Financial Strategies, Inc.
ABOUT
Knowledge.
Experience.
Dilligence.
Passion.
Over four decades of practice
Michael D. Anderson was recruited by Farm Bureau Insurance in the mid-1970s and was youngest career underwriter in the company at that time. He beat his class in both life and casualty insurance sales winning their coveted first 90 days production "Totem Pole" Award. He was soon recruited within the company to become the youngest Agency Manager, first serving as temporary Agency Manager of Worth County(Iowa); then graduating from the company's "Management Academy" and given the keys to managing a large two-county agency (Adair-Guthrie). In two years, he brought the agency from "last" to "second" in production in his division.
Resigning in August 1982 to start his own financial planning company and founded his own insurance brokerage firm - Financial Growth Services, Inc. in Ankeny Iowa with partner Lew Doubleday. Michael bought out his partner and moved his corporate office to West Des Moines. He soon became good friends with popular CPA Chuck Brooks. Chuck introduced him to top business people in Des Moines during a weekly Christian businessman prayer breakfast. Financial planning was added to insurance services and one of the first financial plans was created for the then sports director for popular WHO radio.
Seeking a larger financial planning audience and desiring a warmer climate, Mr. Anderson moved his family to Arizona in 1986, to become Vice President of sales with a well-known financial planning firm in Phoenix. He soon discovered the warm climate and warm reception by new clients were the grounds to re-incorporate in Arizona. In July 1990, he founded his current financial planning firm -- Financial Strategies, Inc.
Today, he interfaces with numerous legal consultants, well-known national financial advisers, and authors who value and praise his work over the years. A 2012 interview by the Wall Street Journal of Mr. Anderson's Inherited IRA rescue services resulted in nearly a hundred inquiries from readers (print and online). Those concerned readers, together, reported over $50,000,000 in retirement plan assets they wanted to protect from his "Inherited IRA Hell", referenced on his website. Today, Mr. Anderson assists beneficiaries after a plan owner’s death and rescues between 5 and 25 million dollars from needless instant taxation each year.
RESCUE YOUR INHERITED IRA MONEY
WELCOME!
You have found the best Inherited IRA Help and Information site for IRA Owners, Estate Lawyers and Accountants, Estate Administrators & Estate Managers.
When you don't know which way to turn, stop. And employ us for extra-ordinary financial consulting on Inherited IRA questions and issues. This area of tax practice can cause one of the greatest chances of adviser malpractice.
Understanding the tax rules and statutes regarding inherited retirement money is one of the hardest areas of finance many advisers and prospective clients struggle and suffer from every day. Mistakes made are legendary since most retirement accounts have ballooned to become the largest financial asset owned at death. And the mistakes cause inherited retirement money to permanently enter INHERITED IRA HELL. It is a one-way trip and nobody gets out!
That is why you need a true time-tested tax professional who fully understands the process of transferring your inherited retirement money from your deceased relative or friend into your name. All without triggering needless instant lump sum or accelerated taxation.
I am here to lighten the load off your shoulders you most likely now feel. I’m an honest and positive professional whose first priority is always the interests of my clients — providing instant professional consulting help and advice early on before you sign any paperwork.
Signing paperwork and sending it back most likely will end any chance to help you if it is filled out wrong. And my long-term experience is that the first paperwork sent out by the plan trustee/firm is sent out with the wrong options. And very little (if any) instruction to complete it correctly.
FSI has been consulting on inherited retirement money since 1998, the first year an inherited IRA account was found feasible by an IRS private letter ruling. (PLR). Back then they were called decedent IRAs. Our inherited IRA site has been featured in many national media sources including the Wall Street Journal, bankrate.com, fox business news, Choate's Notes, and others.
A typical client wanting a solid estate plan used to go to an attorney known or referred and most likely would end up with a really nice Last Will & Testament, some power of attorney documents, and if lucky -- a Living Will. All individually wrapped up in a similar blue back cover that had been used for decades if not centuries! (Bank Box ready)
So, the client signed the new documents and placed them in their bank box to collect dust until they died, rarely thinking to update them throughout their years of life. Even so, the majority (about 70%) today have either outdated Last Will's (as behind the times as a horse and buggy) or absolutely nothing at all for controlling and VALID estate legal documents.
The internet, software, and technology are so aggressive today we barely remember having ever lived without them. They opened up the door to legal document consumers who shop "online" while professional offices as well as the malls and stores they used to go to and buy from - crumble and deteriorate with commercial "for sale or lease" signs on them. Many now for years.
And in the midst of this gigantic change in consumer trends, our online consulting service was born. For any financial matter you need an instant consultation on, consider a free 10-minute chat with Mr. Anderson. If you then hire him, he will either give you the answer you seek with documentation to back that answer up (sent by email). Or find an associated legal consultant or practitioner to refer you to if his licensing does not allow him to answer the question.
Your search for professional help on your retirement inheritance is over.
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TESTIMONIALS
ONLY THROUGH THE TEST OF TIME CAN YOU DETERMINE COMPETENT
FINANCIAL ADVICE
Our Wall of Shame is liked by the top retirement planning advisers/authors in the U.S.
We are pleased to announce that America's number one Retirement Adviser, Attorney and Author Natalie B. Choate, Esq. (Ataxplan Publications), is our main source for correct information regarding your Inherired IRA consulting case. To discover information direct, go to:
The following three stories are from our actual client files from Financial Strategies, Inc. closed cases
(we have a lot more to publish when time allows)
A. AMERICA’S WORST LAWYER?
Clueless Estate Lawyer
A bad Lawyer, the Personal Representative & Successor Trustee, our client’s sister, and her chosen Estate & Trust Attorney & Trust Administrator and Estate/Trust CPA (BFF of Estate/Trust Attorney who also made the referral) refused to provide direct notice, refused to provide direct communication, refused to disclose estate and trust assets, and refused inspection of all trust properties, trusts books of records, and trust accounts. This was contrary to the Trust agreement and statutes but was done because they did not want my client to know what was there. It was necessary for her to hire a very expensive southern lawyer, just to try to obtain communication with the sister in charge and her chosen estate lawyer. His best work, for the most part, was in printing his billings…
But, the estate lawyer the sister hired has been found to be, more or less, A LAWYER FROM HELL! (Referred to as L.F.H. hereafter) She first assisted my client’s mother in updating her living trust early in the year of death. At that time, no one knew that a medical condition would take her life late that same year. Sadly, the original professional trust prepared by a name-brand law firm in the Midwest was replaced. The trustmaker got a thin, poorly written 10-page “jobbie” instead. Of course, it claimed the trustmaker was now a resident of the southern state where she lived part of the year in her boyfriend’s condo. The client’s mother resided the rest of the time in her boyfriend’s Midwest home, the same Midwest town where instructions were left for burial.
The client’s mother did own a rental condo property titled to her trust in the southern state. That didn’t stop the L.F.H. from listing the property as a probate asset on the Probate Inventory filed in the court of this southern state! The female CPA who had been doing the income taxes prior to the death was also using the free state tax approach for the client and a driver’s license was also issued there, giving reasonable proof the trustmaker had the outer appearance as a real resident, at least for IRS purposes. Perhaps the southern state was her resident state irrespective of the fact the IRS is fully aware of winter visitors doing the exact same thing to avoid state tax on some or all of their retirement income. (And the home state tax agencies as well) The problem the client and I discovered after the death was that the consecutive month’s rule wasn’t really met for residency testing per the state statutes. Oh well, no one’s perfect.
