Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

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jastevenson
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Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by jastevenson » Tue Jul 09, 2019 7:54 pm

A family member has a medical condition that predisposes them to making rash financial decisions and has made them susceptible to financial scammers. This individual was formerly healthy, very intelligent, and hardworking, and has a 1 million dollar portfolio, which is invested in ~90% bonds (their preference).

I have been respectful of their autonomy and reluctant to intervene in their financial affairs, but in recent years, they have been taken advantage of by scammers. I would estimate that they have already lost 200k when they sold off bonds to refill their bank account after it had been depleted due to various online and telephone scams.

I have suggested that this family member appoint an individual (whether myself or an independent financial advisor) to manage their money, but they have declined (primarily because their mental disorder prevents them from realizing that they are being repeatedly defrauded). I looked into guardianship, but they are not yet so "far gone" for it to be a reasonable option.

Is there something that they can invest in that will protect their principal, and generate some sort of revenue stream, but which cannot be easily sold off the next time some scammer comes knocking?

I basically want to protect my family member from themselves, so that if a scammer calls them on the phone and asks my family member to wire 200k to Nigeria, they can't do it.

I can help up to a point (one option I had considered is having them liquidate the assets, having them buy a condo with the money, I'd arrange for a property management company to handle it, and have them mail my family member a check each month). This way, they'd still feel "in control" of their money.

Thank you in advance!!
Last edited by jastevenson on Tue Jul 09, 2019 8:07 pm, edited 3 times in total.

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whodidntante
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by whodidntante » Tue Jul 09, 2019 8:02 pm

I suggest asking an attorney about your options. I suspect state law will be a factor.

stan1
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by stan1 » Tue Jul 09, 2019 8:20 pm

One option would be annuitization which would turn the assets into future year cash flows (income). I don't know whether your relative would consider this, but maybe he would since he's OK with bonds. I'm normally not a fan of annuities but this seems like a case where they could offer protection from any number of risks and liabilities.

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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by MotoTrojan » Tue Jul 09, 2019 8:23 pm

stan1 wrote:
Tue Jul 09, 2019 8:20 pm
One option would be annuitization which would turn the assets into future year cash flows (income). I don't know whether your relative would consider this, but maybe he would since he's OK with bonds. I'm normally not a fan of annuities but this seems like a case where they could offer protection from any number of risks and liabilities.
+1. Would want some COLA but compared to holding 90% bonds for life (and the occasional 10% loss due to scam) you'd probably still come out ahead.

OP consider me intrigued by what this condition is, but I won't pry any further.

dbr
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by dbr » Tue Jul 09, 2019 9:13 pm

The above suggested annuity, meaning a single premium immediate fixed annuity, would prevent money being frittered away. But it is a little of a cut off your nose to spite your face solution as it is tough to find inflation indexed annuities and one should also not leave oneself without any reserves. Another option is to put the money in a trust and find a trustee who is iron clad impervious to begging and might be willing to be sued if this person is clever enough and persistent enough to hire a lawyer and fight the trustee for his money. It might work for you to own the condo. Otherwise they could sell it or take out a loan on it. They could also ask for the money back or sue you to get it.

I suspect that the subject of this problem would not agree to an annuity or to a trust.

Is there any possibility of treatment for the disorder that might alleviate the problem? If the condition is permanent you might try some more with legal advice either short of or a retry of guardianship. If this person is not elderly it is tougher.

My personal experience with something of this nature is that the end of the story was that the money finally went away and then things had to be dealt with. Actual guardianship was too high a barrier to cross both legally and practically.

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Sandtrap
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by Sandtrap » Tue Jul 09, 2019 9:25 pm

As long as the person is cognizant of being cognizant, even though illusory, things will not change. And, the harder others try to help, the more they will resist and become even more irrational.

There is no solution without thier consent.

Seek legal counsel and conference together with the impaired person. That's about the best you can do.

