Preying on loneliness and common fear of the unknown among seniors, scammers and unscrupulous salesmen in the US and in California have found a new way to defraud seniors out of thousands of dollars: living trust scams.
March 6-12 is National Consumer Protection week and I would like to use this opportunity to warn seniors of these costly living trust scams in the Southern California area.
Living trusts can be an excellent estate planning tool to avoid probate and ensure your wishes are honored after death, but they are not a one-size-fits-all document and certainly not right for everyone - especially seniors on fixed incomes with limited assets.
Yet through public seminars, phone, mail and door-to-door campaigns, seniors are being contacted by salesman outside of the legal field who offer to living trusts as the solution to all of their fears and financial worries.
High-pressure tactics such as gifts, companionship and exaggerations about death taxes and probate are used to make seniors believe 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 they probably won’t even owe estate or ‘death taxes’ after their passing. Worse is that many of these “trust kits” sold to seniors only contain boilerplate language and really do nothing to avoid taxes or the probate court. The real goal of the scam is to gain access to the senior’s financial information through the Trust Kit so they can be railroaded into buying additional annuities or insurance products the senior does not need.
According to an AARP study published in 2000, about four million people older than 50 with less than $25,000 in annual income may have purchased costly, unnecessary, and potentially dangerous living trusts as a result of high-pressure sales tactics by firms falsely representing themselves as AARP affiliates. These numbers will continue to grow as seniors remain fearful about growing taxes and their future financial security.
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. I recommend that seniors:
- Never sign anything with options or terminology that you don’t understand.
- Don’t give into high-pressure tactics such as gifts, nagging phone calls and limited-time offers.
- Verify any stated affiliations with senior organizations or government agencies. (Note: 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.
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