Nearly 10 years ago, my in-laws placed their co-op into a trust and made their youngest child, a widow, the trustee and power of attorney. Copies of the trust were not given to the other two beneficiaries, the husband and his brother.
My father-in-law passed away three years ago, and my mother-in-law, who was originally in an assisted living facility, is now in a nursing home. (The trust is more than five years old, so the nursing home expenses are paid for by Medicaid.) The apartment was sold a year ago for $1.5 million.
Unfortunately, my in-laws took out a reverse mortgage to subsidize their meager pension and the company recovered almost $700,000. After deducting fees for attorneys, real estate agents, the co-op board and others, $585,000 remained, which was placed in a trust checking account.
Now let’s move on to the problem. My husband, myself, and my brother-in-law have all helped and supported my sister’s life by selling our stocks and taking on the responsibility of getting our mother into a wonderful assisted living community.
However, since my mother-in-law moved into a nursing home for the first time over two years ago, my sister-in-law has never come to visit her. Her sister-in-law stopped contacting her after she sold the apartment. She doesn’t answer her cell phone or home phone. She doesn’t respond to messages.
She sometimes blocked our texts and calls. We now hear she is planning to move out of state, keeping her whereabouts a secret. We haven’t seen the financial statements and the bank says only the trustees can access that information.
We don’t want to get dragged into a long and expensive legal battle. I don’t know if the money is gone. That may be why she stopped all communication. She has always had problems, but she has all the power because she was her stepparents’ favorite child.
My husband is our second POA and the bank requires legal proof that she is ineligible before converting her to POA. Is there any way? What can we do?
Going up a stream without a paddle
Monetarist: “I cashed out my retirement account and bought a house”: My husband won’t pay the mortgage, leaving me and our two children behind. What now?
Dear Up the Creek,
I believe your husband is a “successor” trustee rather than a “second” trustee. A second trustee will be appointed for her to share the responsibility. They may have different skills. For example, one trustee may have legal knowledge and the other may be an accounting expert. Like all fiduciaries, your sister-in-law has a fiduciary responsibility to act in the best interests of your beneficiaries. These are the duty of loyalty (fulfilling the terms of the trust), confidentiality, and prudence (managing the trust carefully). and the duty to inform and explain.
A second trustee ensures ethical and accurate management of the trust, also serves as a safety net to pay related taxes, and also avoids family drama by not showing favoritism to one of the siblings. It also helps to avoid. Being a trustee comes with a lot of work, but she also has a lot of authority in overseeing the trust. While this sounds great in theory, it can also lead to conflicts, especially when large sums of money and multiple stakeholders are involved.
The successor trustee will do exactly what it says on the tin, which is probably the case here since your sister-in-law seems to be holding all the cards. This means they will take over as the original trustee if they die or become otherwise incapacitated. . In either case, the trustee must follow a “Declaration of Trust” that lists her assets on behalf of her grantor (her husband’s father or mother) and outlines the terms of the trust. Trustees do not act on their own whims.
file a complaint with the court
Most trusts and state laws governing trust management provide beneficiaries with the right to a copy of the trust and a periodic accounting of its assets, said Mike Fifik, a Green Tree, Pa., attorney and trust member. It is said that he is giving. legal shield, a network of lawyers. “At the very least, you should send a written accounting request to her sister-in-law with her proof of mailing. If she doesn’t provide them, you can file a lawsuit in her court to force her to give her account.” I can.”
“If you truly believe that your sister-in-law is incapable of continuing as trustee, you should petition the court to remove her and appoint a replacement,” he added. “Once the petition is filed, you will be able to obtain important information such as a copy of the trust, account information, and information about your sister’s medical conditions that are relevant to your capacity as a trustee. This process can be traumatic for the family. It’s a lot of work and it’s expensive.”
However, if successful, you should be able to recover your legal costs and ensure that the trust has not been mismanaged. Perhaps your sister-in-law is not fully aware of her responsibilities, is on a blackout, or has other issues that interfere with her ability to honor the terms of her trust. Although taking legal action is always a last resort, it is best to act while you can still contact the trustee. Once she is gone, she will have to file a claim in court.
If you have financial and ethical questions, you can email The Moneyist at qfottrell@marketwatch.com. You can also follow Quentin Fottrell on X, the platform formerly known as X. twitter.
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