I was recently sent two review copies of Can You Trust Your Trust? by Seymour Goldberg, CPA, MBA, JD. I've reviewed a trust book on the blog once before, Living Trusts for Everyone, and so was expecting something similar. It turned out to be a very different book, for better and for worse.
I was expecting a bit of a layman's discussion of various trusts, their uses, and then maybe a pitch at the end to hire Mr. Goldberg's firm. What I got, however, was an eclectic collection of facts about trusts including some extremely technical detail for a book of just 150 pages. I confess that much of the material was quite new to me, and had to be read two or three times for me to get it. I found it interesting, but you know me, I find weird stuff like this to be interesting.
However, rather than a book for someone considering purchasing a trust, this is really a book for someone considering being the trustee for someone else's trust. And the book will probably talk you out of doing it! Mr. Goldberg is clearly qualified to write the book given his three academic degrees and lengthy experience writing manuals for the American Bar Association and the American Institute of Certified Public Accountants.
Basic Themes of the Book
There are a few themes that run throughout the book, but can be summarized as follows:
1) Trust law is state-specific, but most states have adopted some version of the Uniform Principal And Income Act (UPAIA) and the Uniform Trust Code (UTC) which do standardize the process a bit in comparison to how it used to be.
2) There are so many pitfalls to being a trustee that it should probably be left to a professional institution, despite the cost. At least use an institution as a co-trustee.
3) The tax definition of income (as defined by the IRS) is not the same as the trust definition of income (as defined by the UPAIA), and the differences matter.
4) Beware of trust scams.
5) Be very careful making a trust the beneficiary of your IRA; there are a lot of pitfalls there that can make it much worse than a stretch IRA if done wrong.
The Best Parts of the Book
There were a couple of parts of the book that I thought were particularly well done. The first was a list of all the reasons why you might NOT want to have a trust. These include
- Insufficient assets
- Accounting/record keeping costs for trust transactions
- Tax reporting responsibilities for the trustee (and associated costs)
- Preparation of mandated annual accounting reports (and associated costs)
- Lack of a responsible trustee
- Potential liability of a trustee
- Complex state trust laws
- Lack of adequate advisors familiar with expanding trust litigation issues
- Potential difficulty of obtaining releases from trust beneficiaries to close out trust
- Need to do trust accounting when trustee dies, resigns, or becomes disabled
- Need to maintain records to avoid trustee liability
- Trustee commission costs
- Costs of legal advice
- Cost of defending trust litigation
- Requirements of giving information to trust beneficiary
- Use of relatives and friends as trustees who are no technically competent
- Costs of investment advisors
- Difficulty of keeping up with trust laws
- Time demands on the trustee
Talked out of it yet? Quite a different perspective from the book entitled “Living Trusts for Everyone.” Don't worry though, the list of reasons he gives to create a trust are just as long. But it's a good demonstration of just how comprehensive this short little book can be.
The second part of the book I liked was actually one of the longest chapters (most chapters are just 2-4 pages, this one was 21 pages long.) It is all about Living Trust Scams. This chapter is composed (I believe, it isn't entirely clear) from writings of the attorney generals of several states. Here is a good summary of the chapter.
Trust mills are used by salespeople who prey on seniors and convince them through scare tactics and deception that they need a living trust. While these salespeople are convincing a senior to purchase a trust–generally for $1,500-2,000–they are also gathering detailed information about the senior's assets, claiming the need it to prepare the trust. Instead most of these trusts are cookie-cutter documents prepared in bulk on a home computer. Once the trust is signed and delivered, the salesperson uses the relationship to sell other financial products, like reverse mortgages and annuities that may be unnecessary or even contrary to the senior's interests.
Bottom line- Be sure to buy your trust from an attorney specializing in estate planning and not from someone who sells annuities, financial advice, mutual funds, insurance policies, or reverse mortgages. And for heaven's sake, don't buy anything sold over a free lunch. There are no free lunches.
Issues With The Book
Despite learning a lot from the book, I had a lot of issues with it. The first is that although Mr. Goldberg is certainly highly qualified to write the book, he is not J.K. Rowling. I mean, the author writes manuals for attorneys and accountants. If you put this book on your nightstand, you may never finish it. It is a dry subject to start with, and the author didn't do it any favors.
The second is that the book doesn't seem to have any overarching organization. It is a collection of seemingly barely related topics with no flow between them. The chapters aren't numbered and half of them would have been appendices in any other book. There is plenty of legalese in the book (for example the chapter entitled “IRAs Payable to Non-QTIP IRA Trusts” never actually spells out what QTIP stands for) and although the book doesn't require you to be an attorney to understand it, it certainly wouldn't hurt. I would have liked to see some of the material expanded and some of it minimized. For example, there is a 37 page chapter entitled Application of the Uniform Principle And Income Act Rules in New York State. The book is only 150 pages long (not counting the appendices), and 25% of it is specific to one state? Seemed like an odd editorial decision.
My final beef with the book was the use of extensive “author's notes.” Look at this page for example:
I mean, what is an author's note anyway? Isn't that what the whole book is? Certainly if they're going to be separated out into boxes they ought to be a minority of a chapter, no? Again, an odd editorial decision.
Now, all that said, this book can still be very useful for the right purchaser. That purchaser is the trustee of a trust (his own or someone else's), someone considering being a trustee, and someone who feels like he really wants a very comprehensive handle on trust-related legal issues (especially a New York resident) before purchasing a trust of his own. You can buy your copy today on Amazon for under $20.
Too cheap to buy? Feeling lucky? Well, get ready to win the copy I'm giving away. However, instead of leaving a comment, what you need to do is follow me on Twitter. In the next few days I'm going to send out a tweet about the book. First respondent gets the free copy! Plus you get updates when new blog posts come out and occasional wise tweets from me!
Read this book? Did you like it? Do you have a trust? Are you planning on getting one? Why or why not? If so, what type and for what purpose? Comment below!