94yo MIL called me last week and shared details of how her trust is set up. (FIL passed 5 years ago.) My husband (let's call him Fred Sr) is their only son and our son (Fred Jr) is her only grandchild. There is no other surviving family. Apparently their trust leaves the entire estate to Fred Jr with the caveat that he has to wait until he's 50 to receive any of it. He is now 21. The executor is a combination of Wells Fargo Bank and Fred Sr. Once Fred Sr passes, then it will be only Wells Fargo bank alone. Never mind that I think this is kind of crazy and weird (my parents just left the estate to me and my siblings, evenly split)... does anyone know how much a bank like Wells Fargo can bleed an estate dry through "administrative" fees? We're talking potentially 25 years worth of fees and also whatever they will pay themselves to administer the sale of the house! My in-laws worked so hard for their money and I just don't understand this.
It sounds like WF used FIL's fear of taxes to their own advantage.
There is no federal estate tax until you reach an estate of 11.2 million dollars (last I checked). Does your state have very high inheritance taxes?
Worried, it might be possible but someone will have to read the trust to see if there are restrictions on transferring assets out. And that comes back to the fact that Mom won't allow anyone to read it. Issues: whether WF and Fred Sr. will be joint trustees with equal rights, or if one has jurisdiction over one aspect the other over a different aspect (such as assets).
Powers given also factor in significantly.
Somehow or another, you have to get access to read the Trust. By any chance do you know the firm or attorney who prepared it? In my experience, good firms may either give the original Trust to the Settlor, and make conformed copies for the Trustee, or some clients want both the original and conformed or just copies.
Experience can be a good teacher.
Do you this is possible for the portion that went into lockdown when FIL died?
As to Wells Fargo, and what can be done, including but not limited to removal of it as co-Trustee:
I haven't researched any federal actions against them, but I'm sure there are some. There may also be individual or class action lawsuits (again, I haven't checked). I think it would be possible, and expensive but worth it, to get WF out of the picture. Frankly, I'm surprised it's still in business.
I'm wondering if the Fed will at some point take control. I think it's way past time to put WF into federal jurisdiction and oversight. It might even implode, as some banking institutions did during the 2008 economic crisis.
Yes, court action could be instituted. Class action by others with WF as a co-trustee would I think be a case that would be fascinating, but also well worth it. It would be easier on the plaintiffs b/c each wouldn't be individually financially supporting legal action.
It wouldn't be one of the kind of class actions that are advertised on tv; it would specifically focus on those with trusts, so there might be a different type of class plaintiffs, including some with deep pockets and high net worth. They can be quite insistent on ensuring their interests are addressed.
This is a question that could be posed to someone with extensive estate planning, trust, and probate litigation experience.
Yes, the fees would be substantial, but you might ask yourself: would the money be better spent on removing WF, or allowing WF to absorb the funds in its "actions" as a co-trustee, enriching itself to your family's detriment? I also suspect that it will aggressively assume and take control, and your husband's role will be diminished.
Her son should read the Trusts. It is very common when a trust exists for married couples for that to split into an A B trust, protecting the deceased spouse wishes for their share, not uncommon though that the surviving spouse has access to the funds, if needed.
Your MIL should be encouraged to give her son a copy and he can take it to a CELA to verify the terms and conditions and make sure his mom isn't being taken advantage of.
I wonder if WF charges standardized fees or if they ramp it up when they sense there's no one watching.
I wrote:
"If Fred Jr. is co-trustee with WF..." It should be "If Fred St. is co-trustee...."
Sorry about that.
This to me is unthinkable. If Fred Jr. is co-trustee with WF, I wonder how much, if any, control he has over changing the terms of the Trust.
This whole situation just raises my suspicions.