Good luck
j

Unfortunately, there are so many that fritter away their savings/earnings or are open to scammers, codependents, and "reverse enablers". Whether cognitively impaired, in denial, naive, overconfident, or simply ignorant, the result is still the same. :shock:
j
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by Beehave » Tue Jul 09, 2019 10:02 pm

Maybe 1/2 to fund an annuity (possibly with inflation protection) and 1/2 into the Vanguard Managed Payout fund? As suggested above, these may not be ideal but at least they might preserve the wealth.

Is the impairing condition being cared for and documented? At a minimum, if for any reason the funds do become depleted, at least Social Security disability might be genuinely applicable here, and it will require documentation. Also, I agree about seeing a lawyer. If the family member is being scammed, perhaps there is some objective evidence that can be collected to enable you or another family member to become some level of guardian. It seems to me that any possible record-keeping and documentation of financial losses and illness could be helpful.

I'd also suggest trying to make sure taxes and any necessary insurance payments are being made.

I wish you all well.

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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by Gnirk » Wed Jul 10, 2019 12:16 am

I would think that if a person has been diagnosed with cognitive impairment, and has been a victim of multiple scams, then it’s obvious that person can really no longer manage their own financial affairs, and needs a guardian to do so. I would see an attorney, perhaps one that specializes in elder law.

I sympathize with you. It’s not easy to protect people from themselves.

MathWizard
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by MathWizard » Wed Jul 10, 2019 12:28 am

An inflation adjusted annuity is the best option as has been discussed.

Most scams are by phone or email.

One thing to look into is blocking all calls but for a minimal contact list. I believe iPhones make this easy, Androids or landlines
may be more difficult.

An email filter might also be useful, sending everything to a spam folder except email from know individuals.

These would not be perfect, but would filter out the vast majority of unwanted contacts.

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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by smectym » Wed Jul 10, 2019 7:09 am

Is this “formerly very successful, intelligent, hardworking” etc. individual now no longer any of these things due to medical issues? If so, then part of the problem may be that the individual suffers from isolation, feelings of loneliness, boredom, and lowered self-esteem. Interacting with scammers, and otherwise treating ones financial portfolio as a source of recreation, may seem to offer relief for some of those symptoms. Just something else to consider, and even without a diagnosed cognitive disorder, no household is necessarily immune to these issues as household members age. In particular, personal loneliness can be a huge threat to the portfolio, and scam artists are quite skillful at exploiting this human weakness.

owenmia
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by owenmia » Wed Jul 10, 2019 12:51 pm

Good for you for doing this.

My Dad was in this position but never actually got scammed.

Not a lawyer but based on personal experience:

You should begin proceeding to get guardianship immediately before someone else does.

There are people in south Florida who do nothing else bu take guardianship of old people with cognitive decline. It sounds crazy but they are able to do it. Make sure this is not a threat in your state.

Also, hopefully the broker is a good guy. My dad's was more than willing to work with relatives to keep everyone appraised of the situation.

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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by dm200 » Wed Jul 10, 2019 12:56 pm

Sandtrap wrote:
Tue Jul 09, 2019 9:25 pm
As long as the person is cognizant of being cognizant, even though illusory, things will not change. And, the harder others try to help, the more they will resist and become even more irrational.

There is no solution without thier consent.

Seek legal counsel and conference together with the impaired person. That's about the best you can do.

Good luck
j

Unfortunately, there are so many that fritter away their savings/earnings or are open to scammers, codependents, and "reverse enablers". Whether cognitively impaired, in denial, naive, overconfident, or simply ignorant, the result is still the same. :shock:
j
Yes - this is often "unfortunate". The challenge is to get their "consent" for addressing the problem. Even some obvious scams are 100% "legal".

Is there any aspect to this that they can understand and comprehend?

clip651
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by clip651 » Wed Jul 10, 2019 2:31 pm

One small thing that may help a little - if they are in a living situation where salespeople tend to go door to door (such as a house or other housing with a street accessible doorbell), put up a No Solicitors sign. This won't stop the phone and online scammers, but it may reduce the door to door variety. Examples are folks selling a new roof, new siding, lawn care, alarm systems and others, which may or may not be scams, but also aren't generally good to agree to ... if you need a new roof, you go shopping for a good roofer, you don't go with the first guy that knocks on your door.

