Financial Red Flags and Scams to Watch Out For
Unfortunately, where there is money, there are often criminals and unethical businesses looking to take advantage of people. Seniors are frequently targeted, so it is vital to be vigilant. Here are a few red flags related to estate planning.
1. High-Pressure “Living Trust Mill” Seminars
You may see advertisements for free lunch or dinner seminars that promise to reveal secrets about avoiding estate taxes. These are often run by salespeople, not attorneys, who use high-pressure tactics to sell generic, overpriced “living trust kits.” These one-size-fits-all documents may not be valid in your state or tailored to your specific needs, leaving your family with a legal mess. Proper estate planning should be done with a qualified, local attorney who takes the time to understand your unique situation.
2. Phony “Estate Recovery” Scams
Scammers may call a recent widow or widower claiming to be from a government agency or a collection company. They will falsely claim the deceased had an outstanding debt (like a tax bill or a loan) and that they must pay immediately to settle the estate. They use intimidation and urgency to scare you into sending money. Government agencies will not contact you this way. Hang up and report the call. You can find reliable consumer information and report scams through the Consumer Financial Protection Bureau (CFPB) and the FTC.
3. The Costly Mistake of Putting a Child on Your Deed
Many seniors think the easiest way to pass on their home is to simply add their child’s name to the deed. This is often a huge mistake. First, you lose the “stepped-up basis” we discussed, potentially creating a large tax bill for your child down the road. Second, you are legally giving away part of your house. If your child gets sued, divorced, or has creditor problems, your home could be at risk. It is almost always better to use a will, trust, or a Transfer on Death deed (if available in your state) to pass on your home.
