Not Sure What to Say

[EasterJoy]

I have a friend whose sibling is managing the estate of the person’s father and deceased mother. This sibling was always somewhat secretive about this, but as the parents were very secretive about their finances and the oldest sibling was given access to the paperwork, this didn’t raise a lot of red flags. Now it turns out that the father is cash-poor because the sibling made real estate loans to business acquaintances out of the estate of the deceased mother, loans the oldest sibling OK’d but did not understand, when the mother was demented but before she had died. This sibling had assured all the family that the estate was being run as the parents would run it themselves, but this is something the parents would never have done. The other children are pretty mad at both the sibling managing the estate and the oldest sibling who never disclosed anything about all of this, because the managing sibling had convinced the oldest that discretion was required.

Now the sibling running things wants everyone to contribute money for the father’s maintenance. Of course the rest of the family is up in arms, both about the loan and in wondering what else they don’t know, not to mention upset that they’re being asked to contribute money to a parent who managed his affairs so as to have plenty of money at his disposal when he was old. The sibling managing things is very put out that anyone could question this person’s integrity, judgment, or financial acumen. (This person would be described as honest by people who know the person, although a penny-pincher and a bit of a control freak. The oldest sibling is someone who hates conflict.) Only the oldest sibling and the one managing things have legal power of attorney for the father (and only they had it for the mother before she died). How should this be handled? The father is very frail, not very with it, and the family doesn’t want him upset. I don’t have any good ideas, save those that require a time machine. If it matters, the siblings who aren’t in the management loop outnumber those who are.

I’m afraid that many of these siblings are not going to be on speaking terms by the time their dad dies.

 

[Xantippe]

I have a friend whose sibling is managing the estate of the person’s father and deceased mother. This sibling was always somewhat secretive about this, but as the parents were very secretive about their finances and the oldest sibling was given access to the paperwork, this didn’t raise a lot of red flags. Now it turns out that the father is cash-poor because the sibling made real estate loans to business acquaintances out of the estate of the deceased mother, loans the oldest sibling OK’d but did not understand, when the mother was demented but before she had died. This sibling had assured all the family that the estate was being run as the parents would run it themselves, but this is something the parents would never have done. The other children are pretty mad at both the sibling managing the estate and the oldest sibling who never disclosed anything about all of this, because the managing sibling had convinced the oldest that discretion was required.

Now the sibling running things wants everyone to contribute money for the father’s maintenance. Of course the rest of the family is up in arms, both about the loan and in wondering what else they don’t know, not to mention upset that they’re being asked to contribute money to a parent who managed his affairs so as to have plenty of money at his disposal when he was old. The sibling managing things is very put out that anyone could question this person’s integrity, judgment, or financial acumen. (This person would be described as honest by people who know the person, although a penny-pincher and a bit of a control freak. The oldest sibling is someone who hates conflict.) Only the oldest sibling and the one managing things have legal power of attorney for the father (and only they had it for the mother before she died). How should this be handled? The father is very frail, not very with it, and the family doesn’t want him upset. I don’t have any good ideas, save those that require a time machine. If it matters, the siblings who aren’t in the management loop outnumber those who are.

1. Any financial help to dad will be managed by a different sibling than these two characters.
2. I suspect the majority siblings can probably get power of attorney back after having proven malfeasance, but should they? Perhaps, they should just explain to the guilty siblings that they are willing to pursue legal avenues and suggest (in the nicest possible way) that the siblings responsible for the mess need to yield the floor so it won’t be necessary to explain to third parties what happened to dad’s money. Possible verbiage: “I know you acted according to the best information you had at the time, but if we are going to support dad financially, we need to have full transparency and equal say. We are also going to need to change the power of attorney and we’d like your help doing that.”
3. Hopefully, the money isn’t all gone. Once the majority get power of attorney away from the two siblings, they’ll be able to look into getting dad his rights with regard to his money. Hopefully, the money largely is still there and will be accessible soon. Then take it out and put it in something much more liquid, with a reasonable split between safe, accessible, low-risk and harder to access but well-invested money. (With a large sum of money but a frail elderly relative, I’d go for 50/50.) Consult a tax adviser before doing anything with a large sum of money.
4. Again, if none of that is feasible, not one dime of cash money should go through the hands of the two siblings who still have control of dad and his money. Dad needs new shoes? Great, we’ll buy them! Dad needs new pants! Great, we’ll buy them! But we don’t give any cash to the siblings. If dad has a paid-off house and Social Security, a hundred dollars or two from each sibling every month should fix him up very comfortably until he’s financial affairs are sorted out.

 

[Xantippe]

I’m afraid that many of these siblings are not going to be on speaking terms by the time their dad dies.

That may be baked into the cake already.

