The living trust scam attempts to get you to purchase a living trust. It plays on the fear that probate costs and estate taxes will erode the value of your estate. While living trusts can be a useful tool for some, many unscrupulous sales persons use it to simply get in the door and sell high-commission investments to consumers, whether or not it is the best thing for them.
The Opening Pitch
“Do you want to leave a legacy for your grandchildren and not have the government take all the money you have spent a lifetime saving? Come to a free seminar to learn how.”
You respond to such a mailer, phone call or advertisement by attending a workshop. Or you might call to find out about it and someone will come out to your home to present information. They will sign you up for a living trust by having you fill out forms that disclose all of your financial assets. Once they have seen your finances, they begin to recommend different investments, usually insurance type products like annuities, in order to earn high commissions off the sale of those products.
Sometimes the living trust document you buy is not filled out properly because lawyers are not doing it. If these documents are filled out improperly, you may end up going through probate anyway, the very thing you were told you could avoid. In addition, many older people end up buying investments that are not appropriate for them given their situation.
Washington law protects consumers from trust mill scams by making it illegal for anyone other than an attorney or a professional employed by an attorney to market legal estate distribution documents such as living trusts and wills.
How to Avoid a Living Trust Scam
If you want to know if a living trust will truly help you, you should get the advice of an estate-planning attorney. You can find the name and phone number for such an attorney by calling your local bar association, lawyer referral service.
A “living trust” is different from a “living will.” A “living trust” allows a person to control distribution of his or her estate by transferring ownership of property or assets into a trust. A “living will” is a health care directive setting out a person’s wishes about receiving life-sustaining treatment.