Beware of "One Size Fits All" Estate Plans & "Free Lunch Seminars"
The Attorney General provides Consumer Alerts to inform the public of unfair, misleading, or deceptive business practices, and to provide information and guidance on other issues of concern. Consumer Alerts are not legal advice, legal authority, or a binding legal opinion from the Department of Attorney General.
Beware of "One Size Fits All" Estate Plans & "Free Lunch Seminars"
Misinformation about the cost and complexity of probate provides a golden opportunity for sales pitches exploiting fears that life savings may be lost to taxes, predatory probate attorneys, or distributed years after death because of court delays. With laws curbing telemarketing sales calls, use of free lunch seminars to pitch estate planning products have surged. Promoted as "educational" programs, these seminars are commonly a sales job in disguise. Be alert to seminars pushing "one size fits all" estate planning products, including living trusts. A decision as important as estate planning should be made with reliable, professional counsel who can help you decide what estate plan is best for your own individual situation, rather than someone whose primary interest is making a sale.
WHAT IS A LIVING TRUST?
A revocable living trust is created for the purpose of holding ownership to an individual's assets during the person's lifetime, and for distributing those assets after death. It is called a "living trust" because it is created and takes effect during the maker's lifetime, in contrast to a will, which does not take effect until after the death of its maker. The individual who creates the living trust (the grantor) gives control of his or her property to a trust, which is administered by the "trustee" for the "beneficiary's" benefit. The grantor, trustee and beneficiary may be the same person, with a successor trustee named to distribute assets after death.
A living trust is a legitimate estate planning device that for some people can be a useful and practical tool. But for others, it can be a waste of time and money, and not appropriate to individual estate planning needs. Contrary to some sales pitches, not everyone benefits from a living trust. Estate planning choices should be discussed with experienced estate planning professionals, including your attorney and financial planner.
TIPS TO REMEMBER ABOUT FREE LUNCH SEMINARS
- Never assume that a seminar is purely informational, even if it is held in a public place such as a library or senior center. Seminars are often designed to sell - either at the seminar itself or later - with sign-in sheets often used to make future sales calls. Attending a seminar may lead to a high pressure in-home sales pitch.
- Seminar speakers may be biased in their 'estate planning' recommendations. A seminar is commonly funded with the expectation that the sponsor's products will be sold to attendees.
- Seminar content and materials may be misleading, with exaggerated claims about the length and cost of probate and the purported advantages of living trusts.
- "Experts" may misrepresent their qualifications. The education, experience, and other requirements for receiving a "senior" designation vary greatly and in some cases may be a marketing tool.
- Product recommendations must be suitable for you. Be wary of "one size fits all" recommendations.
TIPS TO HELP IN MAKING A WISE DECISION BEFORE PURCHASING A LIVING TRUST
- Do not be pressured into purchasing a trust based on the in-home sales pitch of a salesman, or immediately following a seminar. Before making any purchase decision, consult with an independent and reliable professional with the necessary background to help you decide what estate plan is best for your individual situation. If you already have a lawyer, discuss the living trust offer with him or her before buying.
- Do not take the word of a sales agent as to whether a living trust is the best estate plan for you. The selection of the appropriate estate plan for your circumstances should not be based on the representations of a person whose primary interest is in making a sale of his company's estate plan product, and who is not a lawyer or reliable estate planning professional. If the sales agent says that the purchase price will include consultation with an attorney, wait until after the promised attorney consultation to select and pay for the estate plan.
- Before buying a living trust from a stranger, call a local lawyer and ask him or her what they charge for preparing trusts. Often the price is much higher than what a local lawyer would charge. Companies selling living trusts rely on the public's apprehension that attorneys are costly.
- Be wary if a trust salesperson promises specific results or dollar savings. Costs of probate and attorney fees vary greatly from state to state, and according to personal circumstances.
- Check out trust company lawyers with the State Bar of Michigan. If the trust salesperson promises a lawyer will review the customer's documents, demand the name of the lawyer and check with the State Bar of Michigan to make certain the lawyer is licensed to practice in Michigan.
- If the salesperson gives the impression that his or her company or the living trust being sold is recommended or endorsed by AARP, do not buy! AARP does not endorse or recommend any living trust product at this time.
- Do not give personal or confidential family and financial information to a salesperson, even if the salesperson promises it will be passed on to a licensed lawyer. Meet with or discuss the matter with the lawyer personally.
- Watch out for companies that sell trusts and also try to sell annuities or other investment. Under the guise of setting up a living trust, financial information disclosed to salespeople may be used to sell financial products, such as annuities. In some instances, the real goal of the living trust sale is to gain access to asset information in order that sales agents can earn high commissions by "moving" existing investments into others being sold by the living trust company.
- If the salesperson says part of the trust cost will pay the lawyer's fee, do not buy! A lawyer may not split a fee with the salesperson or the trust company.
- Discuss whether you can get your money back if you are not satisfied, and get the promise in writing.
- If you have already purchased a living trust without personal consultation with an attorney, have the living trust document reviewed by a reliable attorney. Make sure that the living trust document will achieve your intended estate planning goals. Unscrupulous living trust sales people may charge thousands of dollars for what amounts to a set of pre-printed legal forms. In some instances, because all consumers are sold the same package, the living trust may be ill-suited or even contrary to individual estate planning needs.
To file a complaint against a person or business that sells living trusts, Consumers may contact the Attorney General's Consumer Protection Division at:
Consumer Protection Division
P.O. Box 30213
Lansing, MI 48909
Toll free: 877-765-8388
www.michigan.gov/ag (online complaint form)
To complain about an attorney who is part of a living trust sales promotion, or non-lawyers engaged in the unauthorized practice of law, please contact:
State Bar of Michigan
306 Townsend St.
Lansing, MI 48933