10 Critical Mistakes in Estate Planning

Over my thirty-two plus year career, I continued to see mistakes in legal documents prepared by attorneys along with the failure to review and update these legal documents by their clients. No offense to the many "flawless" attorneys out there. These are the biggest mistakes that I often see:

1. Failure by the attorney to make certain that individual and joint assets are re-titled into the new Revocable Living Trust by the client.
2. Failure in drafting a Revocable Living Trust (mostly on purpose) that names a bank or corporate trustee.
3. Failure by the client to update their legal documents periodically.
4. Failure by the attorney, again on purpose, to force the creation of one or more Testamentary Trusts at the death of the grantors.
5. Failure to have clear language regarding beneficiaries ability to accept their share outright, or as a lump sum.
6. Failure in drafting a Revocable Living Trust that restricts all beneficiaries as if they were all addicted to drugs, having maritial problems, or are a spendthrift.
7. Failure to record a deed for real estate into the name of the Revocable Living Trust.
8. Failure by the attorney to make clear their fee and timetable to perform trust updates.
9. Failure by the attorney to obtain client signatures in all the proper places.
10. Failure by the attorney in not drafting a "see-through trust" when recommending the beneficiary of qualified plans and IRA's be the new Revocable Living Trust.

Let's take these one by one. 

Number one is very typical. The attorney drafts the document, then tells the client to re-title everything, yet nobody follows up to see that it is completed.

Number two in most cases is totally unnecessary for middle class families. Someone with a small estate has no need for a bank trustee. This should be a no-brainer by the attorney, but I have seen it often.

Number three is very common. Sometimes the grantor's beneficiary dies before they do and the Revocable Living Trust is never updated. Further still, the grantor may have wanted to change their beneficiaries, but did not get around to it.

Number four is a pure money grab by the attorney, in my opinion. The grantor paid the attorney for the Revocable Living Trust, then the attorney never explained and the client never read it to see that each beneficiary cannot have access to their share of the estate. Only the income from the principal and for their health and welfare. By adding Testamentary Trusts which are created upon the death of the last grantor, then this is what you end up with. This makes each beneficiary have to hire an attorney. You see, even though your parents left you a share, since you are three siblings for example, then all three have to hire their own attorney to draft their own Testamentary Trust. One attorney cannot represent three siblings. They are barred from doing so since each sibling has competing interests and different beneficiaries.

Number five is related to number four. There is no provision for an outright distribution or lump-sum distribution for beneficiaries when Testamentary Trusts are created. You do not need Testamentary Trusts if you pay beneficiaries outright.

Number six is where the attorney drafts the Revocable Living Trust so that all beneficiaries are considered spendthrifts or have marriage or addiction problems. Each family is different, but attorneys tend to treat all the beneficiaries the same when they draft legal documents, even if only one beneficiary has issues.

Number seven is related to number one. I see this a lot. The attorney tells the client to do a quit claim deed, but there is a breakdown in communication somewhere along the line and the quit claim deed does not get filed with the county where the real estate is located.

Number eight is where the attorneys gladly take the client's money to do the initial drafting of the Revocable Living Trust, but do not have a clear explanation about their fee to update the trust as the client's lives change, or tax laws change. Clients are left to wonder how much it costs for an update and typically blow it off and file it away in the "I'll do it later" category. For example, in Florida, the Revocable Living Trust, the Pour-Over Will and the Financial Powers of Attorney should all be witnessed by two people with their full addresses. Everyone, the grantor and the two witnesses signatures should also be notarized. You may have a problem in Florida if the trust does not have two witnesses and a notarization of everyone's signature. You do not want to find out when someone passes away about this issue. Do an Estate Planning Review!

Number nine is another no-brainer. Believe it or not, most attorneys leave the notarization up to someone who works for them in their office. This is ripe for mistakes. I have seen it numerous times where a signature is left blank, or not dated properly and where the grantor's date and the notary's date do not match. Plus, scribbling through something and initialing it, is a mistake. Never ever scribble through anything on a legal document. RE-DO IT!! The attorney that allows this on a newly created trust is not professional, but rather lazy, in my opinion.

Number ten can be costly. I had a client whose attorney let her husband name his Revocable Living Trust as the beneficiary of his IRA. His wife was a beneficiary, but there was also a corporate beneficiary. This failed to meet the definition of a "see-through trust" as far as the IRS is concerned, because a corporation is not a person. Therefore, you cannot "see-through it" to any person. As a result, the wife could not treat the IRA as her own and she had to take it all out in five years.

