Should my church perform a Declaration of Trust? by Dr. Benjamin Townsend
The Declaration of Trust is a document which is being touted by another church legal association. We believe it will get churches into trouble. Pastors, Deacons, and other Christians must realize the background of this document in law, and refuse to allow someone to have them place the church and church property under such a document. More than that, a pastor must not allow himself to sign a document referring to himself as the “Trustee” which represents the church.
A Christian attorney who is now deceased came up with this document as a modern way for unincorporated churches to hold property and assets. On par with an attorney attempting to help churches, he only could think of a legal remedy for church problems, and not a Biblical remedy. We believe that this attorney used an existing legal document and applied it to unincorporated churches so that they could hold property without coming under the jurisdiction of the state. Since his passing, the Declaration of Trust has evolved into a magic talisman of mystic proportions, designed to fill all the needs of a local church.
The Propagation of the Declaration
In the January-March 2005 Trumpet newsletter, put out by the Indianapolis Baptist Temple, there is an article on the history of the Declaration of Trust. The opening line of this article states: “All churches should organize or re-organize by executing a Declaration of Trust.” We must, as pastors, ask the proper questions concerning this procedure when it comes to placing our churches under any organizational form which has “Trust” in the title.
The article continues with, “the Declaration is rooted in English Common Law, which is the Biblical Law foundation for the American Federal and State Constitutions.” “The Declaration came about in 1986.” And this attorney “came up with the idea of the Declaration of Trust (not to be confused with a Trust), and the Indianapolis Baptist Temple became the first church to implement the document.”
If it is “rooted in English Common Law,” then how was it somehow invented in 1986? Has it always been around? Has it ever been used by churches? What entities have used this magic document, the “Declaration of Trust?”
Any law book can explain what a “Declaration of Trust” is and means. The lengthy definition in the article of what a Declaration of Trust is contains only the fact that it was used as a foundation for the “Declaration of Independence.” That is a good start, but it is not enough. As Pastors, we should want more than just a reliance on what a short article with no footnotes or background explanations states.
As in the article in 2005, it was stated that the “Declaration is being used by approximately forty churches across the land.”
Why such a strong stand against the Declaration of Trust?
This is simple. It is a “Trust.” No matter how many times someone says the “Declaration of Trust” isnot a Trust, it does not change the fact that it is a Trust document. LegalCentral.com answers the question as to “What is a Declaration of Trust?” “A Declaration of Trust (sometimes called a Bare Trust) is one of many types of Trusts available… A Declaration of Trust is a legal structure that allows the division of the beneficial and legal ownership. The person holding the asset for your benefit is the Trustee. The Trustee has legal ownership only. You are the beneficiary. You have beneficial ownership. Provided you are over 18 years of age and of sound mind you boss the Trustee around. You tell the Trustee what to do with your asset.” The Thompson-Gale Legal Encyclopedia gives the definition of a Declaration of Trust as: “An assertion by a property owner that he or she holds the property or estate for the benefit of another person, or for particular designated objectives.” Barron’s Real Estate Terms states that a Declaration of Trust is: “A written statement by a Trustee to acknowledge that the property is held for the benefit of another.” Then Barron’s gives an example sentence which says: “A Declaration of Trust was signed by a Trustee to state that certain valuable land was being held in Trust for certain orphaned children.” Wikipedia, the online encyclopedia states: “In Trust Law, a settler who declares that he holds certain property on trust is said to make a ‘Declaration of Trust.’”
American Jurisprudence 2d explains this Declaration of Trust under Business Trusts, 13 Am.Jur2d, section 13 as follows:
“A business trust is formed under, or on the basis of, an instrument or declaration of trust, which must conform to statutory and other requirements relating to trusts. No special form need be followed in creating a Massachusetts or business trust. It is even possible to create such a trust without the use of the word "trust" or "trustee," where the intention to do so appears from the instrument as a whole. The trust instrument should, however, embody all the elements necessary to constitute a business trust. There should be an unequivocal declaration of trust, a vesting of title in named trustees, a description of the character of the business to be carried on, an outline of the powers and duties of the trustees, provisions for the tenure and election of trustees and for the issuance of certificates of beneficial interest and the transfer thereof, with a statement of the rights of shareholders with respect to profits and dividends. If desired, there may be provisions fixing the term and duration of the trust and limiting or negativing the liability of shareholders and trustees to third persons. The members and trustees are entitled to have the trust instrument applied according to its terms, so long as it does not offend the law or public policy of the state.”