I don't have a good solution for the other issues you raise. For older relatives who are cooperative but at risk of being scammed, I simply advise them to screen all calls, and only return calls to friends and relatives they actually know. And I taught them about internet safety and to not open emails or click on links that look suspicious. This doesn't help if the person you're trying to help doesn't see the problem/risk, etc, as you're describing, and isn't willing to accept help or advice. :(

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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by barnaclebob » Wed Jul 10, 2019 2:48 pm

Gnirk wrote:
Wed Jul 10, 2019 12:16 am
I would think that if a person has been diagnosed with cognitive impairment, and has been a victim of multiple scams, then it’s obvious that person can really no longer manage their own financial affairs, and needs a guardian to do so. I would see an attorney, perhaps one that specializes in elder law.

I sympathize with you. It’s not easy to protect people from themselves.
It probably depends on whether these were legit scams like sending money to Nigeria or just bad but legal investments.

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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by dm200 » Wed Jul 10, 2019 2:58 pm

I cannot suggest just "how", but what you want to accomplish is some kind of protective "envelope" around them - such that financial access filters through someone financially aware - and can get rid of the bad guys/gals.

I would also focus on protection from scams, etc. - rather than the details of the investments.

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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by Swimmer » Thu Jul 11, 2019 9:02 am

Don’t know about the others, but at Vanguard one can name a “trusted contact.” That person would be contacted in the event I’d attempt a transaction that was out of the norm for me.

Something like this might help, but your relative would need to authorize this voluntarily.

Sorry you are dealing with this. Must be quite an ongoing concern.

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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by bsteiner » Thu Jul 11, 2019 9:07 am

dbr wrote:
Tue Jul 09, 2019 9:13 pm
The above suggested annuity, meaning a single premium immediate fixed annuity, would prevent money being frittered away. But it is a little of a cut off your nose to spite your face solution as it is tough to find inflation indexed annuities and one should also not leave oneself without any reserves. Another option is to put the money in a trust and find a trustee who is iron clad impervious to begging and might be willing to be sued if this person is clever enough and persistent enough to hire a lawyer and fight the trustee for his money. ...

My personal experience with something of this nature is that the end of the story was that the money finally went away and then things had to be dealt with. Actual guardianship was too high a barrier to cross both legally and practically.
A trust with highly trustworthy individuals and/or a bank or trust company as trustees is likely to be the best solution. Guardianships are generally cumbersome.

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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by Nowizard » Thu Jul 11, 2019 9:20 am

Hard to know what is going on without a diagnosis, but not asking for that. Assuming this is related to dementia, it will almost certainly increase as time goes by. There would seem to be a probability of future need for custodial care. In that sense, the best use of available funds could be an approach to setting aside funds for future care. Probably not insurable now, but many retirement facilities have upfront charges for reservations with the option of when to go. For example, relatives paid $150K for entry, waited two years and now pay $4,000 a month in charges for a very nice apartment and other services in independent living. That charge remains the same as they move from independent living to assisted care to nursing care, if required. If such is presented as planning, without regard to current status, it might be considered. Just a shot in the dark.

Tim

Katie
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by Katie » Thu Jul 11, 2019 10:14 am

For those suggesting an annuity with inflation protection, would you consider a SPIA and a a deferreed annuity or QLAC that kicks in later to help provide inflation protection?

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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by rj342 » Thu Jul 11, 2019 10:16 am

owenmia wrote:
Wed Jul 10, 2019 12:51 pm
Good for you for doing this.

My Dad was in this position but never actually got scammed.

Not a lawyer but based on personal experience:

You should begin proceeding to get guardianship immediately before someone else does.

There are people in south Florida who do nothing else bu take guardianship of old people with cognitive decline. It sounds crazy but they are able to do it. Make sure this is not a threat in your state.

