The Family War - Winning The Inheritance Battle

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The Family War In The Media

Financial Turkeys Leave A Bad Taste

By Dana Dratch

Thanksgiving turkey is great -- financial turkeys are not.

Money gurus hear about these kinds of turkeys every day. Some are gimmicks. Some are cons. Some are just mistakes or bad financial planning, or greed taken to a new level. Occasionally the stories have a happy ending. Most times they don't.

"They're never funny, because someone's lost money," says Kathleen Miller, CFP of Miller Advisors, based in the Seattle area.

Listen to talk radio and you'll hear many ads for gold coins, touting them as a hedge against inflation and a souring economy, says Dave Ramsey, host of a nationally syndicated radio show on finances, and author of "The Total Money Makeover."

"They talk about it like it's the Holy Grail," he says.

Why he pegs it a turkey: "Gold has a horrible track record" over the long haul, says Ramsey. Over the last 50 years, the S&P averaged about 12 percent annually, while gold increased at an average rate of about 4 percent per year, he says.

As a CPA and retirement planner, Ed Slott is used to helping his clients avoid con artists. His standard advice: Tell them you're going to run this by your accountant first. "That will knock out 99 percent of the scams," Slott says.

But these crooks have their own response. When a client came to Slott with the details of one such "investment opportunity," the scammers had already tried to defuse the value of the CPA's advice.

"They told us, 'He won't like the idea because he won't understand it,'" the client relayed. "They said, 'This is highly technical, and he doesn't know the ins and outs of all these deals. We're a lot sharper than he is.'"

But that just doesn't pass the smell test, says Slott, author of "Parlay Your IRA into a Family Fortune." "If I can't understand it, how can you invest in it?" he asks. His advice to all potential investors: Always enlist a knowledgeable, trusted and neutral third party to go over the details.

Slott recalls one man who tragically lost his wife and later also lost the money she had diligently saved for their retirement: a nest egg of $1 million. When the woman first started saving for retirement 50 years earlier, she was unmarried. So she listed her sister as her beneficiary. She later married, but had forgotten all about that beneficiary form she filed when she first started her job, Slott says. At her death, her husband got nothing and her sister inherited $1 million.

"The beneficiary form trumps the will," says Slott. "It trumps everything."

And it's an all-too-common mistake. Even after a major event, like marriage or the birth of a child, "most people don't check that," he says.

When an elderly man died he left his classic '67 red Mustang to his sons, believing that they could decide which would keep it, says Les Kotzer, an attorney and author of "The Family War: Winning the Inheritance Battle."

When they couldn't agree, their sister, who had been named executor, was forced to sell the car and split the proceeds. While neither blamed her, the brothers were furious at each other. And each refused to have anything to do with her if she spoke with the other, Kotzer recalls. The sister was devastated. She told Kotzer, "I've lost half my family because of that car."

If you're planning to let your heirs decide who gets what when you're gone, think again. "Many times," says Kotzer, "it's the lawyers who work things out."

Recently, Ramsey has heard from several listeners who got into the housing market, many times with no money down, with the intention of quickly selling the house and collecting a big profit.

"The trick to flipping a house is that you have to be able to sell it," he says. "And the market is slowing down."

And if you finance 100 percent and the value of the house sinks, you've lost money. So beware of the get-rich plans you hear on late-night television, Ramsey says.

"You have to work and have some knowledge to make money," he says.

Getting a loan to let you tap that tax refund before the IRS check arrives? Bad idea, says Les Dlabay, co-author of the college text, "Personal Finance."

"You're borrowing your own money," he says. "Usually, it's for a very short term at a very high interest rate."

Add that to the fact that a tax refund means that you've actually miscalculated your withholdings and made a short-term, interest-free loan to the government. That makes the move a double turkey for consumers, he says.

When one Washington state woman became the victim of ID theft, it was the crooks who revealed too much personal information, says Miller. While the credit card in question was still in the woman's possession, someone charged over $4,400 in the space of 18 hours, says Miller.

"They did a couple of dumb things," she says. First, they used the card to buy minutes for their personal cell phones. Then they purchased building supplies, which they had delivered to a local address. 

The good news: The police picked them up and, after three hours on the phone, the card company refunded all the charges.

Call it a classic turkey. Like your aunt's holiday fruitcake it's been around for years.

One radio listener confessed to losing $38,000, says Ramsey. And that's hardly an isolated incident. The Federal Trade Commission Web site posts it as one of the top 10 scams.

The details (like the country, dollar amount and tragic back story) will change. The basics: Someone in another country has access to millions or billions in a bank account. He or she must move the money out of the country and needs a third-party account (yours), in which to put it. In return for your help, you get to keep a small percentage.

The con artists need your financial information and routing numbers to transfer the money into your account. Not so coincidentally, this is the same information someone would need to take money out of your account. With some variations, you might even be asked to wire money to cover "taxes," "fees" or the cost of bribing local officials.

"That one is still hot," says Ramsey. "It's still happening.

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