Dissolving Ric-E Trust

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DannyDoc
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Dissolving Ric-E Trust

Post by DannyDoc » Tue Jul 30, 2013 4:17 pm

How does the expression go, “bless her heart...”

I am very close with my mother and love her dearly. One thing I am most appreciative of is that she instilled in me the virtues of saving money. When my high school friends were using their summer earnings to buy their first car, my mom convinced me to open a Roth IRA. In terms of her savings habits, she is a true Boglehead. Unfortunately, she was not a Boglehead with an investment decision she made in 2000.

A couple years ago she told me that when I was a teenager she had opened a trust in my name for 20k. Whoo-hoo! Who doesn’t love a 20k windfall? That was the good news. However, I soon learned the trust was a very specific, Ric-E Trust, designed by Ric Edelman, and when I learned the details I wanted to throw-up.

This is how the trust works as far as I understand. I do not receive the money until I am 59 1/2. Even though I am no longer a minor, I cannot change the funds in the trust. Only an appointed trustee can act on my behalf, though I can choose who this individual is. Originally this person was my mom, but we decided it made sense to change the trustee to someone closer to my age, so my best friend is now the trustee.

My best friend obviously doesn’t care what funds are in the trust and will act on my behalf. The problem is the trust, now held by Sun America, is composed of three actively managed funds with high expense ratios. According to Sun America I can only change the allocation to other Sun America funds (which are all also actively managed). In addition, Sun America charges a .5% maintenance fee each year. So essentially, every year I am losing about 1.25% on my investment, which obviously adds up to a ridiculous amount of money over time – case in point, the trust is only worth 26k today. I’ve considered running the numbers until my retirement, but it’s just too depressing.

Given how much I stand to lose over the next 35 years in compound returns, I’ll do just about anything to transfer the trust to a financial institution with a lower operating fees and/or a selection of low-cost funds (Vanguard would not hold the Ric-E Trust when I inquired two years ago). Alternatively, I'd also happily dissolve the trust entirely, just about regardless of the penalties I might incur. However, I do not think transferring or dissolving the trust is a possibility. I have also thought about hiring some type of legal counsel.

I’m writing this post to see if anyone can help. Does anyone have experience with the Ric-E Trust? Is there a possible solution, or am I just resigned to paying Ric Edelman and large corporations tens of thousands of dollars in fees over the next 30 years…
Last edited by DannyDoc on Wed Jul 31, 2013 10:54 am, edited 2 times in total.

Calm Man
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Re: Liquidating Ric-E Trust

Post by Calm Man » Tue Jul 30, 2013 5:10 pm

It is such a shame that your well-intentioned mother made such a foolish purchase. If there was more money at stake I would say to get a lawyer. You may still wish to do so eventually but the costs will be high percentage-wise. I advise you, as you seem like a smart person, to read the trust very carefully. There must be clauses about whether the trust can be transferred, whether it can be terminated, etc. If a Ric-E trust is specific to Ric Edelman (he is great at telling people on the radio that he saves them money with cheap ETFs but not that he charges over 1% a year) and his firm is still getting money from the trust, it seems that you can at least call them and inquire. Get to work !!!!

MoonOrb
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Re: Liquidating Ric-E Trust

Post by MoonOrb » Tue Jul 30, 2013 5:33 pm

Have you consulted a lawyer about dissolving the trust? If the settlor (your mom), beneficiary (you), and trustee (friend) all agree that the trust won't serve its purpose (because of the drag of expenses and the limited investment options), then you might be able to have the trust dissolved.

Of course, this costs money, so it's hard to say whether it's worth the expenses you'd incur to do this.

Calm Man
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Re: Liquidating Ric-E Trust

Post by Calm Man » Tue Jul 30, 2013 5:43 pm

I just researched this a bit. For your mom to set up this, there was a one time fee of $400. Edelman touts himself as fee only, however once this is in the Ric-e trust (variable annuity it turns out) he can't charge you anything anymore. But the documents indicate that he gets an annualized 0.25% of the value each and every quarter. So this fee-based guy becomes a commission based guy. With all of the other expense you are in the hole over 2% a year. You should call his radio show and expose him.

DannyDoc
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Re: Liquidating Ric-E Trust

Post by DannyDoc » Tue Jul 30, 2013 8:05 pm

Thanks CM and MO for the prompt replies.

Yeah, the more I researched this a couple years ago, the more it both depressed and infuriated me. I remember calling the "financial advisor" in Ric Edelman's firm who worked with my mother when I inquired about dissolving the trust and changing the trustee and all she kept telling me was why would I want to make financial decisions for myself rather than allowing the "experts" to make them on my behalf. I told her my portfolio had not changed in value since its inception, and was actually losing money in real terms, while her company was making hundreds of dollars a year off me. And then I had to stop talking to her because I was too angry. I just feel like Ric Edelman's organization preyed on my mom's good intentions. At the same time, she did sign the papers. It's just crazy to me one is legally allowed to make a decision that can not be altered for more than FORTY years.

