Living Trusts

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.

Playing on concerns of high estate taxes and probate costs, con artists work to get you to buy a living trust. Living trusts can be practical for some, but aren’t usually necessary for most of people. It’s a shame that some unprincipled salespeople take this legitimate tool and use it for personal gain by trying to sell unnecessary, high commission investments, regardless of whether or not they’re in the consumer’s best interest.

How Living Trust Scams Work

You see an advertisement for a living trust workshop, receive a phone call or see a brochure. The scammer urges you to make an appointment with a living trust “specialist”, who will visit your home. During their presentation they solicit you to fill out forms which ask for detailed financial information. All in the name of purchasing a living trust. What you don’t realize is that their real purpose is to gather enough information about your financial assets so that they can begin to offer various investments, like annuities, for purchase. The purpose of which is to make financial gains for themselves by receiving high commissions off of those recommended investment 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

To ensure accurate and correctly filled in living trust documents, we recommend using an experienced attorney. Living trusts are legal documents and should be treated as such. If the documents were improperly created, they won’t be accepted by the court and probate will ensue anyway. This is the very thing you were hoping to avoid by purchasing a living trust. Additionally, if you fell for the scam, you’ve ended up purchasing investments that usually aren’t appropriate for your given situation.

How to Avoid Living Trust Scams

Our research indicates the best practice for purchasing living trusts is to contact an experienced estate planning attorney first. They will be able to assess your situation and make a recommendation regarding living trusts. Most will even throw in the initial consultation for free. Don’t know how to find a local experienced estate planning lawyer? Look up the contact information for your local bar association. They typically have a referral service that can get you pointed in the right direction.

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 who’ve done it before and whom you trust.

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6 years ago

Is a living trust which is made after the person is sick and receiving Medicaid legal?