Dumb beneficiaries

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Jan 5, 2010 8:52 pm

Any dumb beneficary stories?
Here's one. I had a retired client, blue-collar woman who had somehow saved and grown her IRA to 120k. Nice lady, took her investments seriously, pleasant to meet with.
She dies, leaving her money to her three deadbeat children, all in their late 40s, early 50s. Between them, they had one and half jobs and two drinking problems. They promptly liquidate amost all their accounts!
Good riddance, but I hated to see my clients legacy disappear like that, especially as I had encouraged her in our most recent appointment to take five thousand a year and enjoy herself.



Jan 6, 2010 8:25 am
buyandhold:

Any dumb beneficary stories?
Here's one. I had a retired client, blue-collar woman who had somehow saved and grown her IRA to 120k. Nice lady, took her investments seriously, pleasant to meet with.
She dies, leaving her money to her three deadbeat children, all in their late 40s, early 50s. Between them, they had one and half jobs and two drinking problems. They promptly liquidate amost all their accounts!
Good riddance, but I hated to see my clients legacy disappear like that, especially as I had encouraged her in our most recent appointment to take five thousand a year and enjoy herself.





It's happened to me.  Turns my stomach.  The same thing will happen when my grandmother dies.

Jan 6, 2010 8:49 am
BioFreeze:
Moraen:
buyandhold:

Any dumb beneficary stories?
Here's one. I had a retired client, blue-collar woman who had somehow saved and grown her IRA to 120k. Nice lady, took her investments seriously, pleasant to meet with.
She dies, leaving her money to her three deadbeat children, all in their late 40s, early 50s. Between them, they had one and half jobs and two drinking problems. They promptly liquidate amost all their accounts!
Good riddance, but I hated to see my clients legacy disappear like that, especially as I had encouraged her in our most recent appointment to take five thousand a year and enjoy herself.





It's happened to me.  Turns my stomach.  The same thing will happen when my grandmother dies.



Who is the deadbeat alcoholic? Your mom or your dad?



Catholic family.  My mother has 12 brothers and sisters.  They are in their sixties, but have not a single penny to rub together.  My parents are the only ones who have saved over the years.  They actually listen to my advice.

Interestingly enough, none of the others are alcoholics. 

Jan 6, 2010 9:18 am

I have a guy that I have done a little business with who was the beneficiary of a decent estate with his brother (the two split $750m-$1mm).



 
He always comes into my office like he is Bill Gates, talking about his money like he earned it. Brags about the money he has in his stock drawer, the cash sitting in his money market, some money he has at another firm.
 
Meanwhile he runs a failing business, asks about ridiculous investments, wants to "talk shop" about stuff he hears on CNBC. Total knob.
Jan 6, 2010 9:27 am

Fools and their money...

Jan 6, 2010 11:14 am

I tell my clients that it takes the average person over 80,000 hours (40 hrs a week @ 52 weeks a year for 40 years) to accumulate their nest egg.  It takes the average beneficiary 18 months to figure out a way to spend it.  I read another study that said the average beneficiary has the money for only 9 months before it's gone. 

 
I have two ugly situations right now - first, my client, who used to be a $400K account, is down to $150K because his kids and grandkids "need money."  He used to drive to my office and just run inside and tell me he needed $1000 to boost his bank account a bit.  Now, his loser grandkids pull up, in the cars he bought for them, and he hobbles up to the office, almost falling a couple of times along the way, and says he needs $10,000 or $7000 for this or that.  Poor guy actually peed on my floor one day while he was standing here.  And the vultures know he's got money and he's OK with giving it to them. 
 
Second is a couple of sisters who are fighting over a $180K account at Scottrade that was their dad's trust.  Dad had money with me and at Scottrade.  Sister 1 says that dad promised her $5000 like he gave Sister 2.  Well, Sister 2 was the good daughter that came over and paid his bills, cut his lawn, cooked, cleaned, and did what all good kids are supposed to do.  Sister 1 stole, allegedly, jewelry, took cash, etc after dad died because she didn't feel like her chunk of the inheritance was sufficient.  Sisters 1 is going through attorney after attorney trying to find one that agrees with her that even though the trust didn't say she was entitled to any more than half of the assets, she should get more because Sister 2 got the $5K. 
 
