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San Antonio Probate, San Antonio Estate Planning, San Antonio Elder Law


San Antonio Express-News
December 27, 2005

Trust Mills Illegal

copyright 2005, Paul Premack

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Dear Mr. Premack: I just received a postcard saying "Elder Law Update" and saying a new law goes into effect on January 1st requiring every estate to be probated unless a living trust is created. It tells me to return an attachment to find out how to qualify for a living trust. Clearly the sender of this card wants me to buy a living trust. I am interested but suspicious. What is your take on this? – H.B.

These companies, which are referred to as "trust mills" because they churn out a high volume of cookie-cutter living trusts, are trying to mislead you into becoming their next victim. They misrepresent the law to motivate unsuspecting senior citizens to call them. They press for a home visit, where a representative pressures you to purchase a trust.

They play on some real fears that many seniors face. What will happen if you become disabled? Do you want your estate to go through probate? The problem is they give answers biased toward the solution they offer (a trust), they fail to explore other effective legal alternatives, and they inflate the risks. For instance, there is no new law that requires all estates to be probated.

Trust mill representatives are not licensed to provide the legal advice they offer. They have not graduated from law school, have not passed a difficult exam overseen by the state supreme court, have no enforceable ethical standards they must follow, and have no requirement for continuing legal education. Your lawyer must meet those standards. An experienced estate planning or elder law attorney is who you should be calling for advice.

The trust mill representative, acting illegally, gathers your personal information and a substantial fee. Then a company in another city (often another state) prepares boilerplate trust forms and an attorney somewhere in Texas (whom you have never met and who is acting in violation of ethical rules) signs off on the documents. The sales rep returns them to you and frequently follows up with a sales pitch for insurance products and for annuities.

Many and varied complaints have been filed against these companies in Texas. The Texas Supreme Court’s Committee on the Unauthorized Practice of Law in Houston has made efforts to stop these illegal operations in that area. But the Texas Attorney General’s office and the Texas State Bar are not being very active to protect Texas seniors from the trust mills.

A recent decision in Ohio points in the direction Texas should be going. The Cleveland Bar Association filed a complaint against a company called Sharp Estate Services. Its business model was similar to what I described above; the local sales reps were sending off to a Nevada company for preparation of trust documents. The Ohio Supreme Court ruled the company "engaged in the unauthorized practice of law when they marketed and sold their products through a network of nonattorney advisors, when they prepared legal documents, and when they advised customers as to the legal effect of the documents that they had prepared". The court also held that "use of a review attorney after the execution of a contract to create a living trust or estate plan does not cure the … violation".

The Ohio court permanently enjoined Sharp and its cohorts from selling trusts in Ohio and imposed a fine greater than a million dollars. That is an example Texas should follow and is a warning all Texas seniors, as consumers, should heed.

Prior Column: Probate When Spouse Dies
Next Column: No "right" to Inherit 
Disclaimer: This column answers a specific legal question asked by an individual in Texas. The answer may or may not match your individual situation. Be careful not to treat this column as specific legal advice, as it may not meet your individual needs. It may give you a solid basis for discussion with your own attorney.  You should consult with your personal attorney before you take any action on this or any legal issue. Also, please be aware that laws change, so  this column is valid only as of the date it was published. This communication does not create an attorney-client relationship between the author and the reader.

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