Brother using mother's funds to court his new wife

Dear Len & Rosie,

Seven years ago my mother made a trust to take care of her needs if she became unable to do so herself. She named my brother and me as trustees.

Four years ago my brother divorced his wife and immediately remarried. He moved his new family into mom’s home and put her in a nursing home. Since then he has not bothered to pay mom’s taxes and insurance. He even cashed in our mother’s $6,000 burial fund to court his new wife and pay for his divorce. My mother’s care is covered by Med-Cal. My brother keeps a small portion of mom’s retirement income each month. Everything else goes to the nursing home. My mother has nothing.

I am fearful of confronting my brother. He is an abusive alcoholic and is impossible to reason with. Every time I try to approach him he has some crazy interpretation of why he is doing the “right thing” for mom. Please advise me of what I can expect at the time of my mother’s death, and what I can do now to protect my interests.

Katie

Dear Katie,

Your situation is disturbing. Unfortunately, it is not unique. Some children openly salivate when they are handed the keys to the larder. Your brother probably thinks he can do anything he wants to with your mother’s assets. On top of swiping your mother’s burial fund, he probably pays no rent while living in your mother’s home. He should be paying at least all of the property’s expenses, especially because your mother must pay all of her monthly income except $35 to the nursing home as her Medi-Cal share of cost.

You need to do something about this, not just to protect your share of the trust, but also to protect your mother and any other beneficiaries of the trust. As a trustee, you can be held personally responsible to the beneficiaries if you allow your co-trustee to enrich himself with trust assets. If you and your brother are the only beneficiaries, then only your interest in the trust is at stake, but we wouldn’t be surprised if your brother procured atrust amendment leaving everything to him. For all you know, the property could already be in his name.

If your mother is mentally competent and the terms of the trust allow it, she could amend the trust to remove your brother as a trustee or just simply fire him. She may also be able to revoke the trust and make a new estate plan. If your mother has lost her mental capacity, or if she is unwilling to do anything to stop your brother, you can petition the court to remove your brother as a trustee. If you can prove what you say in your letter to the judge’s satisfaction, the court should remove him as a trustee.

The more you wait, the more your brother will be entrenched in your mother’s home. While it may not be easy, it’s better to do something about this now before there’s nothing left.

Len & Rosie

A common theme in blended families

Dear Len & Rosie,

I have been married to my husband for ten years, but we lived together for at thirteen years before marrying. My husband has children and grandchildren from a previous marriage. He has all of his financial accounts in his name only, and our home is in a trust in his name only. He refuses to add my name to the deed. The trust is revocable, but I will get to “use” the home until I die, and then his heirs inherit. Under the circumstances, is any of his property community property? Or will I be left with nothing when he’s no longer living? I wonder if I would be more secure divorced than married financially, since I worry that his children will contest any thing that my husband leaves me in a trust or will.

Susan

Dear Susan,

This is a common theme in blended families when either or both spouses have children from a prior relationship. Your husband fears that if he dies first, you’ll get everything, and it’ll wind up staying in your family instead of passing to his children and grandchildren. So, his trust was drafted to provide you with a place to live for the rest of your life, and perhaps income on some of his investments - we’d have to review his trust to be sure.

Is there any community property? Maybe. Community property is defined as assets either of you acquire during the marriage, except as a result of a gift or inheritance. Everything your husband owned ten years ago before your marriage is separate property owned by him and him alone. If he wasn’t retired by then, his earnings after the date of your marriage is community property half owned by you, and so is whatever he purchased with his employment income.

Even if the home is in his name alone, you own a partial community property interest in it, if he’s been using community property income to pay the mortgage. This doesn’t mean the entire property is community property; only the portion actually purchased with community property is. Keep in mind that if the two of you signed a prenuptial agreement, then all bets are off. If you did, you may have agreed that his income would remain his separate property.

Assuming you don’t get fed up and divorce him because of his reluctance to provide for you in a manner sufficient for your needs after his death, you may be able to assert that you own part of his trust because it’s community property. But you have to be careful. His estate plan could include a “forced election” by which you would have to choose between your community property rights and your lifetime right to occupy his home together with whatever else he leaves you.

What you ought to do now is to try to talk to him gently about what you’re going to need to provide for yourself after his death. You’ve been together for twenty-three years, so there’s a good chance he’ll listen as long as you acknowledge his need to provide for his descendants.

Len & Rosie