I looked into hiring a trust lawyer this afternoon. An hour consultation will cost me $375. He had not heard of the Ric-E trust, and although he seemed optimistic when I talked to him over the phone, I just feel like little will be resolved definitively in that time. Maybe something will happen after 10 hours, but that's nearly 4k and there's the possibility he'd still get nowhere.

This is why I put this issue out of my mind for the last 2 years. Anytime I think about it or receive quarterly statements in the mail I get extremely upset...
Last edited by DannyDoc on Wed Jul 31, 2013 12:40 pm, edited 1 time in total.

MN Finance
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Re: Liquidating Ric-E Trust

Post by MN Finance » Tue Jul 30, 2013 8:18 pm

I'm not an attorney, but if you meet with one, it won't take long for them to tell you your options. An attorney should always offer to have an opening meeting without cost, they won't give you answers, but you'll at least know if you want to retain them.

It would be next to impossible to imagine a trust document where you couldn't either 1) change trustees and custodians to your liking or 2) dissolve the trust altogether especially assuming grantor, trustee and beneficiary all agree (after all money can always be removed from a trust, not like it's in a vault with no key - and who would sue in this case?) I don't think it's as bad as it seems.

rfburns
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Re: Liquidating Ric-E Trust

Post by rfburns » Tue Jul 30, 2013 8:38 pm

How unfortunate for your mother. And as you know she meant well for you.
I dug this up, so I can see anyone falling for it back then. It turned out to be a period of excess in the markets.
http://www.washingtonpost.com/wp-srv/bu ... 072799.htm
The old article says the age requirement is 59. But I would still go to battle with them if I thought there was a chance to take control.

bsteiner
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Re: Liquidating Ric-E Trust

Post by bsteiner » Tue Jul 30, 2013 8:51 pm

MN Finance wrote:... An attorney should always offer to have an opening meeting without cost, they won't give you answers, but you'll at least know if you want to retain them.
Not always. I wouldn't want to meet with someone on a matter involving a $26,000 trust.

If the first hour is free, then the subsequent hours have to cost more than they otherwise would.

Typically if from a short phone call it appears that we're a good fit for each other, we'll offer to meet with someone for a half hour with no obligation. In other words, if after a half hour they don't want us or we don't want them, the meeting will end. (If we're not a good fit for each other, we'll probably both know it in much less than a half hour.) From the initial phone call, we're able to screen out most of the people who aren't a good fit (such as someone wanting to deal with a $26,000 trust), so that doesn't happen very often. Most people proceed with the matter they came in for, and we bill them for the first meeting (as well as the subsequen time).

MoonOrb
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Re: Liquidating Ric-E Trust

Post by MoonOrb » Tue Jul 30, 2013 9:16 pm

Yes, I don't think that you necessarily will be able to meet with the attorney you want for free, even for an hour. My thinking is that you should just let this go, thank mom for the nice thoughts, and don't sweat it. The costs of prying this loose from Edelman are likely to be substantial, leaving you at the end of the day with perhaps less than what you'd get if you just let it ride. You could probably run some numbers to see how much you'd be able to spend now and come out ahead, and maybe that will guide your thinking.

But putting lawyers and legal fees aside for the time being, I'd continue to press the Edelman company on your own by having the Trustee contact them and basically make the pitch, Hey, what is the process for dissolving a trust when the trustee, settlor, and beneficiary all would like to have it resolved? Who do I talk to about this? And see if you can get it done without having to go through adversarial legal proceedings. I suspect you still may have to get court approval, but that's just a guess and you shouldn't rely on my guess about this.

donall
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Re: Liquidating Ric-E Trust

Post by donall » Wed Jul 31, 2013 10:02 am

rfburns wrote:How unfortunate for your mother. And as you know she meant well for you.
I dug this up, so I can see anyone falling for it back then. It turned out to be a period of excess in the markets.
http://www.washingtonpost.com/wp-srv/bu ... 072799.htm
The old article says the age requirement is 59. But I would still go to battle with them if I thought there was a chance to take control.
This is a irrevocable trust. The article indicates you can change advisors. I would not google Ric-E trust, but how to change an irrevocable trust such as this:
http://www.rbh.com/trust-me-your-irrevo ... 2-15-2009/ which has the following advice:
"Modification or termination of a noncharitable irrevocable trust may be accomplished with a single “consent modification” document if the trust’s grantor and all of its possible beneficiaries agree. The grantor and beneficiaries may agree to take any action with respect to the trust’s terms — even if that action is oppositional to the trust’s purpose." Read your trust documents and google, google is your friend, please investigate possible options. Be aware there is a cadre of lawyers who set up Ric-E trusts. Best of luck, hope that you can put the funds into Roth IRAs the next 5 years instead.

