Entry Submitted by VA Gorman at 10:36 PM EDT on May 16, 2021
A much respected mutual friend has asked me to write you to clear up a few issues. I am a Federal and State licensed Financial Advisor having earned the series 7, 63, 65, 22,10 designations as well as Life and Health Ins Licenses and the NY Real Estate License. My brother is also one of the most respected Thrift and Loan Banking Attorneys in the United State. In my previous work I was deeply involved with HNW banking and Investment banking operations for Prudential, First Union and Wachovia banks. Wachovia had the oldest banking trust charter in the US when it was purchased by First Union but First Union, as you may be aware, decided to use the Wachovia name. I was actively involved in that purchase and transition as part of the Wachovia Private Client Group.
Over the last several years I have witnessed several ‘well meaning’ organizations scare innocent individuals into believing that in order to receive any money resulting from their various currency exchanges they must have ‘various named trusts’ in order to receive their exchange moneys. Since I have been heavily involved in HNW financial planning for many years, and created and managed many trusts, this seemed to me to be an extremely inappropriate turn of events and a very poor use of ‘trusts’. Many people have been lead to believe that because a financial vehicle is called a ‘trust’ it is somehow more ‘secure’. As a licensed banker I am fully aware of the fallacy of this notion. In fact the IRS only recognizes two types of trusts: revocable and irrevocable. A ‘trust’ is most often held in a bank account and is no more secure than a regular bank account. In fact, a ‘trust’ account is far more restricted by the ‘trust’ document that specifically directs and most often restricts the activities of a trust. Furthermore, with an irrevocable trust, the granter of the irrevocable trust loses most if not all control of the assets in said trust under IRS regulations.
At the first meeting where a currency holder will conduct an exchange it would therefore be somewhat irresponsible of the entity conducting the exchange to demand that the resulting wealth be placed in a client’s ‘trust account’ of any kind. Furthermore a trust account can only be opened with the ‘trust agreement document’ having been drafted by a ‘trust attorney’, signed by all trustees (with few exceptions) and notarized. Only after the ‘trust agreement document’ is then approved by the bank will a trust account be opened. The bank may be holding the new clients assets in a skeleton trust prior to disbursement, but this does not matter to the owner of the exchange funds. Therefore, the recipient of the assets resulting from the currency exchange must be able to receive their funds in regular non-interest bearing accounts until they decide, if need be, they would like to subsequently open various ‘trust accounts’ at some later date to be determined by the new owner of the assets released to them by the bank (directly or through a trust such as a skeleton trust). Furthermore, there are probably many people exchanging currencies who do not have a trust or even know what a trust is but must be able to exchange their currencies into a regular bank account or accounts. In addition, it seems that there exists a provision for those older than 70 years of age that provides these individuals with the right to accept their exchange funds and ‘walk away’, These people will have no use for trusts which can actually complicate things while not providing any real advantage. However, they may decide to create and fund trust(s) later for various purposes.
In my somewhat extensive experience with ‘trusts’ I have found that often trusts are misused for purposes other than the original reason they were created by the IRS. They essentially are like ‘wills’ that bypass probate courts for the distribution of assets after the death of the granter. Sometimes they are used for various tax efficiencies. However, in my experience, an individual with good intentions and ethical, wise and knowledgeable advisors will have considerably more control of their assets by maintaining his/her assets in private and corporate accounts with certain assets placed in various trusts should the asset owner meet with an untimely demise.
Finally, during the initial meeting of the currency/bond holders, will the holders of these financial instruments they are exchanging be required at that time to ONLY place their new cash assets in a ‘trust’ account? I can’t imagine this would be so because it takes a bit of time for a new ‘trust’ account to be approved and opened, and a trust will most probably not be in the best interest of the wealth recipient without much great thought and planning. But stranger things have happened.
Please feel free to respond to my personal email: firstname.lastname@example.org or to the email by which I have sent these comments.
Thank you for your indulgence.
HNW Financial Advisor for a currency exchange client
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