Living Trust Mills
A living trust is a form of estate planning that allows you to control your assets (your money and property) while you are still alive, but have it distributed to people or organizations you select when you die.
Depending on your own financial situation they might be appropriate, but they are not for everyone. You should consider your own situation carefully to determine if you need a living trust, and consider whether you need to hire a lawyer. The California State Bar offers detailed information on living trusts including how to find an attorney to assist you.
While many of the attorneys and other professionals who can assist you with estate planning and trusts are honest, there are others out there who may do you harm. Planning an estate and choosing investments involve important legal, financial and personal decisions. If estate planning documents are not properly prepared or executed, they may be invalid or otherwise defective which could lead to lasting damage. Consult with a lawyer or other financial advisor who is knowledgeable in estate planning, and who is not trying to sell a product which may be unnecessary—before considering a living trust or any other estate or financial planning document or service.
Unfortunately, there are unscrupulous actors working for “living trust mills” who will sell you an unnecessary living trust or use your financial information to sell you products that are less secure than your current investments. This type of scam often targets seniors lured by "free" seminars on living trusts or other estate planning presentations. These scam artists often work in assisted living centers, churches and other places where seniors gather. Occasionally, sales agents will pose as estate planners or financial experts to gain the trust of the senior in these "free" seminars and later schedule a visit in the senior's home to gather information in order to review the senior's assets and investments.
Here are some tips and traps:
- A person might call themselves a “trust advisor,” or “senior estate planner,” or “paralegal,” or some similar title, and they may claim to have educational credentials or “certification.” Insist on the person’s identification and a description of his or her qualifications, education, training, and expertise in estate planning. Ask them if they have any state bar or government accreditation, and then tell them that you will check with the state agency before making any decisions.
- Legal document assistants are not permitted to give legal advice, and paralegals must work under the direct supervision of a lawyer.
- Not everyone needs a living trust. Be wary of doing business with anyone who says otherwise or promotes one-size-fits-all living trusts or living trust kits.
- Don’t let yourself be pressured. Take time to carefully consider your decision and discuss it with trusted family members, your lawyer, and any other financial advisor you trust or have worked with in the past.
- Don’t let yourself be frightened. Salespeople may use a review of your investments to scare you into believing your investments are unsafe, and that by "moving" your money, you can earn higher interest with less risk.
- Watch out for companies that sell trusts and also try to sell annuities or other investments. For example, you may be told that your bank accounts are less safe than annuities or other investments that they want you to buy. But the new investment may actually be less safe. It may also have serious costs and less liquidity—that is, you may not be able to use your funds before some future date without paying substantial penalties. Seniors, for example, can find themselves trapped in annuities that will not complete paying out until some far distant future date.
- Sales agents may fail to disclose possible adverse tax consequences or early withdrawal penalties that may be incurred when transferring stocks, bonds, certificates of deposit or other investments to annuities. Make sure all of these issues are addressed before making a final decision.
- Know your cancellation rights. If the sale occurred in your home, you likely have at least three days to cancel. More information on cancelation rights are available from the California Department of Consumer Affairs.
- Always ask for a copy of any document you sign at the time it is signed.
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, the California Department of Insurance, and the California Attorney General.