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hand
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Re: Liquidating Ric-E Trust

Post by hand » Wed Jul 31, 2013 10:43 am

donall wrote:
rfburns wrote:How unfortunate for your mother. And as you know she meant well for you.
I dug this up, so I can see anyone falling for it back then. It turned out to be a period of excess in the markets.
http://www.washingtonpost.com/wp-srv/bu ... 072799.htm
The old article says the age requirement is 59. But I would still go to battle with them if I thought there was a chance to take control.
This is a irrevocable trust. The article indicates you can change advisors. I would not google Ric-E trust, but how to change an irrevocable trust such as this:
http://www.rbh.com/trust-me-your-irrevo ... 2-15-2009/ which has the following advice:
"Modification or termination of a noncharitable irrevocable trust may be accomplished with a single “consent modification” document if the trust’s grantor and all of its possible beneficiaries agree. The grantor and beneficiaries may agree to take any action with respect to the trust’s terms — even if that action is oppositional to the trust’s purpose." Read your trust documents and google, google is your friend, please investigate possible options. Be aware there is a cadre of lawyers who set up Ric-E trusts. Best of luck, hope that you can put the funds into Roth IRAs the next 5 years instead.
Even if legally forcing a refund / dissolution of the trust may be too difficult / expensive to do given the small-ish size of the trust, you should consider whether you can convince Ric-E et al that it is their best interest to do so. Publicity is your friend, especially if these arrangements are still being marketed / generating revenue.

Consider clearly documenting what your mother did, when she did it and why she did it and the results / fees incurred. This sounds like this is something that could be shopped to a consumer advocacy segment on a news program or some other form of news outlet. I imagine returning the $20k would be a small price to pay to stop the bad publicity.

YttriumNitrate
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Re: Dissolving Ric-E Trust

Post by YttriumNitrate » Wed Jul 31, 2013 12:06 pm

deleted.
Last edited by YttriumNitrate on Sat Mar 12, 2016 12:42 pm, edited 1 time in total.

donall
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Re: Liquidating Ric-E Trust

Post by donall » Wed Jul 31, 2013 12:16 pm

hand wrote:
donall wrote:
rfburns wrote:How unfortunate for your mother. And as you know she meant well for you.
I dug this up, so I can see anyone falling for it back then. It turned out to be a period of excess in the markets.
http://www.washingtonpost.com/wp-srv/bu ... 072799.htm
The old article says the age requirement is 59. But I would still go to battle with them if I thought there was a chance to take control.
This is a irrevocable trust. The article indicates you can change advisors. I would not google Ric-E trust, but how to change an irrevocable trust such as this:
http://www.rbh.com/trust-me-your-irrevo ... 2-15-2009/ which has the following advice:
"Modification or termination of a noncharitable irrevocable trust may be accomplished with a single “consent modification” document if the trust’s grantor and all of its possible beneficiaries agree. The grantor and beneficiaries may agree to take any action with respect to the trust’s terms — even if that action is oppositional to the trust’s purpose." Read your trust documents and google, google is your friend, please investigate possible options. Be aware there is a cadre of lawyers who set up Ric-E trusts. Best of luck, hope that you can put the funds into Roth IRAs the next 5 years instead.
Even if legally forcing a refund / dissolution of the trust may be too difficult / expensive to do given the small-ish size of the trust, you should consider whether you can convince Ric-E et al that it is their best interest to do so. Publicity is your friend, especially if these arrangements are still being marketed / generating revenue.

Consider clearly documenting what your mother did, when she did it and why she did it and the results / fees incurred. This sounds like this is something that could be shopped to a consumer advocacy segment on a news program or some other form of news outlet. I imagine returning the $20k would be a small price to pay to stop the bad publicity.
If the Internet is correct, if your mom, the grantor, and you, the beneficiary, sign a consent modification document outlining changes such as dissolving of the trust or other changes prepared by an attorney according to whatever statues that govern the trust may be enough. Irrevocable trusts are there for the grantor to control the funds, so it makes sense that there could be modifications. It is in the self interest of Ric Edelson and Sun America Funds to indicate one cannot change the Ric-E trust. Since this is an annuity, who got or is getting the customary 3-5% of the initial amount?

furwut
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Re: Dissolving Ric-E Trust

Post by furwut » Wed Jul 31, 2013 12:18 pm

If I establish a RIC-E Trust®, can I later change my mind?

No. The RIC-E Trust® is irrevocable. This means that once you establish the Trust and make a contribution to it on behalf of the child, you cannot take the money back or undo any aspect of the Trust.
http://www.ricetrust.com/q.asp?q=22

I listened to Ric Edelman's radio show in the 90s and recall him creating and pitching this product heavily. Sounds like your 26k is locked in until you are 59 1/2 and the financial "advisors" will be gorging on it until then.

donall
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Re: Dissolving Ric-E Trust

Post by donall » Wed Jul 31, 2013 1:08 pm

furwut wrote:
If I establish a RIC-E Trust®, can I later change my mind?

