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(SACRAMENTO) CA Attorney General Bill Lockyer today warned California consumers
to be on the lookout for "living trust mill" con artists who fraudulently
sell trusts and annuities to senior citizens.
Sales agents for these scam operations often misrepresent the disadvantages
of seniors' current investments and the advantages of the investments the agents
are selling. They may even make seniors believe their bank accounts are less
safe than the annuities or other investments they want seniors to buy. To give
themselves a cloak of legitimacy, these sales agents pretend to be experts
in living trusts. They often work in assisted living centers, churches and
other places where seniors gather, hooking elderly victims through free seminars
and other sales presentations.
"Consumers, particularly seniors and their families, should be wary," said
Lockyer. "We believe there are living trust mills violating the law --
and the trust placed in them by seniors. We are determined to investigate and
punish fraudulent conduct, but we also want to help seniors avoid becoming
Seniors pay substantial sums of money to sales agents for living trust mills.
But through fraud and deceit, the sales agents damage seniors' estate plans,
and the security of their investments and life savings.
A state appellate court recently affirmed a multi-million dollar judgment
the Attorney General obtained against an insurance company that conspired with
a living trust mill to commit fraud in selling trusts and annuities to seniors.
In their solicitations, sales agents often pose as expert financial or estate
planners. They pass themselves off as a "trust advisor", "senior
estate planner", or "paralegal", and schedule an initial appointment
with seniors in their homes. Under the guise of helping set up or update a
living trust, the sales agents find out about seniors' financial assets and
Usually, the sales agents then schedule a second visit to deliver a completed
trust and have documents signed and notarized, and title of assets transferred
to the trust. Typically, the agents go over the assets to be placed in the
trust. They use that review of seniors' investments to scare them into believing
their investments are unsafe, and that by "moving" their money, they
can earn higher interest with no risk. The agents may have seniors sign documents
that transfer the senior's CD, mutual fund accounts, or other investments to
an annuity, or a so-called "promissory note" or other investment.
Planning an estate and choosing investments involve important legal, financial
and personal decisions. If estate planning documents are not properly prepared
or executed they can be invalid and cause lasting damage.
Following are additional tips to help consumers avoid becoming victims of
living trust mills and their scams:
Living trust mills' sales agents are not attorneys and are not experts
in estate planning.
Documents in the trust packages may not comply with California law.
Sales agents may not follow procedures set by law for executing or witnessing
wills and other documents. These violations may make the documents subject
Watch out for companies that sell trusts and also try to sell annuities
or other investments.
Sales agents may fail to disclose possible adverse tax consequences or
early withdrawal penalties that may be incurred when transferring stocks,
certificates of deposit or other investments to annuities.
An annuity is not 100% safe, and only a portion is guaranteed by the state.
Insurance companies can and do fail, and their assets may not be enough
to pay the full value of their customers' investments.
So-called "promissory notes" are not insured by the FDIC or
any other government agency and may be very risky. They may not be registered
as securities with the state.
An attorney qualified in estate planning can help consumers decide if they
need a living trust or other estate planning documents, or help them review
an existing trust or will. To obtain a list of attorneys who are certified
as estate planning specialists, and to receive other written information about
estate planning and how to select an attorney, call the State Bar of California's
toll-free number for seniors at 1-888-460-7364. Before consumers buy an annuity
or any other investment, they should review it with people they know and trust,
such as their financial or tax advisor, their attorney and trusted family members.
Consumers who feel they have been victimized by a living trust mill, or annuity
or promissory-note fraud, should report it to their local district attorney
and the California Department of Insurance. Consumer complaints also may be
filed online at the Attorney General/s Website at http://www.ag.ca.gov/consumers/mailform.htm.