Also, hopefully the broker is a good guy. My dad's was more than willing to work with relatives to keep everyone appraised of the situation.
Similar problems here, dealt with unsuccessfully. Father making bad decisions (always did to an extent but worse w age) BUT fully coherent. Refused to move out of decaying house in decaying unsafe neighborhood (yard dogs inside for security = filth), declining health otherwise. Long ugly story.
Wouldn't go into senior apartment when still healthy enough, then balked at assisted living when ok enough for them, then really need to be in nursing home long term, which would require him signing over pension under Medicaid to get into.
He even refused to go to the State Veterans Home for which he was eligible (even though not eligible for VA) - and that so dirt cheap he would NOT have to do Medicaid, as well as said by everyone to be nicest facility in the state, private included.

TWICE went through state DHR to have declared incompetent, once for us to get guardianship, second time just to get *them* to take it on to sidestep any crazy claims of conflicts of interest (he had NO assets, only the pretty decent federal pension).
No doctor would declare him mentally incompetent, not incapacitated in any usual sense. Provision in law for guardianship under "self neglect" but very, very hard to make stick. He put on a good show in court, judge throwing it out quickly ,in spite of medical records showing repeat hospitalizations, house out an episode of Hoarders too nasty to air.
He died in 2017 at 87.

Couple other tidbits -- at least in this state there is a court appointed 'guardian' for their person, and a 'conservator' for finances - two roles, although could be same person.

Finally - I *did* get a Power of Attorney from him at one point to handle some things while he was hospitalized, that he did not actually revoke, and some people acted like that should be slam dunk but it is NOT. You are required to make good faith effort to look out for their best interests so do have some liability exposure (even though standard is pretty lax). It is one thing if they are incapacitated and it is all up to your best judgment, but if they ARE competent -- then you are potentially in a very bad spot if you try to use the POA to do something they explicitly do not want to you to do on their behalf, such as sign nursing home Medicaid application.

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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by Kagord » Thu Jul 11, 2019 11:21 am

All you can really do here is provide advice to the person. A POA likely won't help much, as you can't lock out the individual from undoing whatever you do. I think your only course is court appointed guardianship, and It's very difficult to to prove someone incompetent. Expect questions like "What is your name?", "What state/city to you live in", "What is your date of birth?", if they can answer these questions, they may be presumed competent as they know who they are and where they live. If all the money goes, medicaid steps in for care, and will eat up all assets that haven't been protected 5 years ago.

I know about this because I lost a large inheritance from foolishness. In essence, what I learned, it's their money, they can do what they want with it, you have no right to manage or protect it, even if intentions are not for yourself, suck it up.

On the plus side, you will be in control of your fate when you get older, these are individual protections that could be easily mis-used, which we may appreciate ourselves at some point.

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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by Valuethinker » Thu Jul 11, 2019 11:29 am

stan1 wrote:
Tue Jul 09, 2019 8:20 pm
One option would be annuitization which would turn the assets into future year cash flows (income). I don't know whether your relative would consider this, but maybe he would since he's OK with bonds. I'm normally not a fan of annuities but this seems like a case where they could offer protection from any number of risks and liabilities.
+1 for SPIA annuity

It is possible also to secure a survivor benefit.

The only other possibility is a legal Avenue.

owenmia
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by owenmia » Thu Jul 11, 2019 11:43 am

When my dad was in this position, I spoke to his broker regularly who kept us appraised of his financial decisions.

I also had access to his bank and brokerage account username and passwords.

I would look into guardianship in your state. Does he have children? They can get better access with brokers and etc.

owenmia
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by owenmia » Thu Jul 11, 2019 11:52 am

You might also ask the other members here about a fiduciary.

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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by owenmia » Thu Jul 11, 2019 11:59 am

rj342 wrote:
Thu Jul 11, 2019 10:16 am
owenmia wrote:
Wed Jul 10, 2019 12:51 pm
Good for you for doing this.

My Dad was in this position but never actually got scammed.

Not a lawyer but based on personal experience:

You should begin proceeding to get guardianship immediately before someone else does.

There are people in south Florida who do nothing else bu take guardianship of old people with cognitive decline. It sounds crazy but they are able to do it. Make sure this is not a threat in your state.

