The targeted customers of these salesmen are typically seniors.  They will lure the seniores in by either going door to door or holding free seminars.  More often than not, these seminars will not be taught by an attorney, but by a salseman.  They will advertised to the senior a one-size fits all estate plan, usually for over $2500.  Quite often these “trust kits” end up being a fill in the blank type document and the customer never even meets with an attorney.

There have been reports of Michigan citizens losing over $200,000 to Federal Estate taxes based off these poorly drafted plans.

If you had a estate plan or “trust kit” drafted by one of these outfits, contact a Michigan estate planning lawyer, as soon as possible to rectify the matter and create an estate plan that serves your wishes and provides for your loved ones.

• How have your investments performed?
• How do your investments meet time horizons?
• What adjustments have been made due to the turbulent economy?
• How and when will the planner provided feedback and updates?

What I told the group was that our firm believes in annual reviews of your estate plan.  We care very much about our clients and the hard work that was put into thier estate plan, we do not want their plan to fail due to a lack of maintenance.

Setting up an estate plan is not a “one-and-done” propostion.  Just like going to the dentist, an estate plan needs at least annual check ups.  Occasionally like a dentist there will be major work, such as an amendment to the plan.  But as a whole, only a few tune ups each year.

The reason for the need for check-ups is threefold.

1. Your family situation may change.  There may be a new child to plan for, a divorce, marriage, etc.
2. Your assets may change.  Have you added new bank accounts, bought a new house, new life insurance, etc?
3. The laws change.  There have been many changes to both Michigan and Federal law in the past 10 years alone that effect estate planning.  With the new administration there is bound to be new Federal Estate tax laws as well.

So, have you updated your estate plan?  If you have an estate plan with another attorney, have they cared enough to contact you?

http://www.floridaestateplanninglawyerblog.com/2008/10/using_quicken_to_prepare_a_tru.html

He really makes some great points.  This same analysis can be applied to any of the Do-it-yourself estate planning software, such as Suze Orman or any others.  In conclusion David writes:

There are many mistakes in the Quicken documents, most disturbing might be some of the things that are not included in a Quicken trust. Quicken gives none of the flexibility to a trust that make it useful for the common person. A trustee under a Quicken trust could not do anything without creating liability to a beneficiary because by default they must act as a prudent trustee. If you have a trust created by Quicken 2009, 2008, 2007 or a previous version, you should have it reviewed by an estate planning lawyer.

is the client single or married.  Do you want to destroy the tenancy by the entirety, where Michigan has afforded certain benefits?  Is the goal to avoid probate?  What about estate recover, does that have an effect?  Unfortunately, there are a few factors to consider when making this decision.

Fortunately, a quality Michigan estate planning lawyer will be able to walk you through the scenerios to decide upon the best answer in your situation.

• The Modesto Bee had an article by Valentine Sabuco with the title “Is it time to get your estate planning house in order?”.  In the article she states “that estate planning is a very importnat component of everyone’s financial planning, regardless of the size of the estate.”  I could not agree more with her.  Read the rest of the article here: http://www.modbee.com/business/story/484500.html
• Michael E. Andrews wrote an article for Northindystar.com entitled “Estate plan safeguards assets, loved ones.”  In the article he lists six quality reason why you should have an estate plan.  Many of these have been covered on this blog already.  You can read his article here.
• Troy Neff wrote a good article in the Toledo Free Press entitled “Don’t Try this at Home”.  In the article Mr. Neff tells the story of a client who as a “do-it-yourselfer” and prepared his estate planning documents with a software package, without a lawyer.  Well, when it was all said in done, the client’s plan was fraught with issues.  You can read the full story here: http://www.toledofreepress.com/2008/10/31/don%E2%80%99t-try-this-at-home/

That’s all for this week across the web.  What we can take from it:

• The time for estate planning is NOW.
• I’ve yet to encounter anyone over the age 18 in Michigan who does not have a reason to complete a least  a basic estate plan.
• If you are going to do an estate plan, do it right.  Sometimes an poorly drafted estate plan is worse then having any type of estate plan at all.

By trust mill, i mean a set up where they only meet their attorney once (if at all), and there is little to no customization done for an individuals estate plan.  In other words, it is just a fill in the blank estate plan.

Typically, people are put into one of these “estate plans” by unreputable financial professionals who will tell potential clients that they can have a trust based estate plan with unlimited revisions for a set price.  One way they do this is offer an “Estate Planning Seminar” where they will have an example trust in a pretty binder, then tell everyone they can have their plan done for a set fee, say $2250.  This epitomizes a one-size fits all approach to estate planning, that doesn’t take into account the actual needs of the client.  Typically, salesman use this trust as a loss leader to sell clients annuities.

As an estate planning attorney who actually values his clients, there is no way i would be able to quote a fee with out knowing exactly what the clients goals are and how complex it will be to meet those goals.

Back to the couple I met with.  In addition to the usual problems with trust mill prepared plans, they also had three very important issues that I raised with them.

First, as a married couple, their residence was funded into the trust.  In Michigan, we have what is called tenancy-in-the-entireties, which is a special designation created by the state for real property.  This status gives married couples added benefits against creditors, predators, the IRS, and lawsuits.  Well, someone, either the financial professional or attorney, told the clients to fund the residence into the trust, thereby destroying the added protection the couple had as married couples.

Second, the couple both had what is called “springing” powers of attorney.  This is a counseling question to determine the type of financial power of attorney to use.  After counseling the clients, they realized that they were in the wrong type of financial power of attorney.  Luckily, they have not yet had to rely on it.

Third, their healthcare directives were out of date and not valid.  This attorney who prepared their documents promised to stay in touch every year to review their estate plan (which is supposed to be free, including amendments).  Well the attorney never did.  So, I pointed out the changes necessary to bring the healthcare directives up to date.  Our firm has a systematized membership program called Foundations that clients can opt into that will maintain their plan through the years.

The good news, the couple was able to see the mistakes and correct them before they had to rely on the faulty documents.  The bad news, the couple is going back to the original attorney to have the documents corrected, since they have free changes for life.

You get what you pay for…

We have encountered a scam targeted at seniors. A lady in her late 70s was persuaded by a salesman to sign up as a local representative of a satellite television company, apparently under the suggestion that she could sell

(recommend) the service to her friends and receive commissions. She was offered and did sign an agreement to serve in this capacity, and in so doing authorized a charge of $7,500 to her credit card.

At this point I will not name the company on the contract or the satellite provider, but all of us should be on the lookout for this kind of scam.

It’s unfortunate that this type of thing happens to our seniors.

A real world application of one of these strategies involves using a Qualified Personal Residence Trust otherwise known as a QPRT (as an aside, us estate planners have acronyms for everything, RTL, CRT, CRLT, GRAT, GRUT, etc.).

The way it works is like this: you transfer your home into a QPRT now, with bargain basement values.  This locks in a lower-gift tax amount for the move from your possesion to the trust.  As an added benefit, if interest rates move higher, the discount can be even greater.  After 10 years, the home can then pass to your beneficiaries, typically children.  Now they own the home, outside your estate, free of any Federal Estate Taxes.  If however, after 10 years, you still live in the home, you willp ay your children fair-market rent to your kids.

The WSJ just had a piece about this strategy in more detail here.

If you have any questions, feel free to contact me.