BEWARE OF TRUST SALESMEN
We were recently warned about a trust salesman committing fraud by saying that if you sign up with him, you would get a discount in legal fees from Okura & Associates. We don’t even know this person, and have reported him to the police.
Some time ago I met with a brother and sister whose father had just passed away. A man in Honolulu, who is not an attorney, had approached their father and sold him a trust. When father became seriously ill, the children wanted to make sure the legal papers were in order. They tried to phone the trust salesman. His phone was disconnected. Since they could not find him, they made an appointment with our law office to have their papers reviewed.
There were several problems with the trust. First, it was a trust appropriate for someone living in California, not in Hawaii. Also, it was an A-B trust. This couple had much less than $1,000,000 in assets and did not need an A-B Trust. The trust was a joint trust, which I generally do not recommend. Also, father owned vacant land which was never put into the trust. There had to be a probate. The family had to pay quite a bit more in legal fees than they would have if things had been set up correctly in the first place.
The problem is that a trust salesman cannot give the legal advice needed to set up an estate plan properly. Even attorneys who are not knowledgeable sometimes set up a trust without properly transferring real estate to the trust, or without realizing the risk of loss to nursing home costs. In this area of law, a little knowledge can be dangerous.
I saw another case in which a trust salesman sold A-B trusts to a married couple with over $2,000,000 in assets. Because the husband was much older, the trust salesman had advised putting all of the real estate in the wife’s trust. This advice would have prevented the trusts from saving estate taxes the way it was supposed to! Our law office drafted new trusts for them, and advised them to split their assets between the two trusts, to reduce estate taxes.
Several years ago I was approached by a trust salesman who worked for a mainland company. The trust salesman would find a customer and sell a trust. He would send the information to the mainland, where the trust was prepared. The mainland company would then send the trust papers to a Hawaii attorney for review. The Hawaii attorney would approve the trust papers without even meeting with the customer. The trust salesman would then take the trust papers to the customer to have them signed. The trust salesman asked me if I would consider being one of the company’s review attorneys. I contacted the Office of Disciplinary Counsel. The Office of Disciplinary Counsel (called “ODC”) is the office which issues ethics opinions for attorneys and disciplines unethical attorneys. I asked the ODC whether it would be ethical for me to be a review attorney for this company that sends out trust salesmen. I received a detailed explanation of various possible ethical violations an attorney would be committing by being a review attorney for such a company. I told the trust salesman that I could not be their review attorney.
An attorney who reviews documents for the trust salesman is likely being unethical by serving in that position. If a trust salesman approaches you, my advice is to get his name and contact information and the name of the attorney (in case it is needed by investigators), and then send him away. If an attorney or someone working for an attorney contacts you directly or by phone to get your business when you have not asked to be contacted, this is unethical behavior called “solicitation.” Mail advertising is allowed by attorneys if the envelope and letter say “Advertising Material.”