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Co-Trustee, Advisor's Taking Advantage

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USEYOURHEAD

Junior Member
What is the name of your state (only U.S. law)? Indiana.

This is a long question, but I’m hoping to paint a picture of the situation I’m in. :eek:

BACKGROUND
My father passed last spring, my widowed mother is 86 ... I'm the youngest child and have been trusted to guide mother through the wealth management process with Lawyer, Financial Advisor, CPA, etc. I have an MBA in Finance and have completely organized all estate planning documents … plus everything is entered in Quicken.

There are two other children. A sister in 3rd marriage with step-children and a married brother with two sons.

The Net Worth is estimated at about $3,000,000. There is real estate, commercial interests, QPRTs and CRUT/CGA's. Basically everything passed to my mother.

ADVISOR TROUBLE
These advisors were supposed to be long term trusted friends:

-CPA - his first job was at my Dad's company and CPA says Dad was his mentor - now he's charging $2,500 EVERY month for a few phone calls and ONE meeting. Two years earlier my fired the CPA, but Dad was coaxed back in with promises the fees would remain more reasonable. The CPA started in a small firm but is now part of a big nation-wide accounting firm. (My personal accountant doesn’t even charge $2,500 a year and I run an S-Corp business, plus receive a few K-1’s from family businesses.) $2,500 a year vs. $2,500 a month ??? :rolleyes:

- Financial Advisor =20 year relationship. He was supposed to be a close family friend.

As soon as my Dad passed the Financial Advisor more than doubled fees without any notification. My mother would have never known ... thanks to Quicken and a lot of investigation on my part I found the fees had gone from about $6,000 to $11,000 annual on average for the last five years to $20,000. In previous years, Dad was ready to leave this advisor due to "creeping fees." I have this in written notes from my Dad to the advisor.

The Financial Advisor "balks" at questions I ask and tells me to just not worry about it .. . that he is taking care of everything. He is defensive. :(

HOW LONG CAN WE DRAG THIS OUT
Between the Lawyer, the Fin Advisor and CPA - they've made a simple estate convoluted - My mother calls it sloppiness... in order to have meeting after meeting for which we've been charged. They leak out bits of information, to which I need to ask questions, then they charge me for asking the question. If they were organized … I wouldn’t have to ask any questions. Who’s winning this game?

Within a month of Dad's death, the attorney and financial advisor had removed my Dad's best friend off as co-trustee and changed from having the financial advisor (personally) being co-trustee to his Company being the only trustee. So as of today ... the only trustee is the financial company (which has doubled fees without notification.)'

Notice red flags here?

Tomorrow my mother wants to set me as Personal Representative and co-trustee with the financial trust company.

We are interviewing other financial advisors.

Is this uncommon? These advisors knew my Dad for years and promised him that his wife and daughter would never have to worry.

This seems like the lambs being lead to the slaughter ... but it's a big, heavy decision to leave these advisors who have been involved with Dad for so long. We have many prominent friends in town and we are getting referrals for other high quality advisors. We've interviewed two advisors already who've answered more questions in 1/2 hour than we've gotten out of the others in 6 months.

Do you have any caveats or horror stories about people changing advisors after the family leader's death. Mom's estate is just not large enough to pay $20,000 a year for an accountant and $20,000 a year for a financial advisor that make lots of mistakes and can't even provide a rate of return on the money they hold for us.

We don't mind paying good advisors ... but so far we've lost money faster than the market rate decline ... we still don't know how the QPRT is supposed to be managed and we're out $40,000 in fees. We've meet 4 or 5 times and we still do not have an Estate Planning Flowchart or any idea how much money Mother should reasonably expect to have when she is 90. We have been given no investment strategy. No one idea on how to save on taxes (I had to lead the charge towards selling an item at a loss to offset a large gain).

The only advice we ever do get is - Do a generation skipping trust .. which is good for their fees ... but the family estate might fall under the $3,000,000 exemption which is what Obama currently has posted on his web site.

What can you tell me ….

What would you do in my shoes? :confused:
 


The first thing I would do is get all the documents to a lawyer and make sure you understand what the various documents provide with respect to the key issues: compensation, grounds required to replace the Trustee, reporting requirements, etc. You'll need to have a clear understanding about what the documents provide, and to also need to understand the laws in your state about these issues.

I'm a little confused about the lawyer, and CPA - your Mom should be in complete control of who fills those roles and what the fees should be. You should be able to get an estimate and hold them to it.
 

curb1

Senior Member
Can you explain what is so difficult that she needs anyone but you as a trustee. Unless there is something here I don't get, you are paying for things that you could easily handle. What is the reason for the complexity? If the money is hanging out there, they (the advisers etc.) will take every penny.
 

USEYOURHEAD

Junior Member
Glad for this forum

You guys hit the nail on the head ...

I finally figured out that I was confusing the Trustee and the Investment Advisor.

This now makes a lot of sense ... since I was already doing everything ... AND paying them.

It's taken a hard year of learning ...

My advice to other newbies ... don't think you can just trust old family friends. You've got to dig in and do it yourself or be prepared to pay.
 

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