A recent article from Mainstreet.com reads: Here’s How The Great $41 Trillion Generational Wealth Transfer Is Intercepted By Probate Pirates.
Is this a problem or is it another trumped up issue to draw attention to mom and dad’s money?
The article defines the problem as deceptive but technically legal tactics designed specifically to take advantage of older Americans, according the 2015 True Link Report on Financial Elder Abuse. The criminal is most often a lawyer in probate court.
“Unscrupulous charities, probate courts, home repair scammers, retirement homes, neighbors and even distant family members know that a friendly senior with cognitive issues is a potential gold mine,” said Kai Stinchcombe, CEO and founder of True Link.
This can happen even to an estate with as little as $500,000. I dealt with an individual whose family was facing an attorney and his partner in New York who claimed they were owed 10% of the estate or $50,000. They claimed that since he was the executor for the estate that he rightfully, according to statute, should be paid the amount. The problem was that the same attorney, for far less money, could have recommended a trust to the client, which would have taken it out of the probate estate and reduced the fees to less than $1,000. Shame on him for taking advantage of a poor lady who merely had her home as an asset.
So What Can You do to Eliminate Most of these Fees and Maintain Control of the Estate?
1. Start planning your Estate Plan way before you are susceptible to any dementia.
I would recommend before you turn 75.
2. Get your entire family involved in the process.
The safest way of keeping the vultures out of your estate is to have family members involved in every aspect of your planning: financial, legal, home care, healthcare, assisted care, etc. A caution here: Don’t pick the family member who is oldest or who is loudest. Pick the family member who is the most trustworthy and who cares about you. You know who that is. Don’t ever feel bad about offending someone. Those are normally the ones to avoid.
3. Do an Estate Plan with a qualified Christian advisor familiar with sophisticated preservation and tax strategies.
Make sure he or she has many years of experience and has the credentials to do this type of planning. This is not the attorney!
4. Make sure all of your advisors, attorneys, accountants, bankers, insurance agents and brokers work together as an efficient and unified planning team to achieve the best possible outcomes.
A good planner is like a general contractor for the estate plan. It is helpful if all the advisors are Christian.
5. Make sure that you have a list of possible trustees who you trust and who have agreed to serve.
I have seen some elderly clients who went through 4 different trustees in their lifetime. You create the list. Do not depend on one of your trustees to select the next trustee.
6. Do not let the attorney intimidate you.
Find a Christian attorney who has a list of references and who is easy to talk to. If he avoids explaining the complex legal language or does not take the time with you, walk out the door. There is no reason for an attorney to put all of your documents into language that is difficult to understand. Force them to put it in layman’s terms.
7. Make sure the attorney sets a fee for probate and settling your estate before you die.
He should be paid an hourly fee, not a percentage of the estate. The estates that are charged a percentage are those in states that allow the ugly practice outlined above. Having all your estate in a trust can avoid those fees.
8. Keep a set of your estate documents with the trustee.
Help them understand your plan by introducing them to your wealth planning advisor.
9. Create a Vision Statement prior to beginning the planning process.
This is the foundation for setting goals and objectives and brings to the plan all of your virtues and values. It may be the most important document that you create. Present this Vision Statement to the entire family so that they understand who you are and what you want to accomplish with your plan.
10. Finally, Family Matters!
None of these scams is possible with a family that stays close and watches out for each other. The number one problem in society today, which is the source of most issues in a society, is the break-up of the family. Fight for your family!
For more information on how Kardia can help you build a meaningful family legacy, please contact us or call 303-752-0590.
By Joe Sturniolo
Christian Family Legacy and Wealth Planning