Article on Trust Scams – How this Lawyer Missed the mark

Lawyer Misunderstands the Point

Below is an article by an attorney to CPAs about trust scams.  Although well meaning, I think that the attorney misses the point entirely.  He seems to lump Revocable Trusts into one big lump, which entirely mischaracterizes the point of these trusts.  As you read the article, it seems as if the trusts are going to last forever with huge fees.  However, MOST trusts are created to avoid probate and then distribute the assets quickly.  So, the biggest advantage of a Living Trust in Leawood is to avoid the high probate fees (which I’m sure that this attorney would like to get) and to distribute the assets quickly.

We set up a lot of trusts for this sole purpose.  To get away from multiple thousands of dollars in probate fees (not to mention those prying eyes) and to pass assets quickly to the heirs.

See our Blogspot page here.

See our Delicious page here.

Leawood estate planning attorneys

http://www.accountingtoday.com/news/financial-planning/protect-your-clients-from-trust-scams-75127-1.html

Protect Your Clients from Trust Scams

Accountants are often selected as trustees of trusts for their clients. But before agreeing to act as trustee, the accountant should understand the time constraints and obligations of a trustee, along with other potential pitfalls, including trust scams.
Accountants should determine whether the trust is worthwhile and in the best interest of the client. A client should avoid purchasing a trust that is boilerplate and does not carry out the client’s intentions.

There are many good reasons for establishing trusts. They include protecting assets, preventing the assets from being dissipated prematurely by heirs, anticipating a will contest, avoiding ancillary probates if the real property is located in multiple jurisdictions, elder law planning, making sure the trust assets are maintained in the family, estate planning, and privacy issues.

There are many reasons for not having a trust, however, such as not having a qualified trustee or sufficient assets to warrant the establishment of a trust. The costs of administering a trust, time demands on the trustee, the death or disability of the trustee of a trust that lasts decades, and complex state trust laws can also make trusts difficult propositions.

Be that as it may, senior citizens are often invited to living trust seminars throughout the United States. These free lunch or dinner trust seminars have been the subject of scrutiny by Attorneys General in a number of states, including California, Michigan, Minnesota, Texas and Washington State. These seminars are often called living trust seminars and use techniques that encourage senior citizens to use revocable living trusts.

There are many good reasons for creating living trusts. However, there are many living trust seminars that take advantage of senior citizens by using scare tactics and that are in essence scams.
It is important that the senior only work with an attorney who is knowledgeable in estate planning. In most jurisdictions, going through probate is not a big deal. Having a revocable living trust does not save estate taxes. A living trust can be expensive initially and costly to administer in many cases after death.

An article by the AARP, “The Truth about Living Trusts,” warns about scams involving living trusts, noting, “Pre-printed, generic forms are often passed off as custom-made documents.”

Several years ago we had a client who set up a living trust to avoid probate after he attended a seminar. The pre-printed document ran well over 125 pages and was impossible to read or understand. He had paid a significant sum of money for the canned trust. I immediately had him take steps to eliminate the trust from his estate plan.

We currently have a client who came to us after the death of her parents. The documents exceeded 60 pages and were riddled with boilerplate language, preprinted in a loose-leaf binder. The trusts were not necessary based on the amount of the probate assets. Most of the assets were retirement accounts. The costs of running these trusts for the probate assets of under $2 million will exceed $50,000.

There are some benefits in living trusts, as the AARP acknowledged: “A properly created living trust can be helpful if you need help managing assets during a disability (and a power of attorney won’t work), if you have children or grandchildren with special needs, or own real estate in more than one state.”

Trusts can often be worthwhile, but they can be costly to administer after the death of a client. Most clients, in my opinion, would not understand the terms of a 60-page trust document even if they read it several times.

The bottom line: don’t do a trust unless you fully understand it and the fact that there are often substantial post-death administrative costs of running the trust.

Estate Planning Lawyers in Leawood

Estate Planning is really about comfort. What estate planning is all about is finding the right devices to implement your basic needs. What that indicates is that we utilize the most innovative legal files to appropriately execute your desires. We customize each and every plan so that you get precisely what you want. We do this utilizing the most current tools so that we can prepare a customized strategy at the lowest possible expense. Kindly call us today with any concerns.

The Eastman Law Firm is an estate planning law firm. We focus on estate planning so that you can be assured that you are getting the most up to date methods.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s