ethics concern with trust

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Topic Author
MerriebytheSea
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ethics concern with trust

Post by MerriebytheSea »

I have ethics concerns with a trust and would appreciate input – A bit complex but interesting.

Dad passed, leaving a Trust for his 6 Children and 10 Grandchildren as well as a Sub-Trust for his last wife (S), a wonderful woman. Upon her death, what remained in the Sub-Trust was to revert back to his Children and Grandchildren. Dad appointed his friend’s wife (T) to be trustee. She was way over her head and had poor judgment. (T) refused to communicate to beneficiaries, refused to provide any accounting and handed everything over to a broker who was like the fox guarding the hen house, so we watch him carefully. Most all funds in the Trust were essentially distributed the first year. (T) allowed the Trust to languish for years, unbeknownst (supposedly) to the Trust attorney.

There were many irregularities, so I compelled some accounting in the 3rd year. I questioned some transactions which prompted the broker to call me very upset. He admitted he accidentally made transfers out of a personal account he managed for (S), into the estate Trust – about $25K worth. Since he had distributed those funds, he was in the pickle of needing to pay them back. He said he arranged with (S’s) trustee to have her estate reimbursed from her Sub-Trust, after her death, in order to avoid having to recover the distributed funds from 16 people. I didn’t like it but was advised to accept the plan.

When (S) passed the estate attny sent the 6 Children release forms in preparation for dividing the funds from the Sub-Trust six ways. All the children signed but me. I advised the attny that the grandkids had been left out. Oooops! They thanked me profusely and sent new release forms dividing the funds 16 ways. Releases are not required by the Trust or by the law. I signed most of the release that detailed the division …. but I crossed out language about a global release because there had been so many errors. I wrote that I had no questions or concerns and required no accounting. Nevertheless, they called to let me know that they would make it very expensive if I refused to sign a global release, by taking me to court. (I was told that is the way they do that – be very secretive, offer no accounting, then threaten to do lots of accounting at beneficiary expense if any questions arise. Before I could decide what to do , I learned that the Broker had NOT paid back S’s estate as committed. The estate attny told me that it was past the statute of limitations, so they are not concerned (that the estate essentially ripped off money from Dad’s wife through the broker due to lack of trustee oversight?). I asked, “Since the broker committed to pay it back doesn’t that extend the Statute of L?” No because he took the money from (S’s) private funds – you can go after the broker, but it will cost you. Maybe you can get his insurance to cover it, good luck. So, are we all supposed to ignore that our Trust took $25K of this woman’s money with our acquiescence? Do I have to spend money to get this wrong corrected?
000
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Re: ethics concern with trust

Post by 000 »

Not legal advice. Why not file a complaint with some regulatory agency? FINRA? SEC? CFPB? State Attorney General?
Luckywon
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Re: ethics concern with trust

Post by Luckywon »

MerriebytheSea wrote: Wed Sep 16, 2020 12:11 am I have ethics concerns with a trust and would appreciate input – A bit complex but interesting.

Dad passed, leaving a Trust for his 6 Children and 10 Grandchildren as well as a Sub-Trust for his last wife (S), a wonderful woman. Upon her death, what remained in the Sub-Trust was to revert back to his Children and Grandchildren. Dad appointed his friend’s wife (T) to be trustee. She was way over her head and had poor judgment. (T) refused to communicate to beneficiaries, refused to provide any accounting and handed everything over to a broker who was like the fox guarding the hen house, so we watch him carefully. Most all funds in the Trust were essentially distributed the first year. (T) allowed the Trust to languish for years, unbeknownst (supposedly) to the Trust attorney.

There were many irregularities, so I compelled some accounting in the 3rd year. I questioned some transactions which prompted the broker to call me very upset. He admitted he accidentally made transfers out of a personal account he managed for (S), into the estate Trust – about $25K worth. Since he had distributed those funds, he was in the pickle of needing to pay them back. He said he arranged with (S’s) trustee to have her estate reimbursed from her Sub-Trust, after her death, in order to avoid having to recover the distributed funds from 16 people. I didn’t like it but was advised to accept the plan.

When (S) passed the estate attny sent the 6 Children release forms in preparation for dividing the funds from the Sub-Trust six ways. All the children signed but me. I advised the attny that the grandkids had been left out. Oooops! They thanked me profusely and sent new release forms dividing the funds 16 ways. Releases are not required by the Trust or by the law. I signed most of the release that detailed the division …. but I crossed out language about a global release because there had been so many errors. I wrote that I had no questions or concerns and required no accounting. Nevertheless, they called to let me know that they would make it very expensive if I refused to sign a global release, by taking me to court. (I was told that is the way they do that – be very secretive, offer no accounting, then threaten to do lots of accounting at beneficiary expense if any questions arise. Before I could decide what to do , I learned that the Broker had NOT paid back S’s estate as committed. The estate attny told me that it was past the statute of limitations, so they are not concerned (that the estate essentially ripped off money from Dad’s wife through the broker due to lack of trustee oversight?). I asked, “Since the broker committed to pay it back doesn’t that extend the Statute of L?” No because he took the money from (S’s) private funds – you can go after the broker, but it will cost you. Maybe you can get his insurance to cover it, good luck. So, are we all supposed to ignore that our Trust took $25K of this woman’s money with our acquiescence? Do I have to spend money to get this wrong corrected?
I assume that S has a different set of beneficiaries than the 16 that your father's Trusts do? Are any S's beneficiaries aware of what happened? They are the group that is out 25k. If you feel strongly about this, then maybe you should advise one of them and let them decide whether to take action.
Cruise
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Re: ethics concern with trust

Post by Cruise »

000 wrote: Wed Sep 16, 2020 12:23 am Not legal advice. Why not file a complaint with some regulatory agency? FINRA? SEC? CFPB? State Attorney General?
If you suspect that the trust attorney was unethical or negligent, you can file a complaint with the (depending on your) state's Office of Disciplinary Counsel/State Bar. The Disciplinary Counsel will investigate your complaint to see if the attorney violated his duty to the trustees.
Topic Author
MerriebytheSea
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Re: ethics concern with trust

Post by MerriebytheSea »

Luckywon wrote: Wed Sep 16, 2020 1:14 am
I assume that S has a different set of beneficiaries than the 16 that your father's Trusts do? Are any S's beneficiaries aware of what happened? They are the group that is out 25k. If you feel strongly about this, then maybe you should advise one of them and let them decide whether to take action.
Yes, S was a step-mother who has two adult children. I have not told them and would hesitate to out of concern that it could provoke legal action against the trust. This concern is not about wanting to retain her $25K, but to avoid a legal battle. Keep in mind that I just learned that the broker who committed to reimburse these funds did not do so. I am very surprised that the trust attorneys do not want to pay back the money - it just seems so wrong. S was elderly, so rather than tell her of the error, the broker and trustee collaborated on a supposed deal that pushed the error across the statute of limitations - so now everyone is okay with that? Seems like taking advantage of the elderly.
Last edited by MerriebytheSea on Thu Sep 17, 2020 8:22 pm, edited 1 time in total.
Topic Author
MerriebytheSea
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Re: ethics concern with trust

