Modern Estate Planning Blog

There is a growing trend for scam artists targeting older people by preying on their fears about what will happen to their estates. Perhaps rightly, they work their charm to convince their elderly victims to create a “living trust,” but the outcome is not at all what they promise.

First of all, a living trust really is often a good idea and should definitely be explored with a reputable elder lawyer or estate planning attorney in Sacramento. A living trust can help keep your estate out of the probate process, saving time and money, as well as keeping your affairs out of the public record.  This can ensure your assets are distributed more quickly upon your death. A living trust can also be an excellent tool for managing your assets if you become incapacitated.

That said, there are some issues that arise from these scammers who are counting on their targets not getting proper legal advice and just trusting the salesperson instead. And, it should be made clear that these scammers are salespeople, not professional estate planners or lawyers. They make contact either through the phone or by going door-to-door and using scare tactics to talk their elderly victims into signing on for a “one-sized-fits-all” living trust that is likely not appropriate for their needs.

Problems with the Living Trust Scams

• Not everyone needs a living trust. These kinds of trusts are used for various reasons, including the avoidance of probate and estate or “death” taxes. What the scammers fail to mention is that the target’s estate may not even be subject to these taxes.
• As is the case with most things, “one-sized-fits-all” usually translates to “one-size-fits-very-few.” Every estate and situation has something that makes it unique, and when these salespeople try to shoehorn yours into their pre-made kits, it can end up creating major problems down the road.
• By sharing so much personal and financial information, the elderly person is becoming an even bigger target for unscrupulous salespeople who then continue to sell them more and more financial products that they don’t need.

An Epidemic

The AARP has come out to warn its members about these living trust scams. They found that approximately 4 million people over the age of 50 were pressured into unnecessarily buying living trust services in 2000. As a result, many of their spouses became ineligible for Medicaid (Medi-Cal here in California) and assets were distributed so quickly that it circumvented the legal process and didn’t allow for creditors to be reimbursed properly—leaving the trustee liable for any outstanding claims!

Of course, the safest approach is to work with a trust and estates lawyer in Sacramento who is able to review your situation and make appropriate recommendations, rather than a salesperson who is looking to earn a commission. The elder law attorney is more concerned with protecting his or her reputation by serving the client than in making a few dollars on the sale of a financial product.

If you or your loved one has purchased a living trust in any place other than a seller’s permanent place of business (say, in your home or at a seminar), the Federal Trade Commission mandates that you have a 3-day “cooling off period” in which to cancel the purchase. Contact us and we’ll be happy to review the living trust you purchased at no-charge. Call (916) 241-9661 to schedule your appointment today.