Readers in Minneapolis and St. Paul may have tuned in to our previous discussions about the risks of financial exploitation of vulnerable adults, but a recent case involving a gambling grandmother turns the tables on the usual roles of exploiter versus exploited. Criminal charges stemming from the grandmother's looting of her grandson's college trust fund still serve as a lesson in the importance of monitoring the financial practices of an elder family member, but also illustrate the importance of legal assistance in matters of trust administration.
The grandmother once worked as a nurse for an affluent surgeon. The surgeon's estate established a trust for each of her two grandchildren and named the grandmother as the sole trustee. The grandson's trust named him as the beneficiary of an account originally funded with a $100,000 contribution. The grandson's father began to have concerns about the misuse of funds after the grandmother failed to share information when asked about the trust balance.
The father took action in probate court and demanded an accounting of the trust, but the grandmother never responded. The court issued a warrant for the grandmother's arrest, but nobody knew where to find her. Investigators believe she may still be in hiding. What investigators do know is that much of the trust balance went to checks written for cash and ATM withdrawals at casinos where the grandmother racked up nearly $94,000 in losses.
The grandmother's theft might have been prevented if the trust had been drafted to require two signatures for the authorization of any withdrawals. In the absence of that safeguard, a trust administration professional might have been able to successfully remove the grandmother as trustee and replace her with the father.
As it stands, a trust fund that might have been worth $160,000 with accumulated interest has been largely depleted. Minnesota trust beneficiaries should be aware that they are entitled to an accounting from a trustee and that the law provides remedies to protect against a breach of fiduciary duties.
Source: ABC News, "Granny Edna Sue Pate Accused of Stealing Grandson's College Fund," Alan Farnham, June 7, 2012
Source: The Washington Post, "Authorities: Ind. Woman charged with gambling away grandson's college trust fund found in La.," June 8, 2012