Where to begin? And how not to make this so long that no one reads it? I don’t know, but there’s a lot to learn here, so I’m going to try. Here it goes!
Looking back, there was a lot of mental illness, probably narcissism. Definitely manipulation, love = money, stuff like that. Not to mention physical and emotional abuse – the thing I remember most about childhood was always being scared of my Mom and her moods. In my later years, Mom admitted she didn’t want kids, but Dad said they had to, b/c “who would take care of them when they were older?” The irony of my Dad’s statement and my Mom’s admittance of not wanting kids really helped a lot – I can see why she was a less than stellar mom, she didn’t want to be one and she quickly learned that manipulating the two of us against each other to curry favor with her was a way to have us parent ourselves. Given how much we have both gone through, I’m still amazed that we both grew up, at least in our early adult lives, to be well rounded and functional adults, with no addictions to alcohol or drugs to get us through that childhood.
We were both favored, in our own ways. Mom preferred my sister b/c she was prettier than I, and she thrived on getting me in trouble to continue staying in Mom’s good graces, even making things up, or staging things so I could be blamed for it. As we got older, I excelled in school and wasn’t boy crazy, so I gained points where my sister lost them. I remember that feeling, it was so great to finally be on the good side! Looking back, I can also understand how hard that fall from grace had to have been for my sister, and why she blamed me for it. I think this is what laid the groundwork for what came next.
My parents did well for themselves as first generation immigrants who didn’t assimilate very much. They also shared this ability to be offended by the slightest thing, so friends and family were often on the disowned list. My sister & I both spent time on that list too! Being so isolated, I think it made it easier for them to ignore certain issues, like my sister’s amazingly bad math skills, and her “failure to launch”. I had friends with similar parents, so when I heard about lawyers and trusts and protecting the family wealth from the government, I suggested my parents look into it, and they did. A trust was recommended, but spending $5K was something they were unwilling to spend, and like many older folks, they just figured they had plenty of time, and things would work themselves out. They were so very, very wrong!
Dad had a quick battle with cancer, leaving Mom behind with an unexpected surprise for us. She had early onset dementia, and he had been covering for her. Her battle was long and slow, eventually resulting in a 10 year period of assisted living and nursing homes. 6 months prior to her move into assisted living, my sister contacted me last minute, alerting me to an attorney she had hired, who was making a house call the next morning, documents in hand, to protect the assets. I was days away from a long distance move myself, so the sense of urgency made sense, and I agreed to show up and sign where needed. I take full responsibility for my mistakes here – I trusted my sister more than I should have, I signed documents I barely had a chance to look over, and the one “fishy” document where I did ask a question, I accepted the ridiculous answer I was given, keenly aware that Mom was looking at me for assurance that she should be signing. I believe she didn’t have a clue what she signed, but on some level, she knew to trust me, and I let her down in that regard. The lawyer clearly knew what she was doing – she even brought her young kids to the house to further distract Mom. Doesn’t matter, we lived and Mom died by those documents, proving that she was incompetent to sign them in the first place proved impossible to do after the fact.
My move turned out to be beneficial for my Mom’s long term finances, b/c when she did move into assisted living, the cost of care was significantly more reasonable where I was living. Within a year, I discovered an even better solution for her, at an even lower cost, and she spent nearly 8 years in a loving environment near my home. My sister was absent for years, which didn’t surprise me. It was an uphill battle to get her to move into the accessory apartment in Mom’s home, so we could rent the majority of the home and use those funds to pay for Mom’s care, but eventually she did it, on her own terms, taking over a larger share of the house for her personal use, which I discovered later. It was a sign of the greediness to come. Within a year she stopped communicating with me and closed all the bank accounts and opened new ones I was not privy too, and stopped paying for Mom’s care out of Mom’s assets. Several attorneys would not take the case – too expensive, too complicated, uncertain that the results would work in our favor due to the documents we had signed. (We shared Power of Attorney (POA), which is horrible, b/c we can work together or not, 50/50 control is useless in these situations). The assisted living facility stepped in with the ultimate threat – continue paying or we will bring Mom back to you. It worked, she paid, and for about 6 years, we continued in this fashion, just waiting for the other shoe to drop. I focused on making sure Mom was getting good care, and figured at some point after her death, we'd hash out the rest.
