The free lunch seminar scam

Let's face it: if we keep living, we are going to get old. Maybe you are already old. 


There is a growing class of predators who, instead of working and making money, look to those who have worked their whole lives and maybe saved a little up for their golden years. These people are some of the lowest of the low, and they really make me sick. And it happens every day. 


Enter the free lunch seminar. Targeting those of us who may be objectively classified as "old" and often held at your community's finest all-you-can-eat buffet, swindlers and con-men have been peddling unnecessary and often useless "products" for years. 


Companies now are claiming they are "estate planners" and "retirement specialists," and can prevent you from the costs of expensive lawyers, probate, medicaid recovery, etc.  They will try and sell you annuities. They might try and sell you life insurance or other insurance products. See a theme here? 


Much like the ongoing legalzoom travesty, I see many unnecessary "living trusts" sold at a lunch seminar or on a front porch. Next, the same people who paid these guys in order to not pay a high priced lawyer to have their affairs taken care of, pay a lawyer to fix this mess they bought into from the con-man. 


Here is the basic pitch: 


Either on your porch or at the seminar, the "salesman" tells you how you are going to lose all  your property because of future taxes, medical bills, or attorney's fees. To "save" you and have something to leave to your heirs, you need a living trust. They sell you a couple pieces of paper, that may or not be a trust, and convince you to transfer all your stuff (your house, cars, land, money, EVERYTHING) into that trust. They tell you it is safe, and you are protected. They might say "you have access to a lawyer for follow up." 


In a recent CLE lecture, the statistics that I do not have any basis for were, on average, 50% of these seminars openly distribute false information, and 13% openly perform fraudulent transactions. The same lecture told of the two-hour training that is all these "salesmen" have taken. Two key points:
1.     “treat them as if they are blind 12 year olds,” and 
2.      “scare them by telling them you can save their life savings from nursing homes and Medicaid seizures”


This is not how I want to be treated, or how anyone should be treated. Think of these the same as a telemarketer who is trying to sell you, well anything. Skeptical? You should be. Why are people not more skeptical of someone who buys them lunch?


People are taking notice, however. Several states have enacted legislation providing harsher penalties for taking advantage of the elderly. I'm not the first to write about this, and I won't be the last. 


The take away:

• -Living Trusts are garbage for all but 5% of folks. You probably  don't need one, and it absolutely will not save you money.
• -When placing assets in trust, to have any real benefits, it has to be irrevocable, meaning you DO NOT have control over it anymore. Is this what you really want?
• -Placing your house in trust can cause gift tax consequences, and you can forfeit a step-up in basis that you would otherwise get upon your death if not executed properly. 
• -Most do not help you qualify for medicaid and can disqualify you for VA benefits.
• -Trusts pay much higher taxes than individuals. 
• -If you have income producing assets, you likely don't want them in a trust. 
• -Annuities are usually a bad bet. If you're 75, you have to live until you are 110 to see any benefit.
• -There is no such thing as a free lunch. Be wary.