No. The RIC-E Trust® is irrevocable. This means that once you establish the Trust and make a contribution to it on behalf of the child, you cannot take the money back or undo any aspect of the Trust.
http://www.ricetrust.com/q.asp?q=22

I listened to Ric Edelman's radio show in the 90s and recall him creating and pitching this product heavily. Sounds like your 26k is locked in until you are 59 1/2 and the financial "advisors" will be gorging on it until then.
Furwut, check the website address that gives you this advice. Would you say the website is a disinterested party in Ric-E Trusts?

furwut
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Re: Dissolving Ric-E Trust

Post by furwut » Wed Jul 31, 2013 1:42 pm

Oh - no doubt it is self-serving and I agree it might be worth it for the OP to explore means of breaking it. But the fact they don't disclose how one might easily terminate the trust suggests a difficult road ahead.

donall
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Re: Dissolving Ric-E Trust

Post by donall » Wed Jul 31, 2013 5:42 pm

What's the harm in the OP's mother writing a letter (notarized and medallionaized) to dissolve the trust? Signature include OP's mother, OP, and OP's spouse, if there is one (no claims on annuity ). Add directions to convert the annuity to cash and include a transfer form (trustree to trustree) to another institution. Send to Sun and Ric. Use registered mail. Hey if it doesn't work, time to talk to a lawyer.

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JamesSFO
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Re: Dissolving Ric-E Trust

Post by JamesSFO » Wed Jul 31, 2013 6:32 pm

One thought, what state? A quick google search found some good materials for California straight from the state bar: http://archive.calbar.ca.gov/calbar/2cb ... lestdy.htm

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Blue
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Re: Dissolving Ric-E Trust

Post by Blue » Wed Jul 31, 2013 6:36 pm

Class action?

Letter from a Yale professor?

donall
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Re: Dissolving Ric-E Trust

Post by donall » Wed Jul 31, 2013 7:02 pm

JamesSFo:
I think we do need more information about the state and it would be nice to see the original paperwork from the trust.

This it straight from the website you provided concerning amendment situations:
-We want to make changes to restrictions on the disposition of property in light of the maturity of children beneficiaries.
OP was a teenager when trust was established. He/she is an adult now. It is interesting that there are codes (laws) that actually explain the procedure of changing a trust.

Now in reality, I'm sure the Ric-E trust has lots of silly restrictions and nothing will be easy to dissolve/change the trust. But the $$$ is OP's that was given by mom. Who should have control of $$? Ric or Sun or mom and OP? So is Ric going to make a big deal about .5% of $26K or $1300? He and his partners in the trust have already extracted the upfront annuity fee and have much more to lose in the PR arena if this continues and becomes bigger. OP has little to lose in the PR arena.

hectorochoa
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Re: Dissolving Ric-E Trust

Post by hectorochoa » Wed Jul 31, 2013 8:05 pm

I purchased Ric-E Trusts for my three children when they were born. They are now 12, 4 and 4. This was before I learned about Boglehead investing principles. Thought I was doing a good thing for my kids' futures. Now I see that I am helping Ric Edelman and his kids get richer instead of my own.

I would also be interested in dissolving the trusts set up for my children and using that money in a more efficient manner. I am sure I have the original paperwork saved since I save and file everything.

bsteiner
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Re: Dissolving Ric-E Trust

Post by bsteiner » Wed Jul 31, 2013 9:02 pm

Does the child have a withdrawal power, either at inception or at age 21. If not, then it may not qualify for the gift tax annual exclusion. In other words, the contribution may be a taxable gift, even if it's under $14,000.

I think a court might allow the trust to be terminated. However, if the trust is small, you have to consider whether it's worth the effort to bring a court proceeding.

DannyDoc
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Re: Dissolving Ric-E Trust

Post by DannyDoc » Thu Aug 01, 2013 12:08 pm

First, Calm Man, you were correct. I called Sun America and learned there is a 1.52% annual fee, so coupled with only being allowed to choose funds with higher expense ratios, it’s about a 2% fee per year. And at the time the upfront fee was $300.

Re: location. The trust was established in Virginia, at Ric Edelman’s Fairfax headquarters. My mother and best friend still live in Northern Virginia. I live in California.

Taking everyone’s advice, I don’t think hiring a lawyer makes financial sense. It sounds like the best course of action is for my mother, best friend, and I to sign a consent modification document. In fact, I had forgotten about this, but two years ago when we terminated the appointed financial advisor we also did asked for the trust to be terminated.

“As trustee, with the consent and concurrence of the beneficiary and the grantor, as evidence by their signatures below, the trustee hereby notifies all parties concerned that the trust is terminated and the assets are to be distributed to the beneficiary. Sun American shall sell all the Polaris II, Variable Annuity and send the proceeds to the beneficiary. Sun American shall take all steps necessary to effect this intent.”

The letter, however, was not notarized and medallionaized as donall suggested. We sent this letter to Sun America and the Edelman Financial, and although we successfully terminated the financial advisor, we never heard back from Edelman about terminating the trust. I still have the original copy.

I assume state law pertains to the state in which the trust was established (VA), not the state where the beneficiary currently resides (CA)…?

I was thinking if the trust can be dissolved in CA, I live in LA and Edelman has an office nearby. Maybe I can just a make an appointment, show up, and see what they say. I figure I'll at least get some type of response by showing up in person...

