Senior citizens are often targeted by unscrupulous salespeople who instill and prey on seniors’ financial fears in order to sell unwanted, unnecessary and/ or unsuitable living trusts, legal plans, annuities, and other financial products. Seniors should use extreme caution when approached by individuals trying to sell these types of products.

What is a living trust?

A living trust is an estate planning device created while you are alive. Property and other assets transferred into a living trust before a person’s death, in some cases, pass to another person without going through probate, the process by which a person’s property and assets are distributed according to his or her will.

What is an annuity?

An annuity is a contract that offers the promise of future payments in fixed or variable amounts in exchange for a current lump sum investment.

Living Trust Mills “

Living trust mills” target senior citizens and use unscrupulous sales tactics in their efforts to sell boilerplate living trusts, regardless of whether a living trust is appropriate for the senior purchaser under the circumstances. Some living trust mills then use financial data obtained from the senior in order to sell other investment products, such as annuities, even if those products are not suitable investments for the particular senior.

Living trust mills often market their products through free seminar promotions, in-home appointments, telephone, or mail. They typically employ high pressure sales tactics and exaggerate the negative consequences of not buying the products they sell. Such products generally consist of pre-packaged, boilerplate documents that vary greatly in quality and are not customized to the particular needs of the senior purchaser. For example, living trust mills regularly tell seniors that they will save a significant amount of money in probate costs and fees by purchasing a living trust when, in fact, this may not be the case. Moreover, such companies may promote the benefits of a living trust to get their foot in the door for the purpose of selling other investment products, such as annuities, with the goal of getting paid a high commission on the insurance or financial products they sell.

Tips for Consumers

Be suspicious of ads for “free” seminars and salespeople who call you on the telephone to sell you a living trust or legal plan.

Never provide financial information to someone you don’t know, whether by telephone, at a seminar, or someone who shows up on your doorstep.

Don’t be pressured into buying anything immediately or because the offer will expire if you don’t act immediately. You have the right to take time to think about your options and to consult with a professional or trusted family member or friend.

Before making any important financial decisions, make sure you fully understand the purpose and effect of the product you intend to purchase, as well as the credentials of the person who is making the sale.

If you do make a purchase, make sure you get everything in writing and require copies of all documentation. Additionally, contact the Minnesota Department of Commerce at (651) 296-2488 or 1-800-657-3602 to check on the status of a financial planner, insurance agent, or securities agent making the sale.

If you consider purchasing a product, ask if you have the right to cancel the purchase if you change your mind. Minnesota law generally allows three business days to cancel a sale made in your home. The company is required to notify you of your right to do this.

There are other options besides a living trust. Living trusts are often marketed as a way to avoid probate. Not all estates, however, are even subject to probate. Under Minnesota law, simple estates may avoid formal probate procedures, and estates may avoid probate altogether if the value of their probatable assets is less than $50,000.

Be wary of companies that sell living trusts or legal plans in conjunction with annuity products or other investments. Such companies often work together to gather as much information as possible about a consumer’s assets, primarily to sell annuities and investments that offer high commissions. Always ask about possible tax consequences or early withdrawal penalties, often called “surrender charges,” that may be incurred when transferring investments to or withdrawing principal from an annuity.

Don’t let high pressure sales agents take advantage of you because you have good manners. It is not impolite to say you are not interested, to hang up the phone, or to close the front door.

Be wary of people who pose as senior advisors or estate planners to sell you a living trust when their real motive is to get their foot in the door to sell you other investments, such as annuities. Living trust sales pitches may target areas of concern for seniors, such as long-term care costs. Once they gain seniors’ confidence, they may try to sell other products, such as annuities, by claiming they are a safe investment.

To obtain additional information about living trust mills, other consumer issues, or to file a complaint, please contact:

Office of Minnesota Attorney General Lori Swanson
1400 Bremer Tower
445 Minnesota Street
St. Paul, MN 55101
(651) 296-3353
1-800-657-3787
TTY: (651) 297-7206
TTY: 1-800-366-4812