 

[Burt_Macklin]

If the in the loop sibling are out of funds because the mismanaged the estate then I’d say that they need to own up for their mistakes and foot the bill. That is assuming of course that the estate was large enough to begin with. If I were out of the loop I wouldn’t give any money without being brought in the loop. I say that as someone who manages a small estate that is eventually intended for maintenance and health care for my in-laws.

The super secrecy when it comes to money matters also drives me crazy. My in-laws are secretive to the point they never said anything about being behind on taxes and allowed their house to be sold at tax auction rather than break silence. The only way I found out about their home being auctioned was checking the sheriff’s website. I guess it must be a generational thing.

 

[Xantippe]

The super secrecy when it comes to money matters also drives me crazy. My in-laws are secretive to the point they never said anything about being behind on taxes and allowed their house to be sold at tax auction rather than break silence. The only way I found out about their home being auctioned was checking the sheriff’s website. I guess it must be a generational thing.

Ay yay yay.

Did you manage to save the house, or was it too late?

 

[Luvz2travel]

If the siblings who were not involved in the mess would like to get together and set up a separate trust fund for the dad’s maintenence …the type of account that would have to handled openly and transparently with third party investment firm or accounting firm to track the money. I’m sure there are services out there that do this. I would start an investigation. I have a feeling that since this was all done secretly some of the money may have been waylaid into the managing or older siblings own personal accounts. Just saying. Money makes people stupid and bold. In my grandparents case for example their lawyer ran off with all the money and failed to even record or file their Last Will and Testaments. By the time the family found out there was no money left and the house when cheap because there had been no money to maintain it.

 

[Burt_Macklin]

Ay yay yay.

Did you manage to save the house, or was it too late?

Saved it. The house had been sold at auction but it wasn’t beyond saving.

 

[Xantippe]

Saved it. The house had been sold at auction but it wasn’t beyond saving.

Yay!

Best son-in-law ever!!!

 

[styrgwillidar]

If the in the loop sibling are out of funds because the mismanaged the estate then I’d say that they need to own up for their mistakes and foot the bill. That is assuming of course that the estate was large enough to begin with. If I were out of the loop I wouldn’t give any money without being brought in the loop. I say that as someone who manages a small estate that is eventually intended for maintenance and health care for my in-laws.

The super secrecy when it comes to money matters also drives me crazy. My in-laws are secretive to the point they never said anything about being behind on taxes and allowed their house to be sold at tax auction rather than break silence. The only way I found out about their home being auctioned was checking the sheriff’s website. I guess it must be a generational thing.

I agree with this. The two siblings who approved the loans should foot the bill for Dad’s maintenance. I’m assuming the estate is getting payments on the loans? If they’re substantial loans what were the terms and why isn’t the income stream from those loans sufficient to maintain Dad? That money should go to Dad’s maintenance and whatever additional funding is required should come from the siblings who approved the loans. They then must completely open the books to all the other siblings so everyone knows where the money is. The two siblings will be paid back for Dad’s maintenance from the proceeds of the loans (or them being paid off) after Dad has passed away.

Now, the other option (which I think is better) would be for the siblings who created this mess to buy the loans off the estate. That is, they come up with the money themselves even if they have to take out loans to transfer them from the estate to themselves. Thus severing the business acquaintances from the estate and restoring the funds to the estate. If they think these acquaintances were a good credit risk, they shouldn’t have any problem with taking that risk themselves vice keeping it with the estate.

ETA: Wouldn’t get angry with them or shout- just state very plainly that is my position. I’m not contributing since the estate has substantial assets in the form of loans that these two approved. Their problem, they need to fix it. Again, if these were substantial loans-- where is the income stream from these going?

 

[EasterJoy]

I get the feeling that this is a cash-flow problem, not a no-assets problem, because the parents were quite well-off and lived a very reasonable standard of living. The siblings running things live a reasonable standard of living. It may be as simple as the “money manager” thinking some tax penalty or other can be evaded by putting off selling some stocks or bonds. I don’t know if anyone but the siblings with the power really know.

I think what is going to happen is that the siblings being asked to “loan” some money are going to insist on the books being opened, or no deal. There could be some fireworks from that, but I think that is what is going to happen. I don’t know whether they have any legal standing to demand that. (They might, since the mother’s estate probably goes to them when their dad dies.)

I don’t think elder law allows the person running an older person’s estate to sell themselves assets from the estate or do any other “self-dealing” with money they manage for someone over 65, so I don’t think the “money manager” can buy the loans, at least not without laying all the cards on the table and allowing all the beneficiaries to have the same chance. Besides, as I understand it, it is the estate of the deceased parent that owns the loans–or whatever they are, who knows. I have no idea how that might tie things up.

