Questions regarding enforcement and possible options.

[Egamst3k]

What is the name of your state (only U.S. law)? - I'm in Utah, but the Will was created in Oregon (if that matters).

My question has a bit of backstory, but it's brief. My mother died unexpectedly a few years ago and left my brother and I (21 and 25, respectively) her living will / trust to carry out.

She left my Aunt as the Trustee and my brother and I as the beneficiaries. However, I'm a bit anxious and frustrated for a few reasons - and want some advice.

The will states that half of each half (1/4th total) of the estate should be made available to my brother and I on his 25th birthday. Then, when each of us turn 30, the rest of our half. This has the odd side-effect of me being 29 when I receive the first 1/4th, and then 4 months later receiving the 2nd 1/4th.

Throughout the process of gathering all the assets into the Trust, it was mostly my aunt, grandmother, and brother doing it. I'm currently at college, and everything happened mid-semester. They did a great job of it, since it had everything from collecting insurance to having a house assessed. Afterwards, though, my Aunt stuck everything in a Savings Account... where it's been sitting. The Trust specifically says to invest the assets, but doesn't give any specific mention of what in - I assume leaving it up to the Trustee. I know that, technically, the Savings Account does earn interest and might considered an investment. However, I'm also positive (and have the numbers to back it up) that I could get the same % interest per month that the account gets per year. I've taken a personal finance, business, and investing courses (not that I'm a business Major, but they're required by the Will) with a 1.5% return per month over the last year and a half.

I've petitioned my Aunt a few times to let me have my 1/4th early so that I could invest it as I see fit, and get a jump-start on whatever I might need it for. Currently, the Trust helps me with my college expenses to a large degree (as delineated by the Trust itself), and I've calculated that after taxes at 1.5% per month I could sustain myself indeifnitely where I'm at and be well-off for grad school in a year (with the potential to graduate debt-free). If it sits in the bank, the interest won't even off-set any significant amount of the expenditures, and I might as well be taking away from my brother as well.

I'm not especially close to my Aunt, but she's a good person. I see her at family barbecues, am semi-close to her sons and husband. I simply disapprove of how she's handling the trust now that everything's come down to letting it sit in the bank and paying taxes.

Every time I petition for investments or when I gave her a proposal for my 1/4th, she goes to a lawyer friend of hers for advice who tells her to go strictly by what the Trust says. She doesn't do this for other expenditures (i.e. - my brother asked for the funds to help get a new car since I got my mother's '02 Nissan, and my Aunt simply asked me if I thought it was all right), but apparently if it's a significant enough portion, despite my brother's approval, she's hesitant.

I understand this to a large extent. She's playing in her comfort zone, but it's definitely not my comfort zone.

The final bit is; my brother is getting shipped to Camp Pendleton to be trained as a Marine anytime in the next couple of weeks (they only give him 48 hours notice), and I am unsure of how she's going to react after he's gone. If her response stays the same and requires his consent, it will be very difficult, if not impossible for the first 6 months, and then just very sparse/difficult after that for the next four years. This has provided incentive for me to get things straight now, as opposed to later.

In the end, I guess I want to know:

Is there any precedence anywhere that would allow me to acquire my 1/4th now and invest it as I see fit? I'm under the impression that enforcement of trusts falls to the beneficiaries, of whom my brother and I are the only ones. I've talked extensively with him about this, and I had his approval for the move (he actually helped me draft the proposal to my Aunt) along with the numbers to back up my capability to sustain myself, but her lawyer friend said there wasn't anything that could be done (no offense to anyone here, but having never met the lawyer and only conversed with her through e-mail and one 5-minute phone call, I can't vouch for her ability at all - particularly when she charges me $300 for an e-mail that says "Call me.")

If not, where should I approach the issue of investing the amount properly? We do pay her to manage it, but it's basically writing a few checks to the University and doing taxes. I'm not sure it warrants what we pay her, but she's family and I know her eldest is heading to college soon, so I don't mind it that much.

Lastly, any other advice? The situation is a bit convoluted, but I'd appreciate any help.

Thank you in advance to any replies!What is the name of your state (only U.S. law)?What is the name of your state (only U.S. law)?