I'm a big believer that most people shouldn't actually handle their money in any form.  Not cash, not checkbooks, not investments.  Just let someone else handle everything.  That way you don't screw it up.
Jan 6, 2010 11:41 am
SometimesNowhere:

I have a guy that I have done a little business with who was the beneficiary of a decent estate with his brother (the two split $750m-$1mm).



 
He always comes into my office like he is Bill Gates, talking about his money like he earned it. Brags about the money he has in his stock drawer, the cash sitting in his money market, some money he has at another firm.
 
Meanwhile he runs a failing business, asks about ridiculous investments, wants to "talk shop" about stuff he hears on CNBC. Total knob.
 
 
Jan 6, 2010 11:44 am

Spiff,

 
You raise a good point.  I think, if it could somehow be done profitably, that "family office" services for the average family would do a lot to improve people's financial lives in this country.  I just don't know how you could make enough money doing it.  But I sure as he11 know that you could probably save people more than what they would pay you each year.
Jan 6, 2010 11:45 am

I had an 85 year old client at the bank that got hooked up with a 35 year old (very unattractive) gold digger/scam artist. He started out with about $125k. Over six months time he ended up overdrawn by about $10k. He was also being sued by his ex-wife because $45K of that money was hers in the divorce settlement. Unbelievable. I actually met with his divorce attorney a couple of times, after receiving his permission to discuss all of his finances with her, and we tried figuring out a way to stop the madness, but both of us had our hands tied by privacy laws on my end/attorney client privilege on hers, so we couldn't speak with his daughters or anyone else who could assist about it.

 
I saw this happen a lot at the bank, whether the result of family, girlfriends, or the client not recognizing their inability to handle things and every time it broke my heart.
Jan 6, 2010 11:47 am

I know an accountant who provides "concierge service" for clients.  Basically gives them a budget, and let's them know what they can spend.  The accountant pays all of their bills for them.  Parcels the money out, pays their taxes, files any forms. 


Jan 6, 2010 12:02 pm

One of my first clients ...

 
Met with her and her dying husband.  Husband had a 200k ins. policy and 40k ira.  Husband dies.  Wife blows through 180k of the life policy in less than four months.  Her house looks like a best buy show room.  She spends money on everything and everyone.  We invest the last 20k in a UIT to generate some income.  Three weeks later she needs the money.  Then its onto the IRA, 2500.00 at a time every two/three weeks until its gone.
 
Now she is flat broke with aging electronics and an old car.
Jan 11, 2010 3:07 pm

These stories are the bad part about what they do. The only "control" that I feel I have is to advise the older clients with the deadbeats that it is only going to hurt their beneficiaries to get the money in a lump sum.

Most older clients know that the beneficiaries are losers.
Jan 11, 2010 3:39 pm

While that is true, they aren't normally willing to take the available steps to make sure it doesn't happen.  They could easily establish a trust that says child 1 gets all right now, child 2 over a 10 year timeframe.  Or utilize an annuity that allows for a defined payout.  There are some easy steps, but unfortunately they're more worried about how it will make their kids feel than what is actually best for their kids.  Sad thing is they've known it their whole lives.  They knew from the get go that they couldn't hand Johnny the bag of Oreos and say, just take a few.  Johnny would eat the whole bag and be puking up cookies in 15 minutes. 

Jan 13, 2010 8:09 am

Here's my story.  We actually had two of these going on simultaneously, even thought they had nothing to do with each other. I'm at a bank, so when they asked us about the checking account balance, we could see where the money was going after it left the "long term" investment side.  One lady had about 400k from her mother-in-law's estate (husband was around, just utterly clueless), and pissed it away in home shopping networks.  At least 4 days out of the week, there would be a charge for a pizza, and then hundreds/thousands on HSN, ShopNBC, etc.  She also did a lot background checks on people for some reason.

I have no pity for that lady, but this one is sadder.  Guy with 5 kids lost his wife in a car accident and had about 300k insurance money because the attorney (from his church) phoned in the lawsuit, knowing that if he wrote one letter he could get a decent fee from the ins co's"go away" money, but it would take work to get the guy what he deserved.  Anyway, it was all gone in two years because he got so overwhelmed taking care of the family they were eating fast food all day every day, and they would move to a hotel when they house got too filthy.

