Living Trust Scams

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., in Woodbury, New York
• Pages: 61-81

There are many good reasons for establishing trusts. However, on occa-

sion trusts are the subject of living trust scams involving senior citizens

who are often confused about avoiding probate and instead use living

trusts as a means for transferring assets to their heirs.

The following are examples of discussions regarding living trust scams

taken from a number of sources.

Source: Washington State Ofce of the Attorney General

CONSUMER PROTECTION: SHUTTING DOWN “TRUST MILLS”

Background

“Trust mills” are used by salespeople who prey on seniors and convince

them through scare tactics and deception that they need a living trust.

While these salespeople are convincing a senior to purchase a trust—gen-

erally for $1,500–2,000—they are also gathering detailed information

about the senior’s assets, claiming they need it to prepare the trust. Instead

most of these trusts are cookie-cutter documents prepared in bulk on a

home computer. Once the trust is signed and delivered, the salesperson

uses the relationship to sell other nancial products, like reverse mort-

gages and annuities that may be unnecessary or even contrary to the

senior’s interests.

. . . , an early perpetrator of the scheme, sought out older widowed

women and billed himself as a nancial planning expert.

He held free seminars where he urged attendees to sign up for “free

in-home consultations.”

Then he used his relationship to systematically bilk his clients of their

life savings.

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LIVING TRUST SCAMS

The Attorney General’s Ofce Consumer Protection Division obtained

a civil judgment of more than $1 million against . . . , the Ofce of the

Insurance Commissioner revoked his insurance license and he was nally

convicted on securities fraud but he’s now bankrupt and his clients will

never fully recover from the nancial harm he caused.

Typically, the price paid for a living trust through a trust mill is similar

to the cost to buy one through a licensed attorney, however, the attor-

ney has an enforceable professional obligation to provide accurate and

appropriate estate planning advice.

The Attorney General’s Ofce Consumer Protection Division has

been bringing cases against living trust mills for more than a decade. The

ofce generally has one or two of these cases on the docket at any given

time, but for every case the ofce brings, our attorneys learn of several

new operations they are unable to address due to limited resources and

the complexity of the cases:

(1)

The vulnerable senior victims generally have difculty providing

accurate testimony;

(2)

Sometimes the harm caused by the trust mill isn’t evident to the

purchaser and may not come to light until after the senior has

passed away and descendents [sic] learn the trust was ineffective or

inappropriate;

(3)

The defendant will claim they just “provided information” and will

deny engaging in the practice of law;

(4)

The time it takes to investigate and prosecute these cases allows for

dissipation of the assets available to provide restitution to the victim.

Action:

Attorney General McKenna requested legislation to protect seniors from

trust mill scams (HB 1114-Representatives Jay Rodne (R–Issaquah), Pat

Lantz (D–Gig Harbor), Jim Moeller (D–Vancouver) and Brian Sulli-

van (D–Mukilteo) by prohibiting anyone other than attorneys or those

employed by attorneys from marketing legal estate distribution docu-

ments like living trusts, wills, etc.

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