But, the test for her residence state in the Midwest was also ignored for probate reasons, irrespective that most of the decedent’s large money accounts were opened there and the statements went to the Midwest home address, not the southern state residence that was being claimed by the CPA for IRS tax purposes. Our examination as an estate accounting/tax preparation and Inherited IRA tax consulting firm found the amended trust drafted by the L.F.H. was clueless on how to draft proper estate legal documents. Since our firm is certified by the Supreme Court of Arizona to prepare estate legal documents, with 36 years of estate legal document work either on our own or by working with estate planning legal firms – we can tell a “stinker” from afar.
We also found out the L.F.H. was clueless on why trust funding is necessary BEFORE death. Proper funding was ignored by all estate and tax advisers prior to death as well as the sister in charge. This, even though three months prior to death, written statements by physicians declared the mother (now a patient) incapacitated mentally and physically. The sister had full powers as GPOA and Successor Trustee but chose to ignore the need to fully fund the living trust, prior to death. The L.F.H. stated word for word: ” FINALLY, (CLIENT) ASKED A QUESTION IN A RECENT FAX TO ME WHICH I AM ANSWERING FOR THE BENEFIT OF ALL OF YOU HERE. IT IS NOT MY PRACTICE, NOR COMMON PRACTICE HERE, TO PREPARE A “DECLARATION OF TRUST OWNERSHIP OF PERSONAL ARTICLES” OR ANY OTHER SIMILAR DOCUMENT WHICH WOULD TRANSFER PERSONAL PROPERTY TO THE TRUST, AND IT WAS NOT DONE IN THIS CASE.”
It is a nice admission of malpractice since professional estate planners in this southern state commonly use such assignments on a regular basis. This caused probate on assets that helped run up her fees no doubt! We documented our file with numerous lawyer websites in the same state, describing the assignment of tangible items to the trust as common practice in trust estate planning. (Common nationwide as well) Worst of all, this L.F.H. was not able to properly list the actual sibling beneficiary sisters as the trust beneficiaries. Instead, the trust beneficiaries were identified only by state default statutes to identify just who gets the money. Especially when you have almost a million-dollar IRA, separate from other large estate assets and investment accounts, that is high malpractice! It cost a lot of money to perfect what was penned by me initially as the “world’s worst trust” I had ever read. Not a legal opinion of course. But a fact! There was also no Inherited IRA management legal language, no conduit trust provision, nothing at all to make her trust eligible for such a big IRA payoff upon death.
The southern lawyer my client was forced to hire in order to communicate, came on board even though he had zero knowledge with large trust-owned IRA accounts and eventually admitted it. He was mostly a grapevine between the parties, whose connections discovered after his dismissal now bring up questions of conflict about disclosure items that should have been told upfront to my client. Also, legal and tax help was brought in by me to work for the client to perfect complications of the mother having a bad IRA custodian that did not allow splitting IRA shares inside a trust which was then changed to another bad custodian by the sister for one reason. The investment advisers in charge that got the large IRA account were down south! And friends or fellow yacht club members with the L.F.H. and her CPA associate! The other sibling sisters benefited from this work my client had to pay for, basically getting a free ride for this advisory work we all did for our client, the only sister caring to do things in a professional manner.
This female L.F.H. with direct connections to all the other “players” in the southern estate game that was played out (and is still going on as I write this), charged like a Manhattan lawyer while producing results similar to letting Hannibal Lecture give you a haircut! She sent my client a hokey-looking copy of her employment agreement with the sister in charge, a whited-out IRA beneficiary form copy that looked more redacted than a pilot’s UFO sighting report – all adding up to imperfect production of documents. Only a few of the requested documents ever came in.
Which brings up the question my client and I can not dismiss: Was it all intentional, just to milk the estate for all the fee money the lawyer from Hell and her associated southern advisers could get? We have come to a definitive conclusion that she is not the sharpest knife in the drawer of lawyers. But, perhaps she is intelligent in knowing how to make a trust fail so that a large amount of non–trust assets were forced into probate. But, then, she listed trust assets in the initial probate inventory which only a fool would do. Or, someone milking the estate for all the pesos possible. (This southern state has a liberal policy on how a lawyer can grab a percentage of trust assets, much more liberal than my home state of Arizona)
This L.F.H. does just one thing very well. Billing. Well, maybe that should be changed to “charging” since my client has never seen an actual billing from her, even though 1/3 of the payments came from her inheritance money. The truth is, flat fees were agreed upon upfront, (the factor % included trust assets needing little work) then “extra-ordinary” fees were of course also manufactured by the lawyers on this estate, and by the sister in charge, claiming in mediation the detailed extra-ordinary billings existed but now claiming they don’t. Can you spell highway robbery?
Total legal and accounting fees to date on this estate paid out by all parties to date exceed $300,000! Most of that money went down the toilet directly because the L.F.H. drafted imperfect legal documents and ignored proper trust funding. This, in turn, caused probate, delays, fights, and mistakes in rapid-fire. Though I too participated in the fees paid out, my work helped perfect an imperfect Inherited IRA account. It was necessary. Most of the fees were not. Truly, some of the advisers of this estate have taken their own “share” as if they were listed, heirs. That is shameful since now, they refuse to provide billings to justify the large extra-ordinary fees taken against the estate (and my client’s share). It also is against the law.
Today, the sister is still too busy to do any substantive work on her own (she claims it is short-term memory loss). I wonder if she tells the adults she cares for as a doctor she can’t remember anything? The allowed fee for her full PR and Successor Trustee services weren’t discounted again in the “extra-ordinary” free for all payments that were paid out after mediation was completed. This, even though a whole team of lawyers had been on staff at times doing most of the work. (in the most sloppy, careless way possible) The fact that the CPA recently granted the PR/Successor Trustee carte blanche on when she claims her second half of the pre-agreed fiduciary income payment is laughable if the IRS finds out. Especially since it was deducted on the 706 two years before! Broken statues and laws have run off these people’s backs like water to date.
Between the estate lawyer and CPA handiwork, multiple amended inventories of probate assets were filed again and again and again with the Southern state’s Court and copied to the Southern State’s Department of Revenue (they still have a tax department for Corporate and Estates), because the L.F.H. listed Trust asset(s) as Probate assets on Inventories and failed to list all probate assets. To this day, even though Probate has been “closed” via ex parte communications in a Probate Judge’s Chambers attesting under oath that estate was fully administered), the estate remains not fully administered. The 2011 plan is to hold remaining estate money in accounts that pay no interest so they don’t have to file form 1041 another year. I guess any bank account can pretty well guarantee that. But, it isn’t professional, nor is it the manner in which a professional Trustee would (or could) act since it violates the trust. The trust also remains violated because the terms dictated “distribute” upon the mother’s death. Year four is coming up next week in violation of that trust term…
The IRS Form 706 Death Tax Return, also showed a goof of over $70,000 in death taxes overpaid! Even today, the inventory is flawed, the “corrected” death certificate is flawed, and the list of mistakes fills a couple of pages. The estate is now sealed with the IRS on the 706 and the southern state county probate proceedings. Sealed unless someone wants to go back and lift the rock up that is still hiding the mistakes and misdeeds that this lawyer helped the PR and Successor Trustee perpetrate against my client.
This brings up the second situation that has fueled the fire on this case. Simply stated, it is JEALOUSY & REVENGE. “We Are Going To Get You!” was spoken from the sister in control of the purse strings — to my client, as the mother lay dying in her hospital room. Jurisdiction was declared down south for the revised trust, GPOA, and Last Will. That begat the introduction to the bank-sponsored securities brokers who took delivery of a majority of the estate money which was “ordered” south as well, from its Midwestern roots. The sister allowed migration of jurisdictional control and estate money, even though she was and remains a resident Successor Trustee back in the Midwest.
