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PROBATE CHAINSAW MASSACRE!
Forget the movies ... here's a REAL horror story for you, courtesy of the American Bar Association.
The objective of this article is to educate you to the advantages of responsible estate planning through the use of the CONTRACTUAL IRREVOCABLE TRUST, instead of a WILL (one of the weakest possible -- and potentially most dangerous -- estate planning instruments you could use).
You may have heard of the agony that ambulance-chasing attorneys and certain government agencies can bring to bear on an unprotected individual with exposed assets, and how quickly those accumulations of a lifetime can be wiped out.
But that's just child's play compared to Probate Court.
For example, the DALLAS TIMES HERALD carried a story about Miss Billie Goff (age 41) who inherited $428,609 from her stepfather, with whom she had lived for thirty eight years. Even though the will was valid, she was forced to apply for welfare because she was near financial destitution.
The TIMES pointed out this reason:
"Her stepfather owed back income taxes amounting to $40,000. A number of valuable notes could go back on the estate for payment if the other parties defaulted, even though they were backed up by property. Other costs included accountants who would determine the tax liability, and an attorney to `protect' the interests of the estate."
The TIMES concluded:
"But still, there is not one penny for Billie Goff".
Finally, a probate judge summed it up:
"Unfortunately, it's possible that the estate won't be worth anything!"
Regarding unfair probate abuses, an article appeared in the READER'S DIGEST
entitled: "The Mess in Our Probate Courts." It said:
"Inflated fees, paralyzing delays, patronage only some of the many ugly abuses fostered by our antiquated and inefficient probate system."
It exposed the:
"...great spread in legal fees...as only one of a number of faults, fumblings and frauds to be found in...passing money and property from one generation to the next. The high costs of dying is NOT the funeral: it's the legal and administrative costs of getting the dead man's estate - his lifetime earnings - though the probate or the surrogate courts...this legal institution, intended originally to help the average family, has become a means of exacting onerous ransom from the bereaved."
Another tragic story illustrates the accuracy of the DIGEST disclosures. It concerns an 80 year old widow who was left a multi-million dollar estate by her husband but she NEVER RECEIVED A CENT! Judges approved hundreds of thousands of dollars for lawyers! The estate was said to be so deplorably mismanaged by greedy, senseless "professionals" that an American Bar Association member called it a "dreadful example of judicial dereliction without equal!" This sad observation, although accurate, offered no financial comfort to the poor aged widow!
Even the wealthy have fallen prey to probate's excessive costs, especially when they don't know the proper procedure required to have contractual beneficial use of an estate and pass it one 100% intact to the next generation. Examine these three examples:
1. The estate of ADLAI STEVENSON -- a statesman, Senator from Illinois, Democratic candidate for President of the United States and delegate to the United Nations. He died at 65 with a gross estate valued at $1,398,236. Administrative expenses, attorney fees, all took $139,054. Illinois and federal inheritance tax took $476,670. Thus $615,724 was taken from his gross estate, leaving $782,512. Then $17,171 more was taken to pay the debts which were due upon his death. This left a mere $765,341 for his heirs. This was over 45% SHRINKAGE of the estate!
2. The estate of DWIGHT D. EISENHOWER -- famous World War II general, and twice elected President of the United States. He died at 78 with a gross estate valued at $2,905,857. Administrative costs, attorney's and executor's fees took $121,253. Pennsylvania inheritance taxes and federal estate taxes deducted $410,140. Then $140.036 more was taken to pay debts. This left only $2,234,428 for his heirs. This was over 23% SHRINKAGE of the estate!
3. The estate of ALWIN CHARLES ERNST -- founder and senior partner of Ernst & Ernst, accountants. He died at age 66 with a gross estate valued at $12,642,442. Administrative, attorney and executor fees took $78,862. Ohio inheritance and federal estate taxes took $6,030,936. Then his debts took another $1,014,314. This left $5,518.319 for the heirs. This was over 56% SHRINKAGE of the estate
Only 5% of the American public has a comprehensive estate plan. There are millions of citizens who are annually victimized and robbed of billions of their hard-earned dollars. No, it doesn't have to do with criminal activity as one might think at first; but, it is legalized robbery of which very few are aware. You ask, how can the public be robbed of billions of dollars annually and yet not know it? The answer is that our educational system continues to teach ineffective methods of estate planning (such as a WILL) while leaving the public ignorant of the most effective time-tested methods, in particular the IRREVOCABLE CONTRACT TRUST.
Of course, for every probate victim, there are beneficiaries. Namely, lawyers and the government! These beneficiaries legally mine our pockets to fatten themselves on our hard-earned money and inheritances.
For example:
* Henry J. Kaiser, Sr. owned an estate worth $5,597,772. When he died, it cost $2,488,364 to settle his estate -- a 44% SHRINKAGE in value.
* Walt Disney owned an estate worth $23,004,851. When he died, it cost $6,811,943 to settle his estate -- a 30% SHRINKAGE in value.
* William E. Boeing owned an estate worth $22,386,158. When he died, it cost $10,589,748 to settle his estate -- a 47% SHRINKAGE in value.
* Elvis Presley owned an estate worth $10,165,434. When he died, it cost $$7,374,635 to settle his estate -- a 73% SHRINKAGE in value. (Estate Planner's Notebook, E14)
The list of people, who lost more than 35% of their estate through improper planning, goes on and on: W.C. Fields, Dixie Crosby, Myford Irvine, William Frawley, Hedda Hopper, Marilyn Monroe, Erie Stanley Gardner, Cecil B. DeMille, J.P. Morgan, Alwin C. Ernst, Frederick Vanderbilt, Howard Gould, etc. Of course, these are all famous people with large estates. However, the list for the general population is even more devastating. We can't afford to lose money through improper planning like these "rich and famous" did. Money comes harder and in lesser quantities for most of us.
The sad fact is that we can legally avoid this potential nightmare. Sadly, most people spend more time, money and energy on planning a family vacation each year than they do on arranging their estate plans!
Estate planning should, in our opinion, be Job #1 for all sensible people who own real estate or any other assets of significant value.
* If you are working with Trusts already, do you know what "flies or dies" in the courtroom these days?
* Do you know the difference between having established an alter ego for yourself, rather than proper "arms length" distance"?
* Are you or a family member the Trustee and are you able to write court briefs, perform correct court procedure, and defend a trust that comes under scrutiny?
* Do you have proper ongoing backup support from service providers who know what they are doing?
If you cannot answer the above questions, or have any doubts about what you may already have in place, e-mail us for the Financial Fortress Associates weekly public conference call phone number and pin code. We are always on the call and invite you to join us. Schedule a private call with FFA and get to know us. Attend an FFA Managing Director's Workshop and meet with us personally.
Would you knowingly and willingly go into your closet and cut the sleeves off of every garment you own?
Your estate has been created through your sweat equity and should go to those individuals whom you want to have beneficial use of it, and not to an ever-expanding welfare State. Americans ought to make it an unpardonable family crime for not passing 100% of an estate to future generations.
What do you own right now, in your name, and what do you seek to acquire within the remainder of your lifetime that you'll want to pass on to future generations, in a way that will GUARANTEE THAT THEY RECEIVE 100% OF IT? Make your list and check it twice ...
PLEASE don't give the welfare State a chainsaw to cut your estate to pieces.
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