Trusts may be useful in estate planning, asset protection, and providing for elderly parents or other family members who may be unable to manage their own affairs.

Establishing a trust isn’t especially difficult, but it’s not a do-it-yourself project. It’s important to work with an attorney to be sure the trust complies with legal requirements and will actually carry out its intended purpose.

What may be the hardest part of setting up a trust is choosing the trustee. Here are a few suggestions that may help. Some of them come from information provided by the Financial Planning Association.

1. Be sure you as the creator of the trust understand the trustee’s role. Ideally, trustees will have some expertise in legal matters, taxes, and investments. The specific knowledge needed will vary, depending on the scope and purpose of the trust. It’s important to discuss that purpose in detail with any potential trustees to be sure they have the necessary skills and are comfortable taking on the responsibilities.

2. Consider the pros and cons of choosing a personal or a professional trustee. Generally your choice will come from one of three categories: A personal trustee who is a close friend or family member, a personal trustee who is a professional advisor, or a corporate trustee such as a bank’s trust department.

A family member or close friend may already have inside knowledge of your circumstances, as well as having personal relationships with the beneficiaries of the trust and a personal commitment to carrying out your wishes. The possible downside is that the trustee may have conflicts of interest or find it difficult to enforce some trust provisions.

Professional advisors such as attorneys or accountants will have specialized knowledge that may be important. Even advisors who have worked closely with you will have a level of professional detachment that may make it easier to carry out your wishes, especially any that involve saying “no.”

With a corporate trustee, the relationship is with the firm rather than an individual, which provides continuity and protects the trust even if the original trustee is unable to continue serving. The downside is the lack of detailed personal knowledge and involvement.

3. Evaluate costs. Professional or corporate trustees will, of course, charge for their services. Friends or family members may not charge fees but really should be compensated appropriately. State laws govern the maximum fees trustees can charge and the specific services provided.

4. A commitment to take on the responsibilities of the trust and to carry out your wishes with integrity may be the most important quality for a trustee. Someone without financial and legal knowledge can always get help from professional advisors.

Finally, remember that the word “trustee” isn’t used by accident or coincidence. The trustee’s role is to act in your stead when you are unable to, managing the assets of the trust with the same care you would use and making the decisions you would make in the best interests of the beneficiary of the trust. The most essential factor in choosing a trustee is finding someone you can rely on to act on your behalf. Who is, in short, trustworthy.

This is the gist of an article in the April issue of Financial Advisor magazine by Dr. Somnath Basu, professor of finance at California Lutheran University. He notes, “The problem could be as big, if not bigger, than the 2008 financial crisis.”

A new study by the Center For Retirement Research, Boston College, detailed on CNBC.com, finds the retirement years for Boomers will be much leaner than for their parents. An estimated 51% of them will be unable to maintain their current lifestyles in retirement.

Ironically, one major contributor to this bleak picture is the Boomer generation’s own optimism and positive thinking. Raised in a society of abundance with expectations of prosperity, Boomers have over-spent and under-saved for decades. Many of them assume they will receive ample inheritances. They see increased life expectancy as a wonderful thing, forgetting to factor in the higher medical costs that will come with it. They expect to work well into their 70′s, disregarding statistics that show many of them will be forced to retire sooner due to health problems or job layoffs.

Let’s look at some decidedly pessimistic numbers from the Center For Retirement Research study. The median 401(k) and IRA balance for Boomers nearing retirement is $78,000. Only around half can expect to inherit from their parents, with the median inheritance amount $40,000. That adds up to a total nest egg of $118,000, which at a 4% withdrawal rate provides less than $400 a month for life. Combining that with the average Social Security check of $1,077 means retiring on an income just above the poverty level.

What’s the solution? Many Boomers say they plan to never quit working. Unfortunately, this is delusional. According to a new survey by the Society of Actuaries, “The 2011 Risks and Process of Retirement Survey,” over one-third of Boomers think they will never retire and only 10% say they will retire by 60. Statistics show, however, that 50% have actually retired before age 60. The main reasons are health and downsizing, which boomers discount. Well over 90% of them maintain they have a healthy lifestyle and won’t get sick. Boomers are so out of touch with reality I wonder how many, if asked, “Will you ever die?” would answer, “No,” or “Maybe.”