Post by MerriebytheSea »

Cruise wrote: Wed Sep 16, 2020 1:33 am

If you suspect that the trust attorney was unethical or negligent, you can file a complaint with the (depending on your) state's Office of Disciplinary Counsel/State Bar. The Disciplinary Counsel will investigate your complaint to see if the attorney violated his duty to the trustees.
It is my understanding that a person cannot file with the bar except against their own attorney. The trust attorney functions to protect trustees, not beneficiaries. As I understand it, since the trustee turned a blind eye to this error, the trust attorney does not want to spend legal resources correcting it if he can get away with it. I suppose his argument would be that he is just advocating for his client, which is the trustee.
Luckywon
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Re: ethics concern with trust

Post by Luckywon »

MerriebytheSea wrote: Wed Sep 16, 2020 2:15 am
Luckywon wrote: Wed Sep 16, 2020 1:14 am
I assume that S has a different set of beneficiaries than the 16 that your father's Trusts do? Are any S's beneficiaries aware of what happened? They are the group that is out 25k. If you feel strongly about this, then maybe you should advise one of them and let them decide whether to take action.
Yes, S was a step-mother who has two adult children. I have not told them and would hesitate to out of concern that it could provoke legal action against the trust. This concern is not about wanting to retain her $25K, but to avoid a legal battle. Keep in mind that I just learned that the broker who committed to reimburse these funds did not do so. I am very surprised that the trust attorneys do not want to pay back the money - it just seems so crooked. S was elderly, so rather than tell her of the error, the broker and trustee collaborated on a supposed deal that pushed the error across the statute of limitations - so now everyone is okay with that? Seems like taking advantage of the elderly.
Interesting dilemma, I'm sure you are going to get a lot of opinions here on what to do. If it were me, i think i would consider something along the lines of trying to convince my fellow trust beneficiaries to unanimously request, as a group, that the trustee repay the money to S's estate. As a nuclear option, you could state that you will be informing S"s beneficiaries of what happened. This will likely stir up a hornets nest but perhaps all the trustee beneficiaries will be persuaded that the prospect of prolonged litigation with S's beneficiaries is not in their interests. The trustee's attorney may also decide it's proper to advise the trustee to repay the money, rather than expose the trust to the cost of litigation.

I wonder whether the statue of limitations may have been tolled upon the death of your stepmother, as her beneficiaries were unaware of this 25k debt. I'm sure the trustee would not want that issue to be litigated. Perhaps once the trustee realizes the cat is out of the bag, he'll be inspired to work with you to restore the 25k.

Good luck and please let us know what you decide and how this unfolds.
hachiko
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Re: ethics concern with trust

Post by hachiko »

MerriebytheSea wrote: Wed Sep 16, 2020 2:33 am
Cruise wrote: Wed Sep 16, 2020 1:33 am

If you suspect that the trust attorney was unethical or negligent, you can file a complaint with the (depending on your) state's Office of Disciplinary Counsel/State Bar. The Disciplinary Counsel will investigate your complaint to see if the attorney violated his duty to the trustees.
It is my understanding that a person cannot file with the bar except against their own attorney. The trust attorney functions to protect trustees, not beneficiaries. As I understand it, since the trustee turned a blind eye to this error, the trust attorney does not want to spend legal resources correcting it if he can get away with it. I suppose his argument would be that he is just advocating for his client, which is the trustee.
I suppose it depends on the state, but in many states anyone can file a complaint against an attorney. How seriously the overseers take it may depend on your relationship to that attorney, but you can still file a complaint. In fact, in the model rules attorneys have an ethical obligation to report ethics violations of other attorneys to the bar.

Does the trustee have a license that is regulated by finra? I have no experience with this but I have heard that finra complaints are taken pretty seriously.

But you should consult with a lawyer as any of your options could create problems you are unaware of.
Carefreeap
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Re: ethics concern with trust

Post by Carefreeap »

While not right I think it's up to S's beneficiaries to review the accounting of their Trust.

You can file complaints against both the broker and the atty but I'm sorry to say that $25k doesn't mean that much when one considers legal fees.

FWIW we had issues with DH's grandmother's Trust. Lots of mismanagement but at the end of the day we decided that $100k was cheap to get rid of DFIL's 3rd wife which my DH referred to as the "Greeding Widow".

To add insult to injury DFIL wanted DH to support 3rd wife from his (our) own funds. DH pointed out that 3rd wife had two able-bodied sons who could support their own mother. :oops:
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Cruise
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Re: ethics concern with trust

Post by Cruise »

MerriebytheSea wrote: Wed Sep 16, 2020 2:33 am
Cruise wrote: Wed Sep 16, 2020 1:33 am

If you suspect that the trust attorney was unethical or negligent, you can file a complaint with the (depending on your) state's Office of Disciplinary Counsel/State Bar. The Disciplinary Counsel will investigate your complaint to see if the attorney violated his duty to the trustees.
It is my understanding that a person cannot file with the bar except against their own attorney. The trust attorney functions to protect trustees, not beneficiaries. As I understand it, since the trustee turned a blind eye to this error, the trust attorney does not want to spend legal resources correcting it if he can get away with it. I suppose his argument would be that he is just advocating for his client, which is the trustee.
An attorney's breach of professional responsibility is actionable after a complaint by any party with relevant information.
Luckywon
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Re: ethics concern with trust

Post by Luckywon »

Was the 25k removed from S's personal account or from a trust account she was the grantor of? Did she have mental capacity at the time or did she have an attorney-in-fact or successor trustee? The answers might have some relevance with respect to whether some form of fraud or elder abuse was occurring at the time, which may change the options on the table now for S's beneficiaries.

I had earlier suggested trying to get your fellow beneficiaries on board with asking the trustee to return the 25k but upon further thought perhaps that onerous and unrealistic considering there are 16 beneficiaries. Perhaps a better options is to tell the broker that unless he makes this right you are going to inform S's beneficiaries of what happened. Moreover, you plan to encourage them to report him to his firm, any relevant regulatory agencies, district attorney and you will be honestly testifying as to what happened if called upon to do so. This may be very motivating to the broker if there was some kind of abuse or other breech at the time the 25k was removed from S's account.

I don't think I would let sleeping dogs lie. Things have a funny way of coming to light and if you stay silent now, you may be painted as the villain later on. Of course, the best reason to see that the right thing is done as you already intimated is that what happened was at least borderline fraudulent, victimized someone you respected and liked, and was contrary to your father's wishes.

