Who Do You Trust?

From 1957 to 1963 (unfortunately, I am giving away my age) there was a game show on television (originally hosted by Johnny Carson and Ed McMahon). There were three couples on the show as contestants, Johnny Carson would ask a question of each couple, and the man would then decide whether to answer the question himself or “trust” the woman to do so. Each couple was awarded money for a correct answer, and the couple with the most money at the end of the show won. If the couples were tied in winnings, they were then asked a question involving a numerical answer, and the couple closest to the correct answer was the overall winner, so why do I mention this show?

Who we trust has a great deal to do with our success, in a game show and in life. Some people can be considered very trustworthy; they have proven themselves by their prior actions, either to you, or to one of your other trusted friends.

Especially in your financial matters, you want and need to find trusted advisors to assist you - advisors with the proper education and experience, advisors who keep an office open all year so they are there when you need them, advisors with integrity. We have experienced many new tax clients coming into the office this year to have their tax returns prepared. My first question to them is generally, “Why do we have the privilege of preparing your tax returns this year?” Often the answer is, “The person who prepared my prior returns was only there during tax season, and when I had questions, I could never get hold of them”, or “My friends told me to go to XYZ to get my taxes done, and they would get me a big refund. I went there and got the big refund, but when I got audited, I owed a lot of extra tax because the return was done wrong and I got stuck with the additional tax, penalties and interest”.

You want a tax preparer who knows tax laws intricately, and can prepare the return correctly. Does our office ever make a mistake? According to the U.S. Government Printing Office, the Internal Revenue Code is 13,458 pages. No one can know everything, but 20-30 years experience preparing tax returns sure cuts down on the errors. Occasionally we miss something. If we do, we correct the error in the return at our expense and pay the penalties that are owed. That is what integrity and honor demands. I may be old-fashioned, but the Golden Rule that says “Do unto others as you would have others do unto you” still sounds like a good way to do business.

Now regarding trusts. Many people are confused as to what a trust is. A trust is created when a document is prepared transferring property into the “corporate trust” for the benefit of one or more beneficiaries. The beneficiaries are the individual(s) or organization(s) that receive the income from, or use of, property placed into the trust. Many people create a living (inter vivos) trust to hold title to their property during their lifetime, and then transfer their property to their children, friends, or charities at their death

(just like a will).

Additional benefits of a properly funded trust are:

(1) property is transferred at death without having to go through probate which is a tedious, time consuming and expensive process of getting court approval to transfer the property of the deceased person;

(2) the trust provides for management of the trust property during the period between a person’s death and the distribution of the property to the individuals to receive the property (the beneficiaries) and;

(3) provides for the management of the property if a person becomes incompetent to manage their own financial affairs (through dementia, a stroke, etc) thus avoiding the cost and hassle of a court appointed conservator to manage the incapacitated individual’s finances.

The individual who is appointed to manage the trust property is a “Trustee”. A person setting up a trust can appoint themselves to be the trustee of the trust during their lifetime, or until they become incompetent, thus maintaining control of their own property just as they did before the trust was established. The key is finding an individual to serve as the Trustee after the person dies, or becomes incompetent, a person who has the knowledge, skill and integrity to manage the property in the trust. Duane R. Moats possesses a Masters in Business Administration, is a Certified Public Accountant, and a Certified Financial Planner, and has served as trustee for several of his client’s trusts. If the concept of a trust seems to be of interest to you, please contact him so that he may more fully explain the concept to you and direct you to attorneys who can properly prepare a trust document for you.