In my neighborhood, I see ads and fliers for low-cost living trust seminars nearly every month. Since I draft living trusts and charge considerably more for my services, I am suspicious of what these seminars really offer.
Often, such seminars are scams designed to lure in senior citizens with the promise of bargain-rate estate planning. Here's how it works: A low-cost trust is offered, but it's just a pretext for getting people to reveal their confidential personal financial information. These companies then send unscrupulous insurance sales agents to people's homes to follow up with offers of annuities and other financial products that can mean disaster for those who buy them.
How? From a Jacksonville, North Carolina newspaper: A woman cashed out her IRA and purchased an annuity. The sales agent didn't tell her that her monthly payments would fall from $1700 to $300 per month. A couple put their savings into an annuity with a "guaranteed" 7% interest rate. The sales agent didn't tell them that was only a first-year rate or that they would face a nearly 20% penalty for any withdrawal of their money.
To avoid these scams, use common sense:
- Don't buy a financial product that you don't understand.
- Don't work with estate planners who aren't licensed to practice law.
- Don't work with anyone who uses high pressure sales tactics.
- Be suspicious of any living trust that's marketed at an extremely low price.
For more information on how to create a living trust, see Make Your Own Living Trust, by Denis Clifford (Nolo).