Litigation

The "irrelevant stats" just keep rolling in for "Dissipation Myth" Bab-oon palooza...

In Dumb and Dumber, which appears in today's Finance and Markets Newsletter, Villlanova Associate Professor Robert LeClair, principal in Leimberg & LeClair, Inc. discusses how "many people had little understanding of the most basic financial concepts and were often completely unable to perform the simplest calculations concerning their personal financial affairs.  Little wonder then that so many of us are deeply in debt, unable to handle credit, save little or nothing, and have so many other financial problems".

• A survey published in April 2009 by the Employee Benefits Research Institute found that 47% of workers think they will need less than $500,000 for a comfortable retirement.  The last point in the executive summary to the paper "Ignorance Still a Major Factor"
• A University of Michigan survey asked a simple math problem requiring knowledge of compound interest; only 18% of baby boomers got it right.

Makes a compelling case for simply handing an 18 year old or young adult a lump sum of $1million right? 

If someone cannot estimate what they will need for a comfortable retirement what evidence is there to lead one to believe that they will be more sophisticated in estimating how to allocate a settlement to maximize tax efficiency and preserve government benefits.

• Last January, the President's Advisory Council on Financial Literacy issued a 57-page report including a recommendation that states require "financial education from kindergarten to grade 12."  It also said that college students should have to take a financial literacy course before taking out student loans.
• Purportedly quarterback Steve McNair who earned $75 million over his 13 year professional football career died without a will.  The State of Tennessee will now determine the disposition of his assets through their intestacy laws. Lord knows how much asset dissipation will occur in legal fees sorting out competing claims of his wife and children from assorted partners, the result of ineffective planning.
• Purportedly the individual who was responsible for paying Michael Jackson's life insurance premiums neglected to pay the premiums and his kids will purportedly get 10% of what they should have from insurance proceeds.

Instead of wasting money and time on a dissipation study, how about simply assuming that there is a problem and then spending money and investing time to increase the level of financial literacy?