A living trust is an excellent estate planning tool for many of our clients, but it is not a one-size-fits-all document.
A living trust can serve as a will substitute and, unlike a will, is not subject to probate, which makes it more private and less likely to be contested.
But it is not right for everyone – especially seniors on fixed incomes with limited assets.
Yet, salesmen are selling Living Trust Kits as the fix-all financial solution to seniors who, frankly, cannot afford them. They are soliciting seniors through public seminars, phone, mail and door-to-door campaigns.
As part of National Consumer Protection Week, March 6-12, we want you to know the truth about these scams.
The scammers use high-pressure tactics such as gifts, companionship and limited-time offers. They exaggerate about death taxes and probate to convince seniors that their assets will be tied up in court indefinitely and that their loved ones will be on the hook for thousands of dollars of taxes and legal fees after their death.
What the salesmen fail to tell these seniors is that with an estate tax exemption of $5.45 million this year, they probably won’t owe estate or “death taxes” after their passing. Worse is that many of these Trust Kits only contain boilerplate language and do nothing to avoid taxes or probate court.
This type of exploitation is costing seniors $17 billion a year, according to the True Link Report on Elder Financial Abuse 2015 study. The study found that every $20 lost to exploitation leads to an annual loss of $2,000 as scammers use their new relationship with the senior to manipulate them into other financial mistakes.
The real goal of the scam is to gain access to the seniors’ financial information through the Trust Kit so they can be railroaded into buying additional annuities or unneeded insurance products.
To avoid becoming the victim of a trust scam, seniors should always shop around and check with a qualified estate planning lawyer before deciding on any type of will, trust or financial product such as an annuity or long-term care insurance plan.
We also recommend that seniors:
• Never sign anything with options or terminology that you don’t understand.
• Don’t give in to high-pressure tactics such as gifts, nagging phone calls and limited-time offers.
• Verify any stated affiliations with senior organizations or government agencies. Due to the high rate of senior trust scams, the AARP does not endorse any company that sells living trusts.
• Know your rights under the FTC’s “Cooling Off Rule.” If you purchase a living trust in your home or any place other than the seller’s permanent place of business (such as a hotel seminar), you have three business days to cancel the deal.
For additional tips on how to avoid financial scams for National Consumer Protection Week, visit the government’s official website at ncpw.gov.
Richard Barid and Michael Smith are co-founders of Savannah-based Smith Barid LLC, which focuses on estate planning, elder law and special needs planning. They are both VA-accredited attorneys with extensive experience assisting families with VA Pension (Aid & Attendance) claims. They can be reached at 912-352-3999 or firstname.lastname@example.org or email@example.com.