Beware of Living Trust Scams

Planning in advance for the distribution of assets at death is a good idea. While there are many ways to do this, in order to make the right decision the smart consumer needs to explore every option and consider the type of estate planning that’s appropriate for them. One device is a living trust which is a trust set up during a person’s lifetime. This may be a good idea for some, but not for others. Most importantly, keep in mind that when considering your estate planning needs, your interests may best be met by consulting with an attorney.

What is a trust?
A trust is a written legal document into which you (the Trustor) place some or all of your asset. The assets are managed by you or whomever you designate until your death or a specific date set by you.

Can I change my mind or add/delete items I place in the Trust?
These are details which you would choose upon creation of the Trust. A REVOCABLE (able to be cancelled or altered) TRUST can be changed which is different from an IRREVOCABLE TRUST, which cannot be changed.

What amount of assets are needed in order for a Trust to be right for me?
The dollar value of assets is a very important factor when considering a Living Trust, however it is only one factor. Consult a licensed attorney specializing in Trusts and Estates (PA Bar Association) or contact the Pennsylvania Securities Commission.

The Scams:
Unfortunately, when it comes to living trusts, unscrupulous con artists are ready to play on consumers’ fears of the unknown. In some cases, consumers–mostly elderly–are solicited by phone or mail to attend seminars or to set up in-home appointments to discuss living trusts. Living trusts are then marketed through high-pressure sales pitches which prey on the fear that assets will be tied up indefinitely or that estates are prone to heavy taxes and fees if a living trust is not in place. Con artists often rely on unfamiliar terms such as “probate” and “executor” to convince consumers that a living trust is right for them even though many of the complex rules and fees that can complicate estate distributions do not exist in Pennsylvania.

Sometimes victims are sold worthless “kits”, costing several thousand dollars, which are nothing more than standard forms that may or may not be valid, as laws concerning living trusts vary from state to state. In other cases, false promoters simply want to gain access to consumers’ financial information so they can sell them other products, like insurance annuities.

The Facts:
To avoid being taken advantage of by these con artists, keep the following tips in mind:

Shop around. Check out offers with a trusted attorney or estate planner.
Be certain a living trust is the best option for your situation.
Never sign anything containing options or terminology you don’t understand.
Do not give in to high-pressure sales tactics. Legitimate offers will be around long enough for you to properly research them.
Always check out offers from telephone solicitors or door-to-door sales people.
Make sure you have the option of updating your trust periodically. Understand how this is done and be aware of any costs incurred to do so.
Beware of anyone portraying living trusts as being a solution for estate planning.
Verify any stated affiliation or endorsement by a government agency or senior association.
The Cooling Off Rule states that if you buy a living trust in your home or somewhere other than the seller’s permanent place of business (like a hotel seminar), you have three business days to cancel the deal.

Terminology to understand

Grantor – You are the Grantor since you convey or transfer ownership from you to the Trust. For example, “The Trust of John Smith” is the owner of the real estate or personal property within the trust you created.

Beneficiary – Person(s), corporations, non-profit organizations or whomever you designate.

Fiduciary – An individual or trust company that is for the benefit of another. Also, known as trustees, executor/executrix, or representative are all fiduciaries

Probate – A will, whether single or within a Trust, is subject to review and authentication by the Register of Wills, in the county where the descendant resided at a primary residence.