It’s Not Just Bernie Madoff
If every economic
predator wore a black hat
and resembled Simon
Legree, you wouldn’t
need to protect yourself
against economic ex-
ploitation. Virtually all
my c lie n ts are smart
enough to hang up
on fast-talking telemar-
keters and delete emails Joseph S. Karp,
promising Nigerian C.E.L.A.
riches. It’s because the most efficient
predators are the people you know
and trust, that I suggest clients put
predator protection in their estate
plans.
Here’s a tale of woe told to me by
a new client: She had become affiliated
with a small start-up church, which
after a few months asked her to lend
the church $5,000 for the purchase
of a building. She agreed, and at the
property closing, a flurry of documents
flew around, each requiring her sig-
nature. Trusting she was only making
it official, she signed each one, only
to find out six months later that not
only had she lent them $5,000—she’d
also signed a promissory note of
$200,000 and a mortgage on her home.
Ouch.
★ Listen to Joe Karp with
Anita Finley on Saturday,
January 10 from 7:30-8:00 AM
and Saturday, February 7
from 7:30-8:00 AM
on WSBR 740AM and on the
Internet at www.wsbrradio.com.
★ The likelihood of being taken ad-
vantage of economically increases
as one grows older. We’ve all heard
the stories of how a senior, dependent
on a caregiver who disparages the
senior’s family, is taken advantage of.
One of my own clients, a widower,
did not require the services of a care-
giver, but had become very close to a
man in his 80s, who belonged to the
same veterans organization as he. That
“friend” ended up fleecing my client
to the tune of $450,000.
The cynical truth is that the most
efficient exploiters are often loved ones,
and family dynamics being what they
are, your family members may not even
view their behavior as predatory. One
client, for example, had al-
ways enjoyed an especially
close relationship with one
granddaughter, and had given
her over $100,000 to ease
what her granddaughter told
her was financial stress. She
also honored her grandchild’s
request to not tell any other
family members about the
transactions. Recently she
learned her granddaughter is
not poor...just greedy...and has been
enjoying a luxurious lifestyle. Times
being tough, my client needs the
money and has asked to be repaid, but
the granddaughter claims she does not
have sufficient funds. Now that the
cat’s out of the bag, my client’s gen-
erosity to one grandchild is creating
family discord.
One way you can protect yourself
from this kind of abuse is by creating
an irrevocable trust, or making your
current revocable trust, irrevocable.
You name a trusted family member,
AND an independent person—perhaps
a longtime accountant, attorney or
bank trust department—as co-trustees
over the bulk of your assets, which
you place in the trust. You are not the
trustee. You name the ultimate bene-
ficiaries for those assets, also irrevo-
★ cably so you cannot be manipulated
to change your estate plan. You keep
a smaller portion of your assets in an
operational account, which is replen-
ished as you need funds. I am co-
trustee for several of my clients in this
kind of arrangement, which ensures
★ the safety of the bulk of their assets.
Because you do not have direct access
to the bulk of your funds, you are
spared being “hit up” for money, and
cannot be conned out of those funds.
They remain safe for the rest of your
life, and whatever remains, goes to
your ultimate beneficiaries.
Joseph S. Karp is a nationally certified
and Florida Bar-certified elder law attorney
(C.E.L.A.) specializing in the practice of Trusts,
Estates and Elder Law. His offices are located
at 2500 Quantum Lakes Drive, Boynton
Beach; 2875 PGA Blvd., Palm Beach Gar-
dens; and 1100 SW St. Lucie W. Blvd., Port
St. Lucie. Call him at 561-752-4550 (Boynton);
561-625-1100 (Palm Beach Gardens); or
772-343-8411 (Port St. Lucie). Toll-free from
anywhere: 800-893-9911. E-mail: KLF@
Karplaw.com or website www.karplaw.com