Dear Moneyist,
My father is elderly and lives in Kansas and has a large revocable trust that he and my mother (now deceased) created in 2003. My older brother is the co-trustee and helps my dad with bills, etc. My brother took out a $50,000 loan in secret from my father a number of years ago. He is a co-trustee of my father’s estate.
My father told me recently that my brother never paid it back and that he told my father that he didn’t feel he needed to pay it back. What is the best way to address this so that this doesn’t happen again? Can anything be done about it? It appears there is no documentation, but my brother is furious that I found out about it.
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My brother is also forging checks that he writes from my father’s check book. It is unknown if he is buying anything for himself or if he is forging only checks to pay bills. Is it unreasonable to request that he provide a periodic accounting to the two other beneficiaries (every three to six months) and what should a periodic accounting report include?
When my father passes, a bank is designated in the trust to be the entity that will be distributing the estate, not my brother.
Concerned Daughter,
Dear Concerned,
If your brother is a co-trustee of your father’s estate, he should either be removed or he should not be allowed make any decisions without his sibling’s agreement.
Without a notarized loan agreement, it’s extremely difficult to prove that this money is a loan rather than a gift and, even then, it depends on your brother’s willingness and ability to pay it back. There is a simple solution, however. Talk to your father and his estate attorney about reducing your brother’s inheritance by $50,000. Assuming there’s enough money in your father’s estate and/or the value of your father’s house, you can force your brother to account for the loan after your father dies. By all means, tell your brother after discussing this with your father.
Your brother should not have access to your father’s bank account or check book. He has proven himself to be unreliable at best and untrustworthy at worst. All bills should be paid by direct debit or automatic transfer. Cancel your father’s check book, talk to his bank about the issue with your brother so the employees are aware that there has been an issue with erroneous checks. Talk to your father about becoming power of attorney and help him manage his accounts online. It will empower him and give him more control over his own finances.
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If there’s a risk that your father will be pressured by your brother to allow him to access these online accounts, ask your father if he would mind you keeping the passwords safe. At all points in this process, it’s important to involve your father, his estate attorney and his bank, so they are all kept in the loop and your father feels empowered. The worst thing about elder financial abuse or coercion is not only the breach of trust, but the damage to an elderly relative’s self-confident. With your help, our father should feel like he is gaining control of his finances and life again.
So everyone is kept in the loop, I agree that a periodic accounting is a good idea, as long as that has the blessing of your father. Transparency will help prevent any other mismanagement of your father’s finances, and it will help restore trust in the family’s ability to help your father meet his financial obligations. An independent beneficiary to manage your father’s estate after he passes is a good idea and a trust will help in that process. Every step of the way, put your father first. Ask how he feels about these changes and keep him informed of all developments.
You can be of service to him as a daughter who sees him and respects his independence, as well as a de facto manager of his financial affairs.
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Do you have questions about inheritance, tipping, weddings, family feuds, friends or any tricky issues relating to manners and money? Send them to MarketWatch’s Moneyist and please include the state where you live (no full names will be used).
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