Living Trust Scams
Living Trusts can be a useful way of protecting yourself and your beneficiaries but scam artists out to make a buck can erode your hard-earned assets.
Living Trusts are a legal document intended as a partial substitute for a will. Once created, your assets (your home, bank accounts and
stocks, for example) are put into the living trust which is then administered for you during your lifetime. When you die it's transferred
to your beneficiaries. Living trusts can be very useful when done right. Unfortunately, because of the large sums of money involved, scam
artists lie in wait to exploit you if given half a chance.
The living trust scam attempts to get you to purchase a trust. It plays on the fear that probate costs and estate taxes will erode the value
of your estate. While living trusts can be a useful tool for some, many unscrupulous sales persons use it to simply get in the door and sell
high-commission investments to consumers, whether or not it is the best thing for them.
How Living Trust Scams Work
You respond to such a mailer, phone call or advertisement by attending a workshop. Or you might call to find out about it and someone will
come out to your home to present information. They will sign you up for a living trust by having you fill out forms that disclose all of your
financial assets. Once they have seen your finances, they begin to recommend different investments, usually insurance type products like
annuities, in order to earn high commissions off the sale of those products. Sales people love their commissions and that's what this scam is
all about. If you fall for it once, they may even come back for more at a later time. If that works they may try something else. Rinse and
repeat until your funds are bled dry.
More Living Trust Problems
Sometimes the living trust document you buy is not filled out properly because lawyers are not doing it. If these documents are filled out
improperly, you may end up going through probate anyway, the very thing you were told you could avoid. In addition, many older people end up
buying investments that are not appropriate for them given their situation.
How to Avoid Living Trust Scams
If you want to know if a living trust will truly help you, you should get the advice of an estate-planning attorney. You can find the name
and phone number for such an attorney by calling your local bar association, lawyer referral service. Also keep in mind that, while marketed
to anyone willing to listen, living trusts don't make sense for everyone. People with few assets and simple estates have little reason to
consider a living trust. If someone tries to hard-sell you a living trust, back away. Important decisions should be carefully considered
before any papers are signed and if a significant estate is involved you should have the paperwork drawn up by those you trust.
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