One very important thing to be wary of when considering getting a living trust are trust sales companies, otherwise known as “trust mills.” These companies are often large organizations that sell living trusts and related documents at a drastically discounted price. Many people, especially the elderly, are drawn to their services because of the “too good to be true” prices (which sadly really do turn out to be too good to be true) and the slick presentation accompanied by strong pressure sales.
The trusts drafted by these companies are often done by an attorney in another state (or even a non-attorney, which in most states is illegal) and delivered to you by a sales representative, who may have a misleading job title, like “trust advisor” or “senior estate planner.” Typically, the trusts are just generic fill-in-the-blank forms in a legalese that is hard to understand and may not be appropriate for your specific needs. These badly prepared trust documents may be invalid or cause terrible lasting damage to loved ones and beneficiaries.
But even worse than that, these companies use all the personal and financial information you provide to push unneeded annuities or various investments that earn them large commissions. Typically this is done when they have finished drafting your trust documents and offer to review the assets you are going to use to fund the trust. They use the review as a chance to scare you into believing your investments are unsafe and you should, instead, move your money into the annuities and investment vehicles the company sells (which are promised to have higher interest and less risk, of course).
The California Attorney General’s office offers these helpful tips to consumers to avoid becoming victims of trust mill scams:
- Living trust mills' sales agents are usually not attorneys and are not experts in estate planning.
- Watch out for companies that sell trusts and also try to sell annuities or other investments.
- Sales agents may fail to disclose possible adverse tax consequences or early withdrawal penalties that may be incurred when transferring investments to annuities.
- An annuity is not 100% safe, and only a portion is guaranteed by the state. Insurance companies can and do fail, and their assets may not be enough to pay the full value of their customers' investments.
- So called "promissory notes" are not insured by the FDIC or any other government agency and may be very risky. They may not be registered as securities with the state.
- Before consumers buy an annuity or any other investment, they should review it with people they trust, such as their financial or tax advisor, their attorney, and trusted family members.
A qualified attorney can help consumers decide whether they need a living trust or review an existing trust. Alameda County residents turn to our team at Randick O’Dea Tooliatos Vermont & Sargent because they know we handle each case with compassion and respect – we are eager to do the same for you!
Contact estate planning attorney Hannah Sargent today for all your living trust needs!