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Buyer Beware: How to Avoid Estate Planning Scams

attorney advice on scams

The U.S. Consumer Financial Protection Bureau reported that, of people ages 50 and over, victims of financial fraud lose an average of $34,200 to unscrupulous scammers. Sadly, people fall to these types of estate planning schemes all the time. Imagine spending all that money, thinking you have done everything you could to protect your family, only to find out they are not protected at all.

In the best case scenario, the scam is found out while the victims of the scam are still alive and can make corrections before it is too late. While the costs of the plan may be lost, the victims can still draft corrected documents and protect their loved ones. Sadly, however, many times the scam is not discovered until after it is too late and the individual has passed away, resulting in catastrophe at the worst possible time. The family is trying to grieve and now also needs to figure out how to handle the estate.

Don’t become a victim of estate planning fraud. Here are some things to watch for in order to identify the different forms that estate planning fraud may take and the steps to take when seeking competent estate planning counsel.

Targeted Victims

Older adults, ages 50 and over, tend to be the targets of estate planning fraud. They may be more susceptible to these schemes due to a variety of reasons, including the following:

  • Older adults have acquired more significant assets than those in subsequent generations
  • Older adults are at ages where death is increasingly likely
  • Older adults may experience biological changes that impact decision-making abilities

Many of these individuals are also unfamiliar with the estate planning process and therefore unable to identify deviations from truthful and normal practices.

A scammer often preys upon the fears of these older individuals by creating unnecessary anxiety. The scammer often paints a wildly exaggerated picture of the risks the victim may face if the victim chooses not to work with the scammer, including notions that a “death tax” (which is likely not even applicable to the person in question) would be substantial.

The scammer may also represent that the trust or financial products offered by the scammer are the only possible solutions (despite the existence of other options, such as a will, that may satisfy the individual’s needs and cost less). The doom and gloom messaging matched with the heroic trust product offerings leave the victim feeling as though there is no choice but to purchase these solutions.

Types of Scams

Estate planning scams do not have a one-size-fits-all approach. These scams vary in delivery, outcome, timeline, and approach. However, trust mills are probably the most common form of estate planning scam.

Trust mills are companies, usually composed of nonlawyers, that create a low-cost trust that they replicate over and over again for unsuspecting victims. The problem is that the trusts provide little to no customization to actually protect senior consumers. The main objective with most trust mill operations is to gain access to information about the individual’s accounts and property. Once that information is acquired, these trust mills offer additional financial products and receive a significant commission for each additional product sold.

Avoiding Scams

To avoid becoming another victim, there are a few steps you can take:

1. Investigate direct solicitations. Perpetrators of estate planning schemes often solicit directly using presentations, mailers, door-to-door sales, and telemarketing. These companies often have names that sound very legitimate and can easily be confused with more established organizations like AARP. If someone contacts you regarding your estate plan and is not a licensed attorney, question that solicitation. Search for the company online to verify its reputation and the type of work completed.

2. Ask about qualifications. As an estate planning consumer, questions are your best friend. You should feel comfortable asking any service provider about their professional qualifications. First, find out whether the individual is actually an attorney. A common trait that most of these fraudulent schemes share is that the individuals providing the advice are not licensed attorneys. Some may say that they are advisors or consultants, or that they are associated with an attorney or law firm. A fraudulent individual will often lack legal experience and credentials, will continue to try to provide a legal solution, and then will upsell you on some type of insurance or annuity. Ensure that you are speaking with a vetted and experienced estate planning attorney who is licensed to practice law in your state.

3. Purchase additional products carefully. Additional products in these contexts are consistently used to swindle older people by having them invest in items with little pay-off that provide ridiculous commissions for these sales agents and fraudsters. Additionally, be cautious of trusts described as “pure,” “constitutional trusts,” or “pure equity trusts,” as well as how instruments such as promissory notes are used.

4. Report suspicious activity to local officials. Contact your local law enforcement officials if you suspect that you have encountered fraudulent activity to verify whether there is reason for concern. You can also contact the national fraud hotline at 1-800-876-7060 to log your concern and get help so you can avoid further involvement with fraudulent organizations.

We Can Help

Genuine estate planning can be a complex yet highly rewarding journey. Our team of trusted and experienced attorneys know how to help you navigate the various options that exist for your situation so that you can design an estate plan that actually protects you and your loved ones. Schedule a call with our office today.

James Dolenga, JD

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