Food for thought for those considering whether to appoint corporate vs individual trustees: I doubt these shenanigans would have occurred and the trust administration would probably have been cheaper in the hands of a reputable corporate trustee.
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MerriebytheSea
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Re: ethics concern with trust

Post by MerriebytheSea »

Cruise wrote: Wed Sep 16, 2020 1:20 pm
MerriebytheSea wrote: Wed Sep 16, 2020 2:33 am
Cruise wrote: Wed Sep 16, 2020 1:33 am

If you suspect that the trust attorney was unethical or negligent, you can file a complaint with the (depending on your) state's Office of Disciplinary Counsel/State Bar. The Disciplinary Counsel will investigate your complaint to see if the attorney violated his duty to the trustees.
It is my understanding that a person cannot file with the bar except against their own attorney. The trust attorney functions to protect trustees, not beneficiaries. As I understand it, since the trustee turned a blind eye to this error, the trust attorney does not want to spend legal resources correcting it if he can get away with it. I suppose his argument would be that he is just advocating for his client, which is the trustee.
An attorney's breach of professional responsibility is actionable after a complaint by any party with relevant information.
The plot is a bit thicker than I shared. BUT IT MAY BE WORTH IT IF IT SERVES TO WARN OTHERS OF WHAT CAN HAPPEN TO THEIR ESTATE. Before I get into more, I should say that our Trustee handed over (S's) trusteeship to an associate of the broker (A). So there are two trustees under the protection of the trust attny. Our trustee allowed the broker to take distressing liberties and refused all communication with beneficiaries, including accounting. Unbeknownst to beneficiaries, who had been told by the trust attny that the trust HAD closed, the trustee held on to a very small piece of real estate; about 1.5 years later she tried to sell it "under the table" by cooking up a (provably false) story that she newly discovered it. She pitched this deal to the 6 Children in order to get them to quit claim it to a friend of hers, with the lure that it would pass them each about $2.5K. When I asked questions (like is this legal and why are you leaving out the grandchildren) she became incensed, sent angry emails and threatened to "quit". I called the estate attny who told me the trust had been closed 1.5 years, then called back and said it had not closed.

My siblings united with me, asked that (T) be removed as trustee and asked for accounting. We got none, so we hired a trust attny who seemed earnest but her efforts never helped much. She said, indeed by law, they have to provide accounting, but they have many ways to delay and avoid. They refused to provide a basic financial summary or share estate tax filings; instead flooded me with rhiems of paper with figures which I surmised were brokerage transactions - figures coming and going without title, identity, references or context. With great effort, I analyzed patterns and came up with 5 "what is this" questions. I got non-answers that begged the question. I finally drove to the broker and demanded he answer the questions. He said he "forgot", his assistant said she had spent plenty of time explaining to the estate attny and she was not going to waste more time explaining. Our attorney said she got no explanation from the estate attny. I threatened to have the broker audited. He went into meltdown and confessed that I had hit on an error, which as he put it, did harm rather than good. He called the siblings and convinced some that my snooping was hurting their $ interest. He said he called A (his trustee friend) and they came up with the after death payback plan of the 25K, which did not include telling S (alive and clear headed) what was going on. I did not like it but our attny advised me to accept it.

The estate attny agreed to remove (T) from all trustee work and have her husband sell the parcel, through reopened probate. He said that the value of the parcel (about $15K and what was left in the trust $3K, would be needed to cover his fees, but he could do it at a discount say $8K, if we asked no more questions and children (only) signed a release. My siblings signed off for what would have been $625 ($10K/16), I did not. We never heard back from the estate attny. I never had my questions answered and beneficiaries never got any accounting. I assumed the parcel was sold, the trust was closed and the attny kept all the funds for his work. So that bring us to where my story started.

The $25K was never paid back, the estate attny blundered once again (coming very close to bypassing 10 beneficaries) and is now threatening to make it "very expensive" if I refuse to sign a global release. I have no particular reason to suspect A, other than her close association with this shady broker. To her credit, (S's) Sub-trust increased slightly under her trusteeship. The estate attny says that alone should convince me to sign the release. But why should I give up my legal rights for self protection in order to give others the protection of global immunity under threat of running up expenses to the state - especially since I have found so many errors, even as late as last week? My oversight saved everyone, including the attny, from big messes twice. (My attny friend told me this obstructionism is the norm. Yes, state law compels accounting, but trusts are written to deny it, they typically stonewall and make the process of compelling accounting it so expensive, beneficiaries give up. He said if we go to court, they will tell the judge they avoided auditing in order to save beneficiaries money, but now they need to fund the oversight they never provided, to protect themselves, their trustee AND the beneficiaries - and typically the judge goes along with that.)

So I am left faced with having to choose between being party to ripping off the estate of my beloved step mother or entangling myself and other relatives in the legal world. I am told to let it go, $25K is not that much in the legal world. I suppose it is not much to these professionals. I guess I am just a simple person with naive notions about ethics and honor.
Lee_WSP
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Re: ethics concern with trust

Post by Lee_WSP »

I'm not sure what you think the trust attorney did other than to threaten you with legal action which seems an extreme response.

I also am unsure what you'd like the trust to do, the broker to do, or the attorney to do.

You said yourself that the sub trust would just be reabsorbed back into the main trust upon death. So, if S never intended to spend the $25k, so what? She's dead anyway; she can't spend it, nor can she pass it on to her heirs as it's supposed to go back into the main trust.

I'm being a little harsh here, but these are the facts. What wrong do you want the "trust" and "trust attorney" to correct?

I have nothing to say about the broker.
Luckywon
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Re: ethics concern with trust

Post by Luckywon »

Wow, OK upon hearing the above rest of this saga I have to change my mind again :D

If I were you, I would not sign any releases. I would inform S's beneficiaries of what happened vis-a-vis the 25k, and just let the chips fall where they may. At least, there will have been transparency on your part. By the way, I suspect the threat of an expensive accounting and audit is a bluff. What you have discovered is likely the tip of an iceberg and an accounting/audit presented in court is likely high on the trustee and broker's list of things to avoid.
Bobby206
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Re: ethics concern with trust

Post by Bobby206 »

Two things:

1) it sounds like $25k is the main issue. If so, I'd forget about it and move on with life.
2) it's not clear who the "estate attorney" represented. A lot of people mistakenly think the estate attorney represents the beneficiaries. Usually they only represent the fiduciary (trustee or executor). Thus your ability to even file a complaint against them might come on deaf ears.

Sounds like a crappy situation but I would look for the gate on with life door if it were me.
Topic Author
MerriebytheSea
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Re: ethics concern with trust

Post by MerriebytheSea »

Luckywon wrote: Wed Sep 16, 2020 3:46 pm
Food for thought for those considering whether to appoint corporate vs individual trustees: I doubt these shenanigans would have occurred and the trust administration would probably have been cheaper in the hands of a reputable corporate trustee.
In reply: The broker had been Dad's broker. S came to the marriage late in life with assets, but not much financial experience. When they married, Dad persuaded her to sell her home, co-invest in a new home with him and invest her remaining assets with his broker. For some reason, our trustee managed the sale of the co-owned home, after Dad passed. S complained to me the trustee refused to disclose to her any financial information regarding the sale of the home she co-owned. She was alert and intelligent, but very proper. So yes, this was her personal brokerage account. And yes, I think she was being taken advantage of, as we all were. The broker is independent, he does not work for others.