We also had stale IRA — RMD withdrawals, claiming life insurance proceeds with an imperfect death certificate, failure to manage the IRA properly, failure to protect the securities accounts from large losses, and improper taking of bank deposit box contents owned by my client, improper art valuations and accounting. All this mal–performance and malfeasance adds up to a nightmare estate situation caused on the most part, by bad advisers and a sister who doesn’t really seem to care how much money the bad advisers cost or how many mistakes are being made.
The high-priced southern state CPA started this mess by referring the deceased mother and her estate administrators to just about everybody who is an adviser and also “friend” on her Facebook account page! The death took place almost 3 1/2 years ago, yet today the estate is still not fully settled! Money is still being held hostage because my client won’t sign a forgiveness waiver that I quote, “Covers from the beginning of time to the current time”. Of course, everybody but the Butler is included in the waiver parties now wanting exemption from liability before the final cash payment can be made to my client from the estate.
The once large estate has dwindled down because of market risk (crash of 2008), and very expensive advisory fees (still with no billings being provided to my client for ordinary or extra-ordinary fees charged against her share). Then, you have two investment advisers on the money pulled down to the southern state — both who I found just sitting on their thumbs with the sister in charge until we had to intervene and cry foul over a year ago. (They had made no trades from inception) By that time, additional stock market losses took even more money away from the estate beneficiaries.
Add in a whopping payment to the IRS for the estate tax due because no one advised doing annual “gifting”. Even higher Form 1041 Estate/Trust federal taxes resulted simply because the CPA and lawyer failed to coordinate DNI in the same tax year on the fiduciary return, as the year of death. That kissed 20k away alone. But, we still aren’t done! The expensive legal battles over the large IRA cost plenty, but above all, market loss cost the most because the sister never understood her right to go to cash to protect the estate from the stock market loss was part of her job, not to maintain her deceased mother’s investment positions for months (or years) after her death. The wasted money, energy, and time to get the IRA issues straightened out was huge by all parties involved.
Even to this day, the sister serving as Successor Trustee and her lawyer does not seem to understand the money manager (RIA) is not the custodian of the former failed IRA account. Or that the terms of the mediation agreement my client was forced to sign under duress have not been complied with. At least one brokerage account that was supposed to have been zeroed out and closed still had money in it 8 months after the agreement was signed! Inventories and bookkeeping entries to date, remain incorrect and inaccurate.
Lastly, my observation on this case was that the estate became a “feeding trough” for the southern advisers hired by the sister in charge, far from the client’s regular home. One thing is certain — the revengeful sister in charge has the mental capacity to do better than she has. She is rated “brilliant” in IQ tests. (the whole family were/are lawyers or doctors with high IQ’s) But, as a busy medical doctor, she has trusted an incompetent southern lawyer and CPA to advise and do most of the work instead. Bad work. The fiduciary duty of PR & Successor Trustee (sister), Estate CPA, Investment Advisors, and Estate lawyer, as well as my client’s former southern lawyer, has all but been forsaken in this case. Only the sister, doesn’t reside in this little STEPFORD community with their tight little group most likely looking and hoping for another large estate to feed off when they get done on this one!
Thanks to Facebook and online searches, we now know just how well-connected everyone is with each other in this case. Since there is no statute of limitations for fraud, the revengeful sister with America’s worst attorney (the Lawyer from Hell/L.F.H.) at her side, doing her bidding – may yet find out that using an estate to get even, is not smart. Not smart at all…
B. DUMB INSURANCE COMPANY?
“We Will Make an Exception in Your Case”
This case was settled over a decade ago. The CPA client was the chief financial officer for a company and was not up on the current laws and rules regarding her mother’s inherited IRA account left to her and her four siblings. Initially, our firm was hired to help review paperwork sent to her by the insurance company.
Upon examination, it was obvious the insurance company serving as custodian of the decedent’s IRA account had sent out paperwork to my client and her siblings that would immediately tax the proceeds once the death benefit was paid out! But, it was too late for three of the siblings. They had already signed and executed the paperwork sent which meant they now get the privilege of instant taxation in the tax year (2011). Perhaps if they had compared and seen the projections of how long a stretch IRA will provide income to them and their heirs, they would have made different choices. The problem was, the insurance company initially didn’t offer anything but a lump sum settlement, making if 100% taxable in the year taken.
Our firm was able to save the client and one remaining sister sibling from instant taxation by requesting alternate paperwork that set up an inherited IRA account for the benefit of the daughter (our client). Some work was necessary because the initial response was “we don’t do that here”. This was quite shocking since I am a licensed agent of this insurance company, one of the best-rated and lowest cost term insurance providers in the nation! But, they are not high on the list of qualified IRA custodians. Only New York life gets mentioned by Inherited IRA expert, Natalie B. Choate, as a valid American-based carrier to handle your loved ones IRA.
I found it embarrassing as a licensed agent (currently licensed in Arizona and Iowa) to have to fight the company in order to obtain an exception for her. When the letter from their top legal staff stated “we will make an exception in your case”, our green light was on for executing the alternate paperwork I ordered for her (her sister I think will duplicate what we did) and it was sent in. It also included copies of paperwork “porting” the funds away from this insurance company to what Natalie B. Choate refers to as a “more sophisticated custodian”.
The final result is the funds were never first placed into an insurance company product as an inherited IRA account. But, were transferred by direct rollover to a brokerage firm known as the best qualified to manage an inherited type account. We could not stop the insurance company from paying the death claim on the IRA, from the moves they made. Even still, the new custodian felt everything was in order, but it left that small element of doubt for both me and the client, who as a CPA, knows the truth will be revealed when the 1099-R is issued next January.
Because of that, I had her request and she received confirmation from the legal staff of this insurance company, reassurance that the original “taxable” reporting from the first set of paperwork would be replaced in their systems with a “tax-free” direct rollover coding on the 1099-R. Yet, fingers are crossed since the incompetence of the claims staff was ever present while dealing with them.
Legal recourse would be available if a taxable reporting took place on this case because solid letters in writing were obtained by the firm on “status” prior to the transfer out and away from them ever took place. (In the Inherited IRA advisory field, this is called the “handshake”) If you would like to know the name of this company, just call me at 1-800-782-2806 and I will tell you. Meanwhile, stay away from those bad advisers that cause the stories we publish on this web page!
C. FIVE-FINGER DISCOUNT?
Stealing From the Estate Because You Can
This is the one case, that became dear to my heart. An injured brother contacting me and asking me for help in fighting a sister who had gone rogue and was stealing from his father's estate, after the father had died. My own father called stealing a "five-finger discount" as it obviously is tempting for some to just grab things with their hands and run! It comes down to the oldest written law, The 10 Commandments. I wanted to help him and did, but even I had a little stint as a temporary five-finger discount thief myself. In 5th grade, a school friend was stealing liquid ink fountain pens from our local specialty stores and he had every color of ink. Red, blue, green, and a wonderful aqua-colored ink cartridge especially caught my eye. I probably could have easily purchased at least one of those neat Shaffer brand fountain pens and a few of the multi ink packets of cartridges with just my weekly allowance money.
