Don’t Let Someone Rob You of Your Inheritance

Stephen Trefts, President

When the financial exploitation horse is out of the barn, it is nearly impossible to get it back in again. Sometimes the exploitation is on a relatively small scale, as in the caregiver who helped herself to groceries and made long distance calls. However, many times, the exploitation is financially and emotionally devastating to the exploited individual, as set forth in the following true stories.  We have a few stories that illustrate this problem and highlight methods to keep the horse in the barn.

The Opportunist

“Marvin” was an elderly gentleman with a large estate. His live-in caregiver, who was several decades younger than he, accompanied him to meetings with his attorney and was privy to conversations regarding his estate plan. This plan would have allowed us to manage his extensive farm and land holdings and negotiate with utilities regarding wind turbines. According to Marvin’s wishes, a trust was created which would have left his estate to family members. However, shortly after the trust was created, Marvin married his caregiver and became inaccessible to his advisors. Consequently, his assets were never conveyed into his trust. Unfortunately, Marvin died intestate not long after his marriage, and his estate passed to his new wife, and not to his family.

The Unscrupulous Executor

“Milton” was an aging eccentric who fancied himself an entrepreneur, real estate developer and exotic animal farmer. When he became terminally ill, he drafted a will which provided for his estranged heirs; however, he trusted the wrong friend to be the personal representative of his estate. The friend’s poor judgment and lack of business experience were overshadowed by a willingness to misappropriate estate assets. The friend was removed by the Superior Court, and we were appointed as successor Personal Representative. We worked diligently to recoup the losses from the former Personal Representative for the benefit of the rightful heirs. We are in the process of winding up land use issues, selling the farm, and selling significant holdings of scenic property to the county to enlarge a park system.

The Abusive Caregiver 

“Madeline” was an incapacitated individual who was cared for by a family member. The family member fraudulently entered into a purchase agreement for a vehicle in Madeline’s name and illegally withdrew funds from her bank account to support his family and his drug habit. Isolated from other family and friends, and with every outside contact monitored, Madeline became a virtual prisoner in her own home. By the time we became involved, the family member had run through tens of thousands of dollars of Madeline’s assets—assets which she desperately needed for her care. To free Madeline from a coercive and abusive situation and protect her from her abusers was a very costly endeavor and further reduced her dwindling resources.

The Beneficiaries and Borrowers 

“Morris” was a lonely elderly gentleman who had always had an eye for the ladies. He was also in the early stages of dementia. This was a perfect setup for unscrupulous caregivers at his retirement home. Under the guise of friendship, they confided their money woes to him, and he happily gave them large sums of money for their children and their debts in exchange for their “friendship” and their company. In one instance, a caregiver promised to let him come and live with her if he would lend her the funds for a down payment on a house. Of course, she never repaid him, and he never left the retirement home. Although Morris had sold his farm for a hefty sum when he retired, when we became his trustee, his once considerable estate was nearly gone, and he was faced with spending his final years on Medicaid.

The Stepparent Issues

“Mike” was married for over 50 years, and he and his wife had only one child. When his wife passed away, he employed a caregiver, Mary, whom he later married. Consequently, he changed his will and upon his death, the second wife became very wealthy. In his estate plan, Mike had established a trust whereby his widow would receive income and principle, if she needed it, with the remainder to be distributed to his daughter after Mary’s death. He selected Mary to be the trustee. When Mike’s daughter began to notice a precipitous decline in the value of the trust and an offsetting increase in the value of her stepmother’s assets, including expensive real estate and toys, she was understandably upset, because it appeared to her that her stepmother was spending her inheritance. The daughter and the stepmother each hired attorneys; and eventually, we were called in to resolve the situation. The end result is that, when we became trustee, the outflow of funds to the stepmother was moderated, real estate was conveyed back into the trust and peace prevailed.

Many times we are called in to clean up messes like those in the above cases. However, often the proverbial horse is already out of the barn; and, although we put forth our best efforts, we cannot make estates completely whole. So, what are the warning signs of financial exploitation of vulnerable or incapacitated adults?

  • The decline of mental capabilities so that the individual becomes overly dependent on others.
  • Caregivers, family members or new friends who take an inappropriate interest in financial affairs or who may have questionable abilities or a spotty reputation.
  • Isolation from family and friends.
  • Secrecy and reluctance to discuss financial matters with formerly trusted advisors.
  • Changes in financial habits such as large withdrawals from banks or investment accounts or increased ATM activity.
  • Changes in asset ownership such as real estate or bank and invest- ment accounts.
  • Changes in estate plans or Power of Attorney.

Sadly, by the time financial exploitation is discovered by family members, it is often too late to recoup the losses. In most cases, exploitation is the result of trusting the wrong person. It is particularly sad when the decision to select a friend or family member as a personal representative or trustee was based on a desire to save money. As you can see by the above examples, a choice based on misplaced thrift can be a costly mistake—it is a matter of being “penny wise and pound foolish.” The better choice is to select a professional trustee or personal representative and pay reasonable fees for honest and competent service.

Print Date:  Spring 2011