Also, hopefully the broker is a good guy. My dad's was more than willing to work with relatives to keep everyone appraised of the situation.
Similar problems here, dealt with unsuccessfully. Father making bad decisions (always did to an extent but worse w age) BUT fully coherent. Refused to move out of decaying house in decaying unsafe neighborhood (yard dogs inside for security = filth), declining health otherwise. Long ugly story.
Wouldn't go into senior apartment when still healthy enough, then balked at assisted living when ok enough for them, then really need to be in nursing home long term, which would require him signing over pension under Medicaid to get into.
He even refused to go to the State Veterans Home for which he was eligible (even though not eligible for VA) - and that so dirt cheap he would NOT have to do Medicaid, as well as said by everyone to be nicest facility in the state, private included.

TWICE went through state DHR to have declared incompetent, once for us to get guardianship, second time just to get *them* to take it on to sidestep any crazy claims of conflicts of interest (he had NO assets, only the pretty decent federal pension).
No doctor would declare him mentally incompetent, not incapacitated in any usual sense. Provision in law for guardianship under "self neglect" but very, very hard to make stick. He put on a good show in court, judge throwing it out quickly ,in spite of medical records showing repeat hospitalizations, house out an episode of Hoarders too nasty to air.
He died in 2017 at 87.

Couple other tidbits -- at least in this state there is a court appointed 'guardian' for their person, and a 'conservator' for finances - two roles, although could be same person.

Finally - I *did* get a Power of Attorney from him at one point to handle some things while he was hospitalized, that he did not actually revoke, and some people acted like that should be slam dunk but it is NOT. You are required to make good faith effort to look out for their best interests so do have some liability exposure (even though standard is pretty lax). It is one thing if they are incapacitated and it is all up to your best judgment, but if they ARE competent -- then you are potentially in a very bad spot if you try to use the POA to do something they explicitly do not want to you to do on their behalf, such as sign nursing home Medicaid application.
I went through something similar with my father but not as harrowing. He was losing it and managed to live alone until he thought people were in his apartment with him. He called the police several times.

This was after years of refusing any help. Finally he could no longer function and appeared at the emergency room holding up papers but unable to speak.

That was when he went into a memory care unit. But luckily for him he passed 3 months after when he could no longer talk or use the bathroom.

My consolation was that I was there for him almost every day at the end so he knew family was there

He had 1.4 million in bonds but I had access to his broker. His bank accounts and I the brokerage account.

If somone had stolen that money I would have gone to war. And I mean that literally.

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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by bertilak » Thu Jul 11, 2019 12:51 pm

To the op:

You may be able to convince your "family member" that there are financial dangers to watch out for. A couple of examples: identity theft, asset confiscation if a need for nursing home arises. These can be protected from by setting up an irrevocable trust. (The nursing home protection must be done 5 years in advance or the trust can be broken into.) Your family member may be open to such an arrangement.

As the executor of the trust, you would be in control. I was in such a position. I made a promise to the beneficiary of the trust that I would not "do anything" without his approval. As time went on, he lost interest in all financial matters except for the occasional questions "Do I have enough? Am I doing OK?"

EDIT: When discussing this with your family member it might be more diplomatic to say "nursing care" as opposed to "nursing home." I do speak from some experience.
Last edited by bertilak on Thu Jul 11, 2019 1:34 pm, edited 2 times in total.
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by bsteiner » Thu Jul 11, 2019 12:55 pm

Assuming there are no disputes among family members, you can probably avoid a guardianship if the person is being taken care of physically, and if someone has a power of attorney to manage the person's affairs, or (preferably if there are predators or scammers on the horizon) there's a trust with a trustee who can manage the person's affairs.

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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by Ricchan » Thu Jul 11, 2019 1:09 pm

+1 for irrevocable trust.

You can set it up so the trust income is paid out to the individual to help provide for normal living expenses, while specifying that the principle can only be sold off in certain situations (e.g. medical emergencies, end of life care, etc.) as described in the trust document you end up drafting, preferably with the help of a trust lawyer.

If you don't feel comfortable acting as a trustee and don't know anyone you can trust who does, you can use a public fiduciary like Vanguard to serve as the trustee.