Your point about being painted as the villain is well taken. The crowd calls for Barabbas. Both the broker and the estate attny have used my questioning of blunders and misdeeds - even ones that saved them and others from harm and self-harm, to imply that the expenses of having to patch of their errors is due to my questioning. This blame the messenger is facilitated by the fact that errors have reduced benefits for Children. I have been consistently discreet about the errors. For example, I did not tell the grandchildren that all other parents had signed documents cutting them out of their share (twice!).

Yes, I tend to be careful expenditures, but my take-away from this is that a corporate trustee is a safer bet. The attorney was not able to help much because the trust is written to protect the trustee. I regret not approaching the court early on and compelling review by a CPA.
Lee_WSP
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Re: ethics concern with trust

Post by Lee_WSP »

MerriebytheSea wrote: Wed Sep 16, 2020 4:48 pm
Your point about being painted as the villain is well taken. The crowd calls for Barabbas. Both the broker and the estate attny have used my questioning of blunders and misdeeds - even ones that saved them and others from harm and self-harm, to imply that the expenses of having to patch of their errors is due to my questioning. This blame the messenger is facilitated by the fact that errors have reduced benefits for Children. I have been consistently discreet about the errors. For example, I did not tell the grandchildren that all other parents had signed documents cutting them out of their share (twice!).
Ah, I see the issue now.

Well, this would be a professional liability issue. Contact their professional liability insurers if they refuse to pony up themselves.
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MerriebytheSea
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Re: ethics concern with trust

Post by MerriebytheSea »

Lee_WSP wrote: Wed Sep 16, 2020 3:58 pm I'm not sure what you think the trust attorney did other than to threaten you with legal action which seems an extreme response.

You said yourself that the sub trust would just be reabsorbed back into the main trust upon death. So, if S never intended to spend the $25k, so what? She's dead anyway; she can't spend it, nor can she pass it on to her heirs as it's supposed to go back into the main trust.

I'm being a little harsh here, but these are the facts. What wrong do you want the "trust" and "trust attorney" to correct?
I don't mind you being harsh, I can take it, but I think you have misunderstood some of the facts. The trust attny did not threaten me personally with legal action, but to make things "very expensive" for the trust. The funds that were taken from S were not trust funds, but money from her own private account. The fact that she is dead and cannot spend it does not justify keeping it from her heirs. But since the broker made a plan to pay it back out of S's trust fund, ostensibly with the agreement of S's trustee, it would seem to be the honest thing to do, despite the fact that this "deal" moved the misdeed past the statute of limitations.

I would have liked the trust to pay it back or better yet try and compel the broker to pay it back through his insurance, although I realize this kind of uprightness does not tend to be the popular things to do. But since beneficiaries have tended to be quite compliant, signing things they did not understand, they would probably go along with it. And since S was elderly and not told of the misdeed or the plan to pay it back, there would seem to be some justification for thinking the trust had an obligation to correct what might been seen as dealings abusive of an elderly beneficiaries trust.
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MerriebytheSea
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Re: ethics concern with trust

Post by MerriebytheSea »

Luckywon wrote: Wed Sep 16, 2020 4:19 pm

I suspect the threat of an expensive accounting and audit is a bluff..... an accounting/audit presented in court is likely high on the trustee and broker's list of things to avoid.
No doubt the broker is having more than a little anxiety .... as for the S's trustee, not so much. The mis-depositing of S's personal money into the main Trust had nothing to do with her management of the Sub-Trust. Although the broker said he and she had agreed on a payback arrangement, we have no proof of that. Beneficiaries took him at his word. There is no evidence whatsoever that the trustee mishandled Sub-trust funds. Any audits of the Sub-Trust would be at the expense of Trust beneficiaries, not her.
Luckywon
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Re: ethics concern with trust

Post by Luckywon »

MerriebytheSea wrote: Wed Sep 16, 2020 5:24 pm
Luckywon wrote: Wed Sep 16, 2020 4:19 pm

I suspect the threat of an expensive accounting and audit is a bluff..... an accounting/audit presented in court is likely high on the trustee and broker's list of things to avoid.
No doubt the broker is having more than a little anxiety .... as for the S's trustee, not so much. The mis-depositing of S's personal money into the main Trust had nothing to do with her management of the Sub-Trust. Although the broker said he and she had agreed on a payback arrangement, we have no proof of that. Beneficiaries took him at his word. There is no evidence whatsoever that the trustee mishandled Sub-trust funds. Any audits of the Sub-Trust would be at the expense of Trust beneficiaries, not her.
I wonder then why the trustee is willing to close the chapter on this without fully unraveling this 25k liability. It seems she has an incentive to pay all the trust liabilities and have a full and transparent accounting, all on the dime of the trustee beneficiaries. Perhaps there is more to this than you know. This whole saga reeks of collusion.
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BolderBoy
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Re: ethics concern with trust

Post by BolderBoy »

Are you talking about a trust with $100s of millions in it? Or even $10s of millions?
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NotWhoYouThink
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Re: ethics concern with trust

Post by NotWhoYouThink »

Mostly it reeks of careless inattention and incompetence, which is probably more the rule than the exception in this kind of informal family arrangement.

OP, accounting and attorney bills add up quickly, and are paid by the trust. The potential to unravel this mess and have any money left over to go to the heirs of S is approximately zero. It is more likely that the work would stop, incomplete, when the last $ was spent in the trusts. It's time to let it go. File a complaint with whatever professional organizations make sense, but accept that it isn't likely to go anywhere and the money that has been distributed is what everyone gets. Sign the waiver, walk away.

You are right. Is that enough?
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MerriebytheSea
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Re: ethics concern with trust

Post by MerriebytheSea »

NotWhoYouThink wrote: Wed Sep 16, 2020 5:55 pm
The potential to unravel this mess and have any money left over to go to the heirs of S is approximately zero. It's time to let it go. File a complaint with whatever professional organizations make sense, but accept that it isn't likely to go anywhere and the money that has been distributed is what everyone gets. Sign the waiver, walk away.

You are right. Is that enough?
Honor is important to me, but your point is well taken ... it needs to be balanced with wisdom. Perhaps $25K seems petty to many. As you point out, it can disappear quickly when paying out professional fees, but for many families it is still a great deal of money. Perhaps the best I can do is sign the waiver and take my portion of the misdirected money and do something for the family of my step-mother, without comment.

Feeling right is easy. Its doing right that's hard.
JGoneRiding
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Re: ethics concern with trust

Post by JGoneRiding »

MerriebytheSea wrote: Wed Sep 16, 2020 2:15 am
Luckywon wrote: Wed Sep 16, 2020 1:14 am
I assume that S has a different set of beneficiaries than the 16 that your father's Trusts do? Are any S's beneficiaries aware of what happened? They are the group that is out 25k. If you feel strongly about this, then maybe you should advise one of them and let them decide whether to take action.
Yes, S was a step-mother who has two adult children. I have not told them and would hesitate to out of concern that it could provoke legal action against the trust. This concern is not about wanting to retain her $25K, but to avoid a legal battle. Keep in mind that I just learned that the broker who committed to reimburse these funds did not do so. I am very surprised that the trust attorneys do not want to pay back the money - it just seems so crooked. S was elderly, so rather than tell her of the error, the broker and trustee collaborated on a supposed deal that pushed the error across the statute of limitations - so now everyone is okay with that? Seems like taking advantage of the elderly.
She's dead she doesnt care. You are making a mountain out of a mole hole.
Lee_WSP
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Re: ethics concern with trust

Post by Lee_WSP »

MerriebytheSea wrote: Wed Sep 16, 2020 7:59 pm Perhaps $25K seems petty to many. As you point out, it can disappear quickly when paying out professional fees, but for many families it is still a great deal of money.
Its not petty, but if you pursue this, the only winners are the lawyers litigating this frivolous lawsuit and all the beneficiaries will be out at least 25,000 if not owing on top of that. And all for what? Seriously, for what? Who will benefit if all is "made right"? Serious question, because i don't see it. Negligent people will get their comeuppance, but that's it.