But "JW," said they didn't cost anything if you knew how to "lift" them. To demonstrate, he took me on a training exercise up to the FIVE and DIME store just a few blocks away from our grade school. Then over to another specialty store that he said was "easy as pie" because no one was looking and he had never been caught. Seeing "JW" successfully steal a big pocketful of those Shaffer ink pens and a big packet of color cartridges, all in front of my eyes, must have switched my brain off. It was only a day later "JW" influenced me (taunted me) that I could do it too. I must have been brainwashed or something, since the desire to steal never hit me before or after this incident.
Of course, I went to the store where "no one was watching" and the parents got called as soon as I was horribly busted! I remember a very sore bottom that night, and that stupefied look on my parent’s faces especially my father's look. This best describes it: A look like I was a mass murderer who had forsaken my "Baptist" upbringing and brought permanent shame upon the family for the rest of time. The truth is, I was unduly influenced and then tempted, and well, you know the rest. What did I learn? Well, "JW" was a master thief because he continued to have nice things in school and most likely, he was using his five-finger discount to obtain them. And, I learned that I wasn't cut out for a life of crime! It was "driven" home by my father's whacks on my bottom no doubt -- that I needed to pay for the nice things that I wanted in life. And the lesson "stuck".
Not having the decency as an adult to understand whose money it really is when someone dies is a huge shame. This case involved just two heirs to a nice estate left by the father, a resident of Arizona. First, after the death, the sister in charge took the cash hidden at the bottom of the long umbrella stand. The brother initially tried to invoke his equal powers as Co-Successor Trustee, by hiring our firm to prepare legal documents to that effect. We quickly discovered the AZCLDP (Arizona Certified Legal Document Preparer) that amended his father's trust before his death, had written and delivered an amended page for the father to just switch pages so our client could be added back in as Co-Successor Trustee. I obtained a notarized affidavit from this AZCLDP that stated the father had ordered the change and declared the date and circumstances when he personally created the amended page. I also asked for proof of payment for his services. (Knowing he completely malpractices by doing a "page swap" instead of a properly formatted formal amendment).
Adding insult to my client's chances of claiming his equal Co-Successor Trustee powers along with his sister, the unskilled document preparer did it for free and DID NOT BILL! Nothing could be tied to the "event" or paper trail to support a court challenge to the sister's powers "gone wild", happening by this time. Two Arizona lawyer opinions later, (the first referral was made by me), not for free I must add, declared the amendment wasn't valid under Arizona law and my client had no power to act as Co-Successor Trustee no matter what the intent of the deceased father was before he passed away. They said it would not hold up in probate court... (Where trust terms can be reviewed voluntarily)
All while the sister kept two households of the fathers going with utility bills and other estate expenses with no intention to list the properties for sale or shut down unneeded trust estate expenses. This went on for a couple of years! And of course, she continued to help herself to the estate cash and bank accounts while the brother received nothing but chagrin and excuses. The delay in receiving data from a Successor Trustee sister gone rogue allows time to pass -- days into weeks, weeks into months, and months into years. It is like a long knife being slowly stuck in your back...
Sadly, I see it a lot in my practice. Acting personal Successor Trustees of trusts after a death refusing to give up important estate information to the heirs. They don't know or if they do, they don't care to comply with the 60-day beneficiary notice rule under the Arizona Trust Code. They are too busy feasting on the liquid trust estate money! They ignore the law, their family ties, and the normal human decency of being fair, let alone being kind and fair to your own blood sibling/s. Sometime in the second year of his struggles, our firm reviewed the client's information about his father's IRA account that he had eventually obtained and gave to us. Of course, the time was now "stale" and the period to turn the account into an Inherited IRA and reset the account to the client's date of birth to stretch RMD's out had also passed. (It was in the third year since the death) Prior to our engagement, Met life claims department staff had told the client he had 5 years to take the money out and pay tax on it. When I did a conference call with them, we both heard the same malpractice advice!
Since the father had died after commencing RMD's and since no claim paperwork had been submitted "by" the year after his death, the malpractice from this insurance company advice to our client restricted the normal payout he could have obtained. He would have to use the age of his father for RMD, plus faced the IRS 50% penalty for failed RMD’s starting the year after the death, which had been missed. It was just adding insult to the "hell" his sister had caused upon him with her thefts of money, failure to comply in giving mandatory beneficiary information, etc. Since my client was the only listed beneficiary of the IRA, I do believe the account ended up being liquidated for cash, just to be able to obtain some inheritance money from the estate. Costly finalization on an IRA account we hate to see when cashed in. But, since the sister refused to comply with numerous requests and pleas from our client for information and partial release of his share of inherited assets, the outcome was predictable.
Those pleas and requests infuriated her and her response was to make fun of my client on her online Facebook page, making fun of his disability he has that does not and did not affect his mental functioning in any capacity whatsoever during the multiple years our firm worked with him. He held up like a trooper where many others would have faltered in the stressful moments. I observed and admired his strength as we assisted and pointed him to other authorities and legal experts in our work together.
But, that move by the sister made me mad. And it was time to take a much more drastic step, as the cash accounts by this time were all but drained and the only money left was in the value of the two real estate homes the father had left behind. I suggested that the new vehicle under the Arizona Trust Code petitioning the probate court for relief could be used. And, gave the general legal information I am licensed to give -- stating that an attorney should be able to gain court assistance in helping him remove the sister as Successor Trustee. This was done during a time that most Arizona lawyers probably didn't have experience in this new procedure under the ATC.
The client found a highly respected lawyer who was busy settling the estate of a popular national singer here in the Valley and he agreed to take the case to probate court. It took thousands of dollars in legal and court fees, and many delays in time to get the sister removed or to face potential criminal charges for her estate thefts and disregard for the terms of the trust, or the law in general. (From a recent update, it might have been better to let the criminal court take a look at her estate asset thefts, as she is still taunting and slandering her brother)
The Arizona Republic has been great in publishing the stories of court-appointed Trustees for minors and for situations such as this case. No doubt, the trust needed the removal of the thieving sister as Successor Trustee. And accounting for her past thefts of property and money accounts her father left behind (records and receipts) was important to obtain so the entire financial matters could be reviewed and actual damages could be determined by the court supervision system. The client and I both thought that the court would appoint a Trustee that was better for settling the estate, than letting the sister’s greedy hands control estate assets any longer. Based on her past history, allowing her to sell the remaining real property that remained risked a complete theft of all of the father's assets! (The real estate values were building back from the bottom of price drops in 2006 and the delay in selling actually turned out to be a "blessing" in disguise.)
As soon as the sister was retired by court threats of criminal charges if she didn't resign, the firm the lawyer suggested to the judge to appoint was appointed as new Successor Trustee and the first order of business, of course, was to ask for payment! Kind of hard to do when the money is gone! There was no cash left, (we as financial advisers have seen this before haven't we?), so they obtained remaining inventory records and started threatening to sell them in order to get their fees paid up and also advanced! Both the client and I were shocked at how they treated him in a callous manner.
The court-appointed Trustee moved quickly once appointed. The super cool gun collection, (what was left after the most valuable collectible guns disappeared), was threatened to be sold. The family furniture, improperly stored, was put up for notice of sale or threatened to sell if someone didn't pay the Trustee fees they now demanded! Furniture was threatened to be thrown out, in particular, a couch that had some black particles fall off of a cover over time in storage and was deemed "mold". It was just old rubber pieces but the Trustee didn't care to know the difference.
All of this court-appointed Trustee trouble caused great aggravation to my client to the point I had to "talk him down" from what seemed impossible situations more than once by phone. At desperate times, he was putting up his own money just to buy more time to keep them from selling treasured artifacts from his father's estate. I kept telling him, (as also a professional Realtor here in Arizona), that the property will make him whole when both parcels sell for full value under court supervision. Of course, the court-appointed Successor Trustee had their own "Realtor" to use, so I didn't get that opportunity either. The client wanted me to have the listings, but the new Trustee had their own people that forbid it.