Black’s Law Dictionary, Sixth Edition, states that a Declaration of Trust is the “act by which the person who holds the legal title to property or an estate acknowledges and declares that he holds the same in trust to the use of another person or for certain specified purposes. The name is also used to designate the deed of other writing embodying such a declaration.”
So, every resource cited has explained that the Declaration of Trust is a Trust document. And placing church property in a Trust is no different from placing it into a Corporation.
Biblical Law Center Bulletins
The Declaration of Trust must be validated by those who propagate it. This places all their statements under the scrutiny of a legal microscope. The reason for this answer is because good men of God, who love their churches, have actually asked why is this document being pushed so hard by these people. A recent “Bulletin” stated, “In recent weeks we have seen churches continuing to use the Declaration of Trust to great advantage. Several have reported opening bank accounts without an EIN#. (Biblical Law Center Bulletin, April 12, 2007)” Unless they provide the “several” who have done this, I believe it to be a careful distortion to attempt to soothe men who have questioned this document. A pastor close to this situation wrote that this pastor never showed the Trust document to the Bank, but the bank accepted the existence of the Trust by a verbal statement of the pastor. Also, the pastor in question provided his Social Security number to open the church account.
In their very next bulletin, the “several” reports of bank accounts became “many” in just one day. The April 13, 2007 BLC Bulletin stated: “As mentioned in yesterday’s Bulletin many churches have no problem getting a bank account using the Declaration of Trust.” Also, a letter was provided by the pastor referred to in the previous paragraph who opened a bank account. It reads: “Dear Dr. ______, I am pleased to receive the first newsletter from BLC. We too were able to open a bank account at the local bank with our trust document, and it was not even necessary for us to show them the document or give them a copy. (Emphasis added)” It is ludicrous to think that the document did any good whatsoever. The bank took his Social Security Number and he opened a church account with it. It is dangerous for a pastor to do something like this. The IRS can now attribute those funds as his own. And how exactly is he to try to refute that premise? He cannot.
The back-peddling in the second and third BLC Bulletin as to an overriding emphasis upon NOT having a bank account further belies the reason for the previous statements about “several” and “many” churches getting bank accounts using their Declaration of Trust. The reality is that pastors who have always had a corporate mentality want a bank account. Somehow, having church funds in a bank validates their existence, and makes them a real church.
More Exclusivity Statements
The third BLC Bulletin, dated April 17, 2007 makes this statement: “Why Pedo-baptists are begging for the Declaration of Trust but we can’t let them have it?” We stipulate that a few unincorporated Reformed Presbyterian churches might have called the BLC and desired to have a Declaration of Trust. But the entire portion of two Bulletins make the belabored point that “We have it, but we can’t give it to them!” It is almost as if those forty churches “across the nation” have something no one else can have because they are Baptists. In our research of the Declaration of Trust, we have found that this Business Trust instrument is used far and wide by nearly every type of organization on the face of the earth. Here are some Declaration of Trusts which we found online:
1. Urantia Foundation Declaration of Trust
2. Law Central Build a Document (You can build your own Declaration of Trust for only $99.)
3. Andrew Carnegie Free Library Declaration of Trust
4. Friends of Manjushree Vidyapith School Declaration of Trust
5. Belize Offshore Companies Declaration of Trust
6. Anglo-American Declaration of Trust – June 13, 1944, between Franklin Delano Roosevelt on behalf of the Government of the United States of America and Winston Leonard Spencer Churchill on behalf of the Government of the United Kingdom of Great Britian and Northern Ireland.