Edit:
Also, I am failing to see what the trust attorney did wrong. He's not even involved in the administration of the trust, or at least they typically aren't.
Bfwolf
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Re: ethics concern with trust

Post by Bfwolf »

If I were you, I think this is what I would do:

1) See if you can convince your siblings to split the $25,000 owed to your step-siblings and just give them the money with an explanation that this is their money and the broker messed up. I imagine they would be very thankful, though it's always possible they bring further legal action. I probably wouldn't get the grandkids involved as getting 6 people to agree on anything is hard, let alone 16 people where some are pretty young and the relatively small amount of money may mean more to them.

2) If your siblings refuse, tell your step-siblings the situation. At that point, they may let it go or they may bring legal action, but you can rest easy knowing you did the right thing.

Whether you wish to file a professional complaint against the broker is up to you.
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MerriebytheSea
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Re: ethics concern with trust

Post by MerriebytheSea »

Lee_WSP wrote: Wed Sep 16, 2020 11:31 pm
Edit:
Also, I am failing to see what the trust attorney did wrong. He's not even involved in the administration of the trust, or at least they typically aren't.
From the outset the trust attny or is staff made errors such as assigning the wrong people as trustees. My own attny, who once worked for them, said they were smart but disorganized. I am not up to detailing mistakes but there were lots of ooops, we forgot, redos as if they had never read the trust. I was more concerned about the over-her-head trustee and broker, for good reason. After some irregularities, the trust attny removed the trustee and his office took over some of the administrative duties He staunchly resisted providing accounting/annual reports even though it was required under the law. My attny told me it had become common practice to resist, thereby forcing beneficiaries to hire an attny or go to court to get it. When preparing for final disbursements for the sub-trust, his office made the calculations and sent out releases for only six of sixteen beneficiaries. All signed but me. I objected because 10 beneficiaries had been left out. Had I signed,10 beneficiaries would have missed out on their inheritance. Or if they ever found out, there would have been plenty of hurt feelings and family resentment, and potentially legal action.

Perhaps these kinds of mistakes are commonplace, but in my careers, I was expected to execute my work with a high degree of reliability and accuracy. It may sound over-scrupulous but I made every effort to respect my client's legal rights and deliver excellent service. I worked in the power and health care industries, so this had a way of keeping the lights on and people alive.

I am not looking to embarrass or punish anyone. I was concerned about pressure to sign a global release and I wanted to restore the $25K because S's children could use it and it is rightfully theirs. I understand now that legal costs would make that prohibitive Enough said. This has been a long post but I would like to think it has done some good, if only to alert others as to what can go wrong with a trust and what their beneficiaries might run into if accounting is wanted or errors are made.
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celia
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Re: ethics concern with trust

Post by celia »

OP, I got lost at the very beginning, but I suppose it doesn't matter now. It seems to me that your father and his wife had separate trusts and each had a separate trustee, but both used the same trust lawyer and broker/broker associate. How long ago did your father die? How long ago did his wife die? It seems your father died over 5 years ago and if an accounting couldn't be produced in that time, it probably never will. And at some point, some of the parties involved will retire or die or "forget" certain things. That would make it even harder to get the accounting you are entitled to.
MerriebytheSea wrote: Wed Sep 16, 2020 3:53 pm ...My siblings united with me, asked that (T) be removed as trustee and asked for accounting. We got none, so we hired a trust attny who seemed earnest but her efforts never helped much. She said, indeed by law, they have to provide accounting, but they have many ways to delay and avoid. They refused to provide a basic financial summary or share estate tax filings...
Once your dad died, as a beneficiary, you were entitled to a copy of the trust. Did you ever receive it? Were you officially notified that you were a beneficiary? You were also entitled to a yearly accounting until the trust was closed. Since you never received it, your next step would be to see a lawyer who represented you as a beneficiary. Your lawyer should have written a "demand" letter to the trust lawyer overseeing your father's trust. That lawyer would then talk to the trustee to see why things were not being done.

As you apparently already did this and it got you nowhere, it now turns into "the principle of it" vs the pragmatic thing to do.

If the issue had involved a much smaller amount (say, $250), you likely would have let it slide.

But, here's a new idea. Has the trustee stepped aside? Is there a new trustee? I think YOU would make a great trustee as you appear to already know a lot about trusts. If you have the time, you might ask if you can be the trustee and get the authority to clean this up properly. You would need to be recognized legally as the trustee so you can see banking records for the trust. But I will also predict that you will then find "other problems" that were hidden, that you will also have to resolve. On the other hand, trusts often have a phrase to the effect that following trustees are not obligated to check into what previous trustees had done. They can assume that everything was done properly until they became trustee. (I think the intent is to not discourage someone else from taking on the trustee role and assuming the liability of past mistakes.) Note that this DOES NOT MEAN that they CAN'T look into what previous trustees did.
neverpanic
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Re: ethics concern with trust

Post by neverpanic »

Your case matters to you. I appreciate your desire for honesty, transparency, and fair play. But I also think it would be a not-so-great idea to spend thousands of dollars of the trust's remaining money fighting to recover the $25,000 from your family so that it can be re-distributed to S's children. When I think about legal expenses, I can easily envision this costing the trust $8000-10,000 to fix.

Whether you believe the $25,000 at issue was divided among 6 or 16, you go to the 6, tell them what you know and what you think is the right thing to do. Some may ignore you, others may send you (or S's children) a check. You send your check and that's that.

I respect your pursuit of justice, but sometimes, it's better to take things into our own hands when seeking a practical result. If you go the "legal" route of restoring the $25,000 to S's children, the primary beneficiaries will be the attorneys, the accountants, and the county.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
tibbitts
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Re: ethics concern with trust

Post by tibbitts »

This post seems to make a great case for not having a trust except in unusual circumstances (special needs, etc.)
neverpanic
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Re: ethics concern with trust

Post by neverpanic »

tibbitts wrote: Thu Sep 17, 2020 8:29 am This post seems to make a great case for not having a trust except in unusual circumstances (special needs, etc.)
I disagree. Even though the disputed amount is relatively small, it seems as though the bulk of the estate had mostly been administrated and distributed fairly to the beneficiaries. The OP makes a great case for demanding we do our due diligence in writing clear guidelines and selecting trustees. It's a cautionary tale against leaving things to hope people will do the right thing not a caution against using a trust.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
senex
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Re: ethics concern with trust

Post by senex »

MerriebytheSea wrote: Thu Sep 17, 2020 4:04 am He staunchly resisted providing accounting/annual reports even though it was required under the law. My attny told me it had become common practice to resist, thereby forcing beneficiaries to hire an attny or go to court to get it. When preparing for final disbursements for the sub-trust, his office made the calculations and sent out releases for only six of sixteen beneficiaries. All signed but me. I objected because 10 beneficiaries had been left out. Had I signed,10 beneficiaries would have missed out on their inheritance.
Merrie, thanks for sharing your story. It is valuable to see "real world" downsides to trusts. The fact that a trustee can break the law or commit fraud, then empty the trust to defend himself, is particularly perverse.

