Commentaries on the dramatic increase in sales of living trust instruments have appeared half a dozen times over the last decade in Elder Law Issues. As we have previously observed, the living trust is one among several fine estate planning tools (see, for example, the generally positive reviews accorded to living trusts by the Kiplinger's Retirement Report). Not everyone, however, needs a trust. Many people selling trust kits or packets are in no position to advise whether a trust is appropriate.

Most living trust kits and software fail to address the unique needs of the individual considering whether a trust will be useful. These "fill in the blank" kits may ignore differences in state laws and are almost always silent on possible eligibility for Medicaid.

Trust kit salespeople, many of whom target the elderly through phone solicitation or door to door calls, tend to focus their message on common themes such as "Avoid the high cost of probate," or "Do away with estate taxes." These sales people are not likely to describe actual probate costs, or acknowledge that the vast majority of estates are not subject to federal or state estate taxes. More perniciously, some trust salespersons use the concept as an introduction to encourage inappropriate investment in annuities, or even to gain control of the seniors’ assets.

Several state Attorneys General — Arizona, Colorado, Idaho, Michigan, South Dakota, to name a few — address the concern surrounding the living trust boom as it affects senior citizens through a variety of publications about consumer fraud. Few states directly regulate the sales of living trusts. However, several have initiated litigation to stop "trust mills" from coercing vulnerable clients who cannot afford or have no need for a living trust.

In a case recently ruled on in Nebraska, a dispute arose among family members after all family property was conveyed into a trust formed by directions included in a trust kit. The court notes that the Nebraska Attorney General filed suit against the kit’s seller, the Reverend J.H. Schroeder. The Reverend Schroeder was found to have "employed unfair and deceptive acts and practices by misrepresentation" in 1986.

The current Nebraska Supreme Court case, In re Loyal W. Sheen Family Trust, March 22, 2002, caps the extensive legal proceedings required to interpret the intentions of Loyal W. Sheen and his wife Veona when they used the Reverend Schroeder’s kit to set up a living trust in 1979. If their purpose was to avoid legal proceedings and family disharmony, they were unsuccessful.

The incidence of living trust scams is on the rise. AARP cites a recent survey that suggests that approximately four million seniors may have purchased expensive living trust products of no value to them. The Federal Trade Commission warns against the "cookie cutter" approach to estate planning, and reminds consumers that if a trust kit is sold at a residence or anywhere other than the seller’s permanent place of business the seller must give written notice that there is a right to cancel within three business days.