if we could have an organization that has the advantages of limited liability of a corporation, without the regulation, without the multiplicity of offices of a corporation, for an organization that the government does not create (therefore the organization does not have its allegiance to the state), and also allows the organization to function as a perpetual trust in order to protect and convey assets for many generations? Carefully reading and comparing the Utah Corporation Sole statutes, a good Corporation Sole instrument, and the "Apostille" [not: "Creation" issued by the Governor's office of the State of Utah, show that the Corporation Sole can be everything that is listed above. Are all Corporation Sole documents equally serviceable? Many documents that do meet the State's requirements are so poorly written that they give away all of the advantages recognized in the first amendment's "free exercise [of religion]" clause. Some Corporation Sole documents even attempt to form a contract with "the ALLEGED state of [State]." Under UCC 1-203, Good Faith is a requirement in all contracts. Because it is not possible, in our opinion, to operate in good faith when one is alleging that the other party may or may not exist, then that kind of Corporation Sole instrument is inherently flawed and the courts will eventually walk right through them and seize all of the assets that the corporation accumulates. Some folks who have (in the past) organized a church under Corporation Sole and then promptly applied for the IRS 501(c)(3) status. Applying for permission for exemption under 501(c)(3) voids the natural immunity against regulation found in the First Amendment to the Constitution as well as the Internal Revenue Service Code, section 508. In spite of some sad examples of poor planning, there are also some very solid Corporation Sole instruments that do hold up in the courts. Being a "Corporation," the Corporation sole is by nature a form of limiting liability within the assets of the corporation. The statutes on Corporation Sole in some States stipulate that the property is held "in trust" for the membership of the organization. This makes this kind of corporation function as a trust! In fact, the Oklahoma statutes describing Corporation Sole are found in that state's trust successor provisions, with a waiver of the "rule against perpetuities". One feature of religious societies is that they can accept vows of poverty by their members [Re; monks, nuns, priests and Overseers]. The IRS recognizes these vows of poverty. For a small part of the IRS information on Vows of Poverty, look at pages 2 and 5 in IRS Publication 517. When one is under vow of poverty, the physical objects in their possession are not their own, although it may be their job to look after and use those objects. Thus, when you see a Catholic Bishop being moved between a cathedral and a golf course, he may be carried in stretch limousine, but he is still under a vow of poverty that is recognized by the IRS and he is not questioned or bothered by the IRS. Virtually, all Catholic dioceses are organized as Corporations Sole. One guaranteed way to fail in an attempt to avoid taxation is to work for W-2 wages and donate 100% of your income to a Corporation Sole of which you are the overseer. In cases like this, there is a contractual obligation not to exceed a certain percentage of one's income in charitable donations. Also, the IRS justifiably claims that the Corporation Sole is an "alter ego" of the W-2 wage earner, and liens, levies, and seizes all of the assets of the Corporation Sole. The best way to avoid this scenario is to never work for W-2 wages, but if you do, stay within the guidelines of the IRS when making donations to the sole. You may use other tax strategies for lowering the tax bite if you wish but please recommend that your clients protect their family assets by staying within the law (your contractual obligations). When the client eventually realizes that there is no way to safely reside within the tax system, they may want to get out of it completely with a Corporation Sole. The religious society's property that is in the custody of the Overseer cannot be taken by a court for satisfaction of personal claims against the Overseer, because the property is held ONLY in the Overseer's fiduciary capacity. At one point in American History, the Patriarch of every household was legally considered as being the Overseer of a common-law Corporation Sole. In looking at this pattern, it appears that the U.S. Constitution's prohibition against "corruption of blood" is one of the legal foundations and supports for this concept. When no law can restrict the right, by blood relationship, for your children to inherit the fruits of the parent's labor, this is identical in precept to no law being able to take away the right of future members of your congregation or religious order [family religious unit] to use and enjoy the property of previous generations. Quite obviously, the founding fathers of America thought of the family as the basic religious unit of society. We are therefore acting as a fiduciary for our grandchildren and the family property is not ours alone but belongs to the family. Taxation is the only means for governments to work corruption of blood. Because no law may impair obligation of contracts and when one places their family's property under contract (mortgage or otherwise), that property is no longer protected by the "corruption of blood" provisions. The primary contract that compromises our right of owning property is the Social Security Number. One of the most difficult contracts that one must deal with is the UCC's "holder in due course" issue regarding the Federal Reserve Notes (FRN's). The Corporation Sole Vow of Poverty deals with this issue better than any other method that I have seen. By not owning anything, we can be carrying pockets full of FRN's, be in charge of massive investment accounts, and still have no personal liability for the bankruptcy nature of the Federal Reserve Notes [United States Bankruptcy debt instruments]. During the "transition phase" out of a life that is completely under government regulation and control and into a life of liberty and privacy, it would appear that Corporation Sole could be a valid and valuable tool for many traditional family units, both as a limit on liability and for protection of family assets. Benefits of "Corporation Sole"1. Perpetual. No maintenance required to keep Corporation sole in Good Standing 2. No Annual Fees. Now or in the Future. 