Remember the TV police show where, at the end of each day's daily briefing,
the sergeant told the officers to BE CAREFUL OUT THERE!
Panic and panacea
Being careful out there is good advice. The odds are good that someday,
you?ll be invited to an "estate planning seminar" where the promoters will
predict the incredible expenses, numerous delays, and awful frustrations your
heirs will encounter during the probate process. Then the trust promoter will
promise that all of these problems will be solved if you purchase the
promoter's package of forms or services.
This is the classic panic them and then sell them the panacea routine. First,
they instill panic at the prospect of probate as an overly complex and
expensive process (which it generally is not in most states). Then they claim
or imply, "If you buy my book or set up this trust, all your estate and
financial planning problems are solved." Purchase my book, fill out the
forms, sign them and "beat the probate system." This is unrealistic thinking,
and is as dangerous as treating a life threatening medical problem with a
home or over-the-counter remedy.
A revocable living trust is one of many available estate planning tools. It is
an excellent and highly flexible tool -- if and when it is drafted by a
knowledgeable, competent estate planning lawyer and coordinated with other
wealth management/transfer and estate planning tools and techniques and
individualized to fit your personal needs, circumstances, and objectives.
But a revocable living trust is a potentially dangerous and harmful device
when used as a one-size-fits-all, "do-it-yourself" panacea, or in an insulated
manner and without regard to an effective, over-all estate plan. As explained
above, fear mongers use (or misuse) the revocable living trust to sell their
books or other products or services -- generally with little or no regard to
your tax and non-tax objectives.
The problems with trust mills
What are some of the problems with these "trust mills?" The trusts that are
sold are usually not tailored to your specific needs but are mass produced from
standard forms. Sometimes, the forms are not even very well prepared, causing
tax problems that would (and could) have been avoided with competent
drafting. Signing a trust document is only part of the solution. If the purpose of
the trust is to avoid the probate process, then your assets must be transferred to
the trust. Otherwise, the trust is worthless as a probate avoidance device. And
yet most trust promoters don't take responsibility for, or oversee, the transfer of
assets, and do not adequately explain the procedure to you. Worse yet, the
generic trusts that are sold are frequently over-priced -- with the trust promoter
charging exorbitant fees for what amounts to pre-printed forms. Often, the fee
is considerably higher than what would have been charged by a qualified
lawyer for a customized document and individual and highly specific tax and
The sale of a trust package, where the product precedes the problem (or
solution), is the antithesis of good planning. Proper planning should be a
process which begins with an investigation of your problems and goals, and
ends with the selection and implementation of one or more appropriate tools or
techniques -- that would solve your problems and achieve your goals in the
most efficient and cost effective manner possible. When the trust promoter has
only a single product to sell, then the investigative process of delving into
many important (but unaddressed) issues and searching for viable alternatives
or a more efficient mix of solutions is all but foreclosed.
View probate avoidance as one of many possible estate planning objectives,
and consider the revocable living trust as another highly useful tool that, in
many cases may (and, in our opinion, often should) be used in conjunction with
a will and other appropriate and complementary wealth management/transfer
and estate planning devices.
Any discussion pertaining to taxes in this communication (including attachments) may be part of a
promotion or marketing effort. As provided for in government regulations, advice (if any) related to
federal taxes that is contained in this communication (including attachments) is not intended or written
to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue code.
Individuals should seek advice based on their own particular circumstances from an independent tax
Securities offered through Lincoln Financial Advisors Corp., a broker/dealer. Insurance offered through Lincoln affiliates
and other fine companies.
Advisory services offered through Lincoln Financial Advisors Corp., a registered investment advisor, or Sagemark
Consulting, a division of Lincoln financial Advisors.
This material is for information purposes only. We do not offer tax or legal advice. Seek the advice of a tax advisor prior
to making a tax-related insurance/investment decision.
CRN # 200510-1003322