Sadly, only one-third of Boomers have a plan for financing their retirement, other than planning to work until the day they die. What’s the solution for the remaining two-thirds who are unprepared?

Unfortunately, for many older Boomers it is already too late. Their lack of planning for their retirement years may mean forcing their children and grandchildren to decide whether taxpayers can afford to pick up the tab.

Younger Boomers can take control of their retirement by radically downsizing their lifestyles and increasing their income. This means selling expensive homes, cars, and toys and living as frugally as possible. The resulting savings should first go to pay off high-interest debt, then to fund to the max every available retirement plan. Another possibility is to consider various employment options, including government jobs which offer pension plans unavailable in most private sector jobs.

Wise Boomers will also encourage their own children to emulate the frugality and money skills of their grandparents. The kids will need those skills for their own futures—especially if they have to help their Boomer parents pay the bills.

Still, Rick is one of a handful of planners cited in the article as among the first to use online video to market their services and communicate with clients. He says using private client-only videos to guide clients through forms and money exercises helps him and his clients use their time more efficiently.

Read the piece by Samantha Allen, titled “The Producers,” here.

Don’t worry, he or she might have more education in financial planning than you think. According to an article by Jason Kephart published April 29 in Investment News, increasing numbers of colleges are offering majors in financial planning.

This is good news for planning firms and their clients, according to several planners, including Rick, who were interviewed for the article.

Read the entire piece here.

1. Lack of privacy. Ms. Houston had a simple will that was subject to public probate, rather than a living trust that would have kept her affairs private. Anyone with thumbs and access to the Internet can see a copy of her will.

2. Lack of protection from claims, con artists, and circumstances. The estate, estimated to be worth over 20 million dollars, was left to Ms. Houston’s daughter, Bobbi Kristina Brown. A vulnerable young woman just barely of legal age will receive three huge payouts over the next decade and become a multi-millionaire by the time she’s 30. A trust could have given her some limits and structure, as well as providing for advisors to help her learn how to manage her wealth and protect herself from predators.

3. Lack of tax planning. The federal estate tax of 35% on anything over $5,120,000 will apply to the estate, so Uncle Sam will take around a third of it off the top.

Unfortunately, this lack of skilled estate planning isn’t all that rare among wealthy people. Here are a few of the money beliefs that may be behind inadequate estate planning:

“Complicated estate planning is for rich people, and I’m not rich.” This may especially apply to owners of small businesses who don’t have a particularly high income or lifestyle but whose land or businesses may be worth several million dollars. Yet good estate planning advice is especially important for them, because their heirs aren’t necessarily aware of or prepared for a substantial inheritance.

“The financial advice that was good enough when I was just starting out is good enough now that I’m successful.” A tax preparer, accountant, or financial advisor who is highly competent with small individual or business matters may not have the knowledge necessary for more complex estate planning. Seeking out different financial advisors as your income and net worth grow is no different from consulting a specialist rather than a general practitioner if you have specific medical needs.

“When you can afford the best, you’ll get the best.” Trying to save money by hiring bargain-basement financial advisors is almost always a mistake. It can also be a mistake to assume that someone who charges top-tier fees will always have top-tier skills and integrity. Even if a financial planner or other professional has a reputation as an advisor to the wealthy, it’s still essential to verify that the person or firm is right for you. Ask for references and be willing to ask hard questions about compensation, investment philosophy, and services. Make sure you are a client, not a customer. Work only with financial advisors who, like accountants or attorneys, have a fiduciary duty to put your interests first.

“I know how to make money, so of course I know how to manage money.” Many highly educated and skilled professionals are high earners but don’t necessarily have the knowledge to manage their earnings well. In order to know whether the advisors you hire are competent, it’s important to learn the basics of investing and money management. Look for advisors who don’t set themselves up as “gurus” but are willing to teach and to work in partnership with you.

When it comes to financial advice, it isn’t enough to find someone who will “make you feel like a million dollar bill.” It’s more important to find advisors who will help you take good care of all your dollars.

