Seniors Must Be Wary of Living Trusts and Annuity Fraud

Annuities and living trusts are real investment tools. However, deceitful versions of these investment tools have become a major form of fraud, and more often than not, target elders.

Real annuities are a type of investment wherein an individual contracts with an insurance company. This contract typically includes a promise to pay out in the future in exchange for up front, or ongoing payments. Life insurance is the classic annuity. Living trusts are estate planning tools that allow a living person to transfer their assets to a trust, which is distributed upon their death. This can allow beneficiaries to bypass certain legal processes which can complicate the distribution of the deceased’s assets.

Unfortunately, both of these financial tools can be tweaked into the territory of fraud. Scammers may manipulate the terms of a living trust or annuity to make it unlikely that seniors or their survivors will ever see the trusts’ assets distributed as intended.

Fraudulent Annuities and Living Trusts

There are several common red flags to look for when evaluating annuities. First and foremost, if a senior is unlikely to live to collect the annuity, the annuity should immediately become suspect. While life insurance and similar annuities are an obvious exception, watch out for plans that are unlikely to pay out immediately after the senior’s death. Additionally, if an annuity makes up more than 35 percent of a senior’s assets, or if the surrender penalty (the penalty for an early cash-out) is more than 14 percent of the original principal, the annuity may be fraudulent.

A living trust scam has a slightly different, but potentially overlapping, set of warnings. For example, if the documentation appears to have the senior’s name “cut and pasted” throughout the document, it may be fraudulent. Similarly, if the invoice indicates that it was prepared by someone other than an attorney, like a paralegal, notary, or agent, it could constitute fraud. The absence of the involvement of an attorney in such matters is generally a concern. Additionally, if a living trust is less than $1,000, this is another major red flag. Lastly, if the  living trust was sold at a “free lunch,” or other group seminar, the living trust should receive intense scrutiny.

How to Take Legal Action

Often, seniors and their family have to resort to legal action to straighten out fraudulent annuities and living trusts. With the advice, guidance and support of an attorney, seniors and family members can seek out justice against scammers.

If you or a loved one purchased an annuity or a living trust, and are suspicious, you should trust your instincts. But you may need expertise above and beyond your own. You can reach experts for additional guidance the Life Insurance Claims Lawsuit & Annuity Fraud Class Action Lawsuit Investigation. Here, you can enter information about your situation for a legal review by a trained expert with a background in this type of litigation. The initial consultation is completely free of charge and from it, you can receive additional guidance on the best steps to take in your exact situation.