There you have my 10 Critical Mistakes in Estate Planning. Trust me, it is worthwhile to have someone like me take a look at your legal documents. Although, I am not an attorney, I am qualified by training and experience as a Certified Financial Planner® to review estate planning documents. By this I mean that I can read!

https://marianfs.com

Dealing with Grief

On September 4th, it was my son Reese's 31st birthday. Reese lived for 92 days and died of Sudden Infant Death Syndrome. I was blessed to be his father. Losing a son is no easy thing. You hear people say that "no parent should ever have to bury their child." I agree. Especially when it is your first child and they are only three months old. At age 33, I asked myself at the time, "How I am supposed to deal with this?" Truth be told, I didn't know.

Now that it has been almost 31 years, I can look back at it and evaluate how I have dealt with it over the years. When it happened, I suddenly had to wear a theoretical 50 pound vest around me. I am speaking metaphorically of course. In addition, to that, I had to try and be there for my wife. The first thing we noticed was that we each grieved differently. We both realized very quickly that we had to be supportive of each other when it counted. Too many grieving couples develop silos of grief and fail to communicate with each other. This causes one spouse to think the other does not care. Of course, this is patently untrue. It is simple a break down in communication. However, a breakdown in communication during a period of grief will lead to divorce in a lot of cases. Luckily, that did not happen in our marriage.

For several years, we volunteered at a Compassionate Friends group which became a Bereaved Parents group later on. One of the things that immediately slapped me in the face was that there were always people worse off than you. One lady had lost three of her children in a fire. Another son who filled in one night for his friend at a convenience store was murdered on that freak one night. He was working on his master's degree and was going places in life. There were so many heartbreaking stories among these people, but it was comforting to meet other people who have also lost a child. It was a safe place for a time. However, it is not a place to stay for years upon years. You will know when it is time to move on. Your instincts will tell you.

My wife and I discussed what to do next. We still wanted to have a family. Our plan was to have two or three children about two years apart. When we were ready, we got back up on that horse that had knocked us down and had our second son Marshall. Once he was born, it was not easy. We were on pins and needles that we might lose another child to SIDS. He was hooked up to a breathing monitor and I'll be darn if he didn't set that thing off 28 times in the first 30 days. You talk about a guy running a hundred yard dash to his bedroom. I did that a lot. 

Of course, the risk for SIDS is really about the first six months. We did not know anything about SIDS back then, nor did we even know anyone who had a child who died of SIDS. For myself, I went to the local medical school library and read everything that I could find on it. There are influencing factors that I discovered. Premature birth, male, born in winter months, having a cold prior to death and sleeping on their stomach. Reese was born about 4 - 5 weeks early. He was not really what you would call a premature baby, but when he was born, he was held in the neo-natal unit the whole time at the hospital. When the doctor finally showed up 4 or 5 days later, he said "take him home and treat him like a normal baby." I was like, wait a freaking minute. He was in neo-natal ICU for 4 or 5 days and now, everything is fine? The doctor said "Yes. Treat him like a normal baby." Notice how I remember that 31 years later? Of course, I do not have a very high opinion of that doctor. I know. I know. It wasn't his fault that my son died, but damn it! Get your head out of your rear end. You are a "baby doctor" who is supposed to be knowledgeable about things like, oh I don't know, perhaps Sudden Infant Death Syndrome. Reese had all those signs that I discovered in the medical school library mentioned above.

Sorry, I digressed.

My first real experience with grief was when I was a senior in high school and I learned that my father had died. I never knew my father. Although, he had plans to have a relationship with me, because he had moved back to Arkansas from California to become the Chief of Police in Camden. My sister Tami had told me that they moved to Arkansas so he could have a relationship with me when I turned eighteen. Unfortunately, it was not meant to be.

Dealing with the grief of losing my father has been a lifelong struggle. My mother has been absolutely no help. No parent should ever disparage the other parent to their child, especially when they are deceased. After all, they are not a threat any more if they are dead. 

My wife and I had three miscarriages in a row after Marshall was born. These were no fun. We decided to keep trying. We saw that movie "Rudy" and decided that our baby would be named Rudy if it was a boy and Rudi if it was a girl. We were blessed with a girl and both our son Marshall and daughter Rudi are doing well. 

I've lost two brothers and a sister, too. My brother David was killed in a automobile accident at age 32. My sister Tami died at age 53 of health complications from Lupus and doctor approved morphine. More recently, my brother Jon died last year of a heart attack. I begged him to quit smoking, especially since our father died at age 39 of a heart attack and he was a heavy smoker. After Jon had his second heart attack, he had bypass surgery and quit smoking for a short time, but resumed his smoking unfortunately. There was no good outcome to be had.