“We Can’t Give it to Other Churches!”
It is just a little too late for that. The Declaration of Trust, being a Trust document, has been used for many years by other denominations, including the Presbyterians. It is NOT solely a Baptist document for unincorporated Baptist Churches to use. The Ecclesiastical Law Center advises churches to not use a Declaration of Trust, a corporation, an unincorporated association, or any legal entity to hold their church assets and property. Simply be a church! Here are a few churches and church organizations who had a Declaration of Trust long before 1986.
1. United Reformed Church
2. Church of God in Christ
3. General Board of Church and Society Trustees, Methodist Church
4. Episcopal Diocese Investment Trust created under a Declaration of Trust
5. Church of Scientology
6. Unitarian Christian Association Declaration of Trust
7. The Free Church of Scotland
8. Protestant Episcopal Church, Diocese of Easton
So, we no longer need to feel like this Trust document is some “new, magic bullet” for unincorporated churches to use. As a matter of fact, a Declaration of Trust makes an unincorporated church exactly like those churches listed above. It places the church into a Business Trust, like it or not.
Has it ever been tested in court?
It has been repeatedly reported by the Biblical Law Center that the Declaration of Trust has never been tested in court. However, the Declaration of Trust was filed and tested in the Indianapolis Baptist Temple case. And it did not succeed in protecting that church entity. To further reveal the blindness of those who propagate this document, it has been tested time and time again in every court jurisdiction over the last two hundred years. It is a document that courts recognize as a Trust agreement on which it can have jurisdiction and decide cases. If anything, this document in the IBT case could have been used by the court to prove they had jurisdiction over IBT.
In Tort Claimants Committee vs. Roman Catholic Archbishop, a July 2006 case in Portland, the court decided the following about a Declaration of Trust:
“Determining whether the Declaration of Trust created a valid, enforceable charitable trust requires interpretation of the Declaration of Trust. Under Oregon law, "[t]he same rule of construction applies in the interpretation of an instrument creating a trust as controls in construing any other document, to wit, that the intention of the maker of the instrument must, if possible, be determined and given effect."
In Church of Scientology vs. Commissioner, 83 TC 381, the court found five Scientology groups were using a Declaration of Trust to channel “tithe” money into bank accounts overseas.
The July 1968 Indianapolis case of Presbytery of Indianapolis vs. First United Presbyterian Church, 143 Indiana Appellate 72, is a case where the national Presbyterian body wants to deny the local Presbyterian church the right to withdraw from the national organization with their property. The court stated: “The appellee church received aid through the years from the United Presbyterian Church of North America in a total sum of $ 45,436.31, which has never been repaid; the appellee never executed a resolution and Declaration of Trust as required by the General Assembly of the Church of North America.”
Many pages of this book could be filled with cases similar to the ones above. This Declaration of Trust is not a secret modern way for unincorporated churches to hold property. It is a way for the pastor to become the sole legal Trustee of all the church assets.
The Questions will keep coming
The Director of the Biblical Law Center answered a question at an Unregistered Baptist Fellowship that the Indianapolis Baptist Temple did not lease the property the church now occupies, but that the lease contract was made with the Pastor/Trustee and not the church. This is also an incorrect statement. The lease was made by the church and signed by the Pastor/Trustee. It seems like they would love to have the best of both worlds: entangle as much as possible, all the while convincing everyone that they are not entangled.
Now, I am not saying these people are “evil.” I am saying they are “wrong.” I’m saying they do not know the law. And their “wrongness” has caused them to continue to misunderstand the facts, and misrepresent their Trust document. To perform a Declaration of Trust is a wrong position to take for any church. We believe that it will do more damage to unincorporated churches in the long-run than the “help” and “accommodation” it may give in the short-run.
