Living Trust Scammers Booted Out of NC

Andrea Weigl, Staff Writer :

A Wake Superior Court judge has ordered two California companies to stop selling estate planning products to North Carolina consumers while a lawsuit that accuses the companies of bilking seniors out of hundreds of thousands of dollars proceeds.

Earlier this month, Judge Michael R. Morgan ordered American Family Prepaid Legal Corp. and Heritage Marketing and Insurance Services to stop selling or offering their products in North Carolina. In May, North Carolina Attorney General Roy Cooper sued the two companies, alleging that they worked together to defraud elderly consumers.

American Family Prepaid Legal would solicit customers to buy legal services plans to create living trusts to avoid paying probate costs, the lawsuit says. The company billed its living trust, which cost $1,995, as a bargain when compared with probate costs, the lawsuit says. But for someone to pay almost $2,000 in probate costs, his estate would have to be worth more than $500,000, the lawsuit says. Once the consumer signed up for the living trust, a Heritage sales agent visited the home, ostensibly to have the consumer sign paperwork but really to try to sell deferred annuities.

“These companies targeted seniors, using tricky sales practices to pressure them into spending their savings on living trusts and annuities they may not need,” Cooper said Wednesday in a statement.

Consumers who think they or their loved ones have been involved in this or a similar scheme are encouraged to call the N.C. Attorney General’s Consumer Protection Division at (877) 566-7226.

Some North Carolina attorneys are also guilty of overstating the value of living trusts, implying that probate is much more costly than it actually is, and that estate taxes savings can be achieved only by the use of living trusts (as opposed to wills).  Of course, some attorneys go to the other extreme and don’t believe it using living trusts in any  situation.

I view myself as “neutral,” only recommending living trusts when I think there will truly be a cost savings or other benefit.  I have had many new clients come into the office requesting living trusts based on advice of friends or articles they had read, when a will is a simpler, cheaper method of transferring their property.