• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Sinclair Prosser Gasior

Estate Planning Attorneys - Annapolis, Maryland

  • Facebook
  • LinkedIn
  • Twitter
  • YouTube

Call Now: (410) 573-4818

Attend a Free Workshop Trustee School

  • Home
  • About Our Firm
    • About Our Firm
    • Meet Our Team
  • Services
    • Annapolis, MD Asset Protection and Business Planning
    • Estate and Gift Tax Figures
    • Annapolis, MD Elder Law & Medicaid Services
    • Annapolis, MD Trust Administration & Probate
    • Family-Owned Businesses & Farms
    • Annapolis, MD Incapacity Planning
    • Annapolis, MD LGBTQ Estate Planning
    • Annapolis, MD Pet Planning
    • SECURE Act
    • Annapolis, MD Special Needs Planning
    • Estate Planning for Young Families
  • Resources
    • DocuBank
    • Elder Law Reports
    • Estate Planning Definitions
    • Free Estate Planning Worksheet
    • Frequently Asked Questions
      • Asset Protection Planning
      • Estate Planning
      • Frequently Asked Questions for Families Without an Estate Plan
      • Legacy Wealth Planning
      • LGBTQ Estate Planning
      • Medicaid
      • Power of Attorney
      • Trust Administration & Probate
    • Is Your Estate Plan Outdated?
    • Probate Resources
    • Reports
      • Advanced Estate Planning
      • Basic Estate Planning
      • Trust Administration
      • Estate Planning for Niches
    • Top 10 Estate Planning Techniques
    • Newsletters
  • COMMUNITIES WE SERVE
    • Anne Arundel County
      • Annapolis
      • Crownsville
      • Davidsonville
      • Highland Beach
      • Millersville
    • Baltimore County
    • Calvert County
      • Dunkirk
      • Huntingtown
      • Owings
    • Charles County
      • Charlotte Hall
      • Waldorf
    • Howard County
    • Prince George County
      • Bowie
      • Fort Washington
      • Glenn Dale
    • Queen Anne’s County
      • Grasonville
      • Queenstown
      • Stevensville
    • St. Mary’s County
      • Charlotte Hall
      • Leonardtown
  • Reviews
    • Our Reviews
    • Review Us
  • BLOG
  • Contact Us
  • Make A Payment
  • Client Portal
Home / Estate Planning Articles / Estate Planning Lessons – Wesley Snipes and the “Pure Trust” Argument

Estate Planning Lessons – Wesley Snipes and the “Pure Trust” Argument

April 20, 2016 by Sinclair Prosser Gasior

 Compliments of Our Law Firm,

Written By: The American Academy of Estate Planning Attorneys

You have likely heard the old adage “The only sure things in life are death and taxes.” In the United States, the adage certainly applies. Without a doubt, most Americans pay their share of taxes. Americans also like to find creative ways to reduce their tax burden. Using legitimate tax reduction strategies is perfectly legal; however, in the endless search for a tax break some people fall for outlandish claims relating to “tax-free” Trusts made by “tax protesters” that could land them in jail instead of saving them money. Actor Wesley Snipes is a perfect example of an innocent victim of bad advice – at least that’s what his defense counsel claimed at his trial several years ago. Whether he was a willing participant in a tax evasion scheme or an innocent victim of a persuasive shyster we may never know. We can, however, learn some valuable lessons from his very public tax evasion trial.

Award winning actor Wesley Snipes made close to $40 million between 1999 and 2004, yet paid absolutely nothing in income tax during that time period. In fact, he didn’t even file income tax returns for the years in question. Eventually, Uncle Sam caught on and filed criminal tax evasion charges against Snipes. Snipes and his co-conspirators, an accountant and an anti-tax ideologue, argued that a technicality in the Internal Revenue Code allowed him to escape taxation of his earnings. More importantly, the actor’s defense team argued that Snipes should not be found guilty because he relied on the advice of those co-conspirators. The jury bought his defense, finding him not guilty of the most serious charges. Although Snipes avoided a potential 16 year prison sentence, he did eventually have to serve some time in a federal prison and owed a small fortune in back taxes, penalties, and interest.