This is an excerpt from the book Approved by Man: A Plea for Biblical Reasonableness by Dr. Benjamin Townsend and Dr. John R Wright.
http://www.drbentownsend.com/Pages/ELCBook.aspx
You may order the hardcover book by sending a check for $20 to:
Dr. Ben Townsend
P.O. Box 11
Mesick, MI 49668
The Declaration of Trust is a document which is being touted by another church legal association. We believe it will get churches into trouble. Pastors, Deacons, and other Christians must realize the background of this document in law, and refuse to allow someone to have them place the church and church property under such a document. More than that, a pastor must not allow himself to sign a document referring to himself as the “Trustee” which represents the church.
A Christian attorney who is now deceased came up with this document as a modern way for unincorporated churches to hold property and assets. On par with an attorney attempting to help churches, he only could think of a legal remedy for church problems, and not a Biblical remedy. We believe that this attorney used an existing legal document and applied it to unincorporated churches so that they could hold property without coming under the jurisdiction of the state. Since his passing, the Declaration of Trust has evolved into a magic talisman of mystic proportions, designed to fill all the needs of a local church.
The Propagation of the Declaration
In the January-March 2005 Trumpet newsletter, put out by the Indianapolis Baptist Temple, there is an article on the history of the Declaration of Trust. The opening line of this article states: “All churches should organize or re-organize by executing a Declaration of Trust.” We must, as pastors, ask the proper questions concerning this procedure when it comes to placing our churches under any organizational form which has “Trust” in the title.
The article continues with, “the Declaration is rooted in English Common Law, which is the Biblical Law foundation for the American Federal and State Constitutions.” “The Declaration came about in 1986.” And this attorney “came up with the idea of the Declaration of Trust (not to be confused with a Trust), and the Indianapolis Baptist Temple became the first church to implement the document.”
If it is “rooted in English Common Law,” then how was it somehow invented in 1986? Has it always been around? Has it ever been used by churches? What entities have used this magic document, the “Declaration of Trust?”
Any law book can explain what a “Declaration of Trust” is and means. The lengthy definition in the article of what a Declaration of Trust is contains only the fact that it was used as a foundation for the “Declaration of Independence.” That is a good start, but it is not enough. As Pastors, we should want more than just a reliance on what a short article with no footnotes or background explanations states.
As in the article in 2005, it was stated that the “Declaration is being used by approximately forty churches across the land.”
Why such a strong stand against the Declaration of Trust?
This is simple. It is a “Trust.” No matter how many times someone says the “Declaration of Trust” isnot a Trust, it does not change the fact that it is a Trust document. LegalCentral.com answers the question as to “What is a Declaration of Trust?” “A Declaration of Trust (sometimes called a Bare Trust) is one of many types of Trusts available… A Declaration of Trust is a legal structure that allows the division of the beneficial and legal ownership. The person holding the asset for your benefit is the Trustee. The Trustee has legal ownership only. You are the beneficiary. You have beneficial ownership. Provided you are over 18 years of age and of sound mind you boss the Trustee around. You tell the Trustee what to do with your asset.” The Thompson-Gale Legal Encyclopedia gives the definition of a Declaration of Trust as: “An assertion by a property owner that he or she holds the property or estate for the benefit of another person, or for particular designated objectives.” Barron’s Real Estate Terms states that a Declaration of Trust is: “A written statement by a Trustee to acknowledge that the property is held for the benefit of another.” Then Barron’s gives an example sentence which says: “A Declaration of Trust was signed by a Trustee to state that certain valuable land was being held in Trust for certain orphaned children.” Wikipedia, the online encyclopedia states: “In Trust Law, a settler who declares that he holds certain property on trust is said to make a ‘Declaration of Trust.’”
American Jurisprudence 2d explains this Declaration of Trust under Business Trusts, 13 Am.Jur2d, section 13 as follows:
“A business trust is formed under, or on the basis of, an instrument or declaration of trust, which must conform to statutory and other requirements relating to trusts. No special form need be followed in creating a Massachusetts or business trust. It is even possible to create such a trust without the use of the word "trust" or "trustee," where the intention to do so appears from the instrument as a whole. The trust instrument should, however, embody all the elements necessary to constitute a business trust. There should be an unequivocal declaration of trust, a vesting of title in named trustees, a description of the character of the business to be carried on, an outline of the powers and duties of the trustees, provisions for the tenure and election of trustees and for the issuance of certificates of beneficial interest and the transfer thereof, with a statement of the rights of shareholders with respect to profits and dividends. If desired, there may be provisions fixing the term and duration of the trust and limiting or negativing the liability of shareholders and trustees to third persons. The members and trustees are entitled to have the trust instrument applied according to its terms, so long as it does not offend the law or public policy of the state.”
