Thursday, November 29, 2007

Con Man's Version of the Living Trust?--Little Known Secrets

--Wade through all of the advantages and disadvantages, before coming to a reasoned conclusion--facts to face presented here

Eat well, stay fit, die anyway. This is the reality you must face when contemplating a living trust.

Important, if you are contemplating this form of legal instrument: the good, the bad, the needed, and the unneeded of the Intro Vivos Trust, must be considered.Be careful of the differences.

Have you been approached by a telemarketing trust-hustler, an at-your-doorstep quick-buck con man, or been intrigued by an internet ad on this subject? If so, hold up. Slow down. Wait. There are many factors to consider before committing all of your assets to one of these supposed ease-of-estate-conveyance instruments, particularly when offered by one of the above described purveyors.

Disadvantages:

> Unless your assets exceed $1,000,000 there are no tax advantages. Tax advantages don't kick in significantly until your assets rise above $1,500,000.

> If you are about to apply for Medicaid, you can incur severe penalties if your application is within 5 years of the Trust's establishment.

> Your home, if placed in the Trust, is no longer exempt from the estate tax (in most states), presumably one of the protections you sought when setting up a trust in the first place.

> You give away a lot of personal information when you set one up. So, extra, intensive scrutiny must be focused on the character, reputation, and standing of the people with whom you are dealing.
Don't forget, any dropped item will first strike your toes.

> The expense, often exorbitant.
These are facts the con man will not voluntarily tell you. A goldfish has a memory capacity of 3 seconds. This is the hope the con man is pursuing as he tries to rush his plan past you, especially if you've reached the age where you consider Happy Hour to be time for a nap. There are, however, some plusses.

Advantages:

> Orderliness. The first thing to know about a survival situation is to not get into a survival situation. A trust helps you avoid such a fate.

> Speed in distribution of assets after your demise. You bypass the long, cumbersome probate process (in most states). If you have illusions of competence, then now, before your demise, is the time to fan that flame.

> Clean-cut distribution of proceeds between multiple beneficiaries of your estate. This is a big advantage over probate, where the executor must repeatedly get court approval for so many of the estate-settlement expenses.

> Less squabbling. Reduced tension. Less outright feuding between your siblings or other beneficiaries. When you're all stressed out over this and have no one left to choke, a feeling of peace and tranquility will overtake you with the acquisition of a living trust.

> A great tool for protecting yourself against identity theft. It disrupts the view of any con man lurking in the bushes, planning an identity theft attack on you. Enables you to out-con the identity theft con man by confusing his vision of your estate.

If--oh, that little 2-letter word that means so much--you decide to go the trust route, set one up, it behooves you to find the proper party to take on this task for you. This would mean no telemarketers, high-pressure salesmen, no internet "Trust Specialists." Don't try to ski uphill. Best to stay in your own neighborhood. Level ground. There are probably many reputable financial planners nearby, as well as highly specialized trust attorneys. Find them. Use one.

We're aware that just going through life with your financial assets always, seemingly, in jeopardy, feels like being hit repeatedly in the head with a hammer--and it would feel so good if it stopped. Your attempt to make this euphoric state come to pass, however, must be a cautious undertaking, indeed.

13 comments:

Warren W said...

I have been interested in setting up a family trust, but do not understand why the big differences in costs quoted by lawyers to set one up. I have a friend in California who was quoted a cost of $3,000, and another friend in New Mexico who could get one for $400. This is puzzling. Who is conning who?

Jack Payne said...

The laws covering familty trusts are different in every state, Warren. For example, in California a large 3-ring binder is needed to house the finished trust product, from all the rules set. Whereas, in New Mexico (until a few years ago, at least), requirements could be filled with about a 3-page trust document.

Not necessarily any fraud here, the costs simply reflect the vast difference in the amount of legal work required by law in the various states.

This is all the more reason to forget internet and travelling salesman gurus, and stay in your own local neighborhood when contracting to have one set up for you.

Gene Kranik said...

Sure enough, my Uncle lives in Pennsylvania and had a trust made up for him by one of these internet gurus. It cost him over one thousand dollars. Later a lawyer told him it wasn't worth the paper it was printed on because it didn't comply with the laws of Pennsylvania. I guess you have to be very careful.

sharyn said...

are you working on your next book? I gave up watching jimmy buffett (my favorite musician) last night to finish your book. it's great!!! when does your next book come out? your blog is awesome so many things that effect our lives and your giving great advice right here for free. is this a scam? get on that keyboard and write another great novel. it won't take me 2 years to read the next one, i promise. dang that was a great book and informative website. everyone should book mark you!!

Jack Payne said...

That's a good illustration of the point I tried to make in my comment just above yours, Gene.

All I can add is, amen.

Jack Payne said...

Wow, Sharyn, these are some much appreciated accolades if ever I saw any.

My novel, Six Hours Past Thursday, has been popular only in two places: some 500 copies in public libraries, and 400 in the hands of college libraries, mostly law libraries, law profs and lawyers. Haven't dented the general consumer book market yet. But, if it took you 2 years to get around to reading it, maybe there is some hope yet.

Guerrillero said...

Jack, thanks for these useful tips. They are actual in my situation as never.

Anonymous said...

I did well in real estate the past several years and got out before the big bust...am now setting up a trust. I have got to get these relatives off my back picking at my bones...you have some great tips.

I went to your web site and read the book reviews and first two chapters of your book Six Hours Past Thursday...very impressive.
If the rest of the book is as good as the first two chapters promise I can see how Sharyn is right.

Warmer said...

A trust is worth it to avoid probate alone. When an executor has to keep running back to the court to get approval for every little thing this drags out settlement time.

Jack Payne said...

Probate time can often be dragged out to two years, even more. Good point is made about how a trust speeds up settlement. As a living legal entity, a trust merely rumbles on, in the hands of a trustee or other trustees, at the time of death. This is a big, big advantage over a will indeed.

JesieBlogJourney said...

Trust and will are two very important things that we need to learn and decide what to do with our asset.

I have a simple will but I have not looked into a trust.

Seems that Six Hours Past Thursday is worth reading. I hope to find the time to go to the library and borrow one to read.

Have a great day.

Mr. Grudge said...

Hi Jack,
One of the things we did early was to retain the services of a highly recommended elder care attorney for my parents (my mother died last year and it's just my dad left). It was a wise decision, and as stubborn as my dad gets, he approved of this move. We all love him and care for him and just want him to be happy and live worry free and not get ripped off. I always appreciate your articles and advice, and I've asked him to read some of your past articles and he get's the point. Thank you.

Poly Muthumbi said...

Establishing a living trust even though it may be expensive is a very important decision. It saves your descendants having to go through courts of law and overpaying for assets they could get for free right from your own very hands.In most cases the living trusts are under tax pressure but the main advantage is that the assets are protected from the hands of creditors if they are under a trust since the creditors can have no claim over the asset.

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