View Full Version : Rant: financial hygiene...
My mother-in-law passed away recently.
I'm in the midst of distributing her estate to the heirs.
One of them is a cousin, in his 50s. He's been in the arts his whole life - music/theater. Until quite recently, his mother, my mother-in-law's sister, basically funded his life. He went to a nice prep school, a great college, good grad school, then decades of "work" in the arts, living a lavish lifestyle in Manhattan while his mother paid the bills.
He developed over his life no idea of what money really was, or how you managed it, or good financial hygiene habits. When his mother passed away 3 years ago, it took him about 1.5 years to spend through the rather substantial pile of assets she left him (I helped manage her estate as well...). As he was running out of funds, he managed to severely injure his credit rating with late payments, no payments at all, skipping out on apartments owing huge rents, etc. etc.
Fast forward to now - my mother-in-law, wishing the cousin not to die penniless on the streets, left a sizeable chunk of her assets for his use, but made the mistake of not leaving it in trust - he just gets the $$$, as "he's gotta be an adult now, right?" (I spoke with her just weeks before her death on the matter). Fine, she's right in theory.
I managed after a month to get him to walk into a Schwab office to open up an account, so I could transfer the first batch of available assets to him, which he did late last week. I fired up the transfer, of *several hundred thousand dollars*, only to have it bounced back reversed.... Schwab cancelled his account out from under him when they checked his credit rating and history - they didn't want his business.
My wife said I made a sound like a strangled freefalling platypus when I was informed by the sorrowful lady at Schwab that I had to take the money back.
So, all the plans he's been spinning about getting an apartment or buying a house, and all the other castles-in-Spain ideas are doomed - he likely can't even get a bank account.
So, next week, I get to tell him he needs to get credit counseling before I can reasonably hand out his loot to him. I mean, I suppose I could hand him a suitcase full of $100s, or strap a bag of Krugerrands to a greased pig, but....
Grrrrrrr.
He was "well, can't you open up an account and co-sign it?" - Nope. Not in my lifetime.
Yes, his credit history is so bad he's not even allowed to own and operate *cash*.
That is amazing. So not even a savings account? Just a regular one?
Wow. How frustrating.. and scary. As much of a liberal progressive socialist I can be, one thing I've learned over the years is that nothing teaches you to respect money more than the earning of it. How frustrating for you to know exactly where your MIL's hard-earned money is headed.. I don't envy you your position as executor. As for me, I have seen enough people in my life squander inheritances to make me quite content with the idea of dying broke.
Williamsmith
3-29-16, 9:53pm
Im sorry but I could get some devious enjoyment out of torturing him with this news.
Im sorry but I could get some devious enjoyment out of torturing him with this news.
I'm tempted to bury it in the back yard of The Ancestral Home, and tell him I hid the map inside one of the boxes of his mother's stuff that he hasn't cleaned out of the place yet... Even though he's had several years so far to do so.
I have warned him that everything in the home is being converted to cash or BTUs by the end of the summer, and so far he's cleaned up precisely one old box of Christmas wrapping paper.
Chicken lady
3-29-16, 10:29pm
Can you tell him, "no, I can't consign, but (if you sign this?) I can set up a trust fund for you". Can you? Would he? I mean, "a trust fund" sounds like a good thing!
my dad met with my uncle (a lawyer) to set up his will when we were babies. He said he wanted any liquid assets in trust for our care and education until they were gone or we were 35. My uncle said "YOU aren't 35!" And dad said "I know."
Can you tell him, "no, I can't consign, but (if you sign this?) I can set up a trust fund for you". Can you? Would he? I mean, "a trust fund" sounds like a good thing!
Legally, no, I have no way to force him to put his funds in trust, or to withhold them until he's "good". And I would have ethical qualms about using fraud and intimidation to do so. I'm bound to distribute his funds when I close out the estate and the trust associated with it. That said, a *certain* amount of stalling is perfectly legitimate, if he can't get his act together enough to accept funds somewhere :-)
Chicken lady
3-30-16, 6:32am
I was just thinking it was a place to accept funds. I don't see it as intimidation. Maybe fraud by lack of full explanation, but I was thinking of it presented as an offer, "this I can do", not an only choice "this or nothing."
Financially he sounds like a child. And when my children got hungry when we were out, I offered to stop at grocery stores for fruit and such. Before they discovered subway, this made them happy.
you may have to give him a suitcase full of cash.
rodeosweetheart
3-30-16, 6:39am
One idea-- what about helping him to buy the house that he wants to buy, in cash. And going to a bank local to that, with him, of course, and setting it up so there is a trust there and explaining how the trust would fund the house and give him an allowance?
It just seems odd that for several hundred thousand dollars in cash, Schwab would not accept it! Maybe they would have an obligation to pay his bills with it?
There has to be some bank trust dept that would like a shot at this one.