As someone who has waffled on whether to leave inheritance in trust, this kind of practical story is very helpful. Though your own distress may have an unsatisfactory ending, you are helping others.
Carefreeap
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Re: ethics concern with trust

Post by Carefreeap »

neverpanic wrote: Thu Sep 17, 2020 8:43 am
tibbitts wrote: Thu Sep 17, 2020 8:29 am This post seems to make a great case for not having a trust except in unusual circumstances (special needs, etc.)
I disagree. Even though the disputed amount is relatively small, it seems as though the bulk of the estate had mostly been administrated and distributed fairly to the beneficiaries. The OP makes a great case for demanding we do our due diligence in writing clear guidelines and selecting trustees. It's a cautionary tale against leaving things to hope people will do the right thing not a caution against using a trust.
I agree. I've posted before about the mis-management and errors of my DH's grandmother's Trust, the fact is that there was still a sizable amount of money inherited. Had my FIL inherited outright DH would likely have gotten nothing.
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bsteiner
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Re: ethics concern with trust

Post by bsteiner »

MerriebytheSea wrote: Thu Sep 17, 2020 4:04 am ...
From the outset the trust attny or is staff made errors such as assigning the wrong people as trustees. My own attny, who once worked for them, said they were smart but disorganized. I am not up to detailing mistakes but there were lots of ooops, we forgot, redos as if they had never read the trust. I was more concerned about the over-her-head trustee and broker, for good reason. After some irregularities, the trust attny removed the trustee and his office took over some of the administrative duties ...
The client picks the executors and trustees. The executors and trustees pick their lawyers. The lawyers don't pick the executors or the trustees.

When doing your estate planning, your choice of executors and trustees is one of the most important things to consider. A poor Will or trust agreement with good trustees is often better than a good Will or trust agreement with poor trustees.

What's a Sub-Trust?
senex
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Re: ethics concern with trust

Post by senex »

tibbitts wrote: Thu Sep 17, 2020 8:29 am This post seems to make a great case for not having a trust except in unusual circumstances (special needs, etc.)
Yes, I am particularly distressed at the idea of trustee defrauding beneficiary, then spending beneficiary's money to hinder justice. Talk about setting up a lose-lose situation.

I wonder how much it helps if beneficiary has absolute power to replace trustee. In theory, beneficiary could change trustee, then file a lawsuit against old trustee. But I'm not sure what happens if old trustee refuses to deliver assets (in which case, I presume a multi-year court delay, during which trustee continues to drain trust to pay his bills?). I also don't know if new trustee has an obligation or ability to defend old trustee (again, by draining trust assets). If bsteiner or Gill are watching this thread, I'm curious on the typical outcomes in such cases.
Lee_WSP
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Re: ethics concern with trust

Post by Lee_WSP »

MerriebytheSea wrote: Thu Sep 17, 2020 4:04 am
Lee_WSP wrote: Wed Sep 16, 2020 11:31 pm
Edit:
Also, I am failing to see what the trust attorney did wrong. He's not even involved in the administration of the trust, or at least they typically aren't.
From the outset the trust attny or is staff made errors such as assigning the wrong people as trustees. My own attny, who once worked for them, said they were smart but disorganized. I am not up to detailing mistakes but there were lots of ooops, we forgot, redos as if they had never read the trust. I was more concerned about the over-her-head trustee and broker, for good reason. After some irregularities, the trust attny removed the trustee and his office took over some of the administrative duties He staunchly resisted providing accounting/annual reports even though it was required under the law. My attny told me it had become common practice to resist, thereby forcing beneficiaries to hire an attny or go to court to get it. When preparing for final disbursements for the sub-trust, his office made the calculations and sent out releases for only six of sixteen beneficiaries. All signed but me. I objected because 10 beneficiaries had been left out. Had I signed,10 beneficiaries would have missed out on their inheritance. Or if they ever found out, there would have been plenty of hurt feelings and family resentment, and potentially legal action.

Perhaps these kinds of mistakes are commonplace, but in my careers, I was expected to execute my work with a high degree of reliability and accuracy. It may sound over-scrupulous but I made every effort to respect my client's legal rights and deliver excellent service. I worked in the power and health care industries, so this had a way of keeping the lights on and people alive.

I am not looking to embarrass or punish anyone. I was concerned about pressure to sign a global release and I wanted to restore the $25K because S's children could use it and it is rightfully theirs. I understand now that legal costs would make that prohibitive Enough said. This has been a long post but I would like to think it has done some good, if only to alert others as to what can go wrong with a trust and what their beneficiaries might run into if accounting is wanted or errors are made.
Got it.

Well, a report to the bar if you think he was unethical is the way to go at it. Otherwise his professional liability insurance is the way to get monetary damages for not being up to the standards among the profession.
senex
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Re: ethics concern with trust

Post by senex »

bsteiner wrote: Thu Sep 17, 2020 9:52 am The client picks the executors and trustees. The executors and trustees pick their lawyers. The lawyers don't pick the executors or the trustees.
bsteiner, other threads have discussed trusts with a "trust protector" that can change trustee or veto changes to trustee. When the protector is a lawyer, then the lawyer is choosing the trustee. See for instance: viewtopic.php?p=5247547#p5247547

I admit I don't fully grasp the OP's situation, and OP has not used the words "trust protector," but reading between the lines, that might be the case.
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8foot7
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Re: ethics concern with trust

Post by 8foot7 »

It would be helpful to understand the amount of money that is truly at stake here.
If it is 25k, or worse, a share of 25k, then I can only recommend you find a way to move on.
If it is more, I would suggest looking at ways of pinging the professional insurance of the attorneys that made the error.
bsteiner
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Re: ethics concern with trust

Post by bsteiner »

senex wrote: Thu Sep 17, 2020 10:05 am
bsteiner wrote: Thu Sep 17, 2020 9:52 am The client picks the executors and trustees. The executors and trustees pick their lawyers. The lawyers don't pick the executors or the trustees.
bsteiner, other threads have discussed trusts with a "trust protector" that can change trustee or veto changes to trustee. When the protector is a lawyer, then the lawyer is choosing the trustee. See for instance: viewtopic.php?p=5247547#p5247547

I admit I don't fully grasp the OP's situation, and OP has not used the words "trust protector," but reading between the lines, that might be the case.
In the case of a trust for the second wife, and then for the issue of the first marriage, careful consideration should be given to the choice of trustees.
The trustee is often someone independent (not a beneficiary), or a bank or trust company, or the spouse together with a child, or together with an independent trustee. Occasionally, if the lawyer has had a longstanding relationship with the testator or with the family, the lawyer might be appropriate as a trustee.

