July 28, 2010
The office of Washington State Attorney General Rob McKenna reached a settlement with an Arizona company accused of violating a three-year-old state law intended to crack down on 'trust mill' schemes.

Under the agreement, The Preservation Group and its founders will offer refunds to more than 60 Washington seniors who purchased living trusts.

"We believe the defendants pushed expensive living trusts on Washington seniors while misrepresenting probate as a time-consuming process that can eat up a nest egg," McKenna said. "This case enforces the law our office requested to ensure that only legal professionals can prepare estate documents."

The AG's Consumer Protection Division accused The Preservation Group, LLC, of Chandler, Ariz., and its owners Kevin D. Boterman and Robert J. Feinholz of violating the state's Estate Distribution Documents Act. The law, requested by the attorney general, prohibits anyone who is not a licensed attorney from marketing living trusts or wills.

Exaggerated benefits

The Preservation Group conducted estate planning seminars throughout Washington from approximately August 2007 to at least September 2008. According to the state's complaint, salespeople promoted the advantages of a living trust while exaggerating the complexity of probate, the court-supervised process by which property is transferred to heirs. They then set up appointments to meet with seniors in their homes.

Seniors who paid $2,195 to $2,995 for living trusts were encouraged to provide details about their finances that the salespeople used to pitch additional insurance and investment products, the state alleged.

At the time of the sales, Boterman and Feinholz were registered to sell insurance in Washington but were not licensed to practice law.

Sales ban

The settlement filed in King County Superior Court doesn't require the defendants to admit any wrongdoing but prohibits them selling estate planning products here in the future. They agree to pay up to $40,000 in restitution to eligible consumers who request refunds, as well as $10,200 to reimburse the state for attorneys' fees and legal costs. A $25,000 civil penalty is suspended provided the defendants comply with the settlement terms.

Properly drafted and executed, a living trust can help someone avoid probate and offer other advantages, but isn't a one-size-fits-all solution. For example, individuals with small estates may avoid probate without a living trust. Joint ownership of assets is another way to avoid probate.