Motley Fool Tries to Explain a Trust

You know me.  I’m not a fan of folks giving advice in an area about which they’re not qualified.  And as long as people would take it for what it’s worth and seek out the advice of professionals in the area, I’m ok with it.  But many do not.  Many folks hear or read advice from a big name (e.g., Dave Ramsey) and take it as the best advice to follow, rather than just the opinion of someone who is not a professional in the area.

So, what does that have to do with the Motley Fool?  It is exactly what they did in their “Ask the Fool” section in the Sunday, July 25, 2010 business section of the Grand Rapids Press.  First, I want to say that I’m a big fan of the Motley Fool for financial advice.  Much like I’m a fan of Dave Ramsey’s advice for getting out of debt.  However, when they decide to go “off the farm” and delve into an area that is not their expertise, my enthusiasm for their advice quickly wanes.

The question asked in the “Ask the Fool” section was: What’s a trust?  Brevity of the response aside, it mis-stated part of the concept and gave some advice that is far short of ideal.  They stated that a trust is a legal tool whereby someone gives control of property to a person or an institution.  Ok, close enough in my book.  I would say it is a contract/agreement between the creator of the trust and the trustee agreeing that the trustee will hold title/ownership of the assets for the benefit of the beneficiary(ies).  Then they go on to say that the beneficiary owns the property but the trustee controls it.  I beg to differ.  Who the “owner” is depends on the terms of the trust.  Maybe the beneficiaries are the owner, maybe not.  Yet they just make the blanket statement and leave it at that.

Some will say, “Mike, you’re really splitting hairs here.”  Maybe I am, maybe I’m not.  So surely they must have advised the person asking the question to talk to an estate planning attorney, right?  Nope!  Their response was to “learn more from a financial adviser!”  Yep, that’s right.  A financial adviser.  I guess that shouldn’t be a surprise since Motley Fool is known for giving sound financial advice.  Yet here they are (incorrectly) answering a question about a “legal tool” (their words) and then directing folks to a financial adviser rather than an estate planning attorney.  Would they suggest a reader talk to an estate planning attorney about the best long-term investment to get the reader to retirement?  Of course not!

So there you have it.  Again, a well respected person/group highly qualified in one area can’t help but give advice on a topic about which they are not professionals.  And then they direct readers to someone who, although qualified in the financial arena, is also not qualified to give proper advice.

What do you think?  Am I blowing these issues out of proportion?  Should these individuals and institutions be held accountable for the “off the farm” advice they give and the way it could harm the legacy of families?  I would love to hear your thoughts . . . even if it is to tell me I’m “off the farm.”

Michael Lichterman is an attorney specializing in estate planning and helping provide peace of mind to families and businesses throughout Grand Rapids and West Michigan.  He specializes in Whole Family Wealth™ planning for professionals with minor children, doctors/physicians, nurses, lawyers, and the “sandwich generation” (caring for parents and children) – and does so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

3 Comments

  1. Mike,

    You’re not splitting hairs – you’re providing a more accurate answer and that’s important. For those of us that are not financial experts we often lean on those we see as “experts” only to be led astray due to inaccurate or, more commonly, information that is effectively in-complete.

    Thanks for noting this!

  2. Mike,

    Couldn’t agree w/ you more. Saturday or Sunday morning I was listening to WOOD radio; it was a show hosted by an attorney- your “family” lawyer, or something like that; caller asked “if I take a distribution from my 401k before I’m 59 1/2 will I avoid the 10% penalty because I’m totally blind?”. The lawyer obviously didn’t know the answer – he went around and around about the exceptions; he finally said “sure, I think being totally blind = totally disabled, at least it’s close enough to give it a shot”. I couldn’t believe what I was hearing! He really needed to say “I don’t know; I can get back to you later or you should call a CPA who prepares personal tax returns”. But he never said that. The caller specifically asked “does blind = totally disabled?” and all he could say was “seems to me it would”.
    So yes, all of us in the professional service world need to stick with what we know! (and have a good referral network for things we don’t know!)

  3. Jeff,

    Thank you for the great comment. I’m a firm believer that “guessing” is not what you want from any service professional. You want someone who will say “I don’t know the answer off the top of my head, but I’ll research it and get you an answer.” Glad to know there are like-minded folks like yourself with the same believe.

    Mike

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