For reasons unknown to me, my sister proceeded to move to the same general area as me several years later. I know she had struggled for years to keep herself employed, so perhaps this was a reason for the move, but it was an unwise move – she did no better at finding steady work, and now she had rent to pay, where at home she lived rent free. Early last year a text message was sent to the assisted living facility, claiming all funds had been spent, the family home was for sale, and that no further payments would be made till the home sold. Part of the documents we signed included transferring the home into both our names, again 50/50, but with Mom retaining a life estate, so the house could not be sold until Mom passed. I knew the house could not be for sale, just more lies and deceit from my sister. I consulted another attorney, and proceeded with a lawsuit to obtain accounting records and control of the family home, as well as sole control on the POA. I also hired a local property manager to assist, and we gained access to the home, discovering in the process that it had been sitting vacant for nearly a year. Fully rented, this house, in a HCOL area, could easily gross $60K/year, more than enough to continue caring for Mom AND for my sister to continue siphoning some funds for her benefit. I will never understand why she did this – it was her personal cash cow, and the dire straits she was in could easily be solved by a For Rent sign! While this was going on, my Mom was unceremoniously dragged out of her loving facility early one morning by my sister, and taken to a Medicaid nursing home with horrible reviews. It would be 4 months before I was able to find her through her Medicare/Medicaid records; once I got access, it was as easy as reading the EOB’s and seeing who was getting paid for her care.
My sister had been contemplating her next steps for months prior to all this, slowly paying a Bankruptcy Mill their service fee. Getting served with my lawsuit was the perfect time to execute that plan, and she filed the day before our court date, putting a stay of execution on my lawsuit. From there, we proceeded to Bankruptcy court to resolve all the issues. She originally filed Chap 13, played games with the court dates, and eventually came to learn that she could not force the sale of the house with this filing. I began to view her records from the filing, and was shocked at how bad things had gotten. Between unemployment and really low paying temp work, she averaged $20K/year in income. Her expenses would be breakeven at a $75K/yr salary, and she had made no efforts to cut back her spending as my Mom’s funds began to wane. She had also racked up six figures in credit card debt. Her only assets were an older vehicle and an IRA, which really made her judgement proof – there really was no need to file for bankruptcy! Both my (latest & very expensive) specialty lawyer & I were even more shocked when she made another terrible decision, she filed for Chap 7. She didn’t live in the house, so it was not a protected asset, and this is where I learned a LOT about how bankruptcy courts work.
Once you file for Chapter 7 and a trustee is assigned, that’s it, there’s no going back. If you try to get out of it, you lose all protections of bankruptcy, AND they still get to liquidate your assets to pay off your creditors. Most people who file for Chap 7 don’t have any assets to lose, so other than the filing fees and the legal fee, it’s pretty cut and dried. You attend a meeting with your trustee to review the files provided, you attend two short online courses on finances, and at the end, one final meeting to wrap it all up and give you a clean slate. In this case, with a sizeable asset in play, the courts went on a spending spree. The trustee, who is a lawyer, hired a lawyer to represent her. She later hired a lawyer to handle the closing on the house, and she also hired a forensic CPA to recreate the books and file tax returns as needed. The trustee earns a 5% commission on the assets of the bankruptcy too. All of this will be deducted from my sister’s share of the assets. Oh, and those creditors? Their unsecured debt is now secured, thanks to this incredibly stupid move to Chap 7.
