Estate planning solicitation

Estate Planning Solicitation Lies to You

Last week we received an estate planning solicitation in the regular (snail) mail at home. It made us very angry. It’s not just that it attempted to solicit our clients for non-lawyer estate planning. The solicitation contained numerous outright lies and wild misrepresentations. In case you received one, too, we’re here to debunk the false assertions.

What lies do they tell?

The solicitation, apparently mailed to thousands of Tucson homes, claims that a “recent study” found that 90% of estates will go through probate. The obvious message: if  you don’t do something to avoid it, your estate will go through probate.

Nonsense. Last year in Pima County (Tucson), for example, a total of about 1700 probates were filed. That was a slight increase over 2019.

Meanwhile, almost 10,000 people die in Pima County each year. Public reports indicate that there was at least a 10% increase in 2020, as a result of the COVID-19 pandemic. But even rough (and variable) numbers point to probate filings in 15-20% of “estates.”

Note that the mailing refers to “a recent study” but doesn’t tell us anything about who studied the numbers, or when (or where) it was taken. But people who are actually familiar with the world of probate (like we are) universally scoff at the notion that 90% of deaths require a probate filing.

Why do so few deaths lead to probates? There are several big reasons:

  1. Most people have beneficiary designations, joint ownership and other arrangements in place already, so no probate is required. This is especially true of married couples. A probate filing after the first death in a married couple is exceedingly uncommon.
  2. “Small” estates — those less than $75,000 in value — don’t require any probate proceedings in Arizona. They can be collected by survivors with a simple affidavit, readily available.
  3. Many individuals with larger estates have prepared trusts or other estate planning devices to bypass the probate process. That’s what we do for many clients, in fact.

What about UNNECESSARY ESTATE TAXES?

The flyer screams about the possibility of having to pay estate taxes. Here’s a surprise for readers (and, apparently, the people who sent the flyer out): less than .2% of all Americans will have to pay a single penny of estate taxes under current law. No trust required. In fact, living trusts don’t reduce estate taxes even for those few people who are affected.

The current federal estate tax exemption amount is $11.7 million. Married? Then your effective tax exemption is double that, or $23.4 million. Are you worth more than that? Then you should get qualified, expert assistance with your estate planning.

But, you say, the estate tax exemption could change. In fact, it is scheduled to go down in 2025, unless Congress acts. That’s true. It’s scheduled to go down to about $6 million (we won’t know the exact number until we see how much inflation there is between now and 2025). Married couples still get to double that. So if you’re worth between about $5.5 million and $11 million (double those numbers if you’re married), then you should get expert legal advice.

Wait — you mean there’s no tax to pay on estates?

Pretty much. No federal estate tax on any but the largest .2% of estates.

But what about state estate taxes? There aren’t any in Arizona. There are still some states that impose estate taxes, but unless you live (or own real estate) in one, you don’t need to worry very much about state estate taxes.

This confuses many people. Isn’t there some tax that your heirs will pay? In most cases, no. There is no income tax on inheritances. There is no inheritance tax to worry about. And, unless your estate is extremely large, there is no estate tax. This estate planning solicitation mailing is just a lie.

As if that were not a bad enough misrepresentation, the next line of that screaming headline is also a lie. Estate taxes can’t reach 40% of your estate value. The first $11.7 million (or $23.4 million for married couples) is exempt. The rest of your estate would pay a 40% federal tax. So even if your estate was worth, say, $20 million (for a single person), your estate tax would be 40% of the excess over $11.7 million — or about $3 million in tax. Not that that’s a good thing — but we don’t suggest you trust these liars to figure out how to deal with it.

Who are these people?

We tried to hunt down who was responsible for the estate planning solicitation we received. It comes from something called “Arizona Retirement Planners PMB 262”, with a Scottsdale address. That appears to point back to something called Arizona Retirement Planners, LLC, which is registered to a Melissa Placet. Whoever she is, she’s not an Arizona lawyer. She seems to be a 2015 graduate of Xavier College Preparatory High School.

The registration address is shared by several other Limited Liability Companies. The others are registered to Deborah Placet, who might be Melissa’s mother. Her other companies have names like “Veterans Financial Advisory Group Incorporated” and “Admirality Investments, LLC” (yes, Admirality — not Admiralty). There’s no indication that either of the principals is actually a veteran, or any kind of qualified financial planner. Neither is a lawyer.

Is that all? What’s the big deal?

Isn’t that enough? Well, there’s more to hate about this estate planning solicitation.

Among the allegations packed into this small flyer: “in probate, your private financial affairs become public court records available to anyone on the internet” (we left out the screaming all-caps bold text). That’s just not true.

Even if your estate does end up going through the probate process, very little information shows up in the court file. Financial information goes to the people named in your will, or to your next of kin — and not to the court file. And the financial information is not available online — it’s not even available to people who physically go to the courthouse to look at the file.

How about “no will is effective to pass title to property until probated”? Correct, but irrelevant. No trust is effective to pass title until the successor trustee effects the transfer, either. Even joint tenancy doesn’t move property to the surviving joint tenant until something is filed with the county.

Another one: “49% of the files examined in Arizona were still in the probate process after one year.” We wondered: examined by whom? in our experience, probate proceedings typically take 6-8 months from beginning to end. If they take longer, it’s because there’s something that has to be dealt with — like selling a home, or dividing personal effects. Those same things would delay settlement of a living trust, too.

Can it get any worse?

Tragically, it can. These solicitations are innumerable, and they come from all sorts of sources. Many of them cite the same “study” about wills and probate — though they often give different numbers and shadings.

Unfortunately, the AARP once cited a study (promulgated by a leading online estate planning self-help website) that claimed that 60% of Americans have not signed a will or made any estate plan. That might even be true — but estate planning solicitations ever since have started with “A recent AARP study found that…”, leaving readers to imply that the solicitor was somehow affiliated with, or endorsed by, the AARP.

Many of the estate planning solicitations we see are actually attempts to frighten seniors into buying — annuities! Don’t have a living trust? Worried about probate? You must need an annuity! The logic escapes us, as well.

In fact, just two days after we received the mailing from Ms. Placet, we received another one. This one invited us to dinner at Sullivan’s, a restaurant just steps from our office. It promoted a seminar by a guy who had the impressive title of “Registered Financial Consultant” and a “Certified Estate Planner™”. Before taking him up on his dinner invitation, you might want to look up those honorifics to see what they actually mean. Spoiler alert: he’s an insurance salesman, and almost certainly going to tell you that you ought to have an annuity. You might want to see what the AARP has to say about annuities, too.

Here’s our bottom line: random estate planning solicitations you receive in the mail probably are not going to be helpful. But if you do go to Sullivan’s for dinner, wave at us as you go in. Wink if you’re planning on having a free dinner and then declining the sales pitch.

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