American entrepreneurs really are a whole different breed. They don’t expect anyone to give them a break or a pat on the butt. They get their satisfaction from scoring, not praise. They take pride in doing something better than mankind ever did it before, not just their competitors. They pay their taxes to the local, state and federal governments without resentment, and then they pay for useless but mandatory insurance of all different varieties, interest on borrowed capital necessary to grow and merchant charges for credit card sales that scoop off a clean 2 – 4 percent right from the point of sale. For the credit card companies this is like a private tax that they get first, at the time of the sale, before anyone else gets a chance to cannibalize the entrepreneur’s “gross sales”.

Question: How many congressional Representatives and Senators can you buy with 2% of America’s retail gross sales? Answer: Just about all of them. Credit card companies ARE the BANKS. If you think banks make money lending money you are falling for the image of them THEY want you to have. Banks lend money, sure they do but it’s the credit card income that keeps them floating in a sea of money coming in everyday – NOT the interest they earn off your line of credit or your mortgage. They can shut down those sources of income instantly and still make gigantic profits. It USED to be that banks made money serving your capital needs, but times have changed.

So when the banks caved in to the federal government and made real estate loans that went sour because they never should have been approved in the first place, they didn’t need to go begging to Congress for a handout, because they’d already bought the Congressional Representatives and Senators they needed to patch things up with special legislation for them and billions of dollars of quick money to solve the problem. That’s how the biggest bailout in the history of man happened, which became a stimulus package so gargantuan that it staggered everyone in the world who read about it, and numbed even those Americans who repeated the words, “785 Billion” as though it was just another big number. But the money’s gone now, with no apparent impact on the economy as seen by the American entrepreneur, the progenitor of global prosperity.

American entrepreneurs brush it off, but now with a great deal of resentment. What will their strategy be for 2010 and beyond assuming the federal government aims to feed off them and piles on the fees and taxes and increased costs of staying in business? Will they organize politically? Will they re-organize their companies to be more efficient? Will they sharpen their focus on ROI? Or all of the above? I believe they’ll figure out how to make more money, pour themselves a scotch at 5 p.m. as usual and reinvent the world economy again.

If you’re just starting a business now, or thinking of it, your timing couldn’t be better. Starting a small LLC during an economic slump greatly increases your chances of success in so many ways. If you already run a successful small business, 2010 will challenge your ability to adapt.

For a start-up, you succeed or you die. That’s a strong incentive. During boom times you can always go back to your old profession or find another job even better than the last one. Any business – fundamentally — is only successful if the “money in” is greater than the “money out”. The more “money in” compared to the “money out” is the primary measurement in business success. That may seem simple, but it can become foggy in boom times when “early losses” can be tolerated for future success. If you keep it simple and work out of your home, how much do you really need to successfully take care of the “overhead” including the home and family expenses?

Actually, the list of advantages to starting a private little LLC now could go on and on. The internet advantage, the small computer advantage, the smart phone advantage, the low overhead advantage, the overnight shipping advantage, the changing climate advantage… the list goes on and on. It all boils down to this: because you can take advantage of being small, you have the advantage over businesses that have been successful and are established for a decade or more.

In contrast, successful small business owners that have been through the tough times in the beginning and then experienced growth and expansion due to increased demand and excellent performance in their field are vulnerable right now — perhaps more vulnerable than any period in the past 80 years.

Established small businesses have acquired increased administrative costs, increased government fees and expenses, increased energy costs, increased medical insurance costs, increased payroll costs, increased rent costs, increased insurance costs etc. etc. etc. The bottom line is, the bottom line isn’t what it used to be, and all indications are that this trend will continue. When the “money-in” becomes LESS than the “money-out” the small business has a problem.

The government term for a small business in this situation is “Too Small To Save”. Doesn’t that make you feel special? Seven hundred and eighty five BILLION dollars for failing bankers and insurance companies to give multimillion dollar bonuses to themselves and nothing for small companies hit hardest by the fraud the government and the bankers perpetrated upon them and the whole global economy.

All last year, our congress dished out billions to a few big companies and became fixated on taking over our health care industry, even while they run V.A. hospitals so badly already. Only one thing is certain about the new health care plan, it will cost small businesses more and it will introduce new taxes that will become part of our increasing costs of providing our goods and services to our customers.

Almost as bad as what Congress DID last year is what they DIDN’T DO. Congress ignored working on a new tax law. This is important because many current tax incentives for small businesses expired on December 31, 2009. At the last minute they threw some extensions into the Health Care bill, but the House and the Senate couldn’t agree upon it so, officially, many incentives that have kept American small businesses competitive in a global marketplace and growing for the past three decades expired December 31, 2009.

Currently, successful companies that want to stay successful will be the ones proactively raising their prices, producing less more profitably, investing in energy efficiency, doing more with fewer people and testing new products and services that afford them a higher margin.

In either situation, start-up or established company, small businesses are the backbone of the American economy and the American economy fuels the world economy. When it comes to ending the recession and returning to prosperity everyone’s counting on you!

As early as the 16th century the concept of property being held in trust by one person for the benefit of another was part of the English Common Law. For nearly 400 years the common law trust has been used by lawyers mainly for the benefit of the extremely wealthy, who have cultivated a whole realm of trusts to pass ownership of assets from generation to generation with the least amount of taxation and the greatest degree of security in the process.