The individual will have to be on board with this, of course, since they will be the grantor of the trust. They will be both the grantor and sole beneficiary, and the trustee role should be given to someone they have confidence in to manage the financial decisions for the trust.
Last edited by Ricchan on Thu Jul 11, 2019 1:15 pm, edited 1 time in total.

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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by White Coat Investor » Thu Jul 11, 2019 1:10 pm

jastevenson wrote:
Tue Jul 09, 2019 7:54 pm
A family member has a medical condition that predisposes them to making rash financial decisions and has made them susceptible to financial scammers. This individual was formerly healthy, very intelligent, and hardworking, and has a 1 million dollar portfolio, which is invested in ~90% bonds (their preference).

I have been respectful of their autonomy and reluctant to intervene in their financial affairs, but in recent years, they have been taken advantage of by scammers. I would estimate that they have already lost 200k when they sold off bonds to refill their bank account after it had been depleted due to various online and telephone scams.

I have suggested that this family member appoint an individual (whether myself or an independent financial advisor) to manage their money, but they have declined (primarily because their mental disorder prevents them from realizing that they are being repeatedly defrauded). I looked into guardianship, but they are not yet so "far gone" for it to be a reasonable option.

Is there something that they can invest in that will protect their principal, and generate some sort of revenue stream, but which cannot be easily sold off the next time some scammer comes knocking?

I basically want to protect my family member from themselves, so that if a scammer calls them on the phone and asks my family member to wire 200k to Nigeria, they can't do it.

I can help up to a point (one option I had considered is having them liquidate the assets, having them buy a condo with the money, I'd arrange for a property management company to handle it, and have them mail my family member a check each month). This way, they'd still feel "in control" of their money.

Thank you in advance!!
You either talk them into allowing someone to help or get a guardian appointed. Barring that...you just watch them slowly go broke and cry.

Lots of options once they agree to it or a guardian is appointed, but it's a free country until then.

It's a lot like getting people off drugs actually. Family members always want me to commit their addicted family member to some sort of institution. They don't realize that isn't a legal option in this country.
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by 3-20Characters » Thu Jul 11, 2019 1:24 pm

White Coat Investor wrote:
Thu Jul 11, 2019 1:10 pm
jastevenson wrote:
Tue Jul 09, 2019 7:54 pm
A family member has a medical condition that predisposes them to making rash financial decisions and has made them susceptible to financial scammers. This individual was formerly healthy, very intelligent, and hardworking, and has a 1 million dollar portfolio, which is invested in ~90% bonds (their preference).

I have been respectful of their autonomy and reluctant to intervene in their financial affairs, but in recent years, they have been taken advantage of by scammers. I would estimate that they have already lost 200k when they sold off bonds to refill their bank account after it had been depleted due to various online and telephone scams.

I have suggested that this family member appoint an individual (whether myself or an independent financial advisor) to manage their money, but they have declined (primarily because their mental disorder prevents them from realizing that they are being repeatedly defrauded). I looked into guardianship, but they are not yet so "far gone" for it to be a reasonable option.

Is there something that they can invest in that will protect their principal, and generate some sort of revenue stream, but which cannot be easily sold off the next time some scammer comes knocking?

I basically want to protect my family member from themselves, so that if a scammer calls them on the phone and asks my family member to wire 200k to Nigeria, they can't do it.

I can help up to a point (one option I had considered is having them liquidate the assets, having them buy a condo with the money, I'd arrange for a property management company to handle it, and have them mail my family member a check each month). This way, they'd still feel "in control" of their money.

Thank you in advance!!
You either talk them into allowing someone to help or get a guardian appointed. Barring that...you just watch them slowly go broke and cry.

Lots of options once they agree to it or a guardian is appointed, but it's a free country until then.

