It truly is hard to fathom that there could be a downside to establishing a Trust. The positives are everywhere: avoiding probate, maintaining privacy, protecting assets over the long term, and, perhaps most important of all, creating a clear plan for your family. And yet, trust scams are on the rise—proving that we cannot have nice things.

A comedian hilariously coined the phrase, “This is why we cannot have nice things,” decades ago. Perhaps you even heard your parents or grandparents invoke it with a mix of humor and frustration because something perfectly good was misused, overcomplicated, or taken just a step too far. Which brings me back to the topic of Trusts. These crucial estate planning documents are powerful, legitimate tools that are used most of the time appropriately.

But over time, they have also been pulled into schemes and scams that promise more than the law allows.

The next thing you know, good people like you are left to deal with the consequences.

Trust Scams: In Case You Have Not Heard the News

As we have said many times, our role is to assist families and their loved ones with estate planning and even long-term care strategies. Trusts, Wills, Powers of Attorney … they are all a big part of that goal. However, our focus has shifted as of late to unexpected threats—such as financial scams that target the very tools meant to protect you.

In case you have not heard, the IRS is warning everyday business owners, professionals, and even retirees about a growing wave of tax evasion schemes involving Trusts. Rather than use Trusts for matters such as estate planning, facilitating the genuine charitable transfer of assets, and even holding assets for minors and those unable to handle their financial affairs, these trust scams promise things like:

• Reduce or eliminate income tax or self-employment taxes
• Retain complete control over income and assets
• The ability to deduct personal expenses paid by the trust on your tax return
• Avoid estate or gift taxes
• Hide income illegally

All of that sounds amazing. The problem is that it is not what Trusts are designed to do. Abusive trust arrangements, whether titled a “Pure Trust,” “Constitutional Trust,” “Patriot Trust,” “643 Trust,” or something else, give the appearance that a person is giving up control over their assets and money. In reality, the victim still controls how the money and assets are used. All of those actions are, per the IRS, illegal as illegal gets—no matter what you were promised or how official the paperwork looks. Promoters of abusive trust arrangements use a variety of methods to advertise their schemes, including seminars, flyers, and the Internet. But they should not be believed.

On top of that, the IRS has said, “Should a taxpayer choose to participate in an abusive trust scheme, the taxpayer will not be shielded from potential civil and criminal sanctions.”

How Can You Avoid Trust Scams?

When used properly, Trusts remain one of the more effective estate planning tools available. Furthermore, they are grounded in established law, transparency, and clear intent. So, if you are presented with anything that feels overly aggressive, difficult to explain, or too good to be true, it is worth taking a step back.

Here are a few things to consider:

1. Trust your instincts — If a phone call, text, email, flyer, etc., doesn’t look or sound right, do not reply. Share the information with a family member, lawyer, or financial professional.
2. Have discussions with your senior loved ones — Scammers today are relentless. They will go to great lengths to make the victim feel comfortable so that they can obtain what they want.
3. Talk to a qualified estate planning attorney — Beyond creating estate plans that actually work when you need them to, we are here to help you separate legitimate opportunities from unnecessary and illegal risks.

Call Leigh Hilton PLLC Today!!

Having a competent attorney in your corner will help you and your family navigate the often overwhelming waters of protecting everything you own and everyone you love. That is our job, and we think we do it better than anyone else. Call Leigh Hilton PLLC so we can help ensure you and your family are taken care of in the best possible way.

Leigh Hilton PLLC wants to be your first call every time for any estate planning need. We look forward to serving you.