When I turned age 39, I was wondering if I would make it pass that grim milestone. I had an eerie feeling that year and for good reason. One of my best friends in the world would be murdered and two days later, my step father would die of cancer. My best friend's mother would go on to lose three of her 4 children. One more to ALS and another to murder. Two murdered children in one family. As I mentioned above, there is always someone who has had it worse than you. Remember that.

Looking back, as I am nearing my 64th birthday, I am amazed that I am not in the crazy house. Getting back to the title of this blog, I have dealt with each of these incidents of grief in different ways. For my son Reese, I look at his picture each night that I go to sleep and pat myself on my chest where I used to hold him. On his birthday, we light a candle for Labor Day, since he was born on Labor Day.

For my father, I have researched his life and built a shadow box in his honor. He was a "Rakkasan" or Korea War paratrooper from the 187th which merged into the 101st Airborne. He spent over 10 years in both the Army and the Air Force, then joined the ranks of law enforcement where he served until his death. He was an American hero. I have his pictures on my phone and on my mantle. Further, I have done genealogy on the Allison family and this has been very rewarding to me personally.

For my best friend Mike, I have a beer holder in a drawer in my bath room that holds my hair brush. Every time I brush my hair, I see that beer holder. We were roommates and fraternity brothers and went to the Sigma Alpha Epsilon Leadership School together.

I have pictures of my brothers, David and Jon on my mantle too, along with one with my sister Tami. Whenever the clock strikes 12:12, I think of my brother David. We saw David on 12/12/1993 for the last time at my nephew's first birthday party. On his way home, he was killed in the automobile accident. I do not go by that exit on I-40 often, but when I do, I certainly do not like it. I have a golf tournament award that my brother Jon won along with a picture of him with Eddie Van Halen. I miss my brothers a lot. Both of them were great brothers.

The picture that I have of Tami is one with all of the Allison family except our father. She was always sweet to me and helped me fill in some gaps in regard to my father. It was like that show "Long Lost Family" when I met her in Las Vegas. We instantly connected.

One thing that I noticed about grief is that your friends change. People that you thought were your friends feel too inept to communicate with you, so they slowly slink away. While other people you do not expect have a newfound appreciation of what you have gone through. There is no one answer to dealing with grief. Of course, I could not do it without my faith in Jesus. I am comforted to know that he said "Let the little children come to me." That tells me all I need to know about how Jesus feels about Reese.

Right now, my wife's father is experiencing his last days in a nursing home. More grief to come for my wife and I. My wife lost her brother Jerome at age 57 which was the same age that my step father Hillman died. Unfortunately, grief never goes away, so you have to learn to live with it, like it or not. There is no reason to ruin your life and sink into a depressive state, or get addicted to drugs or alcohol to deal with it, because none of those things will help you. It is more important to recognize grief for what it is, accept it, then keep moving forward living your life. You will never get over the loss of people that you love, but you can choose to live your life and find your own happiness. Little by little, the weight of the 50 lb weight vest will start to dissipate. It will rreturn periodically, but you will get better at removing the weight of it. Stay focused on the future, respect the memories of the past, appreciate the gifts that you received of God putting those people in your life and then live your life in pursuit of your own happiness. Happiness is better than depression any day of the week.

There is Hope in #Fintwit

I am a student of prior wars. One of the craziest wars was World War I, sometimes called the Great War. Parts of this war took place in Northern France, Belgium and Southern Germany via trenches. The Germans advanced and dug large trenches over a vast stretch of land and then defended it. The Europeans also dug trenches very close to where the Germans dug their trenches. The Generals on both sides periodically ordered their men over the side of the trenches to advance to the other trenches. If you failed to get out of your trench when ordered, then you were likely to be shot dead right there by your own side. If you got out of your trench, then you were likely to be shot by the enemy. This insanity repeated itself for several years with neither side advancing. All that happened is thousands upon thousands of people were needlessly killed by incompetent military leaders.

Today's political climate reminds me of this trench warfare. Instead of playing out on a battlefield somewhere, it is playing out on Twitter®. This is just pure stupidity in more ways than one. First of all, nobody should believe that their opinion on Twitter matters in the grand scheme of things. Secondarily, if you are espousing your political beliefs on Twitter, then you will most certainly get attacked and perhaps even some will try and cause you to lose your job. This is all totally ridiculous. It really should stop. I have started to see it rear its ugly head in #fintwit. This is disturbing to me, because our industry already has to fight off all these stinking Ponzi schemers. We do not need to be sullying our reputations as a group over mindless political opinions.

Twitter is today's trench warfare. A bunch of people with way too much time on their hands send out tweets and foolishly believe that their words carry a lot of weight. The truth is Democrats do not care about a Republican's opinion and vice-versa. So, I am going to double cancel culture the both of you Democrats and Republicans. Cut it out. You are giving our profession a black eye.

