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July 18, 2008 at 10:06 AM
American Equity Investment Life Insurance Company has settled a class action suit in Kentucky state court over the sales of annuities to purchasers of living trusts..
The settlement resolves Panter vs. Tackett et al., a class-action suit filed in a Jefferson County, Ky., state circuit court against American Equity, West Des Moines, Iowa, and other plaintiffs.
American Equity could pay the settlement to as many as 24,000 older consumers, according to documents filed with the court.
William McMurry of McMurry & Associates, Louisville, Ky., the lead counsel for the plaintiffs, announced the final approval of the settlement, and a spokeswoman for American Equity confirmed the agreement.
The plaintiffs accused American Equity in their suit of participating in “a living trust mill.”
Marketers who run living trust mills persuade elderly consumers to buy living trusts as a way to avoid probate and reduce estate taxes, McMurry says.
The plaintiffs’ suit charges American Equity of working with Dallas marketing firms and local attorneys from 1997 to 2007 to persuade older consumers to replace current investments with American Equity deferred annuities.
The annuities had 20-year terms, and surrender charges for early withdrawal were substantial, the plaintiffs alleged.
Wendy L. Carlson, American Equity’s chief financial officer and general counsel, notes that recipients of the settlement will receive payments only if they annuitize their settlement. The settlement, therefore, provides an economic benefit to the company as well as to the policyholders who agree to the settlement.