I can now say with certainty that Mom was still alive when the Chap 7 proceedings began, and I assumed that the life estate would protect her. Plus, I didn’t want to sell, and I’m not filing bankruptcy, so they can’t force me to sell, right? Not true. Everything is subjective in bankruptcy court! First we were facing an auction sale. I attempted to make a low bid for my sister’s share, but all those lawyers knew what the asset could be worth, so that didn’t fly. Then they filed a motion to sell the house and split the proceeds 3 ways, the IRS has tables for that sort of thing, so based on Mom’s age, she’d get a small share. I filed a motion to object, pointing out that my Mom needed the rental income to move her back to the assisted living facility, and a small payoff from the sale of the house would not suffice. I was accused of putting my interests ahead of my Mom – I get it, lawyers have to say anything to support their case, but in light of all this, that one really hurt. In the end, it was clear that I had no leg to stand on – I didn’t live there, sentimental value means nothing, and continuing to fight is a losing battle – emotionally and financially. We would fix and sell the house.
Adding to her bills, my sister continued to play games with the court, lying under oath, failing to meet deadlines for discovery documents, fabricating medical issues as a reason to delay proceedings. All of these efforts were met with more motions and orders and eventually court dates, where she was held in contempt of court and forced to return daily until she produced all her records. While there is some satisfaction in this, think of the attorney fees all around, as my attorney also was called in as the representative for Mom & I, so her actions cost us both a great deal of money. Based on all these secrets coming out, we discovered that she had been lying to the local property tax assessor about my Mom still living in the home, and they (rightfully) rewarded us with a tax bill that tripled. Plus penalties and interest, since I could not take the risk of paying the tax bills without protection from a court order to guarantee I would be reimbursed for half when the property was liquidated. We also had some serious issues with that accessory apartment and the other changes my sister had made to the home so she could have more space, so I eventually was able to negotiate a “deal” where I covered all carrying costs and repair costs until the house sold, but was reimbursed for half at closing. This whole mess dragged on for 1.5 years, and I have a six figure bill to prove it. My legal costs are my own to bear, and when Mom passed away right before we listed the house, we had to go back and renegotiate everything, as the POA and life estate were now moot, so the percentages and the dollar amounts all changed, and you need to file a motion for that too, plus get a court order to approve it. You need court orders the whole way through the sale, I’m so thankful that the buyers were willing to wade through this extended closing with us. That being said, if I had more control over the house, I would have invested a bit into updating the kitchens and baths, and sold the house for 30% more, so the buyers are well aware of the deal they got. I’m happy for them, I wish them the best life in their new home, and I’m sure it will be an amazing asset for them in the future.
Another interesting tidbit is that in a Chap 7 bankruptcy, the trustee becomes the owner of all assets, so my sister wasn’t involved at all. The trustee and I signed all the documents as co-owners of the house. And since the house had been titled over to my sister and I, this wasn’t an inheritance, it was a gift, which is now subject to Federal and State taxes. For me, but not for my sister, b/c there’s some statute out there that exempts a bankruptcy estate from paying taxes, so think about that while your being responsible with your finances! The government in this case rewards bad behavior!
I think I’ve covered all the big points and learnings, but I’m open to questions. I’m also not unique, as seen by the many posts on the Inheritance thread. My part of this mess is over, my sister has a while to go before the lawyers and CPA’s are done with her. I believe there will be a final accounting posted to her bankruptcy filing, and if I’m right, I’ll update here. It’s a very sad story, all the hard work and sacrifice of my parents is mostly squandered. They are very much responsible for this; their inaction caused this. I did the best I could given the situation, and I’m grateful that being a Mustachian is what even allowed me to take on this very expensive battle. Had I been allowed to manage the finances for my Mom, I estimate that she would have died with nearly $2 million in assets. Instead, the house was worth about 1/4th that amount, and after my expenses and taxes are paid, my “inheritance” is worth maybe 5% of what it could/should have been. That is a TON of elder abuse and asset mismanagement! But sadly, not illegal. POA’s are powerful tools, and in the wrong hands, they can do a ton of damage.