By LAUREN FOSTER | Barrons

It’s easy for trustees to botch their roles. Here’s how to avoid the common pitfalls.

Trust and estate planning often comes down to three questions: Who gets what? How do you minimize taxes? And, once a trust has been set up, who is in control? Unfortunately, it’s easy for a family to bungle any one of the three. That’s especially so if you don’t have a professional on board as a trustee. Here are the five most common mistakes of do-it-yourselfers, and tips on how to avoid them.

FAULTY RECORDS: Most states require trustees to provide regular accountings to the beneficiaries— not only the income beneficiaries, but also what are known as remaindermen, the family members down the line who will receive the principal once the trust has been dissolved. This means keeping comprehensive records of income, as- sets and distributions—and many trustees fall short of the mark. “This is probably the most mundane, and at the same time, the most troubling task for individual trustees,” says David A. Baker, a partner in law firm McDermott Will & Emery. The price of failure could be a big lawsuit later on by a beneficiary or remainderman.

Tip: Assemble a reliable outside team with a money manager, a trust lawyer and a tax pro.

Tax-loss harvesting can be used as an opportunistic value-add within a well-diversified portfolio.

Over the years, I’ve represented a lot of clients before the IRS. I’ve listened to hours and hours of IRS hold music. And I’ve had a lot of conversations with IRS reps and agents. But last week something happened that truly shocked me: the IRS hung up on me. On purpose.

The details aren’t all that important. Basically, I called the IRS to discuss a client’s tax matter. While it’s my job to zealously protect the rights of my clients, I am very aware that the person on the end of the line is also doing their job, and as such, I am professional when I speak to the IRS. On this day, I did exactly that. I didn’t raise my voice. I wasn’t nasty. I merely tried to explain that there appeared to have been a cross in communications when the agent cut in abruptly with a brusque “This is how we do it” and then, Click.

I was actually rendered speechless. If you’ve met me, you’ll understand that’s quite the feat.

I called back, only to find that there is no way to speak to a supervisor without putting in a special request. I did exactly that – and I’m still waiting.

It was the first of a number of incidents that I would have previously considered to be out of character for IRS. Shocked by what appeared to be a change of direction from the “kinder, gentler IRS” in the 90s, I asked my colleagues on twitter whether they had noticed a difference in the IRS treatment of taxpayers:

The answer was…to continue reading click on IRS Gone Bad

Finds evidence of overcharges for transactions, postage

By Bruce Kelly September 7, 2011 3:42 pm ET

Living up to its warnings of this year, the Financial Industry Regulatory Authority Inc. said today that it has walloped several firms for overcharging for postage and handling.

In May, Finra chief executive Richard Ketchum warned an audience of brokerage executives at the self-regulator’s annual meeting in Washington that it was making inquiries into firms’ overcharging clients for such services. This morning, Finra said it fined five firms a total of $910,000 for overcharging clients on handling transactions.

Mr. Ketchum earlier said: “We are taking a close look at excess charges for routine services, which some firms appear to be treating as an additional de facto commission. You can expect to see some enforcement activity in this area with respect to particularly egregious examples.”

Finra today said in a statement that the five firms were “understating the amount of total commissions charged to customers in trade confirmations and on fee schedules by mischaracterizing a portion of the commission charges as fees for handling services.”

Firms allegedly were using the practice to gouge clients, Finra said. “With respect to each of these firms, the handling fees were designed to serve as a source of additional transaction-based remuneration for the firm and thus were far in excess of the cost of the handling-related service the firms provided.”

The five firms and respective fines were: Pointe Capital Inc. of Boca Raton, Fla., fined $300,000; John Thomas Financial of New York, $275,000; First Midwest Securities Inc. of Bloomington Ill., $150,000; A&F Financial Securities Inc. of Syosset, N.Y., $125,000; and Salomon Whitney LLC of Babylon Village, N.Y., $60,000.

To continue reading, go to FINRA fines five firms almost $1M over fees

NASAA recently released its list of the top scams con artists use to trap unwary, or merely desperate, investors during these volatile economic times

Advisors and investors beware: Even though Bernie Madoff is gone, economic uncertainty and volatile stock markets still breed con artists itching to trap the unwary or merely desperate.

During turbulent economic times like we’re currently facing, “con artists follow the news and seek ways to exploit the headlines to their advantage while leaving investors holding an empty bag,” says David Massey, president of the North American Securities Administrators Association (NASAA) and North Carolina deputy securities administrator.

To help advisors alert their clients of the latest scams, NASAA recently released its listing of the Top 10 financial products and practices: five of each.

“Promoters often offer investors an opportunity to get in on the ‘ground floor’ of new technology or ideas to help others and make a great economic return,” says Massey. “Unsuspecting investors can be lured into these schemes, especially if they sound familiar. These offerings require careful research and a strong reminder that if it sounds too good to be true, it probably is not true, nor will it be profitable to anyone but the promoter.”

Read on for more details about these scams du jour.  Top 10 Financial Scams: Products and Practices

While Hurricane Irene turned out to be milder than expected, it still caused deaths, injuries and an estimated $5 billion to $7 billion in property damage. And Irene was not the only big problem this year. In the spring we had devastating tornadoes in Missouri and widespread flooding in the Midwest. The sad truth: natural disasters occur every year in the U.S. because this is a big country. If you’re unlucky enough to suffer a disaster-related casualty, here’s what you need to know about the federal income tax implications.

Theoretically, our beloved Internal Revenue Code allows you to claim an itemized deduction on your Form 1040 — for personal casualty losses that are not covered by insurance. Exactly what is a casualty loss? It’s when the fair market value of your property or asset is reduced or wiped out by a hurricane, flood, storm, fire, earthquake or volcanic eruption (not to mention sonic boom, theft, or vandalism).

In reality, however, many disaster victims won’t qualify for any personal casualty loss write-offs because of the following two rules.

To continue reading, go to Natural Disasters and Your Taxes.

To help protect investors from such potential “golden cons,” the Financial Industry Regulatory Authority today issued an investor alert, “Gold” Stocks–Some Investments Mine Your Pocketbook, ostensibly to warn investors about investment scams that promote gold stocks.

The Finra alert also provides information on how to invest in legitimate gold investments.

With the price of gold bullion at record levels, there has been a proliferation of blogs, Web sites, YouTube videos and Tweets centered on investing in gold. And while legitimate gold investments are discussed online, Finra officials are concerned that some investors may fall prey to gold-related investment scams.

“Con artists are using the run-up in the price of gold as a hook to part investors from their money,” said Gerri Walsh, vice president for investor education for Finra. “Investors should think twice before investing in any gold investment promising exponential returns, or any company that claims it is a buyout target for other mining companies.”

Finra officials say such gold scams may center on inflated claims regarding the stocks of gold mining companies whose stock value is often based on gold reserves that are difficult to estimate, much less verify.

To wit: The Securities and Exchange Commission took legal action against a mining company based in Florida for false press releases claiming that a mining project in Ecuador contained gold reserves worth more than $1 billion.

To continue reading, go to FINRA WARNS INVESTORS OF GOLD STOCK SCAMS

Blame Congress. TIGTA gives the IRS credit for having to operate in an environment of everchanging tax laws. The American Recovery and Reinvestment Act of 2009, for example, included 56 tax provisions (20 related to individual taxpayers), and The Worker, Homeownership, and Business Assistance Act of 2009 revised the First-Time Homebuyer Credit, causing untold confusion. More tax laws mean more to enforce; more changes mean it’s more likely taxpayers will mess up.