The San Diego Estate Center

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California Living Trusts: Scams and Misconceptions

This section addresses some of those issues identified by Bar Associations across the country. Click here to learn more about how living trust scam artists actually defraud their victims.

Living Trust Scams

Unfortunately, this area of the law is rife with scam artists who prey on the fears of the elderly and other individuals who are vulnerable. Typically living trust salespeople (such as paralegals or notaries) sell pre-printed forms and charge thousands for documents ill-suited or contrary to the seniors’ needs. They use high pressure tactics and deceptive claims to entice seniors into setting up trusts that may not be right for them. The California Bar warns that “[a]n estate plan created by someone who is not a qualified lawyer can have enormous and costly consequences for your estate.” If you have been conned, bring in your trust and we will fix your problems at a discount - but whatever you do not ignore the problem!

Watch for:

  • Ads on Craigslist by non-attorneys for will, trust, or legal document “help.”
  • Paralegals or notaries not working under the supervision of an attorney.
  • Companies that sell “self-help living trust kits.”
  • Door to door salesman.
  • False claims that sales representatives are attorneys, or describe themselves as “trust specialists” or “certified planners.” Note: Attorneys will not solicit in person, they are prohibited by state ethics rules that result in severe sanctions.
  • Companies that use names that sound a lot like the names of legitimate non-profit organizations (such as AARP).
  • Companies that use the living trust as an excuse to find out more information about a consumer’s assets, and then try to sell junk annuities or life insurance using high pressure tactics. These items are proper for many estate plans, but you should consult an attorney or use a reputable agent first.

Only after they are sold the forms are they told that they must consult an attorney. If you have been the victim of one of these scams, report it to your local authorities and have your trust reviewed by an attorney.  If you bring your defective legal trust document in, we will prepare you a new one at a discount.  Contact the San Diego Estate Center for advice on how to hold them accountable - we can bring considerable power to the issue at no cost.

Medicaid and Living Trusts

Setting up and funding a living trust will not reduce your income for purposes of Medicaid. The federal government has accounted for this practice and has established statutory schemes to prevent it. If you give away your assets, you trigger a period of ineligibility of 36 months and 1 day. Transfers to a living trust trigger a waiting period of 60 months and 1 day. Applying for Medicaid during these periods may trigger criminal sanctions.

Living Trusts May Not Reduce Your Taxes

For certain high earning individuals, a living trust actually could reduce income taxes. But the majority of simple revocable living trusts will not reduce your taxes while you are alive or upon your death (on the other hand, irrevocable trusts can be used to reduce or avoid taxes all together). The trust probably will avoid thousands in probate fees.

A Domestic, California Revocable Living Trust Will Not Protect Your Assets From Creditors

Creditors can still reach the assets of your trust during your lifetime. At death, or if the trust becomes irrevocable, the result may differ.

Contact the Law Office of Roy Newman to find a San Diego trust lawyer near you, or to report a scam. We can help you get your money back!