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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Marshall & Associates www.paelderlaw.com