It's a lot like getting people off drugs actually. Family members always want me to commit their addicted family member to some sort of institution. They don't realize that isn't a legal option in this country.
⬆️ This is the unfortunate truth. Nothing you can do if they can be talked into “legitimately” giving away the money. I’ve read many accounts of these scams (prey on elderly usually) and they are are often borderline legal. Scammers often have plausible deniability in the way they provide a “service” or talk up some charity and say the person agreed to it. Very sad.

bltn
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by bltn » Thu Jul 11, 2019 8:41 pm

bsteiner wrote:
Thu Jul 11, 2019 9:07 am
dbr wrote:
Tue Jul 09, 2019 9:13 pm
The above suggested annuity, meaning a single premium immediate fixed annuity, would prevent money being frittered away. But it is a little of a cut off your nose to spite your face solution as it is tough to find inflation indexed annuities and one should also not leave oneself without any reserves. Another option is to put the money in a trust and find a trustee who is iron clad impervious to begging and might be willing to be sued if this person is clever enough and persistent enough to hire a lawyer and fight the trustee for his money. ...

My personal experience with something of this nature is that the end of the story was that the money finally went away and then things had to be dealt with. Actual guardianship was too high a barrier to cross both legally and practically.
A trust with highly trustworthy individuals and/or a bank or trust company as trustees is likely to be the best solution. Guardianships are generally cumbersome.
I was waiting to hear what bsteiner thought.

Given this information , consider getting your relative to allow you to make arrangements with Vanguard to take his investments
into account with them. Then see if your relative will allow you to have his power of attorney with Vanguard . Then if a trust can be established with Vanguard as the trustee and investment manager, he will have a measure of security.
If he won t let you help him, then there may be nothing you can do. Your persuasion may be key.

Tough situation, but not uncommon. My wife and I have both dealt with dementia in our families. My father in law s early dementia changed his family s economic landscape, drastically, well before I met my wife.

Good luck.

AvidGardener
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by AvidGardener » Tue Jul 16, 2019 11:10 pm

When updating dad's Trust at age 86, the trust atty recommended that I be named co-trustee. From that point on I've handled all of dad's investments and expenses. Dad wasn't savvy with past investments. Didn't even know what a CD is. He lives modest and had saved quite a bit of his pension for decades Now his money is invested conservatively Bogle style. On occasion dad does ask how things are going and monthly I show him his spreadsheet. He has age appropriate memory loss. He has a 50k CD that will mature soon, I will probably add to total bond or perhaps treasuries index. Grateful for the co-trustee add and for all the people who share their knowledge here.

psy1
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by psy1 » Wed Jul 17, 2019 12:24 am

I am guessing that this is not dementia but mental illness at a younger age. If so, there is little you can do. Guardianship has a very high bar and squandering money won't win the case. Also, it would be very odd to get a guardianship or conservatorship approved absent any history of hospitalization and extensive documentation and expert testimony.

If the situation is dementia, it will worsen. Consulting an attorney now would be wise for developing a game plan. Even with dementia though, just squandering money is not enough to win any legal battle that would limit his rights.

Steel yourself for a soured relationship in proportion to the effort you put in to this one.

I once saw an 80-something demented man with a 20-something girlfriend. He had no assets and was very simple but had valuable land (by inheritance) that he wanted to give the girlfriend. His family, who owned the adjacent land, was livid and tried to take legal action. Even though he had mild dementia he understood that he owned the land, that he was free to do with it as he wished, and that he wished to give it away, and that if he gave it away it would no longer be his, etc. Therefore he was competent to make the decision, even if unwise or undesired by his family.

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dm200
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Re: Safest way to invest $1 mil for individual with cognitive impairment to protect their assets?

Post by dm200 » Wed Jul 17, 2019 9:36 am

psy1 wrote:
Wed Jul 17, 2019 12:24 am
I once saw an 80-something demented man with a 20-something girlfriend. He had no assets and was very simple but had valuable land (by inheritance) that he wanted to give the girlfriend. His family, who owned the adjacent land, was livid and tried to take legal action. Even though he had mild dementia he understood that he owned the land, that he was free to do with it as he wished, and that he wished to give it away, and that if he gave it away it would no longer be his, etc. Therefore he was competent to make the decision, even if unwise or undesired by his family.
It is very nice to hear that this 20-something old young woman is being "so kind" to this elderly gentleman. :twisted:

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