Common Living Trust Scams And How To Avoid Them
Living trust scams can be a huge drain on financial resources. Scammers might tout a living trust as a good method to hold real estate or do estate planning to protect loved ones. They might also claim that a living trust will protect assets from creditors. However, what actually happens is that these scammers get individuals’ personal information and then create trust documents that are often not reviewed by attorneys and are completely legally invalid. They might also take funds to provide trust “kits” that have little to no real value. Don’t let this happen to you or your loved ones — consider consulting with an experienced Minnesota and Florida trust attorney by calling our Minnetonka, MN office at (763) 420-5087 or our Venice, FL office at (941-909-4644). Roulet Law Firm, P.A. may be able to help meet your estate planning needs.
What Is Trust Scamming?
Older adults are often targets of living trust scams. Con artists essentially make millions of dollars every year by creating and selling unnecessary trust documents and offering unauthorized legal services. Unfortunately, these scams not only affect the individuals who created the trust, but they can have a huge effect on loved ones after the trust creator’s death. Living trust scams can complicate or invalidate other estate planning efforts and end up costing loved ones time and money.
Trust scams are sometimes called “trust mills.” They make statements that trusts will help accomplish all kinds of estate planning goals, many of which are blatantly wrong or only half-truths. Many times, individuals are sold trust “kits” so they can create their own living trusts, many of which will be invalid or incorrect. State governments end up occasionally finding and shutting down these businesses, but the businesses sometimes move on to another state where they have not yet been discovered. In 2000, the United States Senate held a hearing to address the dangers of living trust scams, and you can read through their concerns, including some alarming statistics, in the hearing transcript. The Federal Trade Commission has also recognized the serious danger these scams pose for citizens across the country.
Fraudulent and Misleading Statements Used in Living Trust Scams
Recognizing a living trust scam can be difficult. However, if the company or individual is making any of the following statements, a closer look into their credentials and motivations may be necessary.
Living Trusts Can Save Estate Taxes by 40%
It is true that a living trust can save on estate taxes in some situations. When property is in a living trust (which becomes an irrevocable trust upon death), it often does not “count” for estate tax purposes, which can reduce estate tax obligations.
However, due to the complexities of tax planning and how frequently the laws are changing, you should talk with an experienced estate planning attorney about how to properly prepare your planning documents to minimize estate taxes.
Living Trusts Will Help Individuals Qualify for Public Assistance
A living trust is not a separate legal entity like a business or irrevocable trust would be. As a result, whether you have a living trust will have no impact on whether you can receive public assistance benefits. Assets in a living trust must still be considered when applying for public benefits.
However, there are specific types of trusts that can be used to protect your home and life savings from nursing home and long-term care costs. To learn more about how you can protect your home, click here to download our free guide.
Living Trusts Can Help Avoid Family Conflict After Death
Creating a living trust, on its own, will often have no impact on whether there will be family conflict. While trusts are generally harder to challenge than wills, having a trust by itself does not prevent will contests or trust contests. Also, if the trust was not drafted or finalized properly according to Minnesota or Florida law, it can actually increase the likelihood of an estate challenge.
That being said, a properly prepared trust can make it less likely for a disgruntled heir to be successful when attempting to challenge a trust.
Living Trusts Provide Asset Protection to Avoid Creditors
A living trust does not provide any asset protection. These assets are still subject to creditor claims. After someone passes away, living trust assets will also still be subject to any creditors that remain.
If you want to protect your assets, there are specific types of trusts that can accomplish that. You can also design your trust to protect the money you leave in the event your spouse remarries. You can also design your trust to protect the money you leave for your children and grandchildren so that they do not lose it in the event they get divorced, get sued, lose a job, or have substance abuse issues or poor money management skills.
If you would like to learn more about how a trust can protect your assets for your children and grandchildren, click here to watch our free online masterclass.
Tips to Avoid Living Trust Scams
Living trust scams can seem tempting, but it is important to check the facts before creating any estate planning documents. Some of these scam companies are engaging in the unauthorized practice of law. They might promise that an attorney will review documents, but that may not be the case. Consider these tips to help avoid living trust scams:
- Check with an attorney or estate planner before signing anything.
- Never sign anything you do not understand.
- Avoid high-pressure sales environments.
- Ensure you have the option to update the trust documents from time to time.
- Verify endorsements with state governments or senior associations.
Estate planning is important, and getting an estate plan in place is a good idea. However, trust scammers will often pressure you to make decisions quickly and sign documents without the opportunity to do any research of your own. In general, if you feel pressured or uncomfortable in any way, walk away.
Get Estate Planning Help in Minnesota and Florida
Speaking with an experienced estate planning attorney can help you avoid living trust scams. Direct contact with a lawyer can put your mind at ease about making the right decisions for your unique situation. Contact Roulet Law Firm, P.A. at our Minnetonka, Minnesota office at (763-420-5087) or our Venice, Florida office at (941-909-4644) for more information or to schedule an appointment.
If you would like to learn how to protect your home and life savings from long-term care and nursing home costs, click here to download our FREE guide Save our Home: How to Protect Your Home and Life Savings From Long-Term Care and Nursing Home Costs.
And, if you would like to learn how to make it as easy and inexpensive as possible for your family to manage your affairs during incapacity and after passing, while ensuring your assets only go to whom you want and how you want, click here to register for our FREE online masterclass.