While living trusts can provide significant estate planning benefits, it is important to avoid unscrupulous trust mills. Following a trust mill’s “advice” can result in financial losses and litigation. Before you create a living trust, you should understand the process and how to identify a trust mill.
What Is a Living Trust?
A living trust is a legal document that places your property and assets into a trust during your lifetime. Assets that are placed in the trust are managed by a trustee (you or someone else). The trustee then manages the trust for the benefit of all listed beneficiaries (typically you, your spouse, or other family members). Once you die, the trust’s assets are distributed to successor beneficiaries.
While living trusts are not for everyone, they can be beneficial when properly created and managed. For example, you may:
- Be able to avoid a lengthy probate process,
- Spend less on executor and probate-related costs, and
- Maintain a level of privacy that probate does not allow.
However, when incorrectly written and implemented, living trusts result in unnecessary litigation and expenses.
What Is a Trust Mill?
Trust mills come in several forms. Mills work on volume — they want to create as many trusts as possible in the shortest amount of time. This leads to dangerous shortcuts. Trust mills frequently:
- Provide cookie cutter solutions instead of a personalized analysis and custom estate planning strategies,
- Disregard long-term financial implications of their “product,”
- Pressure clients into purchasing annuities and other investments that provide high commissions to the mill but little benefit to the client, and
- Make errors that result in prolonged litigation.
No two estates are the same — they all have different assets, goals, and challenges. When trust mills apply a “one size fits all” estate plan, the results can be catastrophic.
How to Avoid Trust Mills
Many trust mills hire skilled marketers and salespeople who offer slick and seemingly professional information. At first glance, it can be difficult to determine whether a company is a trust mill. Here are some red flags to look for:
- Non-Lawyers Selling Annuities and Other Investments: Sometimes, insurance and annuity agents offer seminars and living trust services. They may pressure clients to sell assets or cash in a retirement account to buy expensive annuities or policies (resulting in high commission payments to the agent). Unfortunately, these purchases are rarely a good deal for the client.
- Notaries or Paralegals Working on Their Own: Importantly, paralegals and notaries cannot provide legal advice or services without regular and meaningful oversight from a lawyer. Otherwise, they are engaging in the unlawful practice of law (a criminal offense in California). These paralegal-run mills offer inaccurate and cookie cutter advice, which may seriously damage your estate.
- Volume Business Law Firms: These lawyers focus on speed and efficiency rather than a comprehensive estate plan. In fact, you may never meet with a lawyer at these firms. Instead, administrative assistants and paralegals do the bulk of the work — with very little supervision.
When you meet with a trust lawyer, don’t be afraid to ask questions. You are placing an incredible amount of trust in their services. They should be willing to discuss their credentials and approach to estate planning before you sign a retainer or contract. If you are uncomfortable with the company’s answers or methods, do not sign up for their services. Instead, contact an experienced trust lawyer for help.
Speak with a Trust Lawyer About a Living Trust
A good trust lawyer provides personalized advice and pays attention to the details of your estate. If you have questions about living trusts, contact us for a consultation. The Legacy Lawyers will help you build a comprehensive estate plan that meets your needs.