Last week, some clients come into the office to ask for help. They had been telephoned about two and a half years ago by a person selling living trusts. After agreeing to see the salesman and listening to a very convincing sales pitch, they agreed to purchase. When they were told how much it was going to cost, they said they could not afford it.
The salesman persisted and asked them to charge it on their credit card. The clients stated that their credit card balances were too high already. he salesman said that it was not a problem. He had another program for them. It was a con.
The salesman told the clients that when each person in the United States is born, the government puts aside money in an account for them. (NOT TRUE!) Further, the money continues to grow for as long as they are alive but the government does not want anyone to know about the program. It is up to each individual to use the money the government has set aside for them as they like. (NONE OF THIS IS TRUE!)
The salesman’s lie continued. He stated that the clients could access this money to pay their credit cards and even the mortgage. He furnished the clients with some supposedly educational CDs and forms from an entity in the State of Washington (a check of the Washington State Secretary of State’s Office showed the entity did not exist). The forms were to be sent to the credit card companies.
The CDs discussed the theory that the U.S. Tax Code is not valid. Money issued by the federal reserve is not valid. Debts could be discharged by relying on the Uniform Commercial Code (UCC). Other topics in a similar vein were also included.
The scam artist relied on a number of factors in making his sales pitch: 1) A general distrust of the government; 2) A general distrust of lawyers; and frankly, 3) greed of the persons listening to the sales pitch.
The clients were charged nearly $4,000 for the living trust, CDs and the credit card program.
Two years later, the clients have been sued by at least two credit card companies. A lien has been placed against their house and they are constantly fighting off bill collectors. The credit card balances are accruing at an alarming rate through skyrocketing interest and late payment charges!
These clients are not candidates for bankruptcy. They are fortunate enough to have enough equity in their home to pay off the credit card debt. They may be able to get a mortgage, at a high interest rate, because they have never been late on or missed a mortgage payment. This matter has not been resolved.
You should follow two simple rules with your finances:
Rule 1. If it is too good to be true, then it is not true.
Rule 2. If you are confused and starting to believe a sales pitch, refer to Rule 1!
Here are some more practical rules:
1. There is no secret fund set aside for anyone by the government.
2. The theory that the Constitutional Amendment authorizing the income tax was never properly ratified is commonly argued. Even if the amendment was not properly ratified, an individual lacks the resources to fight that battle. The one thing the IRS can have you jailed for is failing to report your income. The federal prison system is full of such people.
You do not want to be a test case. It could take everything you have or hope to get, including your freedom!
No doubt that the government is a poor steward with tax money. As a practical matter though, the roads you drive on and the army that protects you cost money. You have an obligation to contribute.
3. If you could discharge all your credit card and mortgage debt, it would be the equivalent of stealing. You used those credit cards to secure goods and services. You agreed to compensate the bank issuing the credit card for the use of the money (interest). Further, when you signed the agreement accepting the credit card, you agreed to repay it and probably waived several rights that you may have had under the Uniform Commercial Code (UCC) and other important laws. Bank lawyers thought of these problems long ago. Be good stewards. Pay your debts and fulfill your obligations!
4. If you are considering having a living trust drafted, see an attorney. A non-attorney selling living trusts, usually drafted by an out of state company, is practicing law without a license. The sales people generally lack the education, experience, and sometimes the ethics to counsel someone on the proper use of a living trust or any other estate planning tool.
The Ohio Supreme Court and the Courts in other states have routinely prosecuted non-lawyers for selling living trusts and performing other legal activities.
Not every lawyer knows about or favors the living trust concept. However, a growing number of lawyers are actively encouraging their clients to set them up.
Got questions about your financial dealings? Need help with your estate planning needs? Contact the attorneys at Mularski, Bonham, Dittmer & Phillips, LLC at (614) 478-8020 to arrange a consultation.