Re: documentation. I couldn’t find the documentation online. Looking at my paper documentation, Article VIII describes the irrevocability:

“This Agreement of Trust shall be, and the same hereby made absolute and irrevocable, and shall remain in full force and effect until all the terms and limitations herein set forth are fully complied with and performed and the trust assets distributed in accordance with the conditions and terms of this Agreement, without reservation of any right, title or interest on the part of the Grantor. The Grantor cannot alter, amend, revoke or terminate the trust in any way.”

I noticed this statement only mentioned the Grantor. Maybe there is an opening for the Trustee or Beneficiary to dissolve the trust….

Paying Rick Edelman a dollar a day for 40+ years puts shivers up my spine. Though I anticipate it being difficult as furwut suggests, I really appreciate everyone’s support. I feel like think we’re making some headway.

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steadyeddy
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Re: Dissolving Ric-E Trust

Post by steadyeddy » Thu Aug 01, 2013 12:31 pm

This sounds more like a hobby than a financially profitable use of time. If pursuing it is fun/cathartic for you, go for it. If its a nuisance that makes your blood boil, I don't think this is a worthy hill to die on.

letsgobobby
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Re: Dissolving Ric-E Trust

Post by letsgobobby » Thu Aug 01, 2013 12:53 pm

I'm curious about this as well. From the standpoint of wanting to provide an irrevocable trust for my kids, is it really that easy to dissolve it?

donall
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Re: Dissolving Ric-E Trust

Post by donall » Thu Aug 01, 2013 1:15 pm

Virginia State Bar has some information in irrevocable trusts including interpretation and laws that contain procedure (see end of article):
http://www.vsb.org/site/sections/trusts ... inter2010a

There is a lot of material on this site, this caught my eye:
.• Consent by Settlor and All Beneficiaries. Under Virginia Code Section 55-544.11(A), a court shall terminate an irrevocable trust if the settlor and all beneficiaries consent to the modification, even if the termination is inconsistent with a material purpose of the trust.

• Uneconomical Trust. Virginia allows for termination of uneconomical trusts without court approval if the total value of the trust is (i) under $100,000, and (ii) the trustee determines that the value of the trust property is insufficient to justify the cost of administration.(Va. Code Ann. § 55-544.14.) In such instances, the trustee can terminate the trust after he provides notice to the qualified beneficiaries.31 Once the trust has been terminated, the trustee is required to distribute the remaining property in a “manner consistent with the purpose of the trust,” which usually means the assets are distributed among the qualified beneficiaries according to their interest in the trust.32 Even if the trust assets are $100,000 or more, an interested party still has recourse with respect to an uneconomical trust. Under this same statute, a court has the power to (i) modify a trust; (ii) terminate a trust; or (iii) remove a trustee and appoint a successor trustee if the court determines that the trust assets are insufficient to justify the cost of administration.33 In such instances, the interested party would petition the court for relief pursuant to Virginia Code Section 55-544.14.

Might make sense to try the latter as dissolution does not need court approval. Nice to bandy about the relevant codes in your correspondence. Court and attorney fees will probably cost more than you want to spend. An elder care attorney would probably cost less than an attorney specializing in trusts. It would probably take a lot of time to file court papers on your own, but you may find a clerk who is helpful. I skimmed so you may find much more that is useful in this article. good luck

donall
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Re: Dissolving Ric-E Trust

Post by donall » Thu Aug 01, 2013 1:19 pm

letsgobobby wrote:I'm curious about this as well. From the standpoint of wanting to provide an irrevocable trust for my kids, is it really that easy to dissolve it?
My understanding is that it is easier if grantor is alive and agrees to changes/dissolution,if grantor is not alive, more difficult. Also depends on trustee, if trustee agrees, then easier, if trustee doesn't agree, more difficult.

bsteiner
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Re: Dissolving Ric-E Trust

Post by bsteiner » Thu Aug 01, 2013 2:51 pm

donall wrote:My understanding is that it is easier if grantor is alive and agrees to changes/dissolution,if grantor is not alive, more difficult. Also depends on trustee, if trustee agrees, then easier, if trustee doesn't agree, more difficult.
In New York by statute, and perhaps in other states by common law, the grantor (if living) can revoke or amend an irrevocable trust with the consent of all of the beneficiaries. What state's law governs the trust? Are all of the beneficiaries adults?
donall wrote:.• Consent by Settlor and All Beneficiaries. ... Under Virginia Code Section 55-544.11(A), a court shall terminate an irrevocable trust if the settlor and all beneficiaries consent to the modification, even if the termination is inconsistent with a material purpose of the trust.

• Uneconomical Trust. Virginia allows for termination of uneconomical trusts without court approval if the total value of the trust is (i) under $100,000, and (ii) the trustee determines that the value of the trust property is insufficient to justify the cost of administration.(Va. Code Ann. § 55-544.14.) In such instances, the trustee can terminate the trust after he provides notice to the qualified beneficiaries.31 Once the trust has been terminated, the trustee is required to distribute the remaining property in a “manner consistent with the purpose of the trust,” which usually means the assets are distributed among the qualified beneficiaries according to their interest in the trust.32 Even if the trust assets are $100,000 or more, an interested party still has recourse with respect to an uneconomical trust. Under this same statute, a court has the power to (i) modify a trust; (ii) terminate a trust; or (iii) remove a trustee and appoint a successor trustee if the court determines that the trust assets are insufficient to justify the cost of administration.33 In such instances, the interested party would petition the court for relief pursuant to Virginia Code Section 55-544.14.

