Taxation & Estate Planning

Living Trust Scams/Trust Mills/Elderlaw Planning Seminars - STAY AWAY!

By Michael D. Bonasera, Esq.

A living trust scam is typically where [older] couples are drawn to a seminar (of some kind) at which they are sold a one-size-fits-all estate plan that almost always involves some kind of a trust. However, there is no such thing as a one-size-fits-all estate plan.

Ohio has a history with these “Trust Mills” but ever since Cleveland Bar Association v. Sharp Estate Services, Inc. et. al. (2005) 107 Ohio St. 3d 219; 837 N.E.2d 1183, (Decided December 14, 2005) it has been more difficult to find one of these shops. Thankfully.

But they’re still out there…

On January 17, 2008, Professor Beyer linked to this story by The State Bar of Texas called “Living Trust Scams and the Senior Consumer.”

Living trust sales are a growing area of consumer fraud. Con artists make millions of dollars every year selling unnecessary trusts. Each year thousands of consumers lose from $500 to $5,000 through the purchases of living trusts. Often families face potentially greater costs after the consumer’s death, resulting from problems associated with the trusts.***

Here are some of the suggested ways to avoid being a living trust scam victim:

Take time when making your decision. Do not fall victim to high-pressure, “act immediately” sales tactics.

Seek the advice of someone trustworthy and knowledgeable. Contact your accountant, estate planning attorney, banker or financial advisor.

If you conclude that a trust may be right for you, deal directly with a licensed * * * attorney who has substantial expertise in estate planning.

And David M. Goldman of Florida and Florida Estate Planning Lawyer Blog, writes here about a Texarkana, Arkansas class action suit against these scurrilous con-artists:

A number of Texarkana residents have filed suit against sellers of living trust documents in a class action accusing the salesmen of exploiting senior citizens. […]

A Plaintiff says he purchased a living trust after attending a lunch presentation at a restaurant. He states the document was misrepresented and that if he dies with only these estate-planning documents, his estate will still need to be probated because the living trust failed to factor in his real property in Arkansas.

The living trust sellers are facing allegations of “masquerading as qualified financial advisers, estate planners, lawyers, and paralegals” to “exploit and prey” upon senior citizens with the creation and selling of “unnecessary and often useless” living trusts.

Defendants are accused of fraud, unauthorized practice of law, negligence, breach of fiduciary duty and conspiracy. The suit alleges that the defendants created and sold the living trusts as part of a scheme to gain access to senior citizens’ financial information in order to sell annuities and other financial products.

According to the original complaint, the scheme begins with advertisements that persuade senior citizens to attend a free lunch or dinner. At these meetings, the “unlicensed” living trust defendants conduct presentations and distribute materials that misrepresent the impact of probate fees and estate taxes in order to create fear that the senior citizens need to buy a trust to prevent heirs from losing their estate.

These presentations include references to celebrities such as Elvis and describe the large amounts these celebrities have paid in estate taxes. The plaintiffs state these presentations do not include information about the federal estate tax exemption, the sliding scale of the exemption amount, or the possibility of the elimination of future estate taxes.

Read the rest of David’s post here.

Full post as published by The Ohio Trust & Estate Blog on January 21, 2008 (boomark / email).