Mitt Romney, the probable Republican Presidential candidate, has come under attack from both Democrats and other Republican primary candidates for his high income and net worth and his low overall tax rate. The arguments are that Romney made his money by the wrong type of capitalism and that he pays too little in federal taxes.

The tax returns Romney has made public show most of his money comes from investment returns on his holdings rather than from wages or a salary. His overall tax rate in 2010 was 13.9% and his estimated rate for 2011 is 15.4%. This caused a predictable outcry that his tax rate is lower than the income tax bracket of many middle class Americans.

President Obama’s 2011 tax return shows a tax rate of just over 20%. Former Republican candidate Newt Gingrich paid 31% of his 2010 income in federal taxes.

To the uninformed, these varying tax rates initially look unfair. What many people don’t understand is the big difference between “ordinary income” (from wages, a salary, short-term capital gains, and interest) and “passive income” (from stock dividends and long-term capital gains). The federal government taxes ordinary income at up to 35% and passive income at 15%.

Why the different rates?

First, let’s look at dividend income and long-term capital gains taxes on investments held over 12 months. Dividends come from corporations that must first pay income taxes on any profits. Long-term capital gains come from shares of a company purchased and held for more than 12 months.

Since the effective corporate rate is 39.2% (the top federal rate and the average state tax rate), the corporation has already paid taxes on all income, including what is paid out to investors as dividends. Prior to the Bush tax cuts in 2001, dividends were then additionally taxed at almost 40%. This meant every dollar of dividend income was taxed twice, once at the corporate level and again at the individual level. The result was that 60 cents out of every dollar of profit made by a company was paid to the federal government. The Bush tax cuts continued the practice of double taxation, but lowered the amount paid at the individual level to 15%.

The same double taxation applied to long-term capital gains, except that the tax rate was a flat 28% before the Bush tax cuts reduced it to 15%.

This double tax makes it seem that the wealthy pay less tax than they really do. An individual may pay 15% on passive income of, say, five million dollars. Yet corporations have already paid taxes of around 39.2% on that same income, for a total tax rate of 54.2%. Of the five million in profit, over two and a half million goes to Uncle Sam. That would seem to be more than a “fair share.”

According to Congressional Budget Office figures from 2011, the top 1% of taxpayers pay an average of 29.5%, those in the percentiles from 81% to 99% pay 22.8%, those from 21% through 80% pay 15.1%, and the bottom 20% pay 4.7%. Those numbers, of course, don’t include the 49.5% of Americans who pay no federal income tax at all.

Even factoring in the different tax rates on ordinary and passive income, it’s clear that the more money Americans earn, the more tax they pay. What could be more fair than that?

Brent Carnduff, a member of the Internet community SocialTurns, encourages members of the financial industry to make effective use of social media. On April 16, he posted his list of “5 Financial Planning and Retirement Blogs to Follow.” Rick’s blog was one of the five.

Read the entire article here.

A recent Investment News article cited several advisors and fund managers, including Rick, who doubt whether the double registration will do anything for investors except increase their costs. Rick said, “If anything, we need the right regulation, rather than trying to force two different regulators to mesh.”

Read the entire article here.

One common reaction to stories like this is anger at a landlord for unfairly selling a building out from under a tenant. Another is, “Why would tenants spend so much money remodeling a building they didn’t own?”

Neither response sees the whole story.

I empathized with this owner’s loss as a result of a bad business decision. The bad decision wasn’t spending $30,000 to remodel a space she didn’t own. Business owners make such “tenant improvements” all the time. Every tenant you see in a mall has poured thousands of dollars into fixing up and customizing their space. Tenant improvements can range from repainting a space to building a fast food restaurant on leased land.

The poor business decision this owner made was not being sure the lease term ran for long enough to recoup the cost of the tenant improvements. The cost of any tenant improvement is a pure expense that needs to be factored in as part of rent and amortized over the life of the lease. This is because when the lease expires, both parties have the right to not renegotiate a new lease. Any tenant improvements become the property of the owner. Landlords who choose to use property for something different when a lease expires aren’t abusing or taking advantage of tenants—they are simply exercising the contractual rights agreed to by both parties.

