Warnings Continue on Living Trusts

Marshalll Parker & Associates - PA Elder Law, Estate Planning, Long Term Care Resource Center Elder Law Firm

Written By: Attorney Jeffrey A. Marshall , CELA*

For some time we have been warning consumers to beware of high pressure sales of revocable living trusts. Often these "living trusts" are sold with false claims of death tax avoidance, protection of assets from nursing home costs, or inaccurate descriptions of the probate process. Now our warnings are being echoed by a number of other sources.

In July (of 2000), Senator Chuck Grassley, chairman of United States Senate Special Committee on Aging, warned consumers about scam artists who exploit the desires of older Americans to leave their heirs a hassle-free estate. "No parent wants to leave a messy estate for his or her children," Grassley said. "Scam artists exploit these good intentions. They pressure people into buying things they don't need. They sell them useless products. Sometimes they even steal from their victims. We have to protect innocent people who are just trying to get their affairs in order before they pass away." [For more information on the Senate hearings on "The Danger of Living Trust Scams" on the internet go to www.senate.gov/~aging/nr000711.htm]

The November 2000 issue of Consumer Reports magazine contains a "Consumer Alert" about living trusts. The alert notes that while a living trust can be a legitimate estate planning tool for some consumers, "Living trusts have also become a scamster's tool for preying on unwary seniors worried about preserving assets for their family but for whom such a trust is inappropriate." The Consumer Reports alert goes on to note that "Seniors are being approached with high-pressure sales pitches trying to convince them they can save estate taxes and that their heirs will get more if they sign up. Some have paid thousands of dollars for questionable documents. Sometimes, after victims reveal their financial records, they're pressured to switch assets to high-priced insurance or annuities".

And in the November-December issue of Modern Maturity AARP President Tess Cania warns of living trust scams that suggest that AARP recommends living trusts. Cania makes the point that "AARP does not sell, sponsor, or endorse any living trust product. . . Only an attorney with experience in estate planning can help you decide what's best for you."

Unfortunately, the inappropriate marketing of living trusts is going on right here in Northcentral Pennsylvania. Seniors are being approached by mass mailings and other methods. The solicitation may even come from a lawyer. If a senior shows any interest he or she may be visited in their home. Costs of $2,000 to $3,000 are typical.

Recently, the Lycoming Law Association (the local bar association for Lycoming County) took the unusual step of sponsoring a series of ads in the Williamsport Sun Gazette to warn consumers about living trusts. The ads, entitled "The Truth About Living Trusts," noted that "Recently many individuals have been encouraged to set up [a] "living trust." A Living Trust is a revocable trust wherein the person setting up the trust is initially the Trustee and retains the right to the income and principal for life. Many untrue claims are made for the benefits of living trusts." The ad then goes on to refute claims that living trusts reduce death taxes, prevent guardianship, save legal fees, protect privacy, avoid long term care costs, etc.

Part of the problem for Seniors is that the legal terrain in which living trusts operate is so confusing. Probate, trust administration, guardianship, death taxes and the like are little understood and very frightening to most people. Also confusing is that laws differ dramatically from state to state, and what is best for your relative in California is not necessarily right for you. So, you can't rely on what a relative or financial commentator who lives in another state says.

The best defense is for you to deal only with trusted local advisors. Your local elder law attorney can review your situation and provide you with the information you need to make intelligent choices. There are certain types of trusts that can be used to save death taxes, or protect your assets from nursing home costs, but these trusts are very different from the living trusts that are sold. Be particularly wary of visits from non-lawyers, or solicitations from out of the area. Deal with an experienced local lawyer. If you have doubts, get a second opinion.

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