Black’s Law Dictionary, Sixth Edition, states that a Declaration of Trust is the “act by which the person who holds the legal title to property or an estate acknowledges and declares that he holds the same in trust to the use of another person or for certain specified purposes. The name is also used to designate the deed of other writing embodying such a declaration.”
So, every resource cited has explained that the Declaration of Trust is a Trust document. And placing church property in a Trust is no different from placing it into a Corporation.
Biblical Law Center Bulletins
The Declaration of Trust must be validated by those who propagate it. This places all their statements under the scrutiny of a legal microscope. The reason for this answer is because good men of God, who love their churches, have actually asked why is this document being pushed so hard by these people. A recent “Bulletin” stated, “In recent weeks we have seen churches continuing to use the Declaration of Trust to great advantage. Several have reported opening bank accounts without an EIN#. (Biblical Law Center Bulletin, April 12, 2007)” Unless they provide the “several” who have done this, I believe it to be a careful distortion to attempt to soothe men who have questioned this document. A pastor close to this situation wrote that this pastor never showed the Trust document to the Bank, but the bank accepted the existence of the Trust by a verbal statement of the pastor. Also, the pastor in question provided his Social Security number to open the church account.
In their very next bulletin, the “several” reports of bank accounts became “many” in just one day. The April 13, 2007 BLC Bulletin stated: “As mentioned in yesterday’s Bulletin many churches have no problem getting a bank account using the Declaration of Trust.” Also, a letter was provided by the pastor referred to in the previous paragraph who opened a bank account. It reads: “Dear Dr. ______, I am pleased to receive the first newsletter from BLC. We too were able to open a bank account at the local bank with our trust document, and it was not even necessary for us to show them the document or give them a copy. (Emphasis added)” It is ludicrous to think that the document did any good whatsoever. The bank took his Social Security Number and he opened a church account with it. It is dangerous for a pastor to do something like this. The IRS can now attribute those funds as his own. And how exactly is he to try to refute that premise? He cannot.
The back-peddling in the second and third BLC Bulletin as to an overriding emphasis upon NOT having a bank account further belies the reason for the previous statements about “several” and “many” churches getting bank accounts using their Declaration of Trust. The reality is that pastors who have always had a corporate mentality want a bank account. Somehow, having church funds in a bank validates their existence, and makes them a real church.
More Exclusivity Statements
The third BLC Bulletin, dated April 17, 2007 makes this statement: “Why Pedo-baptists are begging for the Declaration of Trust but we can’t let them have it?” We stipulate that a few unincorporated Reformed Presbyterian churches might have called the BLC and desired to have a Declaration of Trust. But the entire portion of two Bulletins make the belabored point that “We have it, but we can’t give it to them!” It is almost as if those forty churches “across the nation” have something no one else can have because they are Baptists. In our research of the Declaration of Trust, we have found that this Business Trust instrument is used far and wide by nearly every type of organization on the face of the earth. Here are some Declaration of Trusts which we found online:
1. Urantia Foundation Declaration of Trust
2. Law Central Build a Document (You can build your own Declaration of Trust for only $99.)
3. Andrew Carnegie Free Library Declaration of Trust
4. Friends of Manjushree Vidyapith School Declaration of Trust
5. Belize Offshore Companies Declaration of Trust
6. Anglo-American Declaration of Trust – June 13, 1944, between Franklin Delano Roosevelt on behalf of the Government of the United States of America and Winston Leonard Spencer Churchill on behalf of the Government of the United Kingdom of Great Britian and Northern Ireland.
“We Can’t Give it to Other Churches!”
