The advent of the living trust has created an opportunity for attorneys, paralegals, notaries, life insurance agents, financial planners and annuity salespeople. Sophisticated marketers churn the pre-packaged trust and market it as a magic piece of paper that solves all estate and tax problems. They tell you will avoid probate; you will avoid taxes, and avoid the courtroom. They use forms and do not treat your plan as any different from all others as they wrongfully believe one size fits all. Mills use this as an opportunity to generate fees, generate commissions or worse. There are three groups of Trust Mills of which you should be wary. The following provides guidance to help you identify a trust mill and protect yourself.
These 3 types of mills often engage in the unauthorized practice of law (UPL). In California “No person shall practice law in California unless the person is an active member of the State Bar” (B&P Code 6125). This means, if you are not an attorney, you cannot give legal advice. For instance, the California Supreme Court ruled that a notary public who undertook to draft and supervise the signing of a will was engaged in unauthorized practice of law. Practice of law includes giving legal advice and counsel about the effects of legal documents as well. Answering questions about the effects of terms in legal documents is giving legal advice. Beware of UPL, as you may be dealing with a trust mill professing to be a financial, tax, or estate planning expert.
The annuity/life insurance salesperson Trust Mill is often predatory upon seniors. They often hold a “free seminar” in hotels, restaurants and other public meeting places. Usually the presenter is not an attorney, but a life or annuity sales agent. Beware of the seminar presenter that promises delivery of the trust or will by the licensed insurance agent to you home. They are trying to sell you insurance or other financial products, some of which you do not need. In worst cases, they will sell the 95 year old an annuity with exorbitant commissions or even premium charges and penalties for surrender or death within the first 10 or 15 years of the policy period. The trust you are sold is boilerplate forms that may not fit your specific planning needs or wishes. Often post death court action is required at great expense to the heirs to fix the inherent problems with these one size fits all forms.
The notary/paralegal service Trust Mill sometimes engages in the unauthorized practice of law. They advertise cheap legal help with preparing legal forms and documents. These notaries and paralegals are not licensed attorneys and are prohibited from giving legal advice or drafting legal documents without the supervision of an attorney. Again boilerplate is the norm and the resulting problems are present requiring legal action to fix the problem after you die reducing the inheritance to your loved ones. Usually, the title of assets do not get changed to your trust so the trust does you no good as trusts only control assets titled in the trust. This likely will necessitate a probate proceeding which you were trying to avoid with the purchase of a trust.
The law firm Trust Mill is often hard to identify as they are generally good marketers as all trust mills are since they profit from a volume practice. Sometimes they will offer “free” amendments or updates. The more trusts they sell, the more money they make. By virtue of their status as lawyers, law firm trust mills unfortunately often enjoy a good reputation for years. The law firm Trust Mill allows paralegals to engage in UPL without attorney supervision. Paralegals in the law firm Trust Mill meet with clients, handle signings, handle interviews and in the course of these meetings provide legal advice. The paralegal or legal assistant should not be giving you legal advice such as telling you what a term in the document means or will accomplish for you. They should never tell you what the law is or what the tax consequence will be. If you have a question about your estate plan or the meaning or effect of something in the documents, ask for the attorney.
Note that it is not uncommon for a paralegal to meet with a client to gather factual information from the client and even create initial rough drafts of documents. This should not be done without the consent of the client, instruction or direction of the attorney, ultimate firsthand review of all documents by the attorney and “regular” attorney supervision of the work of the paralegal. High ratio of paralegals to attorneys (Ie. 5, 10 or more paralegals per attorney) is a telltale sign that you might be dealing with a law firm Trust Mill. Without the attorney supervision, conflicting or incorrect terms are included in the trust requiring court intervention or even resulting in something different than that you intended. The production line approach of one size fits all is common in law firm Trust Mills.