Protecting Loved Ones: A Cautionary Example
We recently experienced a troubling situation with one of our clients, which hopefully can be a good reminder on the importance of the disability panel. Here’s what happened. Many years ago, our client created her trust and added her bank accounts to the trust. She had also added her daughter to the trust accounts as her silent partner co-trustee. Over time, our client began showing signs of dementia. The daughter reached out to our office and expressed concern that her mom had made some questionable financial decisions and she was worried about things getting worse in the future. We began assisting the daughter right away. First, we explained how the disability panel works and prepared a document called a disability certificate, which our client’s children would need to sign. Next, after the children had signed the certificate, we instructed the daughter to give the signed certificate to the bank so they could remove her mom as trustee from the account. This would prevent the mom from causing any future harm to her finances.
The daughter told us that she didn’t believe her mom would ever do anything that would cause harm to her finances, and the daughter decided (based on the bank’s recommendation) not to remove her mom from the bank accounts. About six months later, the daughter contacted our office in tears because her mom had lost a significant amount of money. The daughter shared with us what had happened. Three weeks earlier the mom was online when she received a notice that her computer had a virus and she needed to call customer support immediately. Unfortunately, it would turn out to be a scam. Over the next week, the scammers guided her through a process that resulted in her withdrawing about $45,000 from her bank accounts. The scammers then sent a courier to her home to collect the money, which was never seen again. The daughter contacted our office wondering how this could have been prevented. We explained that because her mom was never removed from the bank account, she still had access to the account. This is why the disability panel can be so important and why we always recommend removing a trustee when they lose the ability to make sound decisions. We’re not sharing this story to blame the daughter for what happened. She did what she thought was best for her mom based on the advice the bank was giving her. And the bank probably meant well, but they didn’t recognize the dangers of what could happen. However, this is a good reminder that when a trustee starts to lose the ability to make sound decisions, it’s important to follow the terms of the trust and make sure the trust assets are protected. The Life Plan has been carefully designed to solve the problems that we face in estate planning today and can help ensure things go according to plan.
But here’s where things went wrong:
When the daughter arrived at the bank, they informed her that she was already named as a co-trustee on the trust accounts with her mom. They explained that she already had access to the trust accounts and could pay her mom’s bills. The daughter called our office and said, “I don’t need to remove my mom from the account because I’m already a co-trustee and can manage her bills.” While this was true, we explained that although she could pay the bills, it didn’t stop her mom from making potentially harmful financial decisions.
2 PrestonEstatePlanning.com
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