Archive for August 12th, 2008

Watch Out for Michigan Living Trust Scams!

Written by Christopher J. Berry, Esq. on August 12, 2008 – 8:38 pm -

I cannot stress this enough. I know of but will not name financial groups who hire sales people to market one-size fits all “living trusts” with paid sales people who use high pressure tactics to try to push this “plan” on seniors. Often, there is not attorney present. They will charge one price, I know one group that charges $2,250 for their “plan.” They will market these “plans” to seniors and retirees through seminars where they provide the food. They use this as an in to try to sell annuities. Often times the attorney will not even meet with the client. In addition to their high pressures seminars, they flood the market with advertising, even going as far as to put out a sham newspaper geared towards seniors.

Be careful if you are attending a seminar on estate planning and their is no practicing attorney there, only financial “professionals” and salespeople. They may say “the attorney is so busy” that’s why he is not attending.

All I will add is what Mike Cox, the Michigan Attorney General has posted on the Michigan.gov site.

Living Trusts

Beware of “One-Size-Fits-All” Estate Plans

A revocable living trust can be an important tool in estate planning for many people. A revocable living trust is a trust instrument that may be changed during the lifetime of its grantor, the person who sets up the trust. It is called a “living trust” because the maker is alive, in contrast to a testamentary trust, which is not effective until after the death of its maker. By itself, the living trust instrument is probably a legal document. However, a subject as important as estate planning should be discussed with trusted professional counsel, including your attorney and financial planner.

In recent years, several for-profit companies have begun marketing living trusts over the telephone, by postcard, by in home sales pitches, and in regional meetings, often held at restaurants or in hotel conference rooms or even senior centers and public libraries. Likely targets of the promotional marketing are senior citizens. The one-size-fits-all trust forms being sold at these events vary greatly in quality and may not be appropriate for your individual estate planning needs. Contrary to some sales pitches, not everyone benefits from a living trust.

Sometimes customers pay exorbitant fees for these trusts. A typical charge by one of the trust kit companies is $1,995.00 per trust. Trained salespersons may exaggerate consequences of failing to buy their products, or may employ high pressure tactics to close a sale and not disclose that the thick, expensive-looking finished document is only a living trust “kit.” (A “kit” is a prepackaged, standardized form document—it is not tailored for the customer’s particular circumstances.) The following tips can help consumers in making a wise decision before purchasing a living trust:

1. Consumers should be wary of salespersons who call on the telephone, send a postcard, or appear at the doorway offering living trusts.

2. Do not be pressured into purchasing a trust based on a phone call, or the in-home sales pitch of a salesman, or immediately following a seminar. Before making any purchase decision, consult with a reliable professional with the necessary background to help you decide what estate plan is best for your individual situation, rather than relying on someone whose primary interest is a sales commission.

3. Before buying a living trust from a stranger, call a local lawyer and ask him/her what they charge for preparing trusts. Often the kit price is two or three times greater than what a local lawyer would charge. Those selling trust kits rely on the public’s apprehension that attorneys are costly.

4. If you already have a lawyer, discuss the trust kit offer with him or her before buying.

5. Be wary if a trust salesperson promises specific results or dollar savings. Costs of probate and attorney fees vary greatly from state to state, and according to personal circumstances.

6. If the trust salesperson promises a lawyer will review the customer’s documents, demand the name of the lawyer and check with the State Bar of Michigan to make certain the lawyer is licensed to practice in Michigan.

7. If the salesperson says that his or her company or the living trust being sold is recommended or endorsed by AARP, do not buy! AARP does not endorse or recommend any living trust product at this time.

8. Do not give personal and confidential family and financial information to a salesperson, even if the salesperson promises it will be passed on to a licensed lawyer. Meet with or discuss the matter with the lawyer personally.

9. Watch out for companies that sell trusts and also try to sell annuities or other investments. Under the guise of setting up a living trust, financial information may be disclosed to sales agents who earn high commissions by “moving” existing investments into others being sold by the living trust company.

10. If the salesperson says part of the trust cost will pay the lawyer’s fee, do not buy! A lawyer may not split a fee with the salesperson or with the trust company.

11. Discuss whether you can get your money back if you are not satisfied, and get the promise in writing.

12. If you encounter problems later, first contact the company or the lawyer and ask for a refund.

You can read this consumer alert at: http://www.michigan.gov/ag/0,1607,7-164-34739_20942-44727–,00.html

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Mixed Families; What to do if Your Spouse is not the Parent of All Your Children

Written by Christopher J. Berry, Esq. on August 12, 2008 – 7:03 pm -

In this day in age of increased divorce rates and multiple marriages in Michigan, it is not uncommon for there to be a situation for a married person to have descendants from prior marriages. Often, this can cause conflicts after your death unless your spouse has adopted your children while they are young.

The problem arises because you have a decision to make, leave assets to the spouse and possibly disinherit your children (what’s stopping your spouse from remarrying after your passing and freezing out your children?). Or leave your spouse high and dry in favor of your children.

Through a trust based estate plan it is possible to plan for the spouse while still protecting the inheritance of the children. This can be done by creating trust that in essence “locks up” a portion of the assets for the benefit of the spouse while living, then to the children. But the spouse does not retain full control of the assets in this “family” or “locked up” trust. An important consideration is who you appoint trustee of any trust where there is provisions that “lock up” any of the assets.

Alternatively, separate assets can be used to fund each of the goals. For example, life insurance could be purchased and put into an irrevocable life insurance trust (ILIT) to ensure that beneficiaries use the portion alloted to them properly, by your own terms.

Regardless, the most important take away is that with multiple marriages, it is important to take these factors into consideration and visit an estate planning attorney for counsel.

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Why is Michigan Probate Viewed as Something to be Avoided?

Written by Christopher J. Berry, Esq. on August 12, 2008 – 6:45 pm -

The word “probate” is derived from the Latin phrase “to prove.” The legal definition of probate means a court process by which a certain instrument is proved to be your Will. Typically when people use the word “probate” they are talking about the whole estate administration procedure. The transfer of assets of the deceased to his or her heirs. Technically, “probate” only refers to the process of administering assets through the court system.

The first reason Michigan Probate is viewed as an evil is the emotional connotations attached to death and the legal proceedings. People have difficulty dealing with the emotions in the process.

Anorther reason is that almost every family has a story about a disastrous result which occurred when someone passed and their assets had to be probated. Deep dark secrets can come to light in the public proceeding. Remember, Michigan probate is a public court proceeding.

There is also a financial reason why Michigan probate is viewed as something to be avoided. It can be expensive. Not only through legal fees, but also court costs and taxes if proper measures are not taken ahead of time.

Remember a will does not avoid the probate system and does not ensure that your estate will be administered smoothly. There can be public, nasty, will contests in probate court.

Taking all these reasons into account, it is no wonder that many clients choose to use a revocable living trust to avoid the probate system in Michigan.

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