It is just a little too late for that. The Declaration of Trust, being a Trust document, has been used for many years by other denominations, including the Presbyterians. It is NOT solely a Baptist document for unincorporated Baptist Churches to use. The Ecclesiastical Law Center advises churches to not use a Declaration of Trust, a corporation, an unincorporated association, or any legal entity to hold their church assets and property. Simply be a church! Here are a few churches and church organizations who had a Declaration of Trust long before 1986.
1. United Reformed Church
2. Church of God in Christ
3. General Board of Church and Society Trustees, Methodist Church
4. Episcopal Diocese Investment Trust created under a Declaration of Trust
5. Church of Scientology
6. Unitarian Christian Association Declaration of Trust
7. The Free Church of Scotland
8. Protestant Episcopal Church, Diocese of Easton
So, we no longer need to feel like this Trust document is some “new, magic bullet” for unincorporated churches to use. As a matter of fact, a Declaration of Trust makes an unincorporated church exactly like those churches listed above. It places the church into a Business Trust, like it or not.
Has it ever been tested in court?
It has been repeatedly reported by the Biblical Law Center that the Declaration of Trust has never been tested in court. However, the Declaration of Trust was filed and tested in the Indianapolis Baptist Temple case. And it did not succeed in protecting that church entity. To further reveal the blindness of those who propagate this document, it has been tested time and time again in every court jurisdiction over the last two hundred years. It is a document that courts recognize as a Trust agreement on which it can have jurisdiction and decide cases. If anything, this document in the IBT case could have been used by the court to prove they had jurisdiction over IBT.
In Tort Claimants Committee vs. Roman Catholic Archbishop, a July 2006 case in Portland, the court decided the following about a Declaration of Trust:
“Determining whether the Declaration of Trust created a valid, enforceable charitable trust requires interpretation of the Declaration of Trust. Under Oregon law, "[t]he same rule of construction applies in the interpretation of an instrument creating a trust as controls in construing any other document, to wit, that the intention of the maker of the instrument must, if possible, be determined and given effect."
In Church of Scientology vs. Commissioner, 83 TC 381, the court found five Scientology groups were using a Declaration of Trust to channel “tithe” money into bank accounts overseas.
The July 1968 Indianapolis case of Presbytery of Indianapolis vs. First United Presbyterian Church, 143 Indiana Appellate 72, is a case where the national Presbyterian body wants to deny the local Presbyterian church the right to withdraw from the national organization with their property. The court stated: “The appellee church received aid through the years from the United Presbyterian Church of North America in a total sum of $ 45,436.31, which has never been repaid; the appellee never executed a resolution and Declaration of Trust as required by the General Assembly of the Church of North America.”
Many pages of this book could be filled with cases similar to the ones above. This Declaration of Trust is not a secret modern way for unincorporated churches to hold property. It is a way for the pastor to become the sole legal Trustee of all the church assets.
The Questions will keep coming
The Director of the Biblical Law Center answered a question at an Unregistered Baptist Fellowship that the Indianapolis Baptist Temple did not lease the property the church now occupies, but that the lease contract was made with the Pastor/Trustee and not the church. This is also an incorrect statement. The lease was made by the church and signed by the Pastor/Trustee. It seems like they would love to have the best of both worlds: entangle as much as possible, all the while convincing everyone that they are not entangled.
Now, I am not saying these people are “evil.” I am saying they are “wrong.” I’m saying they do not know the law. And their “wrongness” has caused them to continue to misunderstand the facts, and misrepresent their Trust document. To perform a Declaration of Trust is a wrong position to take for any church. We believe that it will do more damage to unincorporated churches in the long-run than the “help” and “accommodation” it may give in the short-run.
This is an excerpt from the book Approved by Man: A Plea for Biblical Reasonableness by Dr. Benjamin Townsend and Dr. John R Wright.
http://www.drbentownsend.com/Pages/ELCBook.aspx
You may order the hardcover book by sending a check for $20 to:
Dr. Ben Townsend
P.O. Box 11
Mesick, MI 49668
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