Might make sense to try the latter as dissolution does not need court approval. Nice to bandy about the relevant codes in your correspondence. Court and attorney fees will probably cost more than you want to spend. An elder care attorney would probably cost less than an attorney specializing in trusts. It would probably take a lot of time to file court papers on your own, but you may find a clerk who is helpful. I skimmed so you may find much more that is useful in this article. good luck
Many states have similar provisions, facilitating the termination of small trusts, or allowing for modification or termination of trusts. I think a trusts and estates lawyer could deal with this better than a lawyer in some other area of law, but you'll have to consider what's practical given the amount involved.

letsgobobby
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Re: Dissolving Ric-E Trust

Post by letsgobobby » Thu Aug 01, 2013 3:10 pm

What if the grantor is incapacitated (medically), or dead? Can a trustee get the trust revoked?

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neurosphere
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Re: Dissolving Ric-E Trust

Post by neurosphere » Thu Aug 01, 2013 3:27 pm

letsgobobby wrote:What if the grantor is incapacitated (medically), or dead? Can a trustee get the trust revoked?
I'm late to this thread, didn't read every post, AND I know very little about trusts, so forgive if this is all a rehash...

-- Does anyone have a contract or copy of the actual trust? The trust should spell out exactly what a trustee or beneficiary can or can't do. Many trusts give the trustee complete authority to simply distribute the assets and terminate the trust (although it may be that this is not an option while the grantor is alive).

-- Is dissolving the trust the only option? It seems the main goal is assuming control of the investments within it, and that the actually termination of the trust is secondary. Maybe the trust is ok as is, and can be transferred to an account where suitable investments can be purchased. Surely the trustee has authority to decide how the underlying assets are invested, no?

-- What does the trust say about when and how any assets can be distributed to the trustee? The website says that assets transfer to the beneficiary at age 59.5, or that if disabled, the trustee may be able to distribute them earlier. They also mention several times about "taxes and a 10% penalty". Perhaps the trustee can simply ask for the assets to be distributed, if the beneficiary is willing to pay a tax and penalty. It would likely be less than any legal fees to do something different.

-- There was already language drafted and signed instructing to terminate the trust. Why not start with creating a document with the same language, and getting the signature guarantees and sending it in?

NS
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".

hectorochoa
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Re: Dissolving Ric-E Trust

Post by hectorochoa » Fri Aug 02, 2013 11:03 am

neurosphere wrote: -- Does anyone have a contract or copy of the actual trust? The trust should spell out exactly what a trustee or beneficiary can or can't do. Many trusts give the trustee complete authority to simply distribute the assets and terminate the trust (although it may be that this is not an option while the grantor is alive).
I have located the original copies and will scan them in later today.

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Re: Dissolving Ric-E Trust

Post by bsteiner » Fri Aug 02, 2013 11:24 am

Does it give the grantor, or the beneficiary, or someone else (if it wouldn't be appropriate to give the beneficiary that power) the power to remove and replace the trustee (provided the replacement is not a close relative or subordinate employee)? That's been a fairly standard provision in trusts since 1995.

But for the expenses, some people (even if they happen to sell annuities) have suggested that if the expenses of the annuity are low enough (such as in a private placement annuity, or perhaps a Vanguard annuity), over a long period of time, the deferral might outweigh the expenses, particularly if the annuity is invested in an otherwise tax-inefficient investment (such as taxable bonds, or hedge funds producing short-term capital gains). Someone planning to leave the annuity to charity might consider this. However, I doubt that any of this was relevant to buyers of the trust in question here.

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Re: Dissolving Ric-E Trust

Post by hectorochoa » Fri Aug 02, 2013 3:56 pm

Here are the documents I could find for the RIC-E trust I did for my twins.

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neurosphere
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Re: Dissolving Ric-E Trust

Post by neurosphere » Fri Aug 02, 2013 4:03 pm

hectorochoa wrote:Here are the documents I could find for the RIC-E trust I did for my twins.
I assume this is all you have?. I.e. that you don't also have the actual language of the trust? What you've posted is the summary (which is a start!), but the devil is in the details! :D

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Re: Dissolving Ric-E Trust

Post by bsteiner » Fri Aug 02, 2013 4:23 pm

Article VII may be helpful. It appears to give the beneficiary the power to change the trustee.

