Trusts Salesmen: A Warning

First of all, if you pass away with a valid Will, or no Will at all, then probate will likely be necessary in order to manage your estate’s debts and assets. One way to avoid probate is to have a valid Trust that has been properly funded with an estate’s assets. (A valid Will is still necessary as a backup in case the Trust is invalid, or in case some of the estate’s assets have not been transferred into the Trust). In summary, if a valid “Will and Trust” estate plan is in place, then an estate’s debts and assets can be managed directly from the Trust—no probate necessary.

This perfectly viable estate plan strategy has given rise to a host of Trust booklet products and aggressive (non-attorney) salesmen. They misrepresent the probate process, grossly exaggerating it as difficult and lengthy and expensive. By doing so, they push a “shock sale,” in which they attempt to frighten their audience into buying fill-in-the-blanks “Trust” booklets to be completed without the assistance of a licensed attorney. Even assuming that a fill-in-the-blanks booklet did somehow give rise to a valid Trust, a Trust might not even be an appropriate estate plan strategy for the family that was sold such a product. Further, even if that Trust is valid, if the purchaser doesn’t properly fund the Trust from the estate’s assets, then probate will likely be necessary anyway. In such a situation, the purchaser has now spent up to thousands of dollars on a Trust booklet, and will have to spend up to thousands of more dollars on probate anyway to fix all of the problems.

Further, even the Texas Attorney General has cracked down on such Trusts salesmen and the lies they perpetuate.

Consider the pamphlet entitled “Seniors Living Trusts Are Not For Everyone by Greg Abbott” available from the Attorney General’s website.

A quick summary of the helpful advice shared in that pamphlet:

  • “Our office has heard reports about unethical sales of living trusts. Some victims have paid as much as $1,800 for a living trust on the advice of door-to-door sales persons. Too often, the sale is made without regard for whether a living trust really is in the client’s best interests. The fact is, for a majority of seniors, a living trust is NOT preferable to a will and a durable power of attorney.”
  • “Some sales people often lead victims to believe that probate proceedings are overly lengthy and costly, and a living trust should be used in order to avoid probate. In fact, the probate process in Texas is one of the least expensive and simplest in the United States.”
  • “‘A living trust will reduce death taxes on your estate’ is a frequently used, misleading statement. Most Texans will not face estate taxes. If your estate is subject to taxes, you can use a will to accomplish the same tax savings as a trust, usually at a much lower cost.”
  • “Living trusts are not appropriate for the majority of seniors. In fact, for some people, the expense of creating, administering, maintaining and funding a living trust can outweigh the benefit of having a living trust.”
  • “In deciding if a living trust is right for you, be sure not to succumb to high pressure sales tactics. Be wary of phrases like ‘once in a lifetime,’ ‘act now,’ and ‘don’t let this pass you by.’”
  • “You should also be cautious about allowing a living trust salesperson to see your assets and your net worth because the salesperson may use this knowledge to sell you inappropriate investments. If you are subsequently contacted by a salesperson offering annuity products, you should be aware that there are several types of annuities, many of which are not appropriate for seniors as a tool for financial planning.”

Ultimately, there are a variety of things to consider as you prepare an estate plan for your family.

A Trust is an outstanding option for some families, whereas a Will and streamlined probate is an outstanding option for other families.  One choice is not necessarily better or worse than the other.  It just depends on your family’s unique needs.