I recently came upon an article where The Ohio Supreme Court recently slapped a $6.4 million penalty upon two companies, American Family Prepaid Legal Corp. and Heritage Marketing and Insurance Services Inc., for the illegal practice of law (running a "Trust Mill") in that state. These companies have also been banned from ever operating in Ohio again.
What is a "Trust Mill?" Trust Mills are typically made up of individuals who sell insurance, annuities or other types of high-commission financial products.
It is a fairly well-known fact that people are more motivated to do estate planning than they are to purchase such financial products. So some companies have exploited this fact to their advantage. They first will blanket a community with a marketing campaign explaining the horrors of not having an adequate estate plan (there is much truth to that). The company then will often hold an event of some sort and typically will provide dinner or some other enticement to get people there. They will then sell a very bare bones, one-size-fits-all trust document for an extremely low price. By doing this, the company can gather a great deal of information about the assets of the individuals who purchase these trusts. With that information, they will then identify who would be easy targets for high-pressure sales of these high-commission financial products. In the above mentioned case, the salespersons came to the homes of seniors and used high-pressure tactics to sell these trust kits.
Is there a problem with this? Most definitely! Besides the unscrupulous sales of high-commission, often unnecessary financial products to vulnerable seniors, a major problem is that often, in these types of settings, legal advice is given to the attendees or customers by non-attorneys. That's the equivalent of setting up a pharmacy and staffing it with accountants. It's a bad combination. And it's illegal -- for good reason. Families can be (and frequently are) torn apart as a result of poor estate planning and poor legal advice associated with estate planning. If you're getting a "screaming deal" on a trust-based estate plan, you might want to think again. You may well have been caught in the machinery of one of these Trust Mills. If you have, you should find a qualified estate planning attorney in your community to review your estate plan for you. It's well worth the investment.