The Furor over Living Trusts

By Jones, Leigh | THE JOURNAL RECORD, January 6, 1998 | Go to article overview
Save to active project

The Furor over Living Trusts


Jones, Leigh, THE JOURNAL RECORD


Touting living trusts as the cure-all for probate court headaches, some attorneys aren't telling the whole truth about the limits of this estate planning mechanism.

Though the Federal Trade Commission in April put a stop to certain representations Ada-based Pre-Paid Legal Services made about living trusts, some contend the distortion continues for Oklahoma lawyers who try to lure clients with false promises.

"We have concerns about ads that living trusts are a panacea for all estate planning problems -- they're not," says attorney Fred Doak, the 1997 chair of the Oklahoma Bar Association's Estate Planning, Probate and Trust Law Section. The lawsuit against Pre-Paid last spring highlights a problem some attorneys and advocates for the elderly perceive as being bald- faced misrepresentations regarding the advantages of living trusts. The FTC charged that Pre-Paid and Dallas-based Administrative Company made false statements about the benefits and appropriateness of the more than 3,000 living trusts sold to elderly consumers in 43 states. Specifically, the federal agency argued sales literature that stated, "You could save thousands of hard earned dollars" and other representations failed to inform consumers that probate actions could still occur despite the existence of a trust and that trusts are contestable on grounds similar to will contests. Living trusts, also called inter vivos trusts or revocable trusts, are an estate planning tool in which individuals place lifetime assets and, by transferring ownership of the assets to the name of the trust, remove the assets from the estate thereby avoiding probate. In a consent agreement, Pre-Paid refunded consumers more than $300,000 without admitting liability. The multi-level marketing company, with total revenues of $60 million in 1996, has since ceased marketing living trusts and now provides them as part of its legal services package only if clients request them. "We washed our hands of them from a marketing standpoint," says Pre-Paid's Chief Financial Officer Randy Harp. The FTC's Director of Consumer Protection called Pre-Paid's practices "particularly contemptible because they were designed to prey on the financial fears of the elderly by exploiting a general perception that probate is an expensive and drawn-out process." The FTC also took issue with Pre-Paid's assertions that living trusts were appropriate planning mechanisms for everyone. But Larry Parman, who routinely gives estate planning seminars and advertises for those programs in local newspapers, says living trusts are a good move for virtually everyone, though he usually recommends them to people with assets of more than $100,000. "With less than $100,000 to $150,000 it's a close balancing act," Parman holds. Doak says one of his greatest qualms about living trusts is an exaggeration of the tax benefits.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

The Furor over Living Trusts
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?