Saturday, 18 May 2024

Estate planning: Trust mills

The State Bar of California has created a panel of volunteer attorneys, called the Speakers Panel, to elevate the public's awareness of financial scams targeting the elderly. The author is one such volunteer.


The panel's objective is to help prevent financial elder abuse, a big problem, by educating seniors. One type of scam, discussed in this article, is the so-called “trust mill” living trust scam. The trust mill scam is a major nationwide problem that has cost many elderly persons dearly, not to mention disturbing their peace of mind. Let us see how the “trust mill” scam works.


Trust mills are NOT legitimate law firms. Some may have attorneys on staff, in order to say that they are not illegally practicing law; however, providing legitimate legal services is NOT the trust mill's true objective. Rather, the trust mill offers one thing (living trusts) in order to later-on try to sell something else altogether (financial services).


Like a traveling circus, the trust mill goes from town to town advertising free seminars in order to draw in the public. Trust mills entice people by advertising “living trust” packages at “low costs” – far less than what legitimate legal services cost.


The trusts provided are basically just a one-size fits all, i.e., fill-in the blanks form, and should not be confused with personalized legal services. As such they may or may not be drafted by a licensed attorney, and certainly are not what the public has in mind in regards to professional legal services.


These salesmen will often use phony titles like “certified trust advisor” to make themselves appear legitimate and knowledgeable about estate planning, when they are neither. Such so-called titles are deceitful as they are not certified by any state regulatory agency and were merely issued by the trust mill itself to their sales persons.


Once the trust mill has the elder's trust and financial information, they then try to sell annuities, life insurance, and reverse mortgages – usually in the privacy of the elder's own home. The sales tactics used are unscrupulous and predatory, to say the least. That is, the salesmen are often trained to manipulate the elderly person into believing that the elderly person's money is not safe the way it is, and that they have a solution.


The salesman's ulterior motive is a substantial sales commission, and not the estate planning fee for the trust. Ultimately, therefore, the trust mill experience is far from a “bargain,” as the trust mill experience winds up costing the elderly far in excess of the legal fees charged by a legitimate attorney.


Qualified, ethical attorneys, on the one hand, offer the public a legitimate professional service that they are both licensed and educated to provide – for that sake only. Attorneys develop a one-on-one personal relationship with their client for the purpose of creating an appropriate, individualized estate plan based on client meetings; and will review documents with their clients and answer legal questions. They are not going to use the relationship later-on to try to sell you financial products.


There is some good news. Trust mills are being sued and prosecuted at various levels.


The California Attorney General's Office sued the Family First Advanced Estate Planning, Family First Insurance Services and American Life Insurance Co. The case was settled for $7.2 million, including $5.5 million for defrauded consumers.


Lastly, if you believe that you were a victim, you can call the National Fraud Hotline (1-800-876-7060), your local district attorney's office, and (when relevant) the California Department of Insurance (www.insurance.ca.gov).


Dennis A. Fordham is an attorney licensed to practice law in California and New York. He earned his bachelor's degree at Columbia University, his juris doctorate at the State University of New York at Buffalo, and his LL.M in taxation at New York University. He concentrates his practice in the areas of estate planning and aspects of elder law. His office is at 55 First St., Lakeport, California. He can be reached by e-mail at dennis@dennisfordhamlaw, com or by phone at 707-263-3235.

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