Why TRUST MILLS are Not your Friends

Companies and individuals who advertise in your local newspapers or come to your church or senior center or other places where seniors gather extol the benefits of a "living trust".  They offer beautiful binders and pretty paper and the advantages of the living trust.  But looking at these documents, clients do not realize that these are computer programs where 'one size fits all'.

One serious problem is that consumers do not meet with an attorney and the sales person is not allowed to give legal advice.  For example:  for a couple you will be sold a tax planning trust, whether it is in your best interests or not.  Another serious problem is the misuse of the financial information sales persons obtain to prepare a living trust.  Unfortunately, this information is used to sell annuities and various investments, most often to senior citizens.

To give themselves an air of legitimacy, these sales agents say they are experts in living trusts or estate planning or financial planning.  Then, while offering to help setting up or updating a living trust, the sales agents learn of a senior's financial assets and investments. 

New laws have gone into effect prohibiting insurance brokers from calling themselves "senior" experts unless they have been approved by the California Insurance Commissioner.  In addition, no financial planner may use any "senior specific" certification that may be misleading. 

Often, the sales agents schedule a home visit to explain the living trust and use a second visit to deliver a completed trust and have documents signed and notarized, and title of assets transferred to the trust.  It is often during the second visit when the agents review the assets to be placed in the trust.  The seniors may be asked sign documents that transfer the senior's CD, mutual fund accounts, or other investments to an annuity, or a so called "promissory note" or other investment.  The review is used to scare the senior into believing their investments are unsafe.

Planning an estate and choosing investments involve important legal, financial and personal decisions.  If estate planning documents are not properly prepared or executed they can be invalid and cause lasting damage.

Here are tips to alert the consumer to these scams:

• Living trust mills' sales agents are usually not attorneys and are not experts in estate planning.

• Watch out for companies that sell trusts and sell annuities or other investments.

• Typically, sales agents fail to disclose adverse tax consequences or early withdrawal penalties when transferring investments to annuities.

• Before consumers buy an annuity or any other investment, they should review it with people they know and trust, such as their financial or tax advisor, their attorney and trusted family members.

• Consumers who feel they have been victimized by a living trust mill, or annuity or promissory note fraud, should report it to the Consumer Fraud Section of their local district attorney and to the California Department of Insurance.  Consumers can also file complaints online at the Attorney General's website.

If you are uncertain about what you may have purchased or the value of the documents you are considering signing, please call our office for an appointment.