By John R. Becker
I recently received a series of postcards inviting me to an “Elder Law Update”. They strongly suggested that I needed to have a living trust. In addition to the seminar, I was invited to stay for a free lunch.
Often times these solicitations come from what I call “trust mills”. These companies are referred to that way because they turn out a high volume of cookie-cutter living trusts. Sometimes they charge clients for the living trusts, other times they offer the living trust for free, however as an unwitting consumer will soon find out, low cost or free estate planning documents are not really free. The most serious problem with trust mills is their ultimate objective which is to obtain an individual’s financial information so that its sales personnel can sell annuities and related investments and all too frequently to elderly or otherwise and vulnerable adults.
Some of the sales agents for these operations misrepresent the disadvantages of a senior’s current investments and the advantages of the investments they are selling. They may even make a senior believe his or her bank accounts are not as safe as the annuities or investments they are offering to sell to their potential customer. To lend themselves a cloak of legitimacy, these sales agents purport to be experts at living trusts. In their solicitations, they present themselves as expert financial or estate planners using titles such as “trust advisor”, a “senior estate planner”, or even “paralegal” and offer to schedule initial appointments with seniors in their homes. As they gather information to set up or update a living trust, these sales agents are finding out about the seniors’ financial assets and investments. They sometimes work in assisted living centers, churches and other places where seniors gather. While some are legitimate others are engaged in scamming elderly victims through free seminars and other sales presentations.
Planning an estate and choosing investments involve important legal, financial, and personal decisions. If financial planning documents are not properly prepared or executed, they can be invalid and cause lasting harm.
TIPS TO AVOID BECOMING THE VICTIM OF “TRUST MILLS”
· Sales agents at trust mills are usually not attorneys nor are they experts in estate planning;
· Watch out for companies (and individuals) that sell living trusts together with annuities and other investments;
· Sales agents may fail to disclose possible adverse tax consequences or early withdrawal penalties that may be incurred when transferring stocks, bonds, certificates of deposits or other investments to annuities;
· An annuity is not 100% safe and only a portion is guaranteed by the state;
· Insurance companies can and do fail and their assets may not be enough to pay the full value of the consumer’s investments;
· So called “promissory notes” are not insured by the FDIC or other governmental agencies and may be very risky. They may not be registered as securities with the State of Arizona;
· Before consumers buy an annuity or other investment, they should review it with people who know trust law, such as their financial or tax advisor, their attorney and trusted family members; and
· An attorney qualified in estate planning can help consumers decide if they need a living trust and other estate planning documents or help them review an existing trust or will.
Some steps that you should take before you sign papers to create a will, living trust, or any other estate planning document include:
· Consult with an Arizona-licensed estate planning attorney or financial advisor, preferably one recommended to you by a trusted friend or family member, or contact the State Bar of Arizona and ask for a referral of a certified specialist.
· Beware of high pressure sales tactics. Take time to consider your options.
· If you decide to obtain a living trust, make sure it is properly funded. That is, that the property has been transferred from your name to the trust. Unless your assets are retitled in the name of the living trust, they may very well be subject to probate proceedings upon your death.