I notice some things about our industry having been a part of it since 1988. For most of my career, other financial advisors have mostly looked at each other as competition. I recently had a financial advisor with an office in my building tell me that we were competitors. I told him that we were not. He disagreed. I tried to reason with him that the people that he knows in his circle are in a different circle than the people in my circle. He was unconvinced. Although, I could have offered a ton of help to this younger advisor, he was totally opposed to the idea of even having a further conversation, much less help from a competitor. I thought how sad. He was trying to branch out on his own, but months later, I noticed that he took a salaried job at Citibank. No surprise.

I met another financial advisor who once told me that he knew how much assets under management that I had. I replied, "You're kidding?" He said, "No. In fact, I have a list of every financial advisor in town and how much they have in AUM on an Excel spreadsheet." I was stunned. Why is this guy wasting his time worrying about what other advisors in town are doing? Seems pretty dumb to me. Must be a male ego thing, I guess.

There are some young people coming up today who are making changes in that attitude. Specifically, Jason Wenk, Tyrone V. Ross, Jr. Dasarte Yarnway, Brittany Castro, Emlen Miles-Mattingly, Douglas Boneparth, Ryan Hughes, Alex Rosenberg, Taylor Shulte, Justin Castelli, Breanna Reish , Alex C. (the Armenian) and Kyle Van Pelt. Forgive me, if I left you out. Those are the names that came to my immediate mind. These folks are all about helping each other. They do online seminars, video blogs and reach out to each other by social media. Others have businesses that help young advisors. These people are doing great things for our industry. I can tell you confidently that the future of the financial profession is in good hands with these young professionals. They get it and frankly, I do not care what their political beliefs are since they have no effect on what they are trying to accomplish and I strongly believe will accomplish. 

Let me know if I can be a resource.

https://riarules.com

https://marianfs.com

Who is investing with these fools?

Are people really this stupid? Sadly, apparently so. Some promoter of investments in Texas promised investors a return of 20% per year over two years. In addition, this Texas promoter promised that each investor would potentially receive another $15,000 to $18,000 over five years, plus even more crazy incentives.

I am not sure how many stupid fools invested with this guy, but the Texas State Securities Board's Enforcement Division stepped in and put a stop to it. Or, at least they thought so. The brazen nature of this promoter is unbelievable. While the promoter met with the Enforcement Division, after promising to stop his sham, he was still promoting it to investors on that very same day!

My book, Meet Wall Street. The Reason You're Stupid, 2nd Edition is on sale right now for $0.99 as an eBook at https://books.apple.com/us/book/meet-wally-street-the-reason-youre-stupid/id816020421?mt=11&app=itunes. The subtitle is very apropos for anyone fool enough to invest with this promoter. Hopefully the Texas State Securities Board stopped him before he stole too much money from investors. You can read the press release from the Texas State Securities Board here: https://www.ssb.texas.gov/news-publications/commissioner-enters-order-against-georgetown-promoter-fraudulent-medical.

If you had read my book, then you would not have fallen for an investment promoter like this guy. Let's have a little class on this, shall we? Your first clue to this being a sham was the 20% per year return promised over two years. He was only asking for $50,000 from each investor. That was your second clue. Your third clue was the additional return promised of another $15,000 to $18,000 over five years. Add these clues up and you have a sham investment of a 76% return on your money in five years. How can these guys even say this crap with a straight face? I would report a guy like this so fast they would not know what hit them. I majored in Criminal Justice and I believe in law and order. Besides, I am out here doing the right thing by people and these investment promoter types are ruining it for honest advisers like me.

Readers of my eBook will know that this type of investment violated my rules of investing. One of my rules is to "Keep it Public." By keeping it public, I mean that you should only invest in publicly traded investments listed on a stock exchange.  My other rule is to "Keep it Liquid." This investment was certainly not liquid. Once you gave this promoter your money, then that would likely be the last time you saw it. How are you going to comply with my two rules? This sham investment was not publicly traded and it was not liquid where you can get your money in as little as two business days. Therefore, as readers of my eBook know, this was a big, red flag and they would have never fallen for this investment promoter.

Oh by the way, did these investors check this guy's background? That's what I thought. Another egregious failure. Did they check to see if this was a securities offering registered in the State of Texas or granted an exemption from registration from the State of Texas? Of course, they did not. They just blindly hand their money over to investment promoters like this all the time. You can check an advisor's background at https://www.investor.gov/crs.

Ninety-nine cents will provide you the information to protect you from investment promoters like this guy. Now do you see why the subtitle of my book is "The Reason You're Stupid"? Unfortunately, you are very, very stupid if you invest with someone like this.

You need me in your corner. I am telling you.

https://www.marianfs.com