In and through it all, still, I told him the books will eventually be balanced and his father will be able to rest in peace knowing both children received their fair shares. One a little early... What we didn't know is that the court-appointed Trustee company had a really BAD reputation, and extremely high fees accumulating fast against the estate. We both observed their unfair tactics to threaten to sell property that needed more time to sort through and market, as well as to allow giving certain personal property to the heirs that desired them. Paying their fees and catching up on accumulated fees dictated policy! Nothing else...
In the midst of the fighting and negative things, one event after another, for almost two years, there was suddenly an "intermission" in our case file and work with this client. His attempt to appoint our firm as the estate accountant for needed tax returns that were past due (none were filed by the sister) failed when the court denied it and favored the court-appointed Trustee's accountant instead. Of course, the appointed Successor Trustee was in charge of everything and our client still, had no control and little say after they took over. But, finally... one day the sun rose and the storm clouds were gone!
After time had passed with no updates, to the point I started worrying about the end result -- I was pleasantly surprised when the client responded to my inquiry for an update and told me he and his wife had switched their residence from the west to the east coast and were happy in new jobs and cultures living their dream in New York City!
The increasing values on the real estate by the delay, once sold, helped balance the books which had over $100,000 to make up for on money stolen by the sister without the brother’s permission. She most likely has avoided any serious charges for her wrongful activity serving as the first Successor Trustee. Largely due to the honest and still loving character our client demonstrated towards his sister, no matter what she did to him. At the onset of our firm's consulting work with him, he just desired to be made "whole", not to retaliate against his sister. (I am sure the state sees the "Five Finger Discount" a lot and only prosecutes the most egregious cases when the thief is discovered to be a family member)
Of course, if the sister had acted as a proper fiduciary, both her and her brother could have avoided our firm's fees, the legal fees, the court fees, and the big wallop of court-appointed Trustee fees that were taken out prior to settling the gross estate and clearing it from court supervision. The original antique Colt pistol (and others) that went missing would have gone to the son who was the intended recipient (it's a man thing) for safekeeping for future family generations. All that needless money spent is lost along with treasured personal possessions that most likely were sold for cash by the sister, or remain hidden in her home. All because this sister went rogue and helped herself to the Five Finger Discount. And a loving brother tolerated her actions and patiently waited for a better outcome than I encouraged him all along the way would come if he just had faith and didn't give up. Thank G_d, in the end, he was made whole as best as possible.
Thanks for coming to THE WALL.
I hope you find the right information to help you make the right decisions regarding your Inherited IRA.
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The following three stories are from our actual client files from Financial Strategies, Inc. closed cases
(we have a lot more to publish when time allows)
A. AMERICA’S WORST LAWYER?
Clueless Estate Lawyer
A bad Lawyer, the Personal Representative & Successor Trustee, our client’s sister, and her chosen Estate & Trust Attorney & Trust Administrator and Estate/Trust CPA (BFF of Estate/Trust Attorney who also made the referral) refused to provide direct notice, refused to provide direct communication, refused to disclose estate and trust assets, and refused inspection of all trust properties, trusts books of records, and trust accounts. This was contrary to the Trust agreement and statutes but was done because they did not want my client to know what was there. It was necessary for her to hire a very expensive southern lawyer, just to try to obtain communication with the sister in charge and her chosen estate lawyer. His best work, for the most part, was in printing his billings…
But, the estate lawyer the sister hired has been found to be, more or less, A LAWYER FROM HELL! (Referred to as L.F.H. hereafter) She first assisted my client’s mother in updating her living trust early in the year of death. At that time, no one knew that a medical condition would take her life late that same year. Sadly, the original professional trust prepared by a name-brand law firm in the Midwest was replaced. The trustmaker got a thin, poorly written 10-page “jobbie” instead. Of course, it claimed the trustmaker was now a resident of the southern state where she lived part of the year in her boyfriend’s condo. The client’s mother resided the rest of the time in her boyfriend’s Midwest home, the same Midwest town where instructions were left for burial.
The client’s mother did own a rental condo property titled to her trust in the southern state. That didn’t stop the L.F.H. from listing the property as a probate asset on the Probate Inventory filed in the court of this southern state! The female CPA who had been doing the income taxes prior to the death was also using the free state tax approach for the client and a driver’s license was also issued there, giving reasonable proof the trustmaker had the outer appearance as a real resident, at least for IRS purposes. Perhaps the southern state was her resident state irrespective of the fact the IRS is fully aware of winter visitors doing the exact same thing to avoid state tax on some or all of their retirement income. (And the home state tax agencies as well) The problem the client and I discovered after the death was that the consecutive month’s rule wasn’t really met for residency testing per the state statutes. Oh well, no one’s perfect.
But, the test for her residence state in the Midwest was also ignored for probate reasons, irrespective that most of the decedent’s large money accounts were opened there and the statements went to the Midwest home address, not the southern state residence that was being claimed by the CPA for IRS tax purposes. Our examination as an estate accounting/tax preparation and Inherited IRA tax consulting firm found the amended trust drafted by the L.F.H. was clueless on how to draft proper estate legal documents. Since our firm is certified by the Supreme Court of Arizona to prepare estate legal documents, with 36 years of estate legal document work either on our own or by working with estate planning legal firms – we can tell a “stinker” from afar.
We also found out the L.F.H. was clueless on why trust funding is necessary BEFORE death. Proper funding was ignored by all estate and tax advisers prior to death as well as the sister in charge. This, even though three months prior to death, written statements by physicians declared the mother (now a patient) incapacitated mentally and physically. The sister had full powers as GPOA and Successor Trustee but chose to ignore the need to fully fund the living trust, prior to death. The L.F.H. stated word for word: ” FINALLY, (CLIENT) ASKED A QUESTION IN A RECENT FAX TO ME WHICH I AM ANSWERING FOR THE BENEFIT OF ALL OF YOU HERE. IT IS NOT MY PRACTICE, NOR COMMON PRACTICE HERE, TO PREPARE A “DECLARATION OF TRUST OWNERSHIP OF PERSONAL ARTICLES” OR ANY OTHER SIMILAR DOCUMENT WHICH WOULD TRANSFER PERSONAL PROPERTY TO THE TRUST, AND IT WAS NOT DONE IN THIS CASE.”
It is a nice admission of malpractice since professional estate planners in this southern state commonly use such assignments on a regular basis. This caused probate on assets that helped run up her fees no doubt! We documented our file with numerous lawyer websites in the same state, describing the assignment of tangible items to the trust as common practice in trust estate planning. (Common nationwide as well) Worst of all, this L.F.H. was not able to properly list the actual sibling beneficiary sisters as the trust beneficiaries. Instead, the trust beneficiaries were identified only by state default statutes to identify just who gets the money. Especially when you have almost a million-dollar IRA, separate from other large estate assets and investment accounts, that is high malpractice! It cost a lot of money to perfect what was penned by me initially as the “world’s worst trust” I had ever read. Not a legal opinion of course. But a fact! There was also no Inherited IRA management legal language, no conduit trust provision, nothing at all to make her trust eligible for such a big IRA payoff upon death.