Not looking for specific legal advice, which nobody can give here, but my sense is that this could be a real legal brier patch, not just a family-dynamics brier patch. I wouldn’t know where to start with it, not unless I were a lawyer. I’m not even sure what to suggest with regards to the family dynamics!

The question is–with all these questions and this being in the dark, what would you do?

 

[styrgwillidar]

I get the feeling that this is a cash-flow problem, not a no-assets problem, because the parents were quite well-off and lived a very reasonable standard of living. The siblings running things live a reasonable standard of living. It may be as simple as the “money manager” thinking some tax penalty or other can be evaded by putting off selling some stocks or bonds. I don’t know if anyone but the siblings with the power really know.

I think what is going to happen is that the siblings being asked to “loan” some money are going to insist on the books being opened, or no deal. There could be some fireworks from that, but I think that is what is going to happen. I don’t know whether they have any legal standing to demand that. (They might, since the mother’s estate probably goes to them when their dad dies.)

I don’t think elder law allows the person running an older person’s estate to sell themselves assets from the estate or do any other “self-dealing” with money they manage for someone over 65, so I don’t think the “money manager” can buy the loans, at least not without laying all the cards on the table and allowing all the beneficiaries to have the same chance. Besides, as I understand it, it is the estate of the deceased parent that owns the loans–or whatever they are, who knows. I have no idea how that might tie things up.

Not looking for specific legal advice, which nobody can give here, but my sense is that this could be a real legal brier patch, not just a family-dynamics brier patch. I wouldn’t know where to start with it, not unless I were a lawyer.

Definitely a legal and family brier patch. I think laying all the cards on the table would help so all the siblings could understand the issue(s). Explain things like the income stream from the loans etc. I think that would be the best immediate step to reduce the tension-- a lot of stress comes from speculation prior to having concrete knowledge. Much more likely to come up with a family solution if they actually work together as a family.

 

[EasterJoy]

Definitely a legal and family brier patch. I think laying all the cards on the table would help so all the siblings could understand the issue(s). Explain things like the income stream from the loans etc. I think that would be the best immediate step to reduce the tension-- a lot of stress comes from speculation prior to having concrete knowledge. Much more likely to come up with a family solution if they actually work together as a family.

How to go about getting the money manager to open the books is probably the central question. There is what is right, but the more important question is “what is going to work?”

 

[styrgwillidar]

How to go about getting the money manager to open the books is probably the central question. There is what is right, but the more important question is “what is going to work?”

Yeah, it could get really emotional very quickly, people taking offense, thinking they’re being accused of something, suspicions etc. etc.

Best I could do under the situation would be to try and politely say-- I just want to understand the situation and the plan going forward so we can all get behind supporting it. Luckily my sister handled my Mom’s finances as she got older and kept all the siblings informed on where she put Mom’s money and why.

 

[underacloud]

I think what is going to happen is that the siblings being asked to “loan” some money are going to insist on the books being opened, or no deal. There could be some fireworks from that, but I think that is what is going to happen. I don’t know whether they have any legal standing to demand that. (They might, since the mother’s estate probably goes to them when their dad dies.)

This is the best immediate course of action.

The question is–with all these questions and this being in the dark, what would you do?

See above. I would want to know all about the current financial standing before giving any money.

If it is merely a cashflow issue, then the other siblings could set up loans (properly drawn up) to the estate rather than just giving money. These loans can serve to keep the other siblings honest but also to protect the assets of the estate somewhat, since the siblings will not only then be the future heirs but also legal creditors, which may give them additional legal rights.

 

[Xantippe]

I get the feeling that this is a cash-flow problem, not a no-assets problem, because the parents were quite well-off and lived a very reasonable standard of living. The siblings running things live a reasonable standard of living. It may be as simple as the “money manager” thinking some tax penalty or other can be evaded by putting off selling some stocks or bonds. I don’t know if anyone but the siblings with the power really know.

**I wouldn’t accept that without a lot more information and a consult with a tax guy or gal.

Also, the money that the siblings would be contributing would be after-tax income, too, so there are going to be taxes involved no matter what.

People often do ridiculous things in the name of avoiding taxes. **

I think what is going to happen is that the siblings being asked to “loan” some money are going to insist on the books being opened, or no deal. There could be some fireworks from that, but I think that is what is going to happen.

Good!

I don’t know whether they have any legal standing to demand that. (They might, since the mother’s estate probably goes to them when their dad dies.)

No matter what, they have the legal standing to say, "We can’t help unless we know exactly what is going on. If you want money, you have to start providing total transparency."