The Delaware Statutory Trust (DST), however, is a statutory entity, created by filing a Certificate of Trust with the Delaware Division of Corporations, and governed by Chapter 38, Part V, Title 12 of the Delaware Code Annotated (See 12 §§ 3801 through 3862). Delaware is one of the few U.S. states to have a Statutory Trust law. Most states still rely upon common law trusts.

Common law trusts are still often used but they have many rules that are outdated and can create uncertainty about a number of legal aspects of the Trust. Delaware has undertaken the task to modernize the common law and create an effective and judicially secure form of entity.

Like the Delaware LLC law, the Statutory Trust Act relies on the legal principle of “Freedom of Contract” (See 12 § 3823(b)). This puts the power to determine the rights and responsibilities of the various parties in the hands of the drafters of the Governing Instrument, usually referred to as the “Trust Agreement” (See 12 §3801(f)). The Trust Agreement is the private, governing document of the entity. Delaware does NOT require the Trust Agreement to be filed (unlike several other states) and therefore the parties to the Statutory Trust and their relative duties and responsibilities can remain the secret of the parties.  (See 12 §3810).

The Trust Agreement is the definitive document and Delaware law provides that the Delaware Court of Chancery will enforce its terms upon the trustees and beneficial owners (See 12 §3804).  It is a contract and is enforceable. The Trust Agreement may create various classes or groups of trustees and/or beneficial owners (See 12 §3806). The Trust Agreement determines the nature of distributions of the trusts assets for the benefit of the beneficial owners (See 12 §3805). Trustees may have very broad powers or very limited powers, per the Trust Agreement and they may delegate their duties and authority to officers, committees, agents or others named in the Trust Agreement (See 12 §3806).

There is no requirement for the Trust Agreement to be in English, and no requirement to submit the document to any authority in Delaware for approval. There is no restriction as to the specific location to keep the Trust Agreement and no specific format or phraseology that must be taken into account. In fact, the drafters really have complete authority to devise the relationship of the Trustee and the Beneficial Owners as they desire.

For example, the voting rights of the trustee or the beneficial owners may be expanded, limited or eliminated with respect to any matter relating to the trust, such as investment decisions, distribution decisions, etc. (See 12 §3806). This provides greater flexibility than common law trusts and most alternative forms of business organizations which often have mandatory provisions on such matters as voting rights and dividend distribution.

The Delaware Statutory Trust Act (DSTA) states that the trust is a separate legal entity and that no creditor of a beneficial owner has any right to obtain possession of any of the property belonging to the trust (See 12 §3805(b)). The DSTA also states that a beneficial owner has no specific interest in the property of the trust (see 12 §3805(c), and the beneficial owner may not terminate the trust except in accordance with the private, Trust Agreement (See 12 §3803). Thus, other beneficial owners of the trust are protected against any beneficial owner filing for bankruptcy, going through a divorce, etc.

Beneficial owners can have the same limitations on personal liability for the entity as shareholders of a Delaware corporation (See 12 §3803). Beneficial owners may participate in management, or effectively control the Statutory Trust by directing the trustees without taking on the personal liability (See 12 §3806(a)).

Beneficial owners may transfer their interests to others unless prohibited or limited by the Trust Agreement. Transferability will be permitted by the courts unless specifically limited in the Trust Agreement (See 12 §3805(d)).

Generally, the entity has two types of participants, Trustees and Beneficial Owners. The Trustee holds the legal title to the assets of the trust but is obligated to follow the terms of the Trust Agreement in managing them. The beneficial owners hold equitable ownership and they, too, are governed by the terms of the Trust Agreement as to their ability to manage, control or utilize the assets. Trustees and Beneficial owners cannot be held liable for their good faith reliance on provisions of the trust agreement (See 12 §3802).

At least one trustee must be a resident of Delaware, which can be satisfied by naming a Delaware Trust Company , or by forming a Delaware corporation to act as the trustee (See 12 §3807).

There is no Franchise Tax and no Delaware Income tax on Statutory Trusts formed in Delaware. Under the U.S. Federal Internal Revenue Code a business trust may be treated as a Grantor Trust, a Partnership or an association, like a corporation depending of the wording of the Trust Agreement.  With check-the-box regulations in place, it is possible for a Statutory Trust to elect what type of tax structure under which it wishes to operate.  Further, non-resident alien beneficiaries of self-settled trusts are not required to pay any income tax to or file any tax returns with the United States.  See 26 CFR Section 1.6012-1(b)(2).

A Delaware Statutory Trust may qualify as a REMIC (Real Estate Management Investment Contract), a REIT (Real Estate Investment Trust) or a Regulated Investment Company, such as a mutual fund, under the IRC and receive preferential tax treatment.

Mutual funds set up using a Delaware Statutory Trust may not be required to have annual shareholder meetings, or allow shareholder votes on any matters.

Delaware Statutory Trusts are often used for financing commercial airliners. The trust holds title to the plane, managed administratively by a Delaware Trust Company. The airline is the beneficial owner and uses and maintains the plane while paying a lender who makes a return on the investment. This type of arrangement is sometimes called a leveraged lease. In this way none of the three have responsibility for the plane itself should an accident occur.

This form of entity shows how much flexibility is allowable and still protects the parties under a statute which respects their Trust Agreement and the good faith management decisions of the parties.