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buyer beware: how to avoid estate planning scams by davis law group pc

Buyer Beware: How to Avoid Estate Planning Scams

December 9, 2021 Douglas Davis

Imagine if you had spent thousands of dollars on an estate plan, and when the time came – that protection you put so much work into didn’t actually exist?

Unfortunately, this happens more than it should to victims of estate planning schemes. According to a report conducted by the U.S. Consumer Financial Protection Bureau of people ages 50 and over, victims of financial fraud lose $34,200 on average to unscrupulous scammers.[1]


If these victims are lucky, the scam is discovered before they pass, and although the family members may have lost some money in the process, there is still time to amend the legal documents in order to make them valid and accurate. Unfortunately, many individuals do not discover the scam in time, and as a result, a family’s time of grieving is compounded when the scam is uncovered. To avoid this happening to your estate and your loved ones, we must first identify the different types of estate planning fraud you may encounter, the signs be aware of, and the appropriate steps to take to find a competent and legitimate estate planning council.


Who is Usually Targeted?

Estate planning scammers will usually target adults over the age of 50. Folks in this age range can be susceptible to scams for a variety of reasons. First off, they are more likely to have acquired significant assets than younger individuals. They are also closer to the end of their lives, and may be dealing with chronic illnesses or other health issues. Finally, older adults are more likely to experience biological changes that can impact their 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.


Scammers tend to prey on the fears of older individuals by creating anxiety through wildly exaggerated ideas of the risk they may face if they choose not to work with the scammer. This includes the notion that a “death tax” (which is likely not even applicable to the person in question) would be substantial. The scammer may also try and claim 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). This extreme messaging along with the idea that their product or service will save the victim from financial ruin, may leave that person feeling as though there is no other choice but to go along with the suggested plan.


What Do These Scams Look Like?

Estate planning scams do not all look the same. They can vary in delivery, outcome, timeline and approach. But “trust mills” are typically the most common form of estate planning scams.


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.


How Can You Avoid These 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 well-known organizations like AARP. If you are contacted about estate planning by anyone who is not a licensed attorney, question or end that solicitation. Search for the company online to verify its reputation and the type of work they really do.
  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. It is common for these scammers not to be licensed attorneys, although some may claim they are “advisors” or “consultants” who are associated with a law firm. In this case, the individual will likely not be able to provide true legal experience and credentials, but will try to upsell you on some type of insurance or annuity. Demand to be provided with evidence that this person is a vetted, experienced, estate planning attorney who is licensed to practice law in your state.


  1. Be wary of purchasing additional products. 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.


  1. 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.


Davis Law Group Can Help

Legitimate estate planning is complex, and is not solved by a phone call, or upselling useless financial products. Our team of trusted, experienced estate planning attorneys know how to help you navigate the various options that exist for your specific situation so that you can design an estate plan that actually protects you and your loved ones. Contact Davis Law Group to schedule an appointment or video conference today.


[1] Katherine Skiba, Older Americans Hit Hard by Financial Fraud, AARP (Feb. 28, 2019) https://www.aarp.org/money/scams-fraud/info-2019/cfpb-report-financial-elder-abuse.html.