Mother fraudulently used Credit

A couple of questions, if I may. Was the Trust a revocable or irrevocable trust, and is the Trust still in existence?

You'll need to be aware that Trust instruments are written to permit the Trustee to do just about anything with the funds that they, in their sole discretion, determine is appropriate. The likelihood of being able to prevail in a case against a specific action cum action is slim. They have permission to do just about anything.

They do, however, have to act with fiduciary responsibility.

This however, becomes complicated, because a Trust, necessarily, serves two masters, the beneficiary and itself. The Trust is its own legal entity.

As you analyze what has gone on, the inherent conflict of interest that a Trust faces needs be kept in mind. It does not necessarily resolve in the favor of the beneficiary.

 

"Is "Intelius" a reputable site to get public records from? Or is there somewhere local one can go to get them?"

In my county, we can go online to the circuit clerk office website and pull up public records for anyone, free. Just type in the name. Search for your county's circuit clerk and see what you find.

Good luck, I really hope this gets sorted out.

 

This is a "real world concern", as in "it's not what you know, it's what you can prove"..

You're correct in your overview, however the "Uniform Gifts to Minors Act" stipulates some required actions of the custodian. It seems many of the "rules" may have been followed here, but that is what led to the trouble! All transactions done by "Mom" with this account must be registered as "Mom as custodian for C under the UGMA of state X". You are correct that essentially the custodian can do anything with the account (claiming it is for the benefit of the minor), and "monies" taken from the account MUST be stipulated with this notation.

But..the UGMA stipulates that the securities cannot be pledged for collateral for any loan, so I'm curious about this "mortgage" that may be out there. And..the regs state that the custodian MUST maintain the records of the account, more on this below..

However, there is the "Prudent Man Rule" (no sexist bias here!), that is actually versioned in almost all state's laws for securities transactions of fiduciaries and trustees. The Prudent Man Rule holds that "people acting on behalf of another can only invest in those securities which a reasonably prudent man who is seeking reasonable income and preservation of capital would choose". Generally there is an investment strategy objective given for a trust also. (i.e. no investments in IPOs, junk bonds, etc.).

In the securities industry there is also a requirement for periodic review of any account that is "discretionary". Generally, discretionary means the broker has the ability to choose investments on behalf of the client, but often "POAs, or trustees fall under this.

The main question now is "who is the account holder", or whose name is it in now that "C" is over 21? Per the "regs" the account "must" be transferred into the beneficiaries name upon reaching the age of majoirty (or trust stipulated age).

The obvious problem is whether to pursue legal action, that's a very tough call against your own mother...Getting back to your original point, the UGMA does allow for a "reasonable charge for services of the custodian in operating the account". This only makes it "stickier"....

 

Intelius is just like any other data gatherer and reporter. Their accuracy depends upon the accuracy of their source and the integration of the source data into their records.

Primary sources are ALWAYS better then secondary <long pause> because it's their data.

 

I have no idea if it is revocable or irrevocable...I just looked at a statement to see if I could find that information, but didn't see it. The trust is still in existence, but everything is under my name now.

I am not looking to gain any money that has been stripped from the account through it's years. In a perfect world, yes, I would be reimbursed for the damage that was done, but I am a realist. However, I DO want to finally take some control in this horrible situation. I'm finally strong enough, and have enough clarity to call these people on the carpet for not looking out for my best interests. Taking $13,000 out of my trust to give their family business a face lift, in my opinion, is not in my interest at all.
I also think I shouldn't suffer for what my mother has done to my credit or my reputation. I have only begun this long journey, but I have found a few very bad blemishes on my credit report that I had no idea about. My mother says, "I don't understand why people worry about credit" and her disregard certainly has shown through on her credit AND MINE.

 

You are correct, bizwiz, both on the fact of what you can "prove" and the Prudent Man/Prudent Investor policies that govern how such financial transactions are conducted.

One point is that what is PERMITTED is extremely broad and is constructed so that there are no impediments doing things that the Trustee determines are in the best interests of the Trust/Beneficiary. Without that permission, the Trust would not have the flexibility to act. It is a separation between what is permitted and what is proper.

Another point is that confronting actions taken using the Prudent Man/Investor doctrine, the challenger's burden is quite different since he has difficulty challenging based on "permission". That makes what can be proven a much more difficult task, running somewhat afoul of the conflict of interest inherent in Trusts, outlined earlier.

I'm not arguing that what we are seeing in this situation is not disturbing. I am only cautioning that the "proving" could be a problem, and that MIL and C need to proceed methodically and cautiously as well as proceeding relentlessly.

 

Intelius is acceptable, you can go through the search yourself on line or at your local county courthouse. Just trying to save some aggrevation here.

The reason I suggested a "Public Records" search, was for you to gather all the information you can. There is a chance that something may not be on your credit report. Also, per one of the stories, you should see if there is a Public Record for your arrest when you were 19. You should make every effort to have this "expunged" from your record.

This is a tough one C, we all feel for you. You're best bet is to make the most of going forward:
*focus on cleaning and repairing credit reports,
*clean up any "arrest records",
*find out exactly how much money is left in your trust,
*take steps to prevent any identity "issues" financially.

Bottom line, I don't think you'll get any real money back out of this. If the brokerage firm was "dirty", you've got a shot, but be prepared for a full out war with high priced attorneys. Or, the firm may just throw the broker to the wolves, and you'd have to go after the broker personally.

You should consider moving this account, now that you are the holder (or legally should be). Ask around through people you trust whom they use. I would highly recommend this moving of the acount ASAP.

It sounds like you're stepping into a great family now, take comfort and value in that. Take some time to sort out what is important to you, and go with that.

