Living trust scams

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NEW YORK (CNNMoney.com) -- For older folks, there's a popular scam out there making the rounds. Some shady companies are using fear-mongering to sell living trusts to people who don't need them. Here's what to be on the lookout for:

1. Beware living trust solicitations

A living trust is a way some people transfer assets to their children or grandchildren. The problem -- according to federal agencies and state attorneys general -- is that these expensive living trust products are marketed to people who really don't need them. David Certner, legislative director for AARP, says that most people don't need a living trust. Since most people have simple estates, a will is a cheaper option that a living trust.

These living trust kits -- which run about $2,000, are marketed by salesman that may call you on the phone. They may show up at your door too saying that if you don't buy a living trust that your estate could be eaten up by taxes, or that it could take years for your estate to be given out to your heirs. You may even be asked to attend a "free lunch seminar." Of course, you know there's no such thing as a free lunch. Basically you are being given the hard sell, not only on living trust, but also with products like annuities.

2. Who should consider a living trust

A living trust can be helpful if you have children or grandchildren with special needs, own your own business, or you own real estate in more than one state.

If you don't fall into one of those categories, you might be better off with a will that will be a fraction of the cost. If you own a house or have a bank account or a joint brokerage account with your spouse, these assets will automatically transfer over to the surviving spouse and you don't need a trust.

In reality, only about 5% of the population should consider a trust according to AARP. Remember that if you want to know if a living trust is for you, go to an estate planning attorney. Don't trust any "one size fits all" estate planning product. And don't believe any claims that the AARP has endorsed any living trust document.

-- CNN's Jen Haley contributed to this article.

Talkback: Do you know anyone who recently started a living trust plan?