How to Identify the Numerous Illegal Entities Peddling Living Trusts
It often begins in the form of a full-page ad in your local newspaper
for a free Living Trust Seminar. Other times it may be a telephone
call or even door to door solicitation about a living trust -- usually
accompanied by an offer of a free review, lifetime changes and updates,
an ominous warning about some “new” laws, or an offer to protect your
assets from nursing homes and long term care expenses etc. These are
just some of the more common tactics used by the numerous illegal,
unethical, unqualified, and illicit entities and individuals peddling
living trusts under the guise of legitimacy.
Many consumers are fooled by these con artists because they are extremely
clever in disguising their true unethical and illegal nature. Unfortunately,
the State Bar and Attorney General are simply unable to keep up with
the sheer number and audacity of these outfits. In essence that means
you, the consumer, must be on guard!
Illegal Operations Put Major Efforts Into Looking Official
It is again important to emphasize that these operations put a great
deal of effort into appearing legitimate. They utilize full page ads,
seminars, official-sounding names, logos, packages, lifetime updates
and other tactics to fool people. Many even have attorneys put on
their seminars, and almost all of them are quick to claim “an attorney
drafts or reviews your trust”. (Read on to see why this is illegal).
Their artifices are so good that many never realize what they have
gotten into.
The Bait & Switch – Using The Living Trust To Gain Access To
Your Personal Information and Sell You Annuities, Life Insurance And
Other “Financial Services And Advice”
The true nature of most of these illicit operations is to not only
make money illegally peddling living trusts but to also use it as
an “in” to sell you annuities, life insurance and other “financial
services and advice”. A common part of the living trust process is
a disclosure of your assets. While this is a protected discussion
with a legitimate attorney and law office, it becomes fodder in the
hands of someone who wants to sell you financial advice and products.
When you disclose your asset base to these “illegal operators” as
part of what looks like the living trust process, not only is it unprivileged
communication, you will suddenly find them quite eager to advise you
how to better “diversify and protect” your assets. Translated, they
want to use this information to sell you annuities, life insurance,
and other “financial services and advice”. This is an enormous unethical
conflict of interest even for a legitimate attorney -- much less these
fly-by-night and highly illegal operations.
Your Information is Not Privileged or Protected When You Disclose
It To These Illegal Operations
Being unaware that you have been snared into one of these cleverly
concealed illegal operations you may wrongly believe that your information
is being held in confidence. The dirty little secret is, if you are
baring all of your personal information and assets to a non-attorney,
there is no attorney-client privilege of confidentiality. In fact,
it is highly likely that these operations will share and disclose
much of your personal information and asset base to others.
The Question to Ask – “Is This a Law Office?”
You can quickly determine if you are dealing with a legitimate law
office -- or someone practicing law without a license -- if you know
what to look for and what questions to pose. The most probing and
piercing question you can ask: “Is this a Law Office?” This hits them
right between the eyes. If they are not a law office, the smart ones
will answer no, but will quickly try to recover by telling you that
a lawyer reviews or drafts your trust. Stop right there – you don’t
need to know another thing. It is for sure an illegal operation. The
person or company is practicing law without a license and the lawyer
is aiding someone in the unauthorized practice of law – period. (You
can verify any law office or lawyer by contacting the State Bar of
California or go to the Bar website at www.calbar.org.)
Don’t Be Fooled By the Statement That “A Lawyer Prepares Your Trust”
Never, ever be fooled into believing an operation becomes legitimate
by some statement or claim that “a lawyer prepares or reviews your
trust” or that some lawyer has an association with the company. No
person or company can enter into the practice of law by hiring or
associating themselves with a lawyer. And the lawyer who connects
themselves with any such operation is also violating numerous laws
by aiding in the unauthorized practice of law, forming partnerships
with a non-lawyer, sharing legal fees with a non-lawyer, paying illegal
commissions or fee splits, and knowingly assisting in the violation
of any or all of the aforementioned. In California, the rules that
govern these matters are the California State Bar Rules of Professional
Conduct for Attorneys. Virtually all states follow similar rules.
*The relevant sections are set forth in the footnote below. Once you
understand a few of these rules it becomes simple to figure out all
of these illegal operations in their various forms.
Also Be wary of Lawyers Pushing Financial Services
(Why an attorney should never be selling you anything but legal advice)
Unfortunately, there are instances where lawyers are also engaged
in helping market financial packages and advice with others. This
can occur, directly or indirectly, in “conjunction” with a financial
planner or company. Such arrangements should be met with skepticism
and wariness. Lawyers are never supposed to put themselves in a position
where their own interests could potentially conflict with yours. Yet,
if someone acting as your attorney can somehow benefit from the sale
of “financial services or investments” that lawyer is, by definition,
in a potential conflict of interest. This includes any payments, commissions,
referral fees, “mutual back scratching”, or indirect compensation.
Important Guidelines to Follow
Resolve that you will not be taken in by those fancy full page ads
with lowball pricing and a lawyer conducting the seminar. Resolve
that you will not be tricked by scare tactics; or some salesman’s
or representative’s statement that a lawyer drafts or reviews your
trust. Resolve that you will not be fooled by some fancy binder filled
with a long list of official-sounding documents. And abide by the
following rules:
1. Make sure it is a law office and only a law office you are dealing
with (not an attorney on the staff of someone or some organization
that is not a law office).
2. Dismiss out of hand and ignore anyone who solicits by phone or
comes to your door.
3. Make sure you deal directly with the law office responsible for
your trust (this means the attorney or someone who is an actual employee
of the law office - not a commissioned agent).
4. Make sure your money is paid directly to the law office. Also,
ask the law office if any person is being paid a commission or referral
fee.
5. One more thing. Most likely you are better off using a law office
which focuses its practice primarily on living trusts. The arguments
for this are self evident.
*Selected Passages from the California State Bar Rules of Professional
Conduct
Rule 1-300. Unauthorized practice of Law: A member shall not aid
any person or entity in the unauthorized practice of law.
Rule 1-310. Forming a partnership With a Non-Lawyer: A member shall
not form a partnership with a person who is not a lawyer if any of
the activities of that partnership consist of the practice of law.
Rule 1-320. Financial Arrangements With Non-Lawyers: (A) Neither
a member nor a law firm shall directly or indirectly share legal fees
with a person who is not a lawyer; (B) A member shall not compensate,
give, or promise anything of value to any person or entity for the
purpose of recommending or securing employment of the member or the
member's law firm by a client, or as a reward for having made a recommendation
resulting in employment of the member or the member's law firm by
a client.
Rule 1-120. Assisting, Soliciting, or Inducing Violations: A member
shall not knowingly assist in, solicit, or induce any violation of
these rules or the State Bar Act.
