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Living Trust Mills

Companies advertising "living trusts" sometimes misrepresent the advantages of living trusts. But the most serious problem is the misuse of the financial information sales persons obtain to prepare a living trust. Unfortunately, this information is used to sell unneeded annuities and various investments, most often to senior citizens.

Sales agents for these operations often misrepresent the disadvantages of seniors' current investments and the advantages of the investments the agents are selling. They may even make seniors believe their bank accounts are less safe than the annuities or other investments they want seniors to buy. To give themselves a cloak of legitimacy, these sales agents pretend to be experts in living trusts. In their solicitations, these sales agents often pose as expert financial or estate planners. They pass themselves off as a "trust advisor," "senior estate planner" or "paralegal," and schedule an initial appointment with seniors in their homes. Under the guise of helping set up or update a living trust, the sales agents find out about seniors' financial assets and investments. They sometimes work in assisted living centers, churches and other places where seniors gather, hooking elderly victims through free seminars and other sales presentations.

Seniors pay substantial sums of money to sales agents for living trusts, but sometimes, through fraud and deceit, the sales agents damage seniors' estate plans, and the security of their investments and life savings.

Usually, 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. Typically, during the second visit, the agents go over the assets to be placed in the trust. The agents may have seniors 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. They use that review of seniors' investments to scare them into believing their investments are unsafe, and that by "moving" their money, they can earn higher interest with less risk. Frequently, there are substantial penalties for early withdrawal of the investment.

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.

Following are tips to help consumers avoid becoming victims of living trust mills and their 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 also try to sell annuities or 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 deposit 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 their customers' investments.
  • So called "promissory notes" are not insured by the FDIC or any other government agency and may be very risky. They may not be registered as securities with the state.
  • 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.

An attorney qualified in estate planning can help consumers decide if they need a living trust or other estate planning documents, or help them review an existing trust or will. To obtain a list of attorneys who are certified as estate planning specialists, and to receive other written information about estate planning and how to select an attorney, call the California State Bar's toll free number for seniors at 1-888-460-7364.

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.

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