| Introduction |
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| Probate |
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You've worked hard for your money, and made every attempt to be a conscientious saver. So it’s only natural that you want some control over what happens to your assets in the event of your death. At the very least, you probably want to minimize or avoid potential hassles and headaches for your loved ones.
Estate planning deals with what happens to your assets after you die. Even if you are a person of modest means, you have an estate and several strategies to choose from to make sure that your assets are distributed as you wish and in a timely way. The right strategies depend on your individual circumstances. That is, what is best for your neighbor might not make the most sense for you.
Misinformation and misunderstanding about estate taxes and the length or complexity of probate provide the perfect cover for scam artists who have created an industry out of older people's fears that their estates could be eaten up by costs or that the distribution of their assets could be delayed for years. Some unscrupulous businesses are advertising seminars on living trusts or sending postcards inviting consumers to call for in-home appointments to learn whether a living trust is right for them. In these cases, itís not uncommon for the salesperson to exaggerate the benefits or the appropriateness of the living trust and claim falsely that locally-licensed lawyers will prepare the documents.
Other businesses are advertising living trust kits: consumers send money for these do-it-yourself products, but receive nothing in return. Still other businesses are using estate planning services to gain access to consumers' financial information and to sell them other financial products, such as insurance annuities.
The Federal Trade Commission (FTC), the government agency that works to prevent fraud, deception and unfair business practices in the marketplace, advises consumers to proceed with caution. Before you sign any papers to create a will, a living trust, or any other kind of trust, the FTC suggests that you:
* Explore all the options with an experienced and licensed estate planning attorney or financial advisor.
* Avoid high-pressure sales tactics and high-speed sales pitches by anyone who is selling estate planning tools or arrangements.
* Avoid salespeople who give the impression that AARP is selling or endorsing their products. AARP does not endorse any living trust product.
* Do your homework. Get information about your local probate laws from the Clerk (or Register) of Wills.
* Make sure your living trust is properly funded — that is, that the property has been transferred from your name to the trust.
* Ask if the seller of a living trust is an attorney. Some states limit the sale of living trust services to attorneys.
* Remember the Cooling Off Rule. If you buy a product or service in your home or somewhere other than the seller's permanent place of business (say, at a hotel seminar), the seller must give you a written statement of your right to cancel the deal within three business days.
* Check out any organization that wants your business with the Better Business Bureau in your state or the state where the organization is located before you send any money for any product or service. This is a prudent step, but not altogether foolproof: there may be no record of complaints if an organization is too new or has changed its name.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
A trust is a legal arrangement where one person (the grantor) gives control of his property to a trust, which is administered by a trustee for the beneficiary's benefit. The grantor, trustee and beneficiary may be the same person. The grantor names a successor trustee in the event of incapacitation or death, as well as successor beneficiaries. A living trust, created while you're alive, lets you control the distribution of your estate. You transfer ownership of your property and your assets into the trust. You can serve as the trustee or you can select a person or an institution to be the trustee. If you're the trustee, you will have to name a successor trustee to distribute the assets at your death. The advantage of a living trust? Properly drafted and executed, it can avoid probate because the trust owns the assets, not the deceased. Only property in the deceased's name must go through probate. The downside? Poorly drawn or unfunded trusts can cost you money and endanger your best intentions.
A will is a legal document that dictates how to distribute your property after your death. If you don't have a will, you die intestate, and the law of your state determines what happens to your estate and your minor children. The probate court governs this process. A living trust is different from a living will. A living will expresses your wishes about being kept alive if you're terminally ill or seriously injured.
Probate is a legal process that usually involves filing a deceased person's will with the local probate court, taking an inventory and getting appraisals of the deceased's property, paying all legal debts, and eventually distributing the remaining assets and property. This process can be costly and time-consuming. Many states have simplified probate for estates below a certain amount, but that amount varies among states. If an estate meets the state's requirements for expedited or unsupervised probate, the process is faster and less costly.
Source: Federal Trade Commission
AARP: 1-800-424-3410; www.aarp.org. Ask for a copy of Product Report: Wills & Living Trusts. AARP does not sell or endorse living trust products.
The American Bar Association, Service Center, 541 N. Fairbanks Ct., Chicago, Ill. 60611; 312-988-5522; http://www.abanet.org/home.html
Council of Better Business Bureaus, Inc., 4200 Wilson Blvd., Suite 800, Arlington, Va. 22203-1838; 703-276-0100; www.bbb.org
The National Academy of Elder Law Attorneys, Inc., 1604 North Country Club Road, Tucson, Ariz. 85716; 520-881-4005; www.naela.org
Estate Planning FAQ's
American Bar Assoc.
Savings Bonds Useful in Estate Planning
TreasuryDirect
Living Trust: Deciding How To Manage Your Property
AARP
Beware of Living Trust Scams
ElderLawNet
Living Trust Offers: How to Make Sure They're Trust-worthy
FTC