3. No Annual Reports. Now or in the Future. The State of Utah is used as the "Home" state and because the LDS Church is so powerful in Utah and because there are so many religious Corporation Soles in Utah it is very unlikely that any negative changes will be made in this state. 4. No Operating Rules. Corporation Sole creates its own rules of operations rather than following state statutory code or state guidelines. 5. Authority. Descends on Corporation sole. There is no Board of Directors, Stockholders or Members, unless otherwise provided by the Articles of Corporation Sole. 6. Full Government Recognition. This recognition is without inherent disadvantages of other corporations and entities. Corporation Sole is incorporated by law, in order to give it legal capacities and advantages that other corporations are not allowed (i.e. operational rule and statutory regulations). The government cannot dictate how Corporation Sole is to operate, so it acts with limited government interference. 7. Non-Profit Status. Corporate Sole declares and is recognized by the IRS as a status 508. (Not a 501(c)(3) which must be applied for and granted by the IRS. 8. Simplified, Self-Structured Management. Adversarial attorneys have no substantive means to entrap or to enforce laws that would allow courts to pierce the corporate veil the only valid or wanton acts committed against the government or the public. 9. Self Ruled. Statutory Law does not mandate or require an "Arms Length" test for management of Corporation sole (unlike Trusts which the state and federal laws require and adhere to arm's length standards as in the Grantor/Settlor relationship to the Trust). It is like a Kingship, designed to be self ruled by the creator. It has the authority to "declare" or the "right to rule" as does a king. 10. Lawful business. Corporation sole can be engaged in any lawful occupation, business or profession. All earnings from the lawful endeavors are exempt from income tax. In fact, no state or federal tax returns are to be filed. 11. Provides for Needs. Corporation sole can be responsible to provide for all your needs (i.e. shelter, food, transportation, clothing, medical, etc.) This occurs by first conveying all that you own and all future earnings to Corporation sole. You make a record vow of poverty. This lets the world know that you are now a pauper and own nothing. If you work outside Corporation sole, you do so on behalf of the Corporation Sole. None of these earnings are taxable because they are paid directly to the Corporation Sole. These payments are made without deductions, diminishments or taxes of any kind. You DO NOT become an INDEPENDENT CONTRACTOR. (While not everyone chooses to make use of this option right away, it is always available to you). It may be awkward to do it with your current employer (even though it would save him taxes). However, it is very easy to set this up with any kind of business. 12. Gifts and Donations. Corporate sole may receive tax-deductible gifts and contributions under section 170 (c) (2). (You may want to see a tax Professional for the best way to accomplish this because of the Complexities of the tax code). It is exclusively responsible for how its funds are disbursed. It can gift anything to anyone, in any amount, for any purpose, or, for no purpose. 13. Property Tax. As a non-profit institution, real property owned by Corporate Sole should become exempt from property tax just as are chapels, temples, mosques, synagogues, youth camps, schools, dormitories, etc. conveying title to corporation sole does not relieve you of your responsibility to continue meeting your contractual obligations (i.e. mortgage payments) nor forestall foreclosure proceedings. 14. Records. Corporation sole is required to maintain meticulous records of dealings. However, it is charged with never divulging those records. 15. Purpose. Corporation sole is typically organized for religious, charitable, educational, scientific, cultural, literary, benevolent, social, fraternal, agricultural, recreational purposes or for prevention of cruelty to children or animals. However, there are other legitimate purposes such as; fire protection, professional, industrial, employee organization, cooperative, service organizations, emergency medical and rescue, or search and rescue. A portion of its funds has to be used for a stated purpose. The balance can be used for operations, marketing, administration, etc. (just like every other charity). 16. Titles. As incorporator, you may be the Trustee-in-Trust, Patriarch, President, Bishop, Chief Priest, Minister, Pastor, Administrator, Overseer, etc. While some of these titles sound religious, they are simply titles and should in no way pose any conflicts or compete in any way with your church or religion. <back--Corporation Sole Introduction--next>
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This is a crazy world. What can be done? Amazingly, we have been mislead. We have been taught that we can control government by voting. The founder of the Rothschild dynasty, Mayer Amschel Bauer, told the secret of controlling the government of a nation over 200 years ago. He said, "Permit me to issue and control the money of a nation and I care not who makes its laws." Get the picture? Your freedom hinges first on the nation's banks and money system. Freedom is connected with Debt Elimination for each individual. Not only does this end personal debt, it places the people first in line as creditors to the National Debt ahead of the banks. They don't wish for you to know this. It has to do with recognizing WHO you really are in A New Beginning: A Practical Course in Miracles, an informational study. Disclaimer - The posting of stories, commentaries, reports, documents and links (embedded or otherwise) on this site does not in any way, shape or form, implied or otherwise, necessarily express or suggest endorsement or support of any of such posted material or parts therein. I disapprove of what you say, but I will defend to the death your right to say it. (attributed to Voltaire), but certainly embodies what the 1st amendment of the constitution refers to as the freedom of speech Bill of RightsAmendment 1Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.
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