Dave thought his mom had done everything right: invested her savings, done great estate planning and appointed him her only son, to take over when needed. And the time came for Dave to step in.
Dave’s elderly mom, Agnes began to lose her memory. She had been living with a companion for years before that became apparent. He was showing signs of mental illness and things at Agnes’ home began to decline. The house was a mess. There was rodent infestation. Garbage and trash piled up. Agnes, who could only do what she was directed to do, became a puppet of her companion, Tyler.
Dave took the necessary steps under the trust Agnes had in place, and he became the successor trustee for Agnes, meaning that he was in charge of her accounts. He was not a high income earner on his own, but Agnes had sufficient invested assets to get all the care she needed. He just needed to tap those resources right away.
The Bank Created A Nightmare
Dave took his trustee certification to Agnes’ bank and asked to have it recognized. They refused and blocked his access to Agnes’ account.
The reason given was that they needed two doctor’s letters saying she was no longer able to handle her finances on her own. Agnes’ trust did not require that nor did the law in Agnes’ state. The bank, apparently more concerned about imaginary things that might get them in trouble, paid no attention to Dave’s pleas. He needed to hire live-in help for his mother and it was too expensive for him to pay for by himself. What was his mother’s money for, but for her own needs, he asked the bank?
The bank ignored his requests to access Agnes’ account. They came up with a seemingly never-ending series of excuses: it had to be reviewed by legal, the manager had to review it, the supervisor had to review it and then they repeated these excuses. Dave was getting frantic. His mom needed care and her companion would not let her out of the house to see a doctor to get a doctor’s letter of incapacity. Getting two letters seemed nearly impossible. She was effectively imprisoned in her own home.
What Dave Did Next
Finally, Dave had to assemble a team, borrow money to do so, and get the law involved in getting Agnes to a doctor. He contacted the local sheriff. They agreed to send an officer to Agnes’ home on the date Dave had set for a doctor’s appointment for Agnes. This was an emotionally tricky situation with a mentally disturbed man, Tyler in the house. Dave hired a psychologist to go with the sheriff, along with the county Adult Protective Services social worker, himself and a friend Agnes liked to get Agnes out of the house. At the appointed hour, all five people showed up at the door.
Tyler refused to answer when the sheriff knocked, announced his presence and ordered Tyler to open the door. They went to the back door and got inside. Tyler immediately put pressure on Agnes in front of them, coaching her to refuse to go out, and she did parrot what he told her to say. The sheriff got some tips from the psychologist about what tactics to use with mentally disturbed Tyler. They worked. Agnes was escorted out, went to the doctor and the MD diagnosed that she was cognitively impaired with Alzheimer’s disease.
Dave got the letter the bank demanded saying that Agnes was no longer able to manage her finances. Astonishingly, they refused to accept it! They said they needed TWO letters and would only accept them together. Dave contacted the estate planning attorney and another lawyer. Both put pressure on the bank. Finally, they relented and accepted Dave as trustee, using only the one letter they had received.
This scenario is a nightmare for family. If you or anyone in your family has a trust that describes the only way for a successor trustee to take over is to get two doctor’s letters saying the elder is incapacitated, you could be like Dave—blocked. Even if the trust is written more wisely and had different, more practical ways to address requirements for allowing a successor trustee like Dave to step in, the bank can still stop you.
The Problem With Banks
Dave’s situation is not unique. Some banks refuse to accept legally valid, newly appointed successor trustees. They withhold the cognitively impaired investor’s funds, freeze the accounts and force extreme measures on family when there is difficulty getting an elder to a doctor for the purpose of getting a letter. Some estate planning attorneys advise me that banks even ignore court orders to unblock their aging investors’ accounts to allow access to the successor trustee. Their actions are illegal but they are getting away with it right now. Don’t let this happen to you!
Proactive Steps to Take
What can you do if this may be a problem in your own family?
1. Speak to the bank manager where aging loved ones’ funds are invested and ask about their policy toward successor trustees. The manufactured “two doctor letters” rule is one they make up internally. It is not state law, nor do all trusts require it. It can be a serious problem.
2. If your aging loved one has memory loss, mild cognitive impairment, or a diagnosis of dementia, you must anticipate that at some point your aging loved one will no longer be able to handle finances. See what you can do to make the transition to a successor easier with the help of the estate planning attorney, or a lawyer you consult with on your own.
3. Establish a relationship with your aging parents’ bank, investment advisor or money manager at the first signs of a parent’s memory loss. Warn them of what’s ahead and discuss it. With dementia, the issues of judgment and financial management will not improve, go away or get cured. We don’t have that treatment yet.
4. Create a strategy and plan for what to do if your family must transition an aging loved one out of the position of trustee, account holder or other authority and you encounter resistance.
You can avoid Dave’s nightmare by looking ahead. You can accomplisht a trustee’s transition with a proactive approach.