The southern lawyer my client was forced to hire in order to communicate, came on board even though he had zero knowledge with large trust-owned IRA accounts and eventually admitted it. He was mostly a grapevine between the parties, whose connections discovered after his dismissal now bring up questions of conflict about disclosure items that should have been told upfront to my client. Also, legal and tax help was brought in by me to work for the client to perfect complications of the mother having a bad IRA custodian that did not allow splitting IRA shares inside a trust which was then changed to another bad custodian by the sister for one reason. The investment advisers in charge that got the large IRA account were down south! And friends or fellow yacht club members with the L.F.H. and her CPA associate! The other sibling sisters benefited from this work my client had to pay for, basically getting a free ride for this advisory work we all did for our client, the only sister caring to do things in a professional manner.
This female L.F.H. with direct connections to all the other “players” in the southern estate game that was played out (and is still going on as I write this), charged like a Manhattan lawyer while producing results similar to letting Hannibal Lecture give you a haircut! She sent my client a hokey-looking copy of her employment agreement with the sister in charge, a whited-out IRA beneficiary form copy that looked more redacted than a pilot’s UFO sighting report – all adding up to imperfect production of documents. Only a few of the requested documents ever came in.
Which brings up the question my client and I can not dismiss: Was it all intentional, just to milk the estate for all the fee money the lawyer from Hell and her associated southern advisers could get? We have come to a definitive conclusion that she is not the sharpest knife in the drawer of lawyers. But, perhaps she is intelligent in knowing how to make a trust fail so that a large amount of non–trust assets were forced into probate. But, then, she listed trust assets in the initial probate inventory which only a fool would do. Or, someone milking the estate for all the pesos possible. (This southern state has a liberal policy on how a lawyer can grab a percentage of trust assets, much more liberal than my home state of Arizona)
This L.F.H. does just one thing very well. Billing. Well, maybe that should be changed to “charging” since my client has never seen an actual billing from her, even though 1/3 of the payments came from her inheritance money. The truth is, flat fees were agreed upon upfront, (the factor % included trust assets needing little work) then “extra-ordinary” fees were of course also manufactured by the lawyers on this estate, and by the sister in charge, claiming in mediation the detailed extra-ordinary billings existed but now claiming they don’t. Can you spell highway robbery?
Total legal and accounting fees to date on this estate paid out by all parties to date exceed $300,000! Most of that money went down the toilet directly because the L.F.H. drafted imperfect legal documents and ignored proper trust funding. This, in turn, caused probate, delays, fights, and mistakes in rapid-fire. Though I too participated in the fees paid out, my work helped perfect an imperfect Inherited IRA account. It was necessary. Most of the fees were not. Truly, some of the advisers of this estate have taken their own “share” as if they were listed, heirs. That is shameful since now, they refuse to provide billings to justify the large extra-ordinary fees taken against the estate (and my client’s share). It also is against the law.
Today, the sister is still too busy to do any substantive work on her own (she claims it is short-term memory loss). I wonder if she tells the adults she cares for as a doctor she can’t remember anything? The allowed fee for her full PR and Successor Trustee services weren’t discounted again in the “extra-ordinary” free for all payments that were paid out after mediation was completed. This, even though a whole team of lawyers had been on staff at times doing most of the work. (in the most sloppy, careless way possible) The fact that the CPA recently granted the PR/Successor Trustee carte blanche on when she claims her second half of the pre-agreed fiduciary income payment is laughable if the IRS finds out. Especially since it was deducted on the 706 two years before! Broken statues and laws have run off these people’s backs like water to date.
Between the estate lawyer and CPA handiwork, multiple amended inventories of probate assets were filed again and again and again with the Southern state’s Court and copied to the Southern State’s Department of Revenue (they still have a tax department for Corporate and Estates), because the L.F.H. listed Trust asset(s) as Probate assets on Inventories and failed to list all probate assets. To this day, even though Probate has been “closed” via ex parte communications in a Probate Judge’s Chambers attesting under oath that estate was fully administered), the estate remains not fully administered. The 2011 plan is to hold remaining estate money in accounts that pay no interest so they don’t have to file form 1041 another year. I guess any bank account can pretty well guarantee that. But, it isn’t professional, nor is it the manner in which a professional Trustee would (or could) act since it violates the trust. The trust also remains violated because the terms dictated “distribute” upon the mother’s death. Year four is coming up next week in violation of that trust term…
The IRS Form 706 Death Tax Return, also showed a goof of over $70,000 in death taxes overpaid! Even today, the inventory is flawed, the “corrected” death certificate is flawed, and the list of mistakes fills a couple of pages. The estate is now sealed with the IRS on the 706 and the southern state county probate proceedings. Sealed unless someone wants to go back and lift the rock up that is still hiding the mistakes and misdeeds that this lawyer helped the PR and Successor Trustee perpetrate against my client.
This brings up the second situation that has fueled the fire on this case. Simply stated, it is JEALOUSY & REVENGE. “We Are Going To Get You!” was spoken from the sister in control of the purse strings — to my client, as the mother lay dying in her hospital room. Jurisdiction was declared down south for the revised trust, GPOA, and Last Will. That begat the introduction to the bank-sponsored securities brokers who took delivery of a majority of the estate money which was “ordered” south as well, from its Midwestern roots. The sister allowed migration of jurisdictional control and estate money, even though she was and remains a resident Successor Trustee back in the Midwest.
We also had stale IRA — RMD withdrawals, claiming life insurance proceeds with an imperfect death certificate, failure to manage the IRA properly, failure to protect the securities accounts from large losses, and improper taking of bank deposit box contents owned by my client, improper art valuations and accounting. All this mal–performance and malfeasance adds up to a nightmare estate situation caused on the most part, by bad advisers and a sister who doesn’t really seem to care how much money the bad advisers cost or how many mistakes are being made.
The high-priced southern state CPA started this mess by referring the deceased mother and her estate administrators to just about everybody who is an adviser and also “friend” on her Facebook account page! The death took place almost 3 1/2 years ago, yet today the estate is still not fully settled! Money is still being held hostage because my client won’t sign a forgiveness waiver that I quote, “Covers from the beginning of time to the current time”. Of course, everybody but the Butler is included in the waiver parties now wanting exemption from liability before the final cash payment can be made to my client from the estate.
The once large estate has dwindled down because of market risk (crash of 2008), and very expensive advisory fees (still with no billings being provided to my client for ordinary or extra-ordinary fees charged against her share). Then, you have two investment advisers on the money pulled down to the southern state — both who I found just sitting on their thumbs with the sister in charge until we had to intervene and cry foul over a year ago. (They had made no trades from inception) By that time, additional stock market losses took even more money away from the estate beneficiaries.
Add in a whopping payment to the IRS for the estate tax due because no one advised doing annual “gifting”. Even higher Form 1041 Estate/Trust federal taxes resulted simply because the CPA and lawyer failed to coordinate DNI in the same tax year on the fiduciary return, as the year of death. That kissed 20k away alone. But, we still aren’t done! The expensive legal battles over the large IRA cost plenty, but above all, market loss cost the most because the sister never understood her right to go to cash to protect the estate from the stock market loss was part of her job, not to maintain her deceased mother’s investment positions for months (or years) after her death. The wasted money, energy, and time to get the IRA issues straightened out was huge by all parties involved.
Even to this day, the sister serving as Successor Trustee and her lawyer does not seem to understand the money manager (RIA) is not the custodian of the former failed IRA account. Or that the terms of the mediation agreement my client was forced to sign under duress have not been complied with. At least one brokerage account that was supposed to have been zeroed out and closed still had money in it 8 months after the agreement was signed! Inventories and bookkeeping entries to date, remain incorrect and inaccurate.
