Bad advice. High fees. Trust mills.
There’s a lot to watch out for when you’re planning your estate. “Death brings out the worst in people,” says Francine Kent, an estate appraiser from Sarasota, Fla.
Unscrupulous advisors prey on the elderly and their heirs with questionable legal advice, unnecessary bills, and the ever-present living trust come-ons.
One recent estate stands out in Kent’s mind: a grandfather who had agreed to cover his son-in-law’s college tuition. After the grandfather’s death, his heirs declined to pay for the son-in-law’s bills because he wasn’t named in the will.
“I have seen plenty of awful things,” she adds.
You need a plan (even if you think you don’t).
Think you don’t need a plan? Think again
“We all have something that we value whether it is our final arrangements, a special needs child, a trinket that you want to pass along or whom we want to raise and care for our children in the event of an untimely death,” says Frank Moscardini, an attorney with the Chicago law firm Shimanovsky & Moscardini and a member of the LegalShield Legal Advisory Council. “A will or trust avoids confusion amongst your family by spelling out your wishes and providing a road map to help your love ones settle your affairs in a time of loss while creating the legacy you want to leave.”
Of course, you’re vulnerable to awful things at any time. But waiting can make things worse.
“The biggest issues relate more to taking advantage of an elderly person who may have reduced capacity,” explains Mark-John O’Nions, an estate law attorney. “They want to get the elderly person to sign over their property or sign a power of attorney in order to control the elderly person’s estate.”
And the most vulnerable of the group are senior citizens with no close relatives. Sometimes, these people are unable to understand they’re being scammed.
“They lack the capacity to even know it is happening,” says O’Nions.
All the more reason to contact an expert sooner than later.
“Estate planning covers many areas,” explains Patti Spencer, an estate lawyer. “It includes wills and trusts, taxation, real estate, business law, valuation, and so on.”
Many financial professionals have training in estate planning and can raise issues with you, make suggestions, or point out problems. These include accountants, financial planners, brokers, insurance agents, bankers, many of whom do an excellent job, she says. “On the other hand, the law provides that only lawyers can draft wills, trusts and other estate planning documents for you.”
Watch those fees
Mark Charnet remembers the story of one client who found great legal advice before he passed away. Too bad his kids didn’t.
“He met with his estate planning attorney to have him prepare all of the traditional documents necessary for a person with a net worth of $2.5 million in New Jersey at the time,” says Charnet, the founder of American Prosperity Group in Pompton Plains, NJ. The lawyer prepared all the necessary documents, including a will, power of attorney, a revocable living trust, and a living will.
After he passed away, his heirs contacted another estate planning attorney.
“The attorney moved quickly, making them sign a contract to handle the estate for a cool $15,000 to start, with more hourly billing as the time supposedly involved, would accrue,” he recalls.
The thing is, none of that was necessary. Charnet says the father’s estate planning lawyer had done his job; the second attorney was unnecessary—a fact the second attorney knew.
Charnet’s assessment: Attorney number two was trying to take advantage of the family. “This attorney’s greed cost him many hundreds of thousands of dollars in any future referral business from me.”
Bad advice, legal or otherwise, is everywhere when you’re planning your estate. Use a trusted lawyer and for goodness’ sake, tell your family what to expect when you leave this world. Otherwise, you could lose a lot of money to a predatory third party.
Beware of the trust mills
In talking with estate planning experts, the one common warning is to be on the lookout for “trust mills.” The National Consumer Law Center describes these scammers as dishonest salespeople who prey on seniors’ fears that after their deaths, their life savings and assets will be stolen by the government or by predatory probate attorneys. Likewise, both the Federal Trade Commission and AARP have issued warnings about living trust promoters.
“Con artists who push living trusts on people do not want to help you plan for your future,” explains estate lawyer Melissa J. Breyer. “They’re trying to push you into forking over big bucks for their living trust kit. This is the first sign that your so-called estate planner is up to no good: they’re offering you a one-size-fits-all estate plan.”
Experts also say you should beware of terms such as “Pure,” “Pure Equity” or “Constitutional” Trust—these can be even worse than the living trust scams.
“Don’t be taken in,” advises Spencer.
That’s a lot to be aware of. But don’t let it deter you from planning your own estate. Experts agree on two things—don’t take shortcuts when you’re planning your estate. And don’t wait.
“Professional advice may someday be reduced to an algorithm,” says Michael Repak, a senior estate planner at regional broker-dealer Janney Montgomery Scott. “But we are not there yet.”
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
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