 

[curb1]

Your Aunt is doing the prudent thing in my estimation. You are taking a snapshot of one of the highest returning eras for investment in U.S. history and projecting future gains. My portfolio has increased over 100 percent during the time you mentioned. It is not going to continue and very possibly could go down considerably without careful attention. We are living in a time when preservation of capital is of primary concern. You will have time later to invest as you see fit. Be patient.

 

[Egamst3k]

Well, I think investment pattersn come down to personal preference. I agree that a conservative portfolio is probably the most beneficial with the high probability of volatility, but there are investments with only slightly more risk for a better gain than having it in a savings account.

My Aunt hasn't had any classes or formal training in investing, so I know just lumping it into a single account is her automatic reflex - that's her comfort zone, but I still believe it's only slightly better than hiding it under the bed.

I'm comfortable with riskier movies dealing with reverse ETF's and margin accounts. I've peaked at over 30% ROI per month during the Spring bull rushes a while back, and I'm well aware that from '08 onwards it's been anybody's guess as to the market's direction. The 1.5% return was from fairly conservative stocks with fairly low Beta values, so I'm not worried about losing 50% of my assets in a single day (particularly with the appropriate trailing stops).

I just want to know if there's anything that can be done. I realize that 'no' may be an answer, and I'm fine with that, but I'd rather see if I can capitalize on the opportunity now rather than later when the money she has in the bank may be worth far less if inflation hits and the interest doesn't keep up with it.

 

[anteater]

Subject to how large the trust is and other factors, your aunt is probably too conservative.

I'm comfortable with riskier movies dealing with reverse ETF's and margin accounts.

On the other hand, you should not be allowed around any money for which you have a fiduciary responsibility.

I just want to know if there's anything that can be done.

You can find an attorney willing to take your case, pony up about $10,000 to $20,000 as a retainer, and head to court.

 

[tranquility]

Banks who are trustees often turn as much into cash as possible. Then will stack treasuries to give any needed cash flow. While conservative can certainly be a breach of fiduciary duty, it is much harder to prove. Harder to prove tends to be expensive to prove.

 

[Egamst3k]

On the other hand, you should not be allowed around any money for which you have a fiduciary responsibility.

Hah!

To be serious, I know how margin accounts work and how reverse ETFs work inside and out. I don't short-sell, which would add another layer of insanity, and I don't combine margin accounts and reverse ETFs in the same pot. I prefer Bull-oriented or commodities-oriented ETFs with a mix of "low-risk" stocks for longer-term investments. I haven't liked the Bond market since the US has more than quadrupled its debt, and I've been slowly looking into foreign markets.

We all work in our comfort zones, and mine just happens to be different from yours and hers. I've only had one month of net losses, and it was when I first starting out and didn't realize the volume some of my investments were traded at, making them more erratic than I expected. Luckily I had the forsight to put in less than $1000 so that I could get a feel for the market first.

You can find an attorney willing to take your case, pony up about $10,000 to $20,000 as a retainer, and head to court.

I don't want to create that break in the family, but thank you for the reply. If nothing else, it seems as though the implied answer is, "Nothing can be done without the court interfering."

Thanks for the reply.

 

[Egamst3k]

Banks who are trustees often turn as much into cash as possible. Then will stack treasuries to give any needed cash flow. While conservative can certainly be a breach of fiduciary duty, it is much harder to prove. Harder to prove tends to be expensive to prove.

Thanks for the info.

 

[anteater]

Hah!

To be serious, I know how margin accounts work and how reverse ETFs work inside and out. I don't short-sell, which would add another layer of insanity, and I don't combine margin accounts and reverse ETFs in the same pot. I prefer Bull-oriented or commodities-oriented ETFs with a mix of "low-risk" stocks for longer-term investments. I haven't liked the Bond market since the US has more than quadrupled its debt, and I've been slowly looking into foreign markets.

We all work in our comfort zones, and mine just happens to be different from yours and hers. I've only had one month of net losses, and it was when I first starting out and didn't realize the volume some of my investments were traded at, making them more erratic than I expected. Luckily I had the forsight to put in less than $1000 so that I could get a feel for the market first.

Apparently, you haven't got to the courses that discuss "fiduciary duty" and "prudent investor" yet.

You can do what you like with your own money. You don't start playing with dynamite when handling others' money.

I don't want to create that break in the family, but thank you for the reply. If nothing else, it seems as though the implied answer is, "Nothing can be done without the court interfering."