Article II is intended to permit the gift to qualify for the gift tax annual exclusion.
donall wrote:• Uneconomical Trust. Virginia allows for termination of uneconomical trusts without court approval if the total value of the trust is (i) under $100,000, and (ii) the trustee determines that the value of the trust property is insufficient to justify the cost of administration.(Va. Code Ann. § 55-544.14.) In such instances, the trustee can terminate the trust after he provides notice to the qualified beneficiaries.31 Once the trust has been terminated, the trustee is required to distribute the remaining property in a “manner consistent with the purpose of the trust,” which usually means the assets are distributed among the qualified beneficiaries according to their interest in the trust.32 Even if the trust assets are $100,000 or more, an interested party still has recourse with respect to an uneconomical trust. Under this same statute, a court has the power to (i) modify a trust; (ii) terminate a trust; or (iii) remove a trustee and appoint a successor trustee if the court determines that the trust assets are insufficient to justify the cost of administration.33 In such instances, the interested party would petition the court for relief pursuant to Virginia Code Section 55-544.14.
If this is correct, and if Virginia law governs (the summary didn't say, but the scanned documents show a Virginia address for the law firm), then perhaps the beneficiary could change the trustee and the new trustee could terminate the trust (with court approval if it's over $100,000).

It's often possible to change the governing law of a trust, so if the law of the state whose law governs the trust is unfavorable, it may be possible for the new trustee to change it.

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Re: Dissolving Ric-E Trust

Post by neurosphere » Fri Aug 02, 2013 4:33 pm

bsteiner wrote:Article VII may be helpful. It appears to give the beneficiary the power to change the trustee.
In the case of the OP, he already HAS changed the trustee to his friend. (Note, there are others who have a Ric-E trust who have posted on this thread, which is why I think there is confusion)

I think what's been lost in this discussion is that the main problem is where/how the assets are invested.

I can only assume that the trustee has full authority to transfer the assets of the trust to any institution he wishes.

He had contacted Sun America and was told he could not choose other investments. That may be true. As custodian of the trust, they may have some restrictions. But I cannot believe that the trust specifies that Sun America is forever-after to be the custodian of the trust/funds regardless of the wishes of the trustee (hmm...could they be co-trustee? Maybe that complicates things).

So maybe all that is needed is to transfer the trust. There is nothing particularly wrong with having the trust itself, in my opinion.

NS
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Re: Dissolving Ric-E Trust

Post by sesq » Fri Aug 02, 2013 4:46 pm

Article 5 seems to suggest the Trustee could direct that annuity be moved from Sun to another Custodian (via a 1035 exchange?). Perhaps worth looking into if OP wants to let the deferral ride.

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Re: Dissolving Ric-E Trust

Post by bsteiner » Fri Aug 02, 2013 5:03 pm

sesq wrote:Article 5 seems to suggest the Trustee could direct that annuity be moved from Sun to another Custodian (via a 1035 exchange?). Perhaps worth looking into if OP wants to let the deferral ride.
Article 5 also suggests that the trustee can invest in things other than annuities.

In any event, even if a trust agreement restricts the investments, there's an issue as to whether such a restriction is binding, or whether a court can lift it.

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Re: Dissolving Ric-E Trust

Post by stemikger » Fri Aug 02, 2013 5:13 pm

I wish I had some answers for you. Wow. This guy is on the radio every Sunday making these things sound amazing. He is some salesman and to me he has some nerve. He has a segment on his show where he is calling out other fund companies for their wrong doings. He should look in the mirror.

Not being the sharpest knife in the drawer when it comes to doing due diligence, every time I listen to his show and pick up one of his books while browsing in the store, he is a real fast talker and never really gets to the point and his books are the same way.

So I guess my point is, don't be too hard on your Mom.
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Re: Dissolving Ric-E Trust

Post by denben » Wed Apr 19, 2017 3:17 pm

I'm in this same boat....wondering if anyone - Dannydoc -- has gotten anywhere with liquidating their Ric-E trust or finding a resolution??

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Re: Dissolving Ric-E Trust

Post by skepticalobserver » Wed Apr 19, 2017 5:36 pm

Assuming there are no surrender fees, might you consider a tax-free 1035 exchange to another (lower cost, better performing) annuity?

Just looked at the posted documents. Mike Collins, who runs the Collins firm, has a DC Metro area call-in radio show on WMAL, Saturdays, 9 - 10 am EST. Maybe he has a solution. I'll be listening.

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Re: Dissolving Ric-E Trust

Post by 123 » Wed Apr 19, 2017 9:16 pm

I'd be tempted to picket outside one of the hotels as people arrive for one of his people's seminars (listed on the website). While picketing seems low class there are few things that can be as effective in dealing with financial advisers who are trying to get the trust of their seminar audience. They will probably do anything to make you go away. A simple sign like "Watch out for the 40 year deal with 2% fees each year" might do the trick.
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Re: Dissolving Ric-E Trust

Post by Tricky RIC-E » Tue Jun 27, 2017 2:25 pm

All,

This thread has been very informative, thanks for all of the info! My wife and I were notified a couple months back that her grandmother had setup one of these in 1999! It has not even doubled in value in 18 years! Of course, I immediately thought I would cut our losses, and move it somewhere else, but as I'm reading this thread, it seems near impossible that we will be able to do anything with it... I feel bad for all of the people who were duped by this product. I'm sure most of them thought they were leaving some sort of legacy for their families, but as it turns out, they were just lining the pockets of the "Advisors"..

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Re: Dissolving Ric-E Trust

Post by skepticalobserver » Tue Jun 27, 2017 3:38 pm

Tricky RIC-E wrote: it turns out, they were just lining the pockets of the "Advisors"..
Have you thought about calling Ric out on this?

