Welcome to the Senior Scam Alert, a column designed to inform seniors of scams and cons that are regularly committed against them. Seniors are victims of cons more often than any other age group. Seniors tend to be more trusting, and less apt to question someone who portrays himself as an expert. People over 65 are targeted for scams more than any other age group, and account for 56% of all fraud cases, even though they are only about 13% of the US population. They see taking money from the seniors as a lot easier than doing something else like robbing banks- CBS News Living Trust Scams! Seniors are particularly vulnerable to living trust scams, because they are often homeowners, and many have substantial savings. Predatory lending and living trust scams go hand-in-hand, and seniors, eager to have competent financial planning, fall victim to these thieves. Living trusts are legal agreements that help plan estate distribution before death. They are mainly designed to save taxes and hassle after the death of a family member by avoiding probate court. Living trusts, living wills (also called advance care directives), and financial wills are all different things, so here is a very simplified list of documents and what they are used for. 1. Living Trusts:
Living Trusts are legal documents created for the purpose of holding ownership to an individual's assets during the person's lifetime, and for distributing those assets after death. The individual who creates the trust names a trustee, usually a family member, CPA, or attorney. The living trust is created while the individual is still alive. It is usually designed to avoid probate court and taxes, although there are other ways to avoid probate and probate taxes, such as joint tenancy, a life insurance policy, and IRAs. If an individual is trying really hard to sell you a living trust, and does not mention any other options, its probably a scam. Thousands of seniors have been charged exorbitant fees for documents that are completely useless. Unscrupulous living trust salespeople target elderly consumers, charging them for pre-printed forms that could be purchased for around $25. If you want competent information about living trusts, go to a law firm or CPA firm that is versed in these matters. Executing these documents with a larger firm may cost more, but you are almost certainly insured against fraud or other wrongdoing. And never, EVER purchase financial planning documents from someone selling door-to-door. 2. Legal Will:
A will is a document that is filed with the courts and becomes public record. It is designed to distribute your legal assets after death, and may be used to designate a guardian for your children. You probably do not need a lawyer to prepare your will if you do not have many assets. If you prepare your own will, you will need to have it signed and witnessed by at least two people, preferably not family members. You will need to use a notary, too. A good source for legal do-it-yourself books and documents is www.nolo.com. I have used their books myself with success. You may want to use a law firm if you have a large estate, a business, or small children. It is a good idea to consult an attorney if you want to set up a trust to care for a disabled child or family member. If you fear that someone will maliciously contest your will, consult an attorney. 3. Living Will, or Advance Care Directive:
Often, this document is confused with a living trust or a regular will. An advance care directive is a legal document that outlines your final wishes if you ever become incapacitated. Remember the Terri Schiavo tragedy? Terri was the victim of a tragic medical problem, and lapsed into a ten-year coma. The family argued for years before her feeding tube was removed by order of the courts. The whole tragedy could have been avoided if Terri had filled out an advance care directive. The document is designed to express your medical wishes only, and also allows you to designate a guardian to make medical decisions for you. It covers organ donation, resuscitation orders, and what to do in the event of a coma. I filled out a living will years ago, in my twenties, and promptly mailed it to all my doctors and three family members. You can download an Advance Care Directive for free at http://www.uslivingwillregistry.com . You will need to have two signatures from witnesses; then mail off copies to your doctors and family members. An advance care directive is especially important for persons who belong to religions that oppose certain types of medical treatment, such as Jehovah's Witnesses, who choose to refuse blood transfusions. In order to help decide which option is best for your, make a list of your assets, and begin deciding who will inherit the assets. You must also choose an executor to carry out the will upon your death. For most people, family members or charitable organizations will be the primary beneficiaries of your estate. However, if your intent is to disinherit certain family members, seek competent financial advice. Here are some tips to avoid getting scammed by unscrupulous living trust salesmen. In 2003, the company Alliance for Mature Americans scammed seniors out of millions of dollars using bogus Living Trusts. Once again, do NOT purchase living trust or financial services from someone selling door-to-door. Never! Not Ever! Clear enough?
Living trusts will not reduce your income taxes; it may only help prevent probate at your time of death. Living trusts are not necessarily cheaper than wills. The Federal Trade Commission has issued a warning regarding living trusts, saying that consumers, especially seniors, should be extremely wary of living trust scams.
Often, the scam artists will not even be selling any type of financial service. They ask the victims to fill out long forms with all of their bank information and personal identity information, and then steal it in order to commit identity theft crimes. Sources: Nolo Press, Federal Trade Commission, CBS News, AARP |
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