I hadn't thought about giving the lawyer the power to remove and replace trustees. That would be a difficult spot for someone who isn't a beneficiary, and one for which the person in that spot probably isn't getting paid. I don't think I would want to be in that spot unless I had a longstanding relationship with the testator or the family.
Luckywon
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Re: ethics concern with trust

Post by Luckywon »

Several have advocated that OP should stay silent and move on because 25k in an estate matter is not worth any hassle. I'm generally a fan of this strategy, especially when it comes to estate issues, as I know firsthand how expensive, prolonged, emotionally draining, and fruitless these can be.

However, OP staying silent now will not necessarily close out this matter. If the mother-in-law's beneficiaries ever find out about the 25k, it is possible the matter will be reopened at a later date. Any releases signed by OP will not restrict the mother-in-law's beneficiaries options (although perhaps the releases will transfer liability from the trustee to the beneficiaries, including OP. OP-do the releases do this?).

Whatever happens with the trust now makes scarcely any difference to OP's pocket book. Any expense of trust litigation will be split 16 ways and litigation over 25k is unlikely to occur anyway. What would bother me more would be the prospect of possibly having to explain some day to the mother-in-law's beneficiaries why I knew the Trust owed them 25k yet did not see it was repaid or at least tell them about it. Another thing that would not sit well with me is the notion that I was bullied into helping the broker bury his improper or incompetent actions in this matter.

So I see little upside to staying silent and little downside to telling the mother-in-law's beneficiaries what I know with respect to the 25k.
Last edited by Luckywon on Thu Sep 17, 2020 12:26 pm, edited 1 time in total.
Lee_WSP
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Re: ethics concern with trust

Post by Lee_WSP »

Luckywon wrote: Thu Sep 17, 2020 11:21 am Whatever happens with the trust now makes scarcely any difference to OP's pocket book. Any expense of trust litigation will be split 16 ways and litigation over 25k is unlikely to occur anyway. What would bother me more would be the prospect of having to explain some day to the mother-in-law's beneficiaries why I did not tell them about the 25k that may belong to them. Another thing that would not sit well with me is the notion that I was bullied into helping the broker bury his improper or incompetent actions in this matter.

So I see little upside to staying silent and little downside to telling the mother-in-law's beneficiaries what I know with respect to the 25k.
OP is unclear about the 25k, I get the impression that OP is not sure whether the broker managed to repay S's estate or not. However, it is clear in the OP that it is *supposed* to have been done.
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Re: ethics concern with trust

Post by Luckywon »

Lee_WSP wrote: Thu Sep 17, 2020 11:55 am
OP is unclear about the 25k, I get the impression that OP is not sure whether the broker managed to repay S's estate or not. However, it is clear in the OP that it is *supposed* to have been done.
I thought the whole point of this thread was that the 25k was not repaid.
Lee_WSP
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Re: ethics concern with trust

Post by Lee_WSP »

Luckywon wrote: Thu Sep 17, 2020 12:21 pm
Lee_WSP wrote: Thu Sep 17, 2020 11:55 am
OP is unclear about the 25k, I get the impression that OP is not sure whether the broker managed to repay S's estate or not. However, it is clear in the OP that it is *supposed* to have been done.
I thought the whole point of this thread was that the 25k was not repaid.
He said he arranged with (S’s) trustee to have her estate reimbursed from her Sub-Trust, after her death, in order to avoid having to recover the distributed funds from 16 people. I didn’t like it but was advised to accept the plan.
The whole point of the thread so far as I can discern is that the attorney & the broker were professionally negligent in the eyes of the OP. That the trustee was uh... whatever, is taken as fact but nothing can be done about that.
Luckywon
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Re: ethics concern with trust

Post by Luckywon »

Lee_WSP wrote: Thu Sep 17, 2020 12:31 pm
Luckywon wrote: Thu Sep 17, 2020 12:21 pm
Lee_WSP wrote: Thu Sep 17, 2020 11:55 am
OP is unclear about the 25k, I get the impression that OP is not sure whether the broker managed to repay S's estate or not. However, it is clear in the OP that it is *supposed* to have been done.
I thought the whole point of this thread was that the 25k was not repaid.
He said he arranged with (S’s) trustee to have her estate reimbursed from her Sub-Trust, after her death, in order to avoid having to recover the distributed funds from 16 people. I didn’t like it but was advised to accept the plan.
The whole point of the thread so far as I can discern is that the attorney & the broker were professionally negligent in the eyes of the OP. That the trustee was uh... whatever, is taken as fact but nothing can be done about that.
OP has stated several times in this thread that the 25k was not repaid as planned. For example:
MerriebytheSea wrote: Wed Sep 16, 2020 12:11 am I learned that the Broker had NOT paid back S’s estate as committed. The estate attny told me that it was past the statute of limitations, so they are not concerned (that the estate essentially ripped off money from Dad’s wife through the broker due to lack of trustee oversight?). I asked, “Since the broker committed to pay it back doesn’t that extend the Statute of L?” No because he took the money from (S’s) private funds – you can go after the broker, but it will cost you. Maybe you can get his insurance to cover it, good luck. So, are we all supposed to ignore that our Trust took $25K of this woman’s money with our acquiescence? Do I have to spend money to get this wrong corrected?
Lee_WSP
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Re: ethics concern with trust

Post by Lee_WSP »

Luckywon wrote: Thu Sep 17, 2020 1:05 pm
Lee_WSP wrote: Thu Sep 17, 2020 12:31 pm
Luckywon wrote: Thu Sep 17, 2020 12:21 pm
Lee_WSP wrote: Thu Sep 17, 2020 11:55 am
OP is unclear about the 25k, I get the impression that OP is not sure whether the broker managed to repay S's estate or not. However, it is clear in the OP that it is *supposed* to have been done.
I thought the whole point of this thread was that the 25k was not repaid.
He said he arranged with (S’s) trustee to have her estate reimbursed from her Sub-Trust, after her death, in order to avoid having to recover the distributed funds from 16 people. I didn’t like it but was advised to accept the plan.
The whole point of the thread so far as I can discern is that the attorney & the broker were professionally negligent in the eyes of the OP. That the trustee was uh... whatever, is taken as fact but nothing can be done about that.
OP has stated several times in this thread that the 25k was not repaid as planned. For example:
MerriebytheSea wrote: Wed Sep 16, 2020 12:11 am I learned that the Broker had NOT paid back S’s estate as committed. The estate attny told me that it was past the statute of limitations, so they are not concerned (that the estate essentially ripped off money from Dad’s wife through the broker due to lack of trustee oversight?). I asked, “Since the broker committed to pay it back doesn’t that extend the Statute of L?” No because he took the money from (S’s) private funds – you can go after the broker, but it will cost you. Maybe you can get his insurance to cover it, good luck. So, are we all supposed to ignore that our Trust took $25K of this woman’s money with our acquiescence? Do I have to spend money to get this wrong corrected?
I see.

