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Mark Cornwall: Beware the Pros at Cons
Beware of estate-planning tax scams and the con men (or women) selling them. Do not believe a word if something appears too good to be true. There is no cutting-edge “pure” trust or “unincorporated organization” that allows you to not pay any taxes. Nor is there some new tax plan so clever that attorneys have not yet heard of it. “No, Virginia, there is no Santa Claus.”
The only thing more outrageous than promises of fraudulent estate-planning promotions, are their appeal to hard-working Americans. The con men tell you these are the same closely guarded trusts used by the Rockefellers and the Kennedy Foundation to keep their fortunes intact for generations. They claim that not only can you pay yourself in dividends that are “never subject to taxes,” but your assets held in a PURE TRUST are “beyond the reach of probate and inheritance tax laws.”
Do not believe it. There is no such thing. These scams, and what is known as a “living trust mill” where Living Trusts are churned out through seminars using pre-printed forms and no availability to a lawyer, are fairly common. The illegal ones are sometimes shut down by your local district attorney’s office, and in many cases the scammers are prosecuted and the victims must answer to the IRS.
But these professional cons come back months or years later using different colors, names, faces, brochures, and definitely different catch phrases. “Pure” trust will be changed to “constitutional” trust, and instead of using the Rockefellers, they will be friends of the “Alliance for Mature Americans.”
For your information, the statute of limitations for the IRS is three years from the date filed or from the date your taxes are due to find your mistake. That three years works both ways: if you made a mistake on your taxes you have three years to amend those tax forms, after which you live with your mistake, which could prove costly if found. But there is no statute of limitations for fraud on your IRS filing. Let’s all remember Al Capone and what finally brought him down.
Finding an Attorney
Many people erroneously believe that to get the best representation you must pay the highest dollar to the largest law firm. Nothing could be further from the truth. Size has nothing to do with quality. The right hand in many large firms does not know what the left hand is doing. You pay for expensive taste and lavish overhead by being charged $2.50 a page for a single photocopy.
In this day of modern technology, any solo practicing attorney sitting at his or her desk has the advantage of having a thousand law clerks at the beck and call. What was once the province of the large and prestigious law firms are now at the fingertips of any attorney who subscribes to LexisNexis or Westlaw, the two largest legal resources in the United States. There is no limitation on an attorney’s ability to get answers fast from these Internet resources, and find the most current law to apply to a situation.
Therefore, you can hire any attorney with confidence and not feel guilty that you are settling for something less just because he or she has a solo practice with one paralegal or maybe one secretary.
Many times throughout my books and articles it has been recommended you seek the advice of a certified tax expert. In fact, it bears repeating that you will need to seek expert advice from an estate planner or certified estate-planning specialist, and a tax attorney or discount valuation specialist and CPA, any time you are attempting to use complex trusts or business entities to transfer wealth, avoid extraordinary tax consequences, or governmental regulations. Make sure your attorney has these experts on hand. They are not necessarily found in the same building.
Experts are expensive, but they are worth it. In the long run, if they could not save people like you thousands of dollars yearly, they would not have a job. There are many, many ways to save money on taxes and savings that are simply beyond the scope of any book. My own books stop with sufficient information for you to understand our death and inheritance system and know what you want out of it. But attorneys are the ones educated to do the job right, and there are harsh repercussions for them if they fail to do so.
— No opinion herein is a “marketed opinion” and no information provided herein can be used to avoid tax penalties for which the taxpayer would otherwise be responsible. Mark S. Cornwall has lived in Santa Barbara for more than 30 years and practiced law here for 25 years. His book, Estate Planning: The Heroes Way for Baby Boomers, can be purchased via his Web site, www.MarkCornwall.com; Amazon.com; or locally at Chaucer’s and Borders bookstores. If you have any questions, call him at 805.845.7558.
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» on 04.22.09 @ 05:10 PM
Your mention of “living trust mills” raises the question of those legal self-help businesses, some storefront, some only internet based, and also publishers like Nolo Press. I would love to hear what you think of these. Stay clear? or has some value in certain situations?
» on 04.23.09 @ 04:04 AM
Good job Mark! I will pick up a copy of your book.
» on 04.23.09 @ 09:42 AM
If I can get one message across for the good of every reader that wants their estate plan done right, run the opposite direction from the store front selling fill-in-the-blanks on boilerplate legal forms. Every estate planner has a horror story of having to fix what these “living trust mills” put into action. There is no one-size-fits-all. I respect the Nolo Press because they try to help you understand the system the same way I do but in a different style. But read their disclaimers. Over the last ten years there has been litigation over every aspect of a living trust, especially the funding of these trusts, and the pourover will. You need professional help. Thanks for the comment. It’s very much appreciated.
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