Most new strip centers or malls lease relatively unimproved spaces, sometimes called shells. Tenants get four walls, a cement floor, and bare girders above. It’s the tenants’ responsibility to finish the spaces in the manner they want. This makes a lot of sense, as usually each retailer is very specific about the floor plan, colors, and building materials they use in their spaces. At the end of the lease the relinquished tenant improvements, with years of wear and tear, are typically worth very little. New tenants will rip them out and finish the space according to their needs.

Let’s take an example of a 5,000-square-foot shell that rents for $8 a square foot annually. Let’s say it will cost $100 a square foot for the retailer to finish the space. If the lease extends for 20 years, the annual cost of the tenant improvements is $5 a square foot ($100 divided by 20 years). This brings the total cost for the leased space to $13 a square foot ($8 shell rent plus $5 for improvements).

With a four-year lease, however, the amortized cost would be $27 a square foot. A one-year lease would cost $108 a square foot. Either one would make the space too expensive. A business owner unable to get a longer term would either substantially reduce the cost of the tenant improvement or look elsewhere.

Sometimes a tenant needs to spend a lot to improve a space, but doesn’t want to commit to a long-term lease. In this case the tenant’s best strategy is to get the landlord to improve the space so the tenant isn’t left losing a substantial amount of money if either party doesn’t renew the lease.

Business owners need to understand their rights and responsibilities as tenants. They also need to be sure the costs of rent and tenant improvements are reasonable over the life of the lease. It’s a good idea to consult both an attorney and an accountant before signing any lease.

Many people unassociated with business know little of the risks associated with pursuing a dream and turning a passion into a vocation. In today’s America, when blaming the wealthy for the country’s woes is encouraged, there is a growing notion that those who have wealth got it from their parents or through unethical and shady pursuits. While that is certainly true of some, they are the extreme minority. Research shows that 85% of those who build wealth acquire it the “old fashioned way” by either working hard, risking much, spending little, or saving much.

So it was with Leigh’s family. He and his wife, Janet, ran a small hotel and tended a small vineyard in Tasmania. Wanting to reduce their debt and their workload, they listed both businesses for sale separately and agreed to focus on whichever didn’t sell. After sitting on the market for some time, both properties sold to separate buyers the same afternoon.

Without a “Plan C,” Leigh and Janet decided to pull up stakes and join their son, Sparky, and daughter-in-law, Sarah, who were about to start their own wine business in McLaren Vale.

As Leigh shared the challenges of starting the business, he related a particularly difficult time when it appeared the family would lose their dream, their savings, and their livelihood. They were struggling to survive a partnership breakup. Several setbacks had left them without the cash flow to pay their bills at the end of the month. Miraculously, two people came into their lives at the last moment and made them loans that saw them through a few months.

This got them to the next miracle. Robert Parker, a world renowned wine critic, gave an outstanding rating to their first vintage. Within 19 days U.S. wine buyers had snapped up their entire vintage, and the winery had the money to pay off their creditors. “We are so appreciative of you Americans,” Leigh said, his eyes glistening with tears highlighted by the bright sun.

Today, his family’s brand, Mollydooker Wines, is one of the most recognized labels for high quality Australian Shiraz in the US. Its Carnival of Love was rated twice in Wine Spectator’s Top Ten, its Boxer chosen as Top Shiraz by Consumer Reports, and it received two Parker 99 point scores. The name, Mollydooker, is Aussie slang for left-handed, since both Sarah and Sparky are lefties.

While Leigh’s story of his family’s efforts to pursue a passion and secure a good living is unique to their situation, the struggles, heartbreaking failures, passion, raw determination, and luck involved in building a business are not. Each of my clients who has built a successful business has a story. Most failed, usually several times, often staring bankruptcy in the face just as Leigh’s family did. All of them picked themselves up from each failure. As one of them once told me, “I worked my butt off for 40 years before I really became successful.”

Before we said goodbye to Leigh, we had a chance to taste a bottle of wine labeled “Enchanted Path.” I walked away with a new understanding of the story behind the label. His family’s enchanted path to success wasn’t one of ease, but of risk, determination, and divine intervention when things looked the bleakest. Almost anyone who succeeds in living a dream walks a similar road.