Search on "Wells Fargo financial issues" and you'll get several hits on WF's financial problems as well as management issues.
https://www.google.com/search?hl=en&source=hp&biw=&bih=&q=Wells+Fargo+financial+issues&iflsig=ALs-wAMAAAAAYX7zNBOWwYAnok0ZCEMQtpNO5eY9q0OD&gbv=2&oq=Wells+Fargo+financial+issues&gs_l=heirloom-hp.3..0i22i30l3j0i390l3.1110.9152.0.9244.28.28.0.0.0.0.216.3684.4j22j2.28.0....0...1.1.34.heirloom-hp..1.27.3510.V7veb45HtT0
Just one line of one article provides an inkling of its problems:
"Wells Fargo has gone from one of America's strongest big banks to easily the weakest.
For years, Wells Fargo's laundry list of scandals and legal problems had only a fleeting impact on its once-monstrous bottom line. That is no longer the case...."
https://www.cnn.com/2020/07/15/investing/wells-fargo-bank-dividend/index.html
I don't have precise recollection of every trust I might have worked on at estate planning firms, but I do think that 50 is an odd and extended age for inheritance. There might be special considerations, such as inability to manage money, but that doesn't necessary change as someone ages.
Did your MIL provide any insights into her desire to change the age restriction? Actually, she might be more intuitive than we realize. OTOH, she may realize that WF could actually bleed through the trust during that interim period.
W/o prying or inferring, does Fred Jr. have a problem managing money? If so, I could understand this restriction. If not, it makes no sense to me, other than to exclude your husband from trust funds and/or to provide a piggy bank for WF.
Was the Trust executed before or during the periods when WF began having financial problems?
I would expect WF to "bleed" through the trust corpus, and perhaps then some. Do some background research on the legal problems Wells Fargo has experienced and consider if along with your existing question whether it's advisable to consider an amendment to the Trust to select a more reliable Trustee.
Just for clarification and not to be critical, the individual who created the Trust is a Settlor; after his or her death, the Successor Trustee manages the Trust. The term "Executor" doesn't apply to Trusts, other than if there's a Pourover Will and someone is identified as such (but it's my understanding that legislation years ago changed Executor and Executrix to Personal Representatives, at least in MI). here are distinct differences, however between a Trustee and an Executor. I'm sure this is "clear as mud"!
I also can't help telling you that the setup of this trust stinks. To me it's an opportunity for Wells Fargo to take control and pad its coffers. "Bleed through" is a good expression.
If you do have the Trust reviewed by an attorney, go to a well known, large law firm with an estate planning department where you'll find specialists not only in estate planning, but successor planning, wills and pourover wills, probate litigation, special needs trusts, and other similar practice areas.
I think the age 50 limit was from my FIL who certainly would have wanted Fred Jr to have to work hard at surviving before he got any money. FIL was sort of a jerk, to be honest.
Thank you so much for your reply. I want to reply to your other points more carefully as I am on my phone right now so I will return when I get a bit more time.
Perhaps Fred could say something like "mom, would it be okay if the lawyer explains this to ne, because I'm not sure I understand and want to make sure that I protect your interests"?
I wonder if what she is telling you actually lines up with what the lawyers and bankers are telling her.
I called a local legal firm, one that my own mother used in changing her trust, and asked for an appointment for my MIL. They told me they could not give me an appt as they had worked with her in the past and sent her a letter of disengagement! And that they were certain I could find someone else who could help her! I said, "Oh my, I know she can be very determined when she wants something." and the secretary replied, "She was asking us to do something that was not possible." So there's something going on here that I don't understand. I wish she would let me look over the trust documents myself, it would solve so many of these problems.
1) Her desire to change some of the terms of *distribution* is what prompted the call to me. She says she now wants to remove the age 50 restriction. I believe that is the only thing she is unhappy with right now.
2) I don't think she understands the scope of the fees that could be charged to the estate over 25 years.
3) He could, if she will let him. She's a bit paranoid. Thanks for the suggestion.
As I understood it, when FIL died, 50% of the estate was put into lockdown under the terms of the trust at that time. She is living off of her 50% now. She can only change the terms on her portion of the estate. But now I'm confused because her lawyer told her a few weeks ago that she can't change anything, not even on her portion. She won't show me or Fred Sr the trust documents.
Does she understand the fees that are being charged?
Can Fred Sr. go to the bank with her to review, to make sure SHE understands those terms?