Jan 13, 2010 9:15 am

I can't imagine raising 5 kids on my own...depending on age.

Jan 16, 2010 3:11 pm

Not a beneficiary story per se, but similiar.

Divorced male client who has custody of his 4 kids.  Owns a company that throws off lots of cash and he has a trust fund.

About 2yrs ago he met a newly divorced woman with 2 kids.  She is HOT and knows how to use her assets.  Whirlwind romance, quickie wedding, no prenup.  I find out later that when they were in the limo leaving the reception, she wants to know when they will be meeting with his attorneys so she can be made a beneficiary of his trust, given ownership in his company etc.  Preasures him about this throughout their honeymoon and for the 1st few weeks of marriage.  Meanwhile she is spending several hours a day at the gym, then drinks with girlfriends, neglegting kids, coming home drunk.  After 8mos of this he finally has enough and kicks her out. 

She immediately sues for divorce due to emotional cruelty.  About 2 mos after he kicked her out, he and his oldest son are visited by a few thugs who try to shake them down.  Said thugs are later tied to a close friend of the recent wife.

More than a year goes by and still no resolution to the divorce.  Much money moves from my client to the attorneys and ex.

He now has a serious drinking problem and needs help which he refuses to seek.  His familiy has essentially written him off and his kids are leaving the house at the earliest opportunity to escape.


Jan 16, 2010 3:13 pm
exUBS:

Not a beneficiary story per se, but similiar.

Divorced male client who has custody of his 4 kids.  Owns a company that throws off lots of cash and he has a trust fund.

About 2yrs ago he met a newly divorced woman with 2 kids.  She is HOT and knows how to use her assets.  Whirlwind romance, quickie wedding, no prenup.  I find out later that when they were in the limo leaving the reception, she wants to know when they will be meeting with his attorneys so she can be made a beneficiary of his trust, given ownership in his company etc.  Preasures him about this throughout their honeymoon and for the 1st few weeks of marriage.  Meanwhile she is spending several hours a day at the gym, then drinks with girlfriends, neglegting kids, coming home drunk.  After 8mos of this he finally has enough and kicks her out. 

She immediately sues for divorce due to emotional cruelty.  About 2 mos after he kicked her out, he and his oldest son are visited by a few thugs who try to shake them down.  Said thugs are later tied to a close friend of the recent wife.

More than a year goes by and still no resolution to the divorce.  Much money moves from my client to the attorneys and ex.

He now has a serious drinking problem and needs help which he refuses to seek.  His familiy has essentially written him off and his kids are leaving the house at the earliest opportunity to escape.




This guy should have no problems. Even if there was no pre-nup, eight months will not get her anything.  He needs to get a new lawyer.  And if it's been that long, he can ask the judge to enter a judgment. 

Jan 17, 2010 11:57 am

Client wont admit it, but I think he eventually gave her a part of the company if not a portion of the trust.  That is why it is taking so long to resolve- she is digging in her heals for a cash sale of her portion.  

Jan 18, 2010 12:50 am
exUBS:

Client wont admit it, but I think he eventually gave her a part of the company if not a portion of the trust.  That is why it is taking so long to resolve- she is digging in her heals for a cash sale of her portion.  



Reminds me of the Modern Family episode where the kid calls the hot new wife a "Coal Digger".  He clearly mis-heard his mother talking about the lady, and it was hilarious.

On a serious note, I hate to see any man get taken by a conniving, hot wife.  It's a real shame, and these women have no honor or integrity.

Jan 23, 2010 4:19 pm

A client of mine passed away and left his rather large IRA to his 4 sisters.  They were in their 40's and inherited about 90K each.  I worked with them to develop a plan that would work for each of them and even invited them to a client appreciation event.  I was really trying to build a relationship and help them.


After about a month, despite my objections, all of them took a lump sum distribution of the entire amount.  They didn't have taxes withheld and told me that their lawyer told them that they didn't need to.  

I guess they spent the money because the following March, they showed up at my office and threw a fit because they owed money to the IRS.  Apparently they didn't have it and were upset because we never withheld taxes.  They convieniently forgot our previous discussion.