Protecting Your Assets From Your Slipping Mind

JM Preston Helps a Family Save $170,000 in Assets

Watching a loved one’s mind slip away is extremely difficult. Perhaps their once-active lifestyle deteriorates, their lovable wit recedes, or they simply can’t recognize their loved ones anymore. While the emotional stress can be daunting, the financial dangers can be even worse. One of the purposes of a life plan is to minimize or avoid those financial dangers. Three years ago, this was proven true for me.

I received a frantic call from a client’s daughter whose father had passed away the year before, leaving her mother as the sole beneficiary of the trust. The bank had just informed the daughter that her mother had recently requested to transfer $170,000 to someone in Europe who claimed to have fallen on hard times.

Because the trust appointed the daughter as a silent partner co-trustee with her mother, the daughter was privy to information about the trust assets. The bank was suspicious about the mother’s odd request and therefore notified the other trustee on the account, the daughter.

The daughter immediately called her mother and tried to convince her that she was being scammed, but the mother didn’t believe her. Part of the problem is that her mother was in the early stages of dementia, which meant she could still hold a normal conversation and discuss the problem. But having a conversation like that with someone who is suffering from this disease can be very frustrating.

I explained to the daughter that her mother should probably not serve as a trustee anymore. If this scam could happen once, it likely would happen again.
Many traditional estate plans require that two doctors approve the trustee’s removal. However, in this case, the mother didn’t want to visit her doctor for fear that the doctor would confirm that she was suffering from dementia. Luckily, the life plan trust she and her late husband had created years earlier contained a solution to protect the trust assets.

In a life plan, a trustee may be removed for incapacity purposes when the disability panel believes that the trustee is no longer capable of taking care of the assets. In this case, the disability panel consisted of the mother’s three adult children. I immediately sent the daughter and her two siblings a one-page document to sign that would show their mother was no longer capable of serving as trustee.

Within a week, the daughter was able to remove the mother as trustee on the financial accounts. The daughter took over as trustee and made sure that her mother was provided for properly.

Unfortunately, elder-abuse scams such as this are not uncommon. In fact, they seem to be getting worse each year.

In a life plan trust, we include several protections to safeguard your assets. In this story, we saw two of them in action. First, the daughter was serving as a silent partner co-trustee, which is how she was able to discover that her mother was falling victim to a scam. Second, the disability panel provided an efficient and practical manner to remove the mother as trustee.

In the end, the estate plan worked as intended, and the mother’s assets were preserved for her future care.

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