The Tax Protester Movement

Although the details of Snipes’ finances were never released, it appears by his association with his co-conspirators that Snipes may have fallen victim to one of several common arguments made by tax protesters. What these arguments have in common is that they all claim to provide a legal basis for not paying income tax. One argument claims the 16th Amendment (which allows Congress to levy an income tax) was never legally ratified. Another argues that signing an income tax return under penalty of perjury violates your 5th Amendment right against self-incrimination.

The “Pure Trust” Scam

One of the most common tactics used by tax protesters is the “Pure Trust” argument. Also known as a “Constitutional Trust” or “Common Law Trust,” proponents of these Trusts argue that income earned by the Trust does not incur income tax and assets held by the Trust are not subject to gift and estate taxation. They are often touted as “Asset Protection Trusts” with promises of complete privacy and tax avoidance. Unfortunately, unsuspecting taxpayers fall victim to these tactics all the time – often with devastating financial consequences down the road.

There are many websites abound with explicit, or implied, claims that a Trust can be created which will shelter your assets from the Internal Revenue Service, effectively avoiding all taxation on the assets held by the Trust. The websites claim not only will of your assets be held tax-free, but they will also be out of the reach of creditors, divorcing spouses, and even the bankruptcy court, according to proponents of these “Pure Trusts.” The reality, however, is that there is no such thing as a “Pure Trust.” Sadly, many hard working, otherwise law abiding taxpayers only find this out after they have lost the assets that were supposed to be protected and/or have been hit with a huge bill from the Internal Revenue Service for back taxes.

The Real Asset Protection Trust

The good news is that there are legitimate methods of protecting your assets from creditors and spouses, including a True Asset Protection Trust. Legitimate strategies also exist that can be used to reduce your tax obligation. An experienced estate planning attorney can explain how these strategies can be incorporated into your estate plan. In the meantime, remember that “if something sounds too good to be true, it probably is.” Don’t believe outlandish claims that promise tax-free income. If you are unsure about something you read, consult with an experienced estate planning attorney for guidance.

Primary Sidebar

Download our free estate planning worksheet

There's a lot that goes into setting up a comprehensive estate plan, but with our FREE worksheet, you'll be one step closer to getting yourself and your family on the path to a secure and happy future.
  • This field is for validation purposes and should be left unchanged.

Follow Us

  • Facebook
  • LinkedIn
  • Twitter
  • YouTube

Testimonials

5 Stars
Client Review
September 3, 2020
    

We initiated estate planning following a presentation by Sinclair Prosser Attorney Jon Gasior. We were so impressed, we contracted with them to complete our estate planning. Subsequently, we assembled information on our assets and Sinclair Prosser Gasior did the rest. Correspondence was communicated to our financial institutions and the estate was established. We were very pleased with the courteous manner of the Sinclair Prosser Gasior staff. However, it was their professionalism that made us satisfied we chose this firm to handle our estate. We have nothing but praise for Sinclair Prosser Gasior .

default image
– Walter K.

ANNAPOLIS

900 Bestgate Road
Suite 103, Annapolis, Maryland 21401
Phone: (410) 573-4818
Fax: (410) 573-2802

BOWIE

4201 Mitchellville Road
Suite 403, Bowie, MD 20716
Phone: (301) 970-8080
Fax: (410) 573-2802

MILLERSVILLE

1520 Jabez Run Rd
Suite 300, Millersville, Maryland 21108
Phone: (410) 573-4818
Fax: (410) 573-2802

WALDORF

Hamilton Centre II
3261 Old Washington Road, Suite 2020 Waldorf, MD 20602
Phone: 800-366-4615

Map

map for office

Footer

footer logo
  • Facebook
  • LinkedIn
  • Twitter
  • YouTube

The information on this Maryland Attorneys & Lawyers / Law Firm website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. This information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.

© 2022 American Academy of Estate Planning Attorneys| Privacy Policy | Contact Us | Disclaimer | Site Map