Lastly, my observation on this case was that the estate became a “feeding trough” for the southern advisers hired by the sister in charge, far from the client’s regular home. One thing is certain — the revengeful sister in charge has the mental capacity to do better than she has. She is rated “brilliant” in IQ tests. (the whole family were/are lawyers or doctors with high IQ’s) But, as a busy medical doctor, she has trusted an incompetent southern lawyer and CPA to advise and do most of the work instead. Bad work. The fiduciary duty of PR & Successor Trustee (sister), Estate CPA, Investment Advisors, and Estate lawyer, as well as my client’s former southern lawyer, has all but been forsaken in this case. Only the sister, doesn’t reside in this little STEPFORD community with their tight little group most likely looking and hoping for another large estate to feed off when they get done on this one!
Thanks to Facebook and online searches, we now know just how well-connected everyone is with each other in this case. Since there is no statute of limitations for fraud, the revengeful sister with America’s worst attorney (the Lawyer from Hell/L.F.H.) at her side, doing her bidding – may yet find out that using an estate to get even, is not smart. Not smart at all…
B. DUMB INSURANCE COMPANY?
“We Will Make an Exception in Your Case”
This case was settled over a decade ago. The CPA client was the chief financial officer for a company and was not up on the current laws and rules regarding her mother’s inherited IRA account left to her and her four siblings. Initially, our firm was hired to help review paperwork sent to her by the insurance company.
Upon examination, it was obvious the insurance company serving as custodian of the decedent’s IRA account had sent out paperwork to my client and her siblings that would immediately tax the proceeds once the death benefit was paid out! But, it was too late for three of the siblings. They had already signed and executed the paperwork sent which meant they now get the privilege of instant taxation in the tax year (2011). Perhaps if they had compared and seen the projections of how long a stretch IRA will provide income to them and their heirs, they would have made different choices. The problem was, the insurance company initially didn’t offer anything but a lump sum settlement, making if 100% taxable in the year taken.
Our firm was able to save the client and one remaining sister sibling from instant taxation by requesting alternate paperwork that set up an inherited IRA account for the benefit of the daughter (our client). Some work was necessary because the initial response was “we don’t do that here”. This was quite shocking since I am a licensed agent of this insurance company, one of the best-rated and lowest cost term insurance providers in the nation! But, they are not high on the list of qualified IRA custodians. Only New York life gets mentioned by Inherited IRA expert, Natalie B. Choate, as a valid American-based carrier to handle your loved ones IRA.
I found it embarrassing as a licensed agent (currently licensed in Arizona and Iowa) to have to fight the company in order to obtain an exception for her. When the letter from their top legal staff stated “we will make an exception in your case”, our green light was on for executing the alternate paperwork I ordered for her (her sister I think will duplicate what we did) and it was sent in. It also included copies of paperwork “porting” the funds away from this insurance company to what Natalie B. Choate refers to as a “more sophisticated custodian”.
The final result is the funds were never first placed into an insurance company product as an inherited IRA account. But, were transferred by direct rollover to a brokerage firm known as the best qualified to manage an inherited type account. We could not stop the insurance company from paying the death claim on the IRA, from the moves they made. Even still, the new custodian felt everything was in order, but it left that small element of doubt for both me and the client, who as a CPA, knows the truth will be revealed when the 1099-R is issued next January.
Because of that, I had her request and she received confirmation from the legal staff of this insurance company, reassurance that the original “taxable” reporting from the first set of paperwork would be replaced in their systems with a “tax-free” direct rollover coding on the 1099-R. Yet, fingers are crossed since the incompetence of the claims staff was ever present while dealing with them.
Legal recourse would be available if a taxable reporting took place on this case because solid letters in writing were obtained by the firm on “status” prior to the transfer out and away from them ever took place. (In the Inherited IRA advisory field, this is called the “handshake”) If you would like to know the name of this company, just call me at 1-800-782-2806 and I will tell you. Meanwhile, stay away from those bad advisers that cause the stories we publish on this web page!
C. FIVE-FINGER DISCOUNT?
Stealing From the Estate Because You Can
This is the one case, that became dear to my heart. An injured brother contacting me and asking me for help in fighting a sister who had gone rogue and was stealing from his father's estate, after the father had died. My own father called stealing a "five-finger discount" as it obviously is tempting for some to just grab things with their hands and run! It comes down to the oldest written law, The 10 Commandments. I wanted to help him and did, but even I had a little stint as a temporary five-finger discount thief myself. In 5th grade, a school friend was stealing liquid ink fountain pens from our local specialty stores and he had every color of ink. Red, blue, green, and a wonderful aqua-colored ink cartridge especially caught my eye. I probably could have easily purchased at least one of those neat Shaffer brand fountain pens and a few of the multi ink packets of cartridges with just my weekly allowance money.
But "JW," said they didn't cost anything if you knew how to "lift" them. To demonstrate, he took me on a training exercise up to the FIVE and DIME store just a few blocks away from our grade school. Then over to another specialty store that he said was "easy as pie" because no one was looking and he had never been caught. Seeing "JW" successfully steal a big pocketful of those Shaffer ink pens and a big packet of color cartridges, all in front of my eyes, must have switched my brain off. It was only a day later "JW" influenced me (taunted me) that I could do it too. I must have been brainwashed or something, since the desire to steal never hit me before or after this incident.
Of course, I went to the store where "no one was watching" and the parents got called as soon as I was horribly busted! I remember a very sore bottom that night, and that stupefied look on my parent’s faces especially my father's look. This best describes it: A look like I was a mass murderer who had forsaken my "Baptist" upbringing and brought permanent shame upon the family for the rest of time. The truth is, I was unduly influenced and then tempted, and well, you know the rest. What did I learn? Well, "JW" was a master thief because he continued to have nice things in school and most likely, he was using his five-finger discount to obtain them. And, I learned that I wasn't cut out for a life of crime! It was "driven" home by my father's whacks on my bottom no doubt -- that I needed to pay for the nice things that I wanted in life. And the lesson "stuck".
Not having the decency as an adult to understand whose money it really is when someone dies is a huge shame. This case involved just two heirs to a nice estate left by the father, a resident of Arizona. First, after the death, the sister in charge took the cash hidden at the bottom of the long umbrella stand. The brother initially tried to invoke his equal powers as Co-Successor Trustee, by hiring our firm to prepare legal documents to that effect. We quickly discovered the AZCLDP (Arizona Certified Legal Document Preparer) that amended his father's trust before his death, had written and delivered an amended page for the father to just switch pages so our client could be added back in as Co-Successor Trustee. I obtained a notarized affidavit from this AZCLDP that stated the father had ordered the change and declared the date and circumstances when he personally created the amended page. I also asked for proof of payment for his services. (Knowing he completely malpractices by doing a "page swap" instead of a properly formatted formal amendment).
Adding insult to my client's chances of claiming his equal Co-Successor Trustee powers along with his sister, the unskilled document preparer did it for free and DID NOT BILL! Nothing could be tied to the "event" or paper trail to support a court challenge to the sister's powers "gone wild", happening by this time. Two Arizona lawyer opinions later, (the first referral was made by me), not for free I must add, declared the amendment wasn't valid under Arizona law and my client had no power to act as Co-Successor Trustee no matter what the intent of the deceased father was before he passed away. They said it would not hold up in probate court... (Where trust terms can be reviewed voluntarily)
All while the sister kept two households of the fathers going with utility bills and other estate expenses with no intention to list the properties for sale or shut down unneeded trust estate expenses. This went on for a couple of years! And of course, she continued to help herself to the estate cash and bank accounts while the brother received nothing but chagrin and excuses. The delay in receiving data from a Successor Trustee sister gone rogue allows time to pass -- days into weeks, weeks into months, and months into years. It is like a long knife being slowly stuck in your back...
