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Living Trust scammers

Even if you have a modest estate, a "living trust" can be an important estate-planning tool that gives you control over your assets while you’re alive while, upon your death, allows transferring your assets to your heirs without going through the time and expense of probate. However, there are many mistaken beliefs about "living trusts," and the American Association of Retired Persons (AARP) has recently reported that there has been an upsurge of deceptive telemarketing calls, mass mailings and newspaper ads that are designed to lure consumers into paying a lot of money for something they may not need.

But, before going further, let's explain what a "living trust" is. A "living trust" is simply a trust that is established during your lifetime. Under a living trust agreement, you select a trustee to hold your property for your benefit during your lifetime pursuant to the terms of a trust agreement.

You have complete control over these assets because you retain the right to amend or revoke the trust agreement at any time. When you die, the property held by the trustee is passed on to the beneficiaries designated in your trust agreement without having to pass through the probate court.

The advantages of having a living trust are that assets funded into the trust avoid probate and, because assets distributed through a trust pass outside of the probate court, there is no public record of the distributions. Living trusts reduce estate taxes while providing for a surviving spouse. In addition, with a living trust, you can determine when income or principal will be distributed to the beneficiaries. You may set the ages and purposes (e.g., health, education, support) for which a trustee distributes income or principal to a beneficiary. A living trust will also provide that assets pass to your children upon the death of your surviving spouse, which makes a living trust a useful estate planning tool in a remarriage situation. Finally, living trusts protect assets from a beneficiary’s creditors.

However, there are some disadvantages to living trusts. First, there is no one to supervise an inexperienced trustee. If an inexperienced trustee makes a mistake, no one may ever know about it. Second, to avoid probate, you have to take the steps necessary to transfer your assets into your trust or change the beneficiary designations. It will take time to process the paperwork and expenses to draft the trust agreement properly. Third, a living trust will cost more to draft than a simple Will.

Sad to say, there are companies that are churning out "standard" living trusts and are attempting to sell their services in seminars, by direct mail, and by telemarketing. They have no concern for your overall estate plan. All these companies are doing is attempting to sell a living trust in a "one-size-fits-all" package. This can have a detrimental affect with estate planning and could result in the transfer of property to the wrong heirs.

In most cases, such companies have claimed to use the services of an attorney. However, the attorney is only a front man for the company and does not play any part in creating an estate plan or living trust. Also, such companies will make false claims about the benefits of a living trust by exaggerating the beneficial effect of a living trust regarding asset protection.

Here are some ways to spot deceptive "living trust" companies:

Many of these companies will try to sell living trusts door-to-door, through seminars or through telemarketers, without giving you any way to check the credentials of the sales person or company.

Other companies use "sound alike" names, thereby confusing their services with legitimate non-profit organizations like the AARP.

Some companies will attempt to sell self-help kits. These kits require that you transfer your assets without properly explaining how to do so and with no supervision.

There are companies whose goal is to steal your identity, or to gather information about you to use for other purposes.

Some may tell you that, without this device, all of your assets will be taken away in an expensive probate proceeding.

They will use living trusts as a pretext to try and sell you annuities or insurance.

In almost every case, high pressure tactics are used. The best thing to do is to not make a decision while "under the gun" and to consult with licensed estate planning professionals (such as an attorney or financial advisor) before going down this road.