Swanson files suit in living trust case

By all accounts, Steven Shimek's elderly parents are the last people who should have a living trust. Most of their income comes from Social Security, and they already have a will covering the rest of their modest assets, said Shimek, a retired St. Paul police officer.

So he was shocked when he found that they had been targeted by an aggressive sales campaign for living trusts and had bought one for $2,500. Shimek said the seller refused to respond to his inquiries about the sale to his 90-year-old father and 85-year-old mother, who both suffer from dementia and live in an assisted-care facility.

"My mother had forgotten that she had even written the check," Shimek said.

A lawsuit filed Wednesday against two California companies that sold the living trust to Shimek's parents and as many as 2,000 other older Minnesotans is the latest move by Minnesota Attorney General Lori Swanson against companies that she contends have illegally marketed millions of dollars in investments to the elderly.

In January, Swanson's office sued Allianz Life Insurance, accusing it of deceiving thousands of elderly people into making investments in deferred annuities that could lock up their money far beyond their life expectancies.

At a news conference Wednesday that included Shimek, Swanson said her latest suit-against American Family Legal Plan and Heritage Marketing-is part of a broader focus by her office on companies that illegally target older Minnesotans.

"We are looking at other companies," she said.

The two companies, both based in Irvine, Calif., could not be reached for comment Wednesday, either at their headquarters or at their Bloomington sales office. American Family Legal Plan is not affiliated with American Family Insurance, which is based in Madison, Wis.

The extent of the two companies' activities in Minnesota is still being determined, but Swanson said about $4 million in trusts may have been sold in the state, while total annuity sales could be as much as $50 million.

According to Swanson's lawsuit, the elderly were targeted through direct mailings that claimed American Family Legal and Heritage Marketing had special expertise in estate planning and could advise people about how to avoid estate taxes and probate fees.

Those who responded to the mailings were visited in their homes by sales agents posing as estate planners, who sold the living trust plans for $2,000 or more.

The agents received commissions of $600 to $800 for each living trust they sold, the suit says.

Swanson said the sales agents would exaggerate the financial impact of probate and estate taxes to scare people into buying the plans, which she said were boilerplate living trusts not tailored to the buyers' needs.

Swanson said that many people don't realize that their estates don't have to go through probate if they have less than $20,000 in assets.

Further, probate "can be a simple procedure," she said.

The lawsuit said that when sales agents delivered trust plan documents to buyers, the agents also tried to sell them $25,000 annuities.

Swanson said the suit, filed in Hennepin County District Court, seeks to stop the two companies from doing business in Minnesota and to get restitution for people who bought the investments.