Ric's radio show nationwide schedule:

http://tunein.com/radio/options/The-Ric ... ow-p26239/

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Re: Dissolving Ric-E Trust

Post by dwash59 » Wed Jul 12, 2017 10:39 am

Tricky RIC-E wrote:All,

This thread has been very informative, thanks for all of the info! My wife and I were notified a couple months back that her grandmother had setup one of these in 1999! It has not even doubled in value in 18 years!
Money put into the market in 1999 would not have been expected to double. Unfortunately, that was a bubble in the market.

S&P 500 on 06/30/1999 : 137.00
S&P 500 on 06/30/2017 : 241.80

So, even an S&P 500 index fund before fees would not have doubled your money over those 18 years. Sometimes, investing a lump sum at the wrong time gives suboptimal returns.

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Re: Dissolving Ric-E Trust

Post by Rager1 » Wed Jul 12, 2017 3:34 pm

dwash59 wrote:
Tricky RIC-E wrote:All,

This thread has been very informative, thanks for all of the info! My wife and I were notified a couple months back that her grandmother had setup one of these in 1999! It has not even doubled in value in 18 years!
Money put into the market in 1999 would not have been expected to double. Unfortunately, that was a bubble in the market.

S&P 500 on 06/30/1999 : 137.00
S&P 500 on 06/30/2017 : 241.80

So, even an S&P 500 index fund before fees would not have doubled your money over those 18 years. Sometimes, investing a lump sum at the wrong time gives suboptimal returns.
But the index numbers you quoted don't include dividends.

The Vanguard Total Stock Market Index (VTSMX) compound annual rate of return between 1/1/99 and 12/31/16 was 5.89%. So, a $3,000 invested there on 1/1/99 would be worth $8,404 at the end of 2016, 18 years later. Substantially more than doubled (2.8 times).

Ed

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sergeant
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Re: Dissolving Ric-E Trust

Post by sergeant » Wed Jul 12, 2017 4:45 pm

I just read the expenses posted on his web site. Looks like close to 4% a year. Yikes! :shock:
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arcticpineapplecorp.
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Re: Dissolving Ric-E Trust

Post by arcticpineapplecorp. » Wed Jul 12, 2017 8:10 pm

dwash59 wrote:
Tricky RIC-E wrote:All,

This thread has been very informative, thanks for all of the info! My wife and I were notified a couple months back that her grandmother had setup one of these in 1999! It has not even doubled in value in 18 years!
Money put into the market in 1999 would not have been expected to double. Unfortunately, that was a bubble in the market.

S&P 500 on 06/30/1999 : 137.00
S&P 500 on 06/30/2017 : 241.80

So, even an S&P 500 index fund before fees would not have doubled your money over those 18 years. Sometimes, investing a lump sum at the wrong time gives suboptimal returns.
Welcome to the group dwash59.

Unfortunately you have made a mistake with your information. You are providing a "price" quote, that is, what the price of the S&P500 index was in 1999 and is in 2017. But the price doesn't include all the dividends reinvested over that time. As a result, you want to look at a growth chart which includes both dividends and capital gains. If you go to morningstar.com and pull up a growth chart as I have below you see that a $10,000 investment on 6/30/99 would be worth $25,258.87 (in S&P500 admiral shares, lower expense ratio) and $24,863.71 (in investor shares, higher expense ratio). Either way, you would definitely have more than doubled your money between 6/30/99 and 6/30/17.

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Source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
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Re: Dissolving Ric-E Trust

Post by samsoes » Thu Jul 13, 2017 6:33 am

skepticalobserver wrote:
Tricky RIC-E wrote: it turns out, they were just lining the pockets of the "Advisors"..
Have you thought about calling Ric out on this?

Ric's radio show nationwide schedule:

http://tunein.com/radio/options/The-Ric ... ow-p26239/
Edelman's show is no longer live. He takes pre-arranged, pre-screened calls during the week for play on the weekend show. (Same for his monologues.) Therefore, an on-air "ambush" is no longer possible.
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Re: Dissolving Ric-E Trust

Post by denben » Tue Jun 12, 2018 12:49 pm

Hey everyone -- I have taken action with my state's attorney general, FINRA and the state department of insurance since an annuity falls under that category. AMAZINGLY, that action resulted in the immediate offer to change ownership of the annuity from the trust to the beneficiary which will then allow the annuity to be sold (penalties and fees, yes... but still free of the ridiculous RIC-E trust since it will be an empty shell.)

The various offices are investigating on different levels, and I've shared this list serve with them as well to see that this is a pervasive and toxic issue for many families.

The department of insurance inquiry has resulted in the most immediate response from the various parties -- so I HIGHLY recommend you send in a complaint with your state's department of insurance ASAP. The compliance office at Royal Alliance (for whom Edelman worked at the time) will enjoy hearing from those offices, I'm sure.

I explained the sales process, group "event" sales environment, various inappropriate descriptions in the sales materials, attorney network, etc.

Hope this helps!

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