A 90-Year-Old Woman's Tough Decision

How do you ask a 90-year-old client to give up total control of her assets?

Recently I had a meeting with a long-term client (let’s call her Susan) and her out-of-state nephew in which the nephew and I asked her to resign as the trustee of her own revocable trust.

This is a tough conversation to have. In effect, we were asking her to transfer control of all of her money to her nephew. Susan agreed to do this, but only because she trusts my advice. Talk about responsibility.

Let me provide a little background. Susan hired me as her financial adviser just after the dot-com bust. She was recently widowed. Her husband had put their investments 100% in stocks. Her stocks were dropping in value a lot, she was scared, and she didn’t know what to do. She has no children and wanted most of her money to go to charity when she passed. (Susan was one of the inspirations for a book I wrote: RINKs — Retired, Independent, No Kids.)

We created charitable remainder trusts for Susan, which established annuities for her and helped diversify her portfolio tax-efficiently. We set up a revocable trust for the rest of her assets. With no children, she made one of her nephews a successor trustee for her trusts.

Susan’s investments have grown nicely over the years, and running out of money was never an issue. The issue was her declining health. She moved to a very nice assisted living residence, and we made sure most of her bills were automatically paid because she was becoming confused about money and forgetting to pay some bills. Her tax attorney had been suggesting to me and her nephew that it was time Susan stepped down and let someone else control her finances. I was resistant. I pushed back. My biggest concern: Would Susan be taken advantage of?

Yes, we financial planners go to seminars and meetings discussing estate planning and asset transfers. But nothing can actually prepare you for helping a client make such an important, irreversible decision. How can you advise a client to trust a distant relative when you don’t understand that relative’s own history or motivations about money? How can you explain this to someone, who may not really understand why this will be for her own benefit?

I think you have to rely on your best judgment of the individuals involved. You have to ask a lot of questions. And you have to respect the reasoning why the client, when originally creating the estate documents, would choose this individual over all other possible candidates to be the successor trustee. And that’s what I did in Susan’s case.

Yes, we make the big bucks managing money, and that’s what most people see. But the emotionally hard and more important work is helping clients make the really tough life decisions.

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Raymond Mignone has been a certified financial planner and fee-only investment adviser since 1989, with offices in Boynton Beach, Fla., and Little Neck, N.Y. He is the author of the book RINKs – Retired, Independent, No Kids. His website is www.RayMignone.com.