“Come have a free lunch/dinner. Let us sell you a sweet deal. Just tell us a little about yourself. Send back this post card with your name and address. We want to help. You’re foolish if you don’t buy a trust package from us.”
Sound familiar? This is the common sales pitch being used all over the U.S. to victimize senior citizens. Smooth-talking, total strangers give a speech and get personal information. A salesman calls on the elderly victim and talks a good story about horrible costs of probate.
The truth? That salesman works on commission. He only gets paid if he sells a trust. Is a trust necessary? No. Is a trust a good idea? Not for most people. Does the trust save money for the buyer? Rarely. Does the trust end up costing the buyer a lot of unnecessary expense and complication? Often, yes.
In most trust sales scams, the senior victim never meets with or receives any legal advice or counseling from an attorney. Sometimes an attorney lends his name or spends a couple of minutes on the phone selling the trust, but does not tell the client the truth, that the trust is both unnecessary and a rip-off.
The Pennsylvania Supreme Court has recently disbarred yet another attorney who participated in trust scams for over 18 years. On July 28, 2014, the PA Supreme Court disbarred Brett Weinstein who made millions selling bad trusts to good people. He received fees from his cronies who were variously known as American Family Prepaid Legal Corporation, a company called “ALMS” (how ironic), Kaehal Estate Planning Coordinators, American Family Legal Plan, Heritage Marketing and Insurance, American Plan, Integrity, Inc., United Integrity, Advanced Legal Services, EPA, the Patriot Group, and probably a host of other mom-and-apple-pie names. Locally, a broker from Venango County has worked with several similar companies. The broker was recently charged with multiple crimes involving stealing from an elderly client. Representatives of these companies (and many others) often sold annuities to the senior victims, again on commission, without caring whether it was beneficial to the buyer or not.
The sales pitch of these outfits hinges on the claim that probate is horribly expensive and that a revocable living trust will eliminate costs and taxes. These claims are blatant lies. Probate includes courthouse filing fees which are nominal, usually $100 to $250, depending on value of the estate, and cost of publishing legal notices, about $200, in our county. What are these salesmen charging for a fancy trust package? Anywhere from $1,800 to $3,500. Since the passage in Pennsylvania of the Uniform Trust Act in 2006, a trust must be administered very much like probate, with legal notices published. A revocable living trust saves no estate or inheritance taxes, because it is still owned by the grantor who puts his assets into it. Anyone who tells you different is lying.
In addition to the totally unnecessary costs without benefit, these trusts often do real harm. Most of these salesmen tell the customers to put their homes into trust. Once this is done, the home is no longer an exempt resource in a Medicaid analysis. (Medicaid pays nursing care bills at home and/or in a nursing home, for eligible people.) That means the elderly victims will be told they are going to have to sell the house or be ruled ineligible for Medicaid, a terrible result.
Some of the worst trusts actually change the intended results after death. One such trust, prepared by the disbarred Mr. Weinstein, took separate assets of a wife and separate assets of her husband, dumped them into the trust, and left them to pass to numerous children. However, this was a second marriage for both husband and wife, they each had separate children (none in common) and they never intended to mingle the assets or to have his assets go to her children or vice versa. Fortunately, this couple’s savvy adult daughter spotted the problem and sought help while the couple was still capable of revising the plan. Some of the nastier trusts create a complex maze of on-going trusts when the first spouse dies. The surviving spouse cannot begin to understand the complicated mess that results, may owe Inheritance Tax that could have been avoided, and the cost of untangling it will be far higher than probate would have been. One such trust created four sub-trusts, and after the wife died, it turned out the major asset of the couple was a large retirement account which was not and could not be owned by the trust. All indications were that an attorney who got an illegal shared fee gave his rubber stamp but that attorney never spoke with the couple and had no idea what assets they had. But he got $2,500 for his rubber stamp.
To prospective buyers: Remember, there is no free lunch or dinner. Do not fall for the fast talk from a stranger passing through. Seek advice from a reputable local attorney who will sit down with you face to face and ask you, in detail, about your family structure and each and every one of your assets. If you have ever bought a trust from a travelling salesman, especially one of the names listed above, and/or involving Weinstein, then call a local attorney immediately to have it reviewed, revised, or revoked. Don’t wait, as your family deserves better.
To children or other caregivers of a frail elderly parent, relative or friend: Check on your relative or friend often, and discourage him or her from allowing any stranger to call on them. Tell them of the scams and rip-offs out there and help them avoid being victimized. If you have or can get permission to look at finances, make sure your parent or friend has not written large checks to unfamiliar names. This may include the names above or any broker or any name you don’t recognize. If spotted within 30 to 60 days, the transaction sometimes may be unwound or cancelled or at least further harm may be prevented; the bank may be able to help minimize the damage if given prompt notice of such a problem. Anyone who has been the victim of a scam may contact a local attorney, may contact Protective Services through Active Aging in Meadville, or may report the problem to the Office of the Attorney General of Pennsylvania, Consumer Protection Bureau, on-line at attorneygeneral.gov/complaint or by phone in Erie at 814-871-4371. Take action to protect your family and to stop the rip-off.
For the decision and report on Weinstein’s disbarment, see Supreme Court of Pennsylvania, No. 2038 Disciplinary Docket No. 3, No. 54 DB 2011, AR No. 78665.