Beware of Living Trust and Probate Scams

FTC, Apr 25, 2007

Misinformation and misunderstanding about probate and estate taxes provide a ripe environment for scam artists to prey on older consumers' fears that their estates will be eaten up by costs, and that distribution of their assets to loved ones will be long delayed. Some unscrupulous businesses advertise seminars on living trusts or send postcards inviting consumers to call for in-home appointments, ostensibly to learn whether a living trust is right for them.

 A common practice is to greatly exaggerate the benefits of living trusts and falsely claim that locally-licensed attorneys will prepare the documents.In some instances, consumers send money for

living trust kits but receive nothing. In others, the offer of estate planning services is merely a ruse to gain access to consumers' financial information and to sell them other financial products, such as insurance annuities. These practices may violate federal securities laws, as well as other laws.

Many state Attorneys General and other authorities, such as disciplinary or grievance committees of state or city bar associations, have taken enforcement actions against living trust scam artists.Some cases have been brought under state Unfair and Deceptive Acts and Practices laws. Others have been prosecuted as the unauthorized practice of law because the salespeople were not lawyers.