By Quentin Fottrell
'That money was intended for my children'
&#34;My father showed no major cognitive impairment, though he was depressed and later turned out to have long-hidden PTSD from his wartime service in Okinawa.&#34; (Photo subject is a model.)
Dear Quentin,
A regular reader here. Recently, there was a story about a brother stealing money from his parent. Unfortunately, that story rang true for me.
In 2006, my father, then 88, met with an attorney whom my brother and I also used for estate planning. My father intended to create bloodline trusts. I already had a trust for my two children, while my brother had a wife and no children. At the time, my father showed no major cognitive impairment, though he was depressed and later turned out to have long-hidden PTSD from his wartime service in Okinawa.
In August 2006, my father asked to be brought from Florida to New York and was soon placed in assisted living. Around that time, I received a copy of a trust naming my brother and me as joint trustees. It was not a bloodline trust, but I was told it was still being finalized. My father died six months later, and I executed the estate as it then existed.
Everything seemed fine
Everything seemed fine until 2022, when I discovered - while reviewing an old paper copy of my trust - that the attorney had attached the front page of a trust created for my brother. That trust showed a $500,000 transfer from my father, explicitly described as a gift, made at the same time my father was supposedly creating his bloodline trust. There was no tax return reflecting such a transfer.
When I requested documents from the attorney still in practice, I received an unsigned irrevocable trust describing the $500,000 as a loan, not a gift. The retired attorney claimed ignorance. I was also sent copies of emails that supposedly informed me of the gift, though I have no memory of them and cannot locate them in my email records.
I split our father's estate on the understanding that no such $500,000 transfer had been made. The irrevocable trust was never executed, and it appears my father was taken advantage of. I have no contemporaneous documentation of this transaction at all.
To make matters worse, my brother later mishandled other family assets and spent decades working under the table. He could not have purchased his home without that $500,000. That money was intended for my children.
Hell of a story, isn't it? Can we get justice?
Regular Reader
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot respond to questions individually.
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From your telling, your brother took advantage of your father's faith and ill health, and exploited your trust and the fact that you were busy with your life.
Dear Reader,
This is a complex and sinister tale.
In the world of family inheritance, such financial malfeasance is not unheard of. Sometimes, one sibling feels entitled to more and will use nefarious means to get it.
From your telling, your brother took advantage of your father's faith and ill health, and exploited your trust and the fact that you were busy with your life. And, yes, it's a hard lesson: Hire a lawyer who either knows what they're doing or does not engage in subterfuge; even a competent lawyer may commit malpractice or ethical violations through conflicts of interest, or failure to ensure that documents are properly executed. Appoint a trustworthy person to hold power of attorney to oversee an ailing relative's estate plan.
It's also a confusing tale, which is probably why your brother's alleged plan succeeded. To summarize: Your father intended to leave money to your children via trusts. At the same time, $500,000 was allegedly secretly moved into a trust for your brother without your knowledge or consent. He used that money to buy a house and took other family assets, bypassing your father's wishes. You and your kids were, it seems, denied an inheritance. This appears to be a case of elder abuse and fraud. If the trust was never executed, no loan documents were signed, and no contemporaneous bank records confirm the transfer, your brother may have engaged in &#34;unjust enrichment,&#34; which can affect both liability and limitation periods.
You write that &#34;everything seemed fine.&#34; Yes, this is a cautionary tale because a tax return recording that $500,000 &#34;gift&#34; is a secondary document, a record of what he had allegedly done. (A Form 709 federal gift-tax return is required when the gift exceeds the annual exclusion and is not otherwise sheltered by the lifetime exemption.) The primary document is the actual bank account showing the transfer; if there's a month or a page missing, that's a red flag. Separately, the emails your brother and/or her lawyer sent you could give them plausible deniability. The absence of a Form 709 may be evidence that the transfer was never properly disclosed.
In New York, civil fraud or elder-financial-abuse claims must be filed within six years from when the fraud took place or two years from when it was discovered or reasonably should have been discovered. Criminal fraud generally has a five-year limitations period, although it may be longer for major or ongoing financial crimes. The statute of limitations may be tolled if your father was mentally incapacitated and/or if the fiduciary concealed material facts from a co-trustee or executor and made false representations when settling the estate.
Legal questions
There may still be avenues to pursue some form of justice. It may be possible to seek the imposition of a constructive trust, file an equitable accounting claim, or reopen probate based on newly discovered evidence. Exposing your brother to potential IRS scrutiny with credible inconsistencies could also provide leverage. Ultimately, justice does not always mean winning a lawsuit; it can also take the form of negotiated restitution, mediation or publicly documenting the events as a form of moral vindication - even if a legal remedy is no longer possible.
The other question mark concerns the lawyer who set up this trust. Either he knew that your brother was acting in an unscrupulous manner and was receiving some kind of payment for his services and to keep quiet about those services; or he was following your brother's instructions naively and/or recklessly. The former seems unlikely, given that the lawyer knew there were two children and it's an attorney's job to watch out for the interests of their client - the trustee - not to serve the interests of the beneficiaries.
In New York, the statute of limitations for a lawyer's misconduct depends on the claim. Legal malpractice generally has a three-year limitations period, running from when the malpractice occurred. Breach of fiduciary duty claims are usually three years, but may be six years if based on fraud or self-dealing. Criminal conduct follows the applicable criminal statute, often five years or longer. Disciplinary complaints against a lawyer actually have no statute of limitations, although the more time that elapses, the more difficult it will be to prove/investigate.
Roughly one in six people 60 years and older has experienced some form of abuse in the past year, according to the World Health Organization. &#34;Rates of abuse of older people are high in institutions such as nursing homes and long-term care facilities, with two in three staff reporting that they have committed abuse in the past year,&#34; the WHO says. &#34;Rates of abuse of older people have increased during the COVID-19 pandemic. Abuse of older people can lead to serious physical injuries and long-term psychological consequences.&#34;
As your story illustrates, the paper trail should be followed meticulously, particularly if there are notable gaps in the paper trail itself.
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-Quentin Fottrell
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02-03-26 0712ET

<p>A reader recounts a troubling family situation where their brother allegedly stole $500,000 from their ailing father, intended for the reader's children. The father, who had PTSD, created a trust that was manipulated by the brother, who later mismanaged family assets. The reader discovered the transfer while reviewing documents years later, raising concerns of elder abuse and fraud. The situation highlights the importance of proper legal oversight in estate planning and the potential for financial exploitation within families.</p>

'Hell of a story, isn't it?': My brother stole $500K from my ailing father. Can we get justice?