Things must be really messy and Schwab decided that they didn't have the manpower to manage him due to his terrible history. What a mess, Bae.
rodeosweetheart
3-30-16, 7:27am
This bank advertises itself as opening checking accts for people who have been told they can't have one due to mismanagement:
http://www.peoplescashsolutions.com/second-chance-checking/index.html
here is an article with more suggested second chance accounts:
http://www.thesimpledollar.com/second-chance-checking/
ToomuchStuff
3-30-16, 8:11am
A friend took care of an old timer, whose wife had passed on long before (and they never had kids). He was shocked to find when the gentleman passed, between the life insurance, house and car, he was left right around 1 million dollars. He was effectively at retirement age, and started to think about retiring. and started to make some smart decisions, then he made a couple of stupid ones, mainly getting involved financially with one of his kids.
When all was said and done, he was left with his vehicle and his dog. Lost all that money as well as his life savings, and still has judements against him, that if he tried to open a bank account, the money would get sucked up by the courts.
I wouldn't be surprised if your relative has something similar.
Not understanding banking very much.........why would a bank deny anyone a checking or savings account? It's not like a credit card, where you could actually use money for a while that isn't yours. Wouldn't things in a savings or checking be harder to do that in? I mean if you have $$ in savings or checking and use it, why is that so bad for the bank?
ToomuchStuff
3-30-16, 10:44am
Did you read my post above yours?
Court JUDGEMENT, and LEINS against the person trying to open the account. If the bank/credit union, etc. opens the account, the information gets run through a system, where the judgements notice and the accounts are frozen, until the order signed by a judge, to drain them, until the judgement is satisfied.
These can be from a private suit, or from a government agency (state, federal, IRS).
Williamsmith
3-30-16, 11:54am
Banks don't make money by holding it. They make it by lending it out. That money has to be liquid and not subject to legal restrictions. Some money is more useful than other money and some money is costly to handle. Today's money is not connected to the gold standard, It is fiat money. Or faith money. This is true of the general money supply as well as individual holdings. Really once the bank gets it, it just turns into either an asset or a liability. Apparently, Schwab feels this guy is too much of a risk with his money. That's kinda my perception of it. Might be totally out of whack but there you go.
rodeosweetheart
3-30-16, 12:00pm
Since Schwab won't take it, and you are having trouble setting up a bank account, how about seeing an attorney to set up a spendthrift trust:
http://www.sandiego-estateplanninglawyers.com/lawyer/2012/12/10/Estate-Planning/Estate-Planning-Leaving-Assets-to-a-Troubled-Heir_bl6085.htm
Not understanding banking very much.........why would a bank deny anyone a checking or savings account? It's not like a credit card, where you could actually use money for a while that isn't yours. Wouldn't things in a savings or checking be harder to do that in?
This was a standard boring brokerage account at Schwab, not a savings account - the theory was that most of his inheritance was going to go here, and he was going to have someone help him prudently invest the funds in relatively boring things to provide for his retirement. He actually went into their office and opened up the account in person, it got zapped by The Home Office when they were doing their know-your-client work I presume.
Since Schwab won't take it, and you are having trouble setting up a bank account, how about seeing an attorney to set up a spendthrift trust:
http://www.sandiego-estateplanninglawyers.com/lawyer/2012/12/10/Estate-Planning/Estate-Planning-Leaving-Assets-to-a-Troubled-Heir_bl6085.htm
Not a bad idea at all, except that the money is already his in some legal sense, and I can't force the issue. If I can talk him into doing this sort of thing voluntarily, I'd do it in a flash :-)
Ok....now I get it. Thanks for explaining.
Teacher Terry
3-30-16, 1:29pm
Bae, what a terrible situation and how sad that other people have funded his lifestyle and he is blowing threw the $. Ugh!
freshstart
3-30-16, 6:00pm
can you talk to an attorney and legally get you out of having to be the bag man for this guy's inheritance? my dad had a bad egg cousin and he agreed to be the trustee of his money for his aunt because he could not be trusted to take care of himself, like staying out of jail. He wanted all the money immediately and would come to my aging parents house with a bunch of thugs and baseball bats and make (thank God) empty threats. Before these threats escalated and after rescuing a pit bull and putting in an alarm system, my dad saw a lawyer who somehow got the court to appoint a trustee, IDK how, I forget, but I do know he was legally able to get himself out of the situation despite having been executor and trustee.
cleaning out her house was fun because she taped admonishing notes to her son to unexpected objects in the home. "I told you- no hookers in MY house" was on the Cheerios, lol. I felt horrible for her though that she thought those notes would somehow change the behavior of a 50 yr old man and that despite her efforts, he did in the end end up getting all her money in one lump sum that likely went into his arm.
good luck, you are a good guy for making any effort. LOL at the wrapping paper? What??
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