Unless your aunt is willing to do something voluntarily, that's about the size of it.

 

[tranquility]

To be serious, I know how margin accounts work and how reverse ETFs work inside and out. I don't short-sell, which would add another layer of insanity, and I don't combine margin accounts and reverse ETFs in the same pot. I prefer Bull-oriented or commodities-oriented ETFs with a mix of "low-risk" stocks for longer-term investments. I haven't liked the Bond market since the US has more than quadrupled its debt, and I've been slowly looking into foreign markets.

Goodness. You should re-consider anteater's advice then:

On the other hand, you should not be allowed around any money for which you have a fiduciary responsibility.

Because you don't understand the responsibility. While what one does with one own money has something to do with:

We all work in our comfort zones, and mine just happens to be different from yours and hers. I've only had one month of net losses, and it was when I first starting out and didn't realize the volume some of my investments were traded at, making them more erratic than I expected. Luckily I had the forsight to put in less than $1000 so that I could get a feel for the market first.

Your comfort zone has nothing to do with fiduciary responsibilities. It is more related to the needs of the trust and what a "prudent investor" would do.

 

[Egamst3k]

Apparently, you haven't got to the courses that discuss "fiduciary duty" and "prudent investor" yet.

You can do what you like with your own money. You don't start playing with dynamite when handling others' money.

No, which is why I'm here - info like this.

I never intended to invest other peoples' money. I was wondering if there was a way to hasten the process of receiving the portion of the trust I am entitled to in 4 years so that I could invest it as I see fit.

Not the entire trust, not my brother's portion, and certainly nobody else's money besides my own.

Unless your aunt is willing to do something voluntarily, that's about the size of it.

Thank you.

 

[Egamst3k]

Goodness. You should re-consider anteater's advice then:

I've made profit with what I've done, and I know it's not everybody's cup of tea. I do thorough research and keep very careful track of my assets.

I'd be more than willing to listen to some good evidence for actions on a different course than what I've taken from more experienced investors, and I have taken a long-term investing course (which will come in very handy when I'm out of college, I assure you), but for the time being what I've done has worked.

Your comfort zone has nothing to do with fiduciary responsibilities. It is more related to the needs of the trust and what a "prudent investor" would do.

I agree. I will never, and have never expected my aunt to dabble in what I do. At the same time, the Will states it should be invested, and my mother already had a portion of the trust invested in a fund she trusted. Currently none of the trust, at least that I'm aware of, is invested in anything other than a jumbo savings account. No funds, no bonds/treasuries/stocks/etc.

I am also not looking to sue my aunt in any way. She has been a capable manager, if understandably inexperienced.

Maybe I worded the original post poorly, or perhaps my replies have been poor, but I asked if there was anything that amounted to, "Could I get my portion of the trust released early with my brother's consent, and in doing so dissolve my aunt's legal responsibility so that if anything should occurr, she wouldn't be in the middle of it."

It sounds like the answer is no, and that's the answer I expected, but it's always nice to double check with those more knowledgable than myself.

 

[tranquility]

Nothing I've posted is intended to pass judgment on how you handle your money. While I've been around a long time and can tell you in some detail the tax ramifications of different investments, I am a simple man and know little of such things. (Well, maybe a little.)

Handling other people's money is something I do know about. It would be very hard to imagine a trust situation where investments such as those you listed would not be a breach of a trustee's fiduciary duties. Aunt cannot legally or morally breach her duties through not following the terms of the trust--including distributions to you too early. She could also be in breach if she followed your advice. Even if you wrote out a contract promising not to sue. It would not be binding and the breach would be unrelated.

The only thing I could see is if she resigned her appointment. The next person to be trustee is already written in the trust, so your situation may not improve.

Now, such a conservative "portfolio" (for lack of a better term) MAY not be in keeping with the needs of the trust and could be a violation of her fiduciary duties. Yet, I know corporate trustees (especially banks) tend to turn everything into cash and it is difficult to wrestle away control from them. I might suggest to aunt to get professional investment advice. Tell her it would protect her from claims for not doing so and might lead her to feeling comfortable with more risk.

 

[Egamst3k]

Thank you for taking more than a few sentences to explain.

You've been very helpful, and I think I have my answer.

Thank you, again.