I don’t think elder law allows the person running an older person’s estate to sell themselves assets from the estate or do any other “self-dealing” with money they manage for someone over 65, so I don’t think the “money manager” can buy the loans, at least not without laying all the cards on the table and allowing all the beneficiaries to have the same chance. Besides, as I understand it, it is the estate of the deceased parent that owns the loans–or whatever they are, who knows. I have no idea how that might tie things up.

Not looking for specific legal advice, which nobody can give here, but my sense is that this could be a real legal brier patch, not just a family-dynamics brier patch. I wouldn’t know where to start with it, not unless I were a lawyer. I’m not even sure what to suggest with regards to the family dynamics!

The question is–with all these questions and this being in the dark, what would you do?

A lawyer sounds like a good idea. Even just in order to be able to say, “I was talking to a lawyer, and she said…”

Good luck!

 

[BlueEyedLady]

I am not a litigious person and I do not think that family disputes should be brought into court except as a very last resort.

That said, someone needs to get a lawyer or CPA who specializes in estate planning on the phone YESTERDAY. The fact is that even if the books are opened, without the aid of someone very familiar with all of the financial and legal issues and obligations at play (which vary a lot based on jurisdiction, the amount of money we’re talking about, the health of the father, etc), the situation is ripe for more misunderstandings, abuses, and even outright theft. This outside help should not be sought so that one of the siblings can “win”, but so that they can collectively make sure that their father is provided for in the best way possible.

And for the sake of family relationships, don’t use the information that the lawyer gives as a threat. It is not “My lawyer said that I have the right to…”, it should be more like “The lawyer said that we can…for dad”.

 

[underacloud]

If it were my parents or anyone that I loved that needed care: I would offer to pay for groceries, their electric bill (directly) or any other kind of bills that I could pay directly. I would not hand money over to siblings or anyone for that matter, that had already mismanaged funds.

Perhaps by saying “I am happy to help dad, I will mail a check for $50 monthly to dad’s electric company and $50 monthly to dad’s insurance please give me the billing information” or whatever the amount that the sibling can afford. Even if the books were to be opened there is no way to guarantee that the siblings with power are not going to mismanage things again. It sounds as if they gave loans to personal business friends? What is to keep them from doing that again? Now they want siblings to hand over cash with no questions asked?

I’d rather say something like this: “I am happy to help dad. I’m good at managing funds and working to an available budget and would be very happy to become invloved in managing dad’s estate.”

…and then wait for the response.

Or…there are companies that sepcialise in helping families run budgets and get out of debt. You could suggest bringing in such a third party to manage the funds. It is hard to argue that this would be unreasonable.

 

[Hodegetria]

I am not a litigious person and I do not think that family disputes should be brought into court except as a very last resort.

That said, **someone needs to get a lawyer or CPA who specializes in estate planning on the phone YESTERDAY. **The fact is that even if the books are opened, without the aid of someone very familiar with all of the financial and legal issues and obligations at play (which vary a lot based on jurisdiction, the amount of money we’re talking about, the health of the father, etc), the situation is ripe for more misunderstandings, abuses, and even outright theft. This outside help should not be sought so that one of the siblings can “win”, but so that they can collectively make sure that their father is provided for in the best way possible.

And for the sake of family relationships, don’t use the information that the lawyer gives as a threat. It is not “My lawyer said that I have the right to…”, it should be more like “The lawyer said that we can…for dad”.

I agree with BlueEyedLady. We had a similar situation many years ago and nobody wanted to “air the dirty laundry”. By the time everything was really out in the open–after too much money and time wasted on estate and family planning lawyers and forensic accountants-- the eldest brother ended up doing weekends in jail for a year AND his lawyer was disbarred. You NEVER know. FIND OUT.

NB: I’m NOT saying this is going on here, but if we’d acted quickly when it first became apparent there were problems, then most of the money would have been saved and “eldest brother” wouldn’t have been able to continue mishandling the estate.

 

[Burt_Macklin]

I agree with this. The two siblings who approved the loans should foot the bill for Dad’s maintenance. I’m assuming the estate is getting payments on the loans? If they’re substantial loans what were the terms and why isn’t the income stream from those loans sufficient to maintain Dad? That money should go to Dad’s maintenance and whatever additional funding is required should come from the siblings who approved the loans. They then must completely open the books to all the other siblings so everyone knows where the money is. The two siblings will be paid back for Dad’s maintenance from the proceeds of the loans (or them being paid off) after Dad has passed away.

I’m really trying to figure out why any honest person would make such a loan with money for their parents’ retirement. They are assuming all of the risk on themselves if the venture fails and if they make a good return they have to split the returns several different ways. Little to gain and everything to lose.

 

[Burt_Macklin]

Yay!

Best son-in-law ever!!!

Oh pshaw! I just didn’t want them moving in with me and the money I used was theirs to begin with.