Well, the liability of the trust to repay it is questionable. Probably impossible to prove since S is dead. If anything, S's heirs will need to file a professional liability claim against broker as I've stated numerous times already.
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MerriebytheSea
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Re: ethics concern with trust

Post by MerriebytheSea »

Lee_WSP wrote: Thu Sep 17, 2020 9:55 am
MerriebytheSea wrote: Thu Sep 17, 2020 4:04 am
Lee_WSP wrote: Wed Sep 16, 2020 11:31 pm
Edit:
Also, I am failing to see what the trust attorney did wrong ....
From the outset the trust attny or is staff made errors such ..... there were lots of ooops, we forgot,redos .....He staunchly resisted providing accounting/annual reports even though it was required under the law. .... He sent out releases for only six of sixteen beneficiaries. ....I objected because 10 beneficiaries had been left out. Had I signed,10 beneficiaries would have missed out on their inheritance.....
[/u]

.... a report to the bar if you think he was unethical is the way to go at it. Otherwise his professional liability insurance is the way to get monetary damages for not being up to the standards among the profession.
I don't know that the attny was outright unethical. He was clearly strong-arming us out of our legal right to have annual reports, which we never got despite several requests. I have no clue as to what services he provided/billed or how much he charged the estate. He is currently insisting I sign a global release for all trustees (NOT required under the terms of the trust or under the law). I crossed out the global sections of the release and wrote "I have no remaining question and accept the current disbursement, but do not want to sign a global release over matters I know so little about." Attny said S's trustee was insisting on the global release under threat of taking it before a judge and making it "very expensive". I am not exactly sure what her claim would be, since no beneficiary is currently asking questions and all have signed acceptance for the proposed disbursement. I asked that question. Was told S's trustee provided services at a very discounted price for this elderly lady, so it is unfair to deny her a release. Perhaps it is insensitive to deny her a release, but are we supposed to give up our legal protections (when there have been so many errors, right up to last week) so she feels safe?

Please note, I am usually good at being able to see things from other people's perspectives and yes I have come to see there is no easy answer and yes it makes sense to sign and move on. I continue adding to this post only because I think it is a instructive conversation as to what can happen to one's beneficiaries. I have never worked in law but it is my unsophisticated impression that trusts tend to be written to execute the testator's wishes and prevent infighting and legal challenges under the assumption that problems are likely to arise from beneficiaries. In this case, beneficiaries have generally been quiet, patient, undemanding and compliant. Even the attny assist. has thanked me profusely for catching errors (that would have been problems for them) and raising them with discretion. The outlandish, problematic behaviors in this trust have come from the broker (who took many liberties I have not mentioned) and the main 0-her-H trustee who provided almost zero oversight.
Lee_WSP
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Re: ethics concern with trust

Post by Lee_WSP »

Sounds like your in a game of chicken at this point.
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MerriebytheSea
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Re: ethics concern with trust

Post by MerriebytheSea »

celia wrote: Thu Sep 17, 2020 5:55 am
Once your dad died, as a beneficiary, you were entitled to a copy of the trust. Did you ever receive it? Were you officially notified that you were a beneficiary? You were also entitled to a yearly accounting until the trust was closed. ....

But, here's a new idea. Has the trustee stepped aside?

Once Dad died, beneficiaries got a simple letter of notification by the trustee, which was the last we heard from her for almost 2 years. She handed over all management to Dad's bond broker, who sent brokerage agreement forms to beneficiaries and said we needed to sign in order for him to divide assets. Instead of saying your dad's estate is currently worth x and your share is y, and it is currently in bonds which I can divide in kind if you want me to be your broker he presented things as though beneficiaries had to open their own brokerage accounts with him, to find out what they were inheriting. When I hesitated, he told me that was holding up settlement of the estate. I drove to his office and questioned why I needed to sign an agreement to put him in charge of my forthcoming assets to find out what I was inheriting. He said he computer was freezing up and would not give him access to that information until I opened up a brokerage account - which seemed preposterous. I contacted the trustee who said I needed to get all info directly from the broker. I ended up signing a brokerage agreement, so I could find out what I was inheriting and avoid holding up the trust. In hindsight, he was clearly trying to maintain control over all these investments.

As for the trust attny. He only sent me a copy of the trust because I requested. I sent other beneficiaries copies, because they had not asked and had not received one. Yes we were entitled to annual statements, but never got them, despite my repeated requests. The trustee's husband (legally co-trustee but refusing to get involved) told me to ask the broker and the broker told me to ask the woman trustee. When I told him she would not, he said that was because she was entirely over her head and did not understand what was going on. I asked for the estate tax filings, but they refused. I complained to the estate attny's office, to no avail. I hired an atty yet never got much that was understandable. It became my impression that the firm has developed a practice of stonewalling all information, thereby keeping beneficiaries in the dark to keep control. It seemed to be, ask any questions, we will slow walk it and it will cost you dearly. Perhaps this was their way of keeping "control" of beneficiaries, but in this trust it served to permit a lack of oversight of a trustee and broker who needed to be watched. From my very limited knowledge, I kept running into errors, even a few basic, but serious, attny mistakes - so it could be said that I found myself providing oversight from the very insulated periphery.

As an added point of interest, the broker apparently purchased about a half million in high front loaded mutual funds the day after my dad passed, in an apparent attempt to harvest a big commission, because he was supposed to disburse funds right way to most beneficiaries. This front load created a substantial loss between the DOD and disbursement, which needed to be reported for tax purposes. Probably why he delayed those tax reports for well over a year .....

This mess is closing and I am anxious to be done with it. AGAIN, I am detailing this so others can learn from what befell us.
Lee_WSP
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Re: ethics concern with trust

Post by Lee_WSP »

MerriebytheSea wrote: Thu Sep 17, 2020 5:18 pm
This mess is closing and I am anxious to be done with it. AGAIN, I am detailing this so others can learn from what befell us.
That's fine, but how would you have structured it differently? Sounds like the broker is the worst offender. But your dad trusted him.
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celia
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Re: ethics concern with trust

Post by celia »

MerriebytheSea wrote: Thu Sep 17, 2020 3:53 pm ...Attny said S's trustee was insisting on the global release under threat of taking it before a judge and making it "very expensive". I am not exactly sure what her claim would be, since no beneficiary is currently asking questions and all have signed acceptance for the proposed disbursement. I asked that question. Was told S's trustee provided services at a very discounted price for this elderly lady, so it is unfair to deny her a release.
I don't understand the last line. How does a release on the father's trust (agreeing to the final distribution) impact the wife's trustee, other than that trustee possibly knowing about the $25K that was mistakenly removed from the trust she was managing? It seems that she may be owed some more money for being the wife's trust's trustee (rather than the money going to wife's children). Possibly there was something in wife's trust (that you're not privy to) where specific things go to the children and something else (a specific account that is missing money, for example) goes to the trustee.
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