We're all here to help as best we can, just let us know what you need, and keep us posted.

 

The account is under my name now, but it took much more work than it should have. When I turned 21 I was supposed to receive a letter notifying me that I should be prepared to take over the trust etc. Well the letter never came and I asked my mother about it, etc. After being rebuffed by her numerous times I finally called the firm and talked to the financial advisor myself. Apparently my mother wouldn't write the letter that was required on her part to relinquish the trust to me. Another month or two later I was asked to write a letter of my own and send in my birth certificate, which I did. In the letter I wrote that I would like A full history of the account...I also asked the advisor on the phone...but no one has ever mentioned it other than to say the records probably do not exist anymore.

 

I know, we're probably making "C"'s head spin with all this, but you're right. Like any case, there are some "details" in the Act, which "may" have been violated. The "big" item of the "prudent man rule" is obviously a wild card gamble, depending upon the judge you're in front of, well, in this case the Arbitrator.

And, the bottom line, what will "C" really get back? The money is gone, and obviously Mom does not have the "deep pockets" to really go after. Going after the brokerage firm could be an expensive risk also.

The other "accounting mess" (relating to actions) is whether the "principal" ever got reduced/withdrawn. This is obviously a critical point, but it would take a full accounting review to determine this.

Again, we're getting a bit deep here in the "what ifs", hope this isn't confusing you "C"..

 

There is close to $30,000 left in the account now. Ani and I have already been discussing where to place the money, because I just don't feel safe having it with a firm that can not provide me with records. I also have 5 oz of gold that I have to find a place for because it is still in my grandmother's safety deposit box, which my mother could easily get to.

 

C, it is very important that you get a copy of the Trust Instrument. It will tell you what you are dealing with.

If the Trust still exists, then you may still only be the beneficiary, and not entitled to participate in its administration, no matter how old you might be.

The Trust Instrument will tell you the terms and conditions of the Trust.

Without it, you are flying blind and without a compass.

 

Whoa....unless the trust agreement states an age OTHER than legal age of majority the account is required to transfer to you automatically. This is a regulation. In fact, thinking about the age of this account, there's a good chance it should have been turned over when you were 18. So, your "mom" did not have to relinquish custodial power of the account. Unless..she made some claim that you could not act in your own best interest. But, this is getting messy now.

Simple question: when you have the account statements, look for an account description of "Uniform Gifts to Minors Act" or "UGMA". I'd be interested to know if the account is classified as this.

As for the "records probably do not exist anymore", this is a violation. Do NOT accept this answer. Again, as suggested several times, put ALL communications in writing as backup. It's been quite a while, so I would have to look up the records retention regulations to be exact, but this statement by the firm is unacceptable. I wish I were on the phone with them!

Keep up posted..

 

Per my question above, I'm wondering if there is a full agreement, or was it a simple "UGMA" account? If so, then it is bound by the underlying SEC, NYSE and FINRA/NASD regs.

 

Good question, I see wher you're going with this question...

 

I have a statement that I was able to pull away from my mother for 04/01/07-04/30/07
Next to her name is has C/F
and mine has UGMANC

I turned 21 11-06-06 so the trust was already well overdue

 

Bizwiz is correct. If it's an UGMA account (which it appears to be), the law says it becomes yours when you turn 18.

This is why a good financial advisor will tell you not to use an UGMA if you want to put any restrictions on it. At 18, the money becomes the property of the child, even if that child is a drug addict running with a bad crowd.

So there is NO defense (such as using the money for C's good) for any withdrawals after the 18th birthday. Somewhere when the UGMA was set up, I believe the birthdate must be specified. So the brokerage knew (or should have known) that this was no longer a trust account, but was the property of the minor.

If there's a trust instrument other than the UGMA agreement, I suppose it would get a little stickier, but an UGMA reverts to the beneficiary at age 18. Period.

 

I'm not in that biz, so take my answer for what it's worth. At this time I would probably not, yet, report it. When you meet with them on friday, then you have a lot of leverage. You will be armed with options (which they don't or didn't expect) and having this threat to their biz is much more powerful, if you put that option into their lap. They might be open to a settlement. They may no longer be, if there are other entities investigating. If that meeting on friday goes bad, then you can always report then. Just my opinion ;-)

 

The answer is YES, she can file a complaint. She has solid ground for complaint(s) going back to her 18th birthday, since you stated the account was described as UGMA on a statement.

The sticky part here (for Mom and the brokerage firm) is that the principal has been "reduced", and I'm assuming it is not due to poor investment performance.

Just be aware that the brokerage firm/Ops Mgr is going to cover themselves, by saying as little as possible. "C" should call the Ops Mgr, but I advise that you be there for the call as well. A speakerphone would com en handy at this point. Also be aware that they WILL record the call, as I'm sure the previous ones have been.

So, have "C" call, and make sure to ask the following questions:

A) Is this call being recorded?
1) Is this account an UGMA account?
2) Names of beneficiary and custodian..
3) Opening balance of account,
4) Current value of account (as of previous business day),
5) Does the firm have a (separate) Trust Agreement on file?,
6) On what date did "C" become holder of account (per thier records),
7) Name, Series license held by, and "CRD" number of Ops Mgr.,
8) Same for registered broker on account,
9) How long/when can they provide historical statements on account?,
10) When can they provide copy of original account agreement,
11) How quickly can they add your Mother In Law for POA to the account.

Follow up with a written letter covering all aspects covered in call, and detail any actions to be taken by the brokerage firm.

This should be a good start, and cover the basics. A word of (inside) advisement here, be aware that they will not jump through hoops for a $30K account, this one's now on the "small fish pile". Just stay on them..


Good Luck, keep us posted.

Good Luck