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Seniors – Watch Out for Estate Planning and Financial Scams

By: Gregory Herman-Giddens, Esq.

Imagine spending thousands of dollars on an estate plan to protect loved ones, only to find that no true protection exists. Unfortunately, this scenario happens on a regular basis to individuals who are victims of estate planning schemes. According to a report conducted by the U.S. Consumer Financial Protection Bureau of people ages 50 and over, victims of financial fraud lose $34,200 on average to unscrupulous scammers.

Sometimes new clients will come in with a large, fancy binder, thinking they have a complete, effective estate plan, when it turns out they have only a fill-in-the blank, one-size-fits-all trust. A generic trust alone is essentially useless, and may actually increase the fees and taxes incurred after death.

In some instances, the scams are discovered before the victims die. Though the family members may have lost the money involved, the victim can still amend the legal documents in order to make them valid and accurate. Unfortunately, many individuals do not discover the scam in time. As a result, a family’s devastation during a time of grieving is compounded when they discover the scam. To avoid becoming a victim of estate planning fraud, it is important to identify the different forms that estate planning fraud may take, the signs to watch out for, and the steps to take when seeking competent estate planning counsel.

Who are the Primary Victims?

Older adults, ages 50 and over, tend to be the targets of estate planning fraud. They may be more susceptible to these schemes due to a variety of reasons, including the following:

  • Older adults have acquired more significant assets than those in subsequent generations
  • Older adults are at ages where death is increasingly likely
  • Older adults may experience biological changes that impact decision-making abilities

Many of these individuals are also unfamiliar with the estate planning process and therefore unable to identify deviations from truthful and normal practices.

A scammer often preys upon the fears of these older individuals by creating unnecessary anxiety. The scammer often paints a wildly exaggerated picture of the risks the victim may face if the victim chooses not to work with the scammer, including notions that a “death tax” (which is likely not even applicable to the person in question) would be substantial. The scammer may also represent that the trust or financial products offered by the scammer are the only possible solutions (despite the existence of other options, such as a will, that may satisfy the individual’s needs and cost less). The doom and gloom messaging matched with the heroic trust product offerings leave the victim feeling as though there is no choice but to purchase these solutions.

What Types of Scams Should We Watch For?

Estate planning scams do not have a one-size-fits-all approach. These scams vary in delivery, outcome, timeline, and approach. However, trust mills are probably the most common form of estate planning scam.

Trust mills are companies, usually composed of non-lawyers that create a low-cost trust that they replicate over and over again for unsuspecting victims. The problem is that the trusts provide little to no customization to actually protect senior consumers. A main objective with most trust mill operations is to gain access to information about the individual’s accounts and property. Once that information is acquired, these trust mills offer additional financial products and receive a significant commission for each additional product sold.

Older adults are also frequently the target of other scams involving fraudulent claims about investments, taxes, merchant accounts and more.  Raising awareness among seniors and their family members can help prevent such losses.

We reached out to our local Sheriff’s Offices to see what advice they could share.

Collier County, Florida

The Supervisor of the Victim & Senior Advocacy Unit at Collier County Sheriff’s Office Angela Larson shares “family members can also be a factor pressuring seniors into using a less-than-reputable service providers. Seniors, for example, could be pressured and pushed to make decisions quickly without the benefit of running it by another person — perhaps a trusted family member, friend or their own attorney. This is especially relevant now with the isolation due to COVID-19.” Ms. Larson recommends checking the Florida Bar to verify a Florida attorney’s credentials. “Unfortunately, people may not realize they have been scammed until much later and when it is too late,” states Ms. Larson.

Lee County, Florida

“Unfortunately, there are all kinds of scams targeting our seniors,” says Beth Schell, Manager of Community Response Unit, Lee County Sheriff’s Office. Ms. Schell advises that typical scams include:

  • COVID19 scam. Scammers will call asking for your social security number, date of birth and even credit card information to pay money to put their name higher on the list or to pay for the vaccine in advance.
  • Grandparents’ scam. Seniors receive a call advising them that their grandson/granddaughter has been in accident, arrested and needs to post bail money to get them out.
  • Lottery scams. Scammers call and inform seniors that they have won a lottery or sweepstakes of some kind and need to make some sort of payment to unlock the supposed prize. Seniors will be sent a (fake) check that they deposit and the scammers drain the account. Two men in Collier County were arrested for such a scam in 2020.
  • Amazon email scam. Scammers send an email claiming that Amazon is having issues authorizing a purchase and needs the person to re-enter our billing information. This is a common one given the pandemic and increase in online purchases.

The Lee County Sheriff’s Office shares scam and fraud alerts on Facebook, Instagram and NextDoor. Seniors are encouraged to contact the Lee County Sheriff Fraud and Scam Line, 239-258-3292, to determine if they were scammed or identify and how to avoid a scam.

Ms. Schell encourages seniors “do not to be afraid or embarrassed to call if you have fallen victim to a scam. By reporting such a scam, LCSO’s economic crime unit can investigate and when an uptick occurs, we can send alerts to help all our residents stay safe. You may also check scams online with the Federal Trade Commission or FBI’s Internet Crime Complaint Center IC3.”

How to Avoid Estate Planning Scams

To avoid becoming another victim, below are a few suggestions:

  1. Investigate direct solicitations. Perpetrators of estate planning schemes often solicit directly using presentations, mailers, door-to-door sales, and telemarketing. These companies often have names that sound very legitimate and can easily be confused with more established organizations like AARP. If someone contacts you regarding your estate plan and is not a licensed attorney, question that solicitation. Search for the company online to verify its reputation and the type of work completed.
  2. Ask about qualifications. As an estate planning consumer, questions are your best friend. You should feel comfortable asking any service provider about their professional qualifications. First, find out whether the individual is actually an attorney. A common trait that most of these fraudulent schemes share is that the individuals providing the advice are not licensed attorneys. Some may say that they are advisors or consultants, or that they are associated with an attorney or law firm. A fraudulent individual will often lack legal experience and credentials, will continue to try to provide a legal solution, and then will upsell you on some type of insurance or annuity. Ensure that you are speaking with a vetted and experienced estate planning attorney who is licensed to practice law in your state.
  3. Purchase additional products carefully. Additional products in these contexts are consistently used to swindle older people by having them invest in items with little pay-off that provide ridiculous commissions for these sales agents and fraudsters. Additionally, be cautious of trusts described as “pure,” “constitutional trusts,” or “pure equity trusts,” which purportedly allow you to avoid paying income taxes. 
  4. Report suspicious activity to local officials. Contact your local law enforcement officials if you suspect that you have encountered fraudulent activity to verify whether there is reason for concern. You can also contact the national fraud hotline at 1-800-876-7060 to log your concern and get help so you can avoid further involvement with fraudulent organizations.

Genuine estate planning can be a complex yet highly rewarding journey. Our team of trusted and experienced attorneys know how to help you navigate the various options that exist for your situation so that you can design an estate plan that actually protects you and your loved ones.

Those needing assistance in estate planning may contact me for a consultation at gregory.herman-giddens@henlaw.com or by phone at 239-344-1240.