My husband’s parents left a deposit of $585,000. My sister-in-law is the guardian, but she is blocking our calls and planning to leave town. What can we do?
Written by Quentin Futrell
“My father-in-law died three years ago, and my mother-in-law, who initially lived in assisted living, is now in a nursing home.”
Nearly 10 years ago, my in-laws placed their co-op in a trust, making their youngest child, a widow, trustee and power of attorney. No copies of the trust were delivered to my husband, his brother, and the other beneficiaries.
My father-in-law died three years ago, and my mother-in-law, who initially lived in assisted living, is now in a nursing home. (Because the trust was more than five years old, Medicaid pays for the nursing home.) The condo sold a year ago for $1.5 million.
Unfortunately, my in-laws took out a reverse mortgage to support their meager pensions, and that company recovered nearly $700,000. After attorney fees, real estate agent, co-op board, etc., $585,000 remained, which was placed in a trust checking account.
“My sister-in-law has cut back on communications after selling the condo. She won’t answer her cell phone or the house phone. She won’t answer texts.
Now to the problem: My husband, my brother-in-law, and I helped and supported their sister along the way, taking on the responsibility of selling the stock and getting their mother into a wonderful assisted living community.
However, since my mother-in-law first went to an assisted living center over two years ago, my sister-in-law has never visited her. My sister-in-law dropped communications after the apartment was sold. She won’t answer her cell phone or home phone. She won’t respond to messages.
She blocked us from time to time on text messages and phone calls. Now we’ve heard she’s planning to move out of state, keeping her whereabouts a secret. We haven’t seen any financial data, and the bank says only the trustee has access to that information.
We don’t want to get involved in a long and expensive legal battle. We don’t know if the money is gone. This may be the reason why she stopped all communication. She always had problems, but she was my in-laws’ favorite child, so she had all the power.
My husband has the second power of attorney, but the bank wants us to legally prove that it is improper before we can change it to a power of attorney. Do we have any recourse? What can we do?
Up a creek without a paddle
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Dear Father of the Creek,
I suspect that your husband is the “successor” trustee, not the “second” trustee. A second guardian is appointed to share responsibilities. They may have different skills: for example, one trustee may have a legal background while another may be an accounting expert. Your sister-in-law, like all trustees, has a fiduciary duty to act in the best interests of the beneficiaries: a duty of loyalty (enforcing the terms of the trust), of confidentiality, of prudence (managing the trust carefully) and a duty of information and accountability.
The second trustee also acts as escrow to ensure ethical and careful management of the trust, payment of relevant taxes, and can also help navigate any family drama by not showing favoritism to a sibling. Being a trustee is a lot of work, but they also have a lot of power in overseeing the trust. This sounds great in theory, but it can also lead to conflict, especially when there is a large amount of money and many parties involved.
The successor trustee, which may be the case here since your sister-in-law seems to hold all the cards, does exactly what it says on the tin: that is, he succeeds the original trustee in the event of his death or incapacity. . In either case, the trustee must adhere to a Declaration of Trust, which lists the assets and sets out the terms of the trust on behalf of the grantor (your husband’s father or mother). The trustee does not act on his whims.
Submit a petition to the court
Most trusts and the state laws governing the administration of trusts entitle beneficiaries to a copy of the trust and a periodic accounting of the assets, says Mike Vivek, an attorney in Greentree, Pennsylvania, and a member of LegalShield, a network of attorneys. “At the very least, you should send your sister-in-law a written request — with proof of mail — to obtain an accounting. If she does not submit these requests, you can petition the court to compel her to provide an accounting.”
“If you truly believe your sister-in-law is unable to continue as conservator, you should petition the court to remove and replace her,” he adds. “Once you file the petition, you will have the ability to obtain important information such as a copy of the trust, account information, and information about your sister’s medical condition relevant to her ability to serve as trustee. The process is often painful and expensive for families.”
However, if you are successful, you should be able to recover your legal expenses, and ensure that the trust has not been mismanaged. Your sister-in-law may not be fully aware of her responsibilities, may be on a power trip, or may have other issues that hinder her ability to carry out the terms of the trust. Taking legal action is always a last resort, but it is best to act while the trustee can be contacted. If it disappears, you will need to petition the court.
You can email The Moneyist with any financial and ethical questions at firstname.lastname@example.org, and follow Quentin Fottrell on X, the platform formerly known as Twitter.
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Previous columns by Quentin Fottrell:
I am 35 years old and mortgage free. My 55 year old boyfriend wants me to move into his house and help him pay his mortgage. What should I do?
My mother is the guarantor on my brother’s mortgage – using her house as collateral. What would happen if she died?
“I was living in a silent divorce”: I want to separate “at the kitchen table” from my husband without lawyers. Is this a good idea?
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