Sadly, I see it a lot in my practice. Acting personal Successor Trustees of trusts after a death refusing to give up important estate information to the heirs. They don't know or if they do, they don't care to comply with the 60-day beneficiary notice rule under the Arizona Trust Code. They are too busy feasting on the liquid trust estate money! They ignore the law, their family ties, and the normal human decency of being fair, let alone being kind and fair to your own blood sibling/s. Sometime in the second year of his struggles, our firm reviewed the client's information about his father's IRA account that he had eventually obtained and gave to us. Of course, the time was now "stale" and the period to turn the account into an Inherited IRA and reset the account to the client's date of birth to stretch RMD's out had also passed. (It was in the third year since the death) Prior to our engagement, Met life claims department staff had told the client he had 5 years to take the money out and pay tax on it. When I did a conference call with them, we both heard the same malpractice advice!
Since the father had died after commencing RMD's and since no claim paperwork had been submitted "by" the year after his death, the malpractice from this insurance company advice to our client restricted the normal payout he could have obtained. He would have to use the age of his father for RMD, plus faced the IRS 50% penalty for failed RMD’s starting the year after the death, which had been missed. It was just adding insult to the "hell" his sister had caused upon him with her thefts of money, failure to comply in giving mandatory beneficiary information, etc. Since my client was the only listed beneficiary of the IRA, I do believe the account ended up being liquidated for cash, just to be able to obtain some inheritance money from the estate. Costly finalization on an IRA account we hate to see when cashed in. But, since the sister refused to comply with numerous requests and pleas from our client for information and partial release of his share of inherited assets, the outcome was predictable.
Those pleas and requests infuriated her and her response was to make fun of my client on her online Facebook page, making fun of his disability he has that does not and did not affect his mental functioning in any capacity whatsoever during the multiple years our firm worked with him. He held up like a trooper where many others would have faltered in the stressful moments. I observed and admired his strength as we assisted and pointed him to other authorities and legal experts in our work together.
But, that move by the sister made me mad. And it was time to take a much more drastic step, as the cash accounts by this time were all but drained and the only money left was in the value of the two real estate homes the father had left behind. I suggested that the new vehicle under the Arizona Trust Code petitioning the probate court for relief could be used. And, gave the general legal information I am licensed to give -- stating that an attorney should be able to gain court assistance in helping him remove the sister as Successor Trustee. This was done during a time that most Arizona lawyers probably didn't have experience in this new procedure under the ATC.
The client found a highly respected lawyer who was busy settling the estate of a popular national singer here in the Valley and he agreed to take the case to probate court. It took thousands of dollars in legal and court fees, and many delays in time to get the sister removed or to face potential criminal charges for her estate thefts and disregard for the terms of the trust, or the law in general. (From a recent update, it might have been better to let the criminal court take a look at her estate asset thefts, as she is still taunting and slandering her brother)
The Arizona Republic has been great in publishing the stories of court-appointed Trustees for minors and for situations such as this case. No doubt, the trust needed the removal of the thieving sister as Successor Trustee. And accounting for her past thefts of property and money accounts her father left behind (records and receipts) was important to obtain so the entire financial matters could be reviewed and actual damages could be determined by the court supervision system. The client and I both thought that the court would appoint a Trustee that was better for settling the estate, than letting the sister’s greedy hands control estate assets any longer. Based on her past history, allowing her to sell the remaining real property that remained risked a complete theft of all of the father's assets! (The real estate values were building back from the bottom of price drops in 2006 and the delay in selling actually turned out to be a "blessing" in disguise.)
As soon as the sister was retired by court threats of criminal charges if she didn't resign, the firm the lawyer suggested to the judge to appoint was appointed as new Successor Trustee and the first order of business, of course, was to ask for payment! Kind of hard to do when the money is gone! There was no cash left, (we as financial advisers have seen this before haven't we?), so they obtained remaining inventory records and started threatening to sell them in order to get their fees paid up and also advanced! Both the client and I were shocked at how they treated him in a callous manner.
The court-appointed Trustee moved quickly once appointed. The super cool gun collection, (what was left after the most valuable collectible guns disappeared), was threatened to be sold. The family furniture, improperly stored, was put up for notice of sale or threatened to sell if someone didn't pay the Trustee fees they now demanded! Furniture was threatened to be thrown out, in particular, a couch that had some black particles fall off of a cover over time in storage and was deemed "mold". It was just old rubber pieces but the Trustee didn't care to know the difference.
All of this court-appointed Trustee trouble caused great aggravation to my client to the point I had to "talk him down" from what seemed impossible situations more than once by phone. At desperate times, he was putting up his own money just to buy more time to keep them from selling treasured artifacts from his father's estate. I kept telling him, (as also a professional Realtor here in Arizona), that the property will make him whole when both parcels sell for full value under court supervision. Of course, the court-appointed Successor Trustee had their own "Realtor" to use, so I didn't get that opportunity either. The client wanted me to have the listings, but the new Trustee had their own people that forbid it.
In and through it all, still, I told him the books will eventually be balanced and his father will be able to rest in peace knowing both children received their fair shares. One a little early... What we didn't know is that the court-appointed Trustee company had a really BAD reputation, and extremely high fees accumulating fast against the estate. We both observed their unfair tactics to threaten to sell property that needed more time to sort through and market, as well as to allow giving certain personal property to the heirs that desired them. Paying their fees and catching up on accumulated fees dictated policy! Nothing else...
In the midst of the fighting and negative things, one event after another, for almost two years, there was suddenly an "intermission" in our case file and work with this client. His attempt to appoint our firm as the estate accountant for needed tax returns that were past due (none were filed by the sister) failed when the court denied it and favored the court-appointed Trustee's accountant instead. Of course, the appointed Successor Trustee was in charge of everything and our client still, had no control and little say after they took over. But, finally... one day the sun rose and the storm clouds were gone!
After time had passed with no updates, to the point I started worrying about the end result -- I was pleasantly surprised when the client responded to my inquiry for an update and told me he and his wife had switched their residence from the west to the east coast and were happy in new jobs and cultures living their dream in New York City!
The increasing values on the real estate by the delay, once sold, helped balance the books which had over $100,000 to make up for on money stolen by the sister without the brother’s permission. She most likely has avoided any serious charges for her wrongful activity serving as the first Successor Trustee. Largely due to the honest and still loving character our client demonstrated towards his sister, no matter what she did to him. At the onset of our firm's consulting work with him, he just desired to be made "whole", not to retaliate against his sister. (I am sure the state sees the "Five Finger Discount" a lot and only prosecutes the most egregious cases when the thief is discovered to be a family member)
Of course, if the sister had acted as a proper fiduciary, both her and her brother could have avoided our firm's fees, the legal fees, the court fees, and the big wallop of court-appointed Trustee fees that were taken out prior to settling the gross estate and clearing it from court supervision. The original antique Colt pistol (and others) that went missing would have gone to the son who was the intended recipient (it's a man thing) for safekeeping for future family generations. All that needless money spent is lost along with treasured personal possessions that most likely were sold for cash by the sister, or remain hidden in her home. All because this sister went rogue and helped herself to the Five Finger Discount. And a loving brother tolerated her actions and patiently waited for a better outcome than I encouraged him all along the way would come if he just had faith and didn't give up. Thank G_d, in the end, he was made whole as best as possible.
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