Estate planning is an essential step in securing your assets and ensuring your loved ones are cared for. However, as more individuals turn to trusts for asset protection and tax benefits, scammers have found ways to take advantage of unsuspecting people. Trust scams can leave victims with financial losses, invalid documents, and legal complications.
Common Trust Scams to Watch For
1. Living Trust Mills
Some organizations aggressively market “one-size-fits-all” living trusts, often through free seminars or mailed advertisements. These companies promise significant estate tax savings and probate avoidance, but their primary goal is to sell expensive and unnecessary estate planning documents. Many of these trusts are improperly drafted, leaving families unprotected when they need them most.
2. Fraudulent Trustees
A scammer posing as a professional trustee may convince individuals to transfer assets into a trust they control. Once in control, they mismanage or outright steal the funds. Always verify a trustee’s credentials and reputation before granting them access to your assets.
3. Fake Charitable Trusts
Scammers may encourage individuals to create a charitable trust, promising tax breaks and estate benefits. In reality, the scammer diverts the assets for personal use. Before setting up a charitable trust, ensure the organization is legitimate and registered with the IRS.
4. High-Pressure Sales Tactics
Some scammers pressure individuals—particularly seniors—into purchasing expensive and unnecessary trusts. They use fear tactics, falsely claiming that without their trust services, families will face excessive taxes, probate costs, and legal fees. Legitimate estate planners provide education and options without pressure.
How to Protect Yourself
✔ Work with a Reputable Attorney – Always seek guidance from an experienced estate planning attorney, not a sales representative or financial adviser with no legal expertise.
✔ Verify Credentials – Check an attorney’s or trustee’s licensing and certifications before entrusting them with your estate.
✔ Avoid High-Pressure Seminars – Be wary of free seminars or cold calls promoting immediate trust services. Take time to research and consult a professional.
✔ Read Before Signing – Never sign estate planning documents you do not fully understand. Ask questions and get a second opinion if needed.
✔ Report Suspected Fraud – If you suspect a trust scam, contact your state attorney general’s office, the Better Business Bureau, or a local consumer protection agency.
Final Thoughts
A well-structured trust can be an excellent estate planning tool, but it’s important to avoid fraudulent schemes. By working with qualified professionals and staying informed, you can ensure your assets are protected and your loved ones are secure.
If you need guidance on setting up a legitimate trust, contact the Davis Schilken, PC team today (303)670-9855. We’re here to help you make the right decisions for your future.