Summary:

In a real-life scenario, a grandson, the successor trustee of a family trust, requested a loan using his grandmother's trust property. This raised suspicions of financial elder abuse, as the grandson intended to use the loan for personal gain rather than for the benefit of his grandmother.

The Loan Request:

My client is a 94-year-old lady in a retirement home. Her husband has passed away.  The property title is in a family trust with multiple beneficiaries, and the grandson acts as the successor trustee. The estate will be settled upon Grandma's death, and proceeds will be distributed to the numerous family beneficiaries.

The grandson, acting as the successor trustee, intends to misuse the loan. He plans to borrow money, using the free and clear single-family asset held in the family trust as collateral, to purchase a franchise business for personal gain.

Borrower background:

The trust document authorizes the successor trustee (grandson) to convey the title in a sale or borrow against the property as the single signer.

The free and clear property is valued at $800,000. The grandson desired to sell the property with the option of purchasing it back in 24 months for maximum cash-out to acquire a franchise business for himself as a 100% owner. His chosen method to obtain capital for his business franchise purchase was to quickly sell the property at a steep discount to get his greedy hands on the proceeds.

The 'greedy' grandson planned to borrow quick money and use the property as collateral while waiting for a sale and closing. He was referred to a hard money lender, a private lender typically providing short-term loans secured by real estate, for a short bridge loan.

The remaining family beneficiaries did not know that their (inheritance) future financial benefits would be misappropriated and permanently lost by one greedy relative. Like millions of others, the sociopathic grandson dwells in self-absorbed dreamland entitlement. I have met a few of these terrible people.

The competent lender responds :

The lender representing trust deed investors to originate this loan, a professional with a duty to protect the interests of the trust's beneficiaries, asked the procuring borrower's loan broker if the elder had legal counsel to represent her interests. Would the borrower's counsel provide a letter stating that Grandma understood this transaction's material facts and ramifications? Do you know if the transaction is an appropriate financial decision?

When asked if the elderly grandmother had legal counsel to represent her interests, the loan broker representing the grandson responded, Yes, a lawyer involved only represents the grandson. This response raised a major red flag as it indicated potential collusion. The lawyer, who only represented the grandson, may have been willing to participate in defrauding the grandmother in the scheme to misappropriate unearned benefits away from the estate.

Any equity or proceeds from the sale of the property or loan proceeds should be reserved to pay for Grandma's housing and continuing care.

Any prudent and knowledgeable real estate or mortgage broker representing private money trust deed investors will decline this loan request. The procuring borrower's loan broker, who is responsible for ensuring the loan is in the best interest of the borrower and the trust's beneficiaries, will likely continue dialing for dollars to find another sucker lender dumb enough to arrange this transaction.

A procuring loan broker involved in this transaction is a bonified scoundrel, a term used to describe a person who is genuinely and notoriously dishonest or dishonorable. The property equity has gone, the grandson takes money for personal use, other beneficiaries get screwed, and there is no money to care for grandma s medical and living expenses.  The parasitic scoundrel was waiting for Grandma to die to cover up this fraud. I call this effort 'Felony Stupid.'

Yes, fraud, elder abuse, and negligent misrepresentation will surface when the beneficiaries left out of their rightful inheritance file a lawsuit against the grandson, mortgage brokers, the borrower's lawyer, and investor(s) who purchased the trust deeds. The legal implications of such a lawsuit can be severe, potentially leading to criminal charges and significant financial penalties.

Any reasonable loan broker will run for the hills or hop on a bus, Gus, and drop off the Key Lee to avoid this transaction.

Comments:

Financial elder abuse relates to the misappropriation of financial resources or assets. An abuser will take, misallocate, misappropriate, secretly obtain, or retain the real or personal property of an elderly or dependent adult for wrongful use, intending to defraud.

Third-party support staff members have daily contact and access to older adults and work to instill confidence and trust. Trusted individuals, like family members, paid caregivers, and nursing home staff members, commit most elder abuse cases. We read about these incidents daily. Misappropriation of an older person's financial interests, personal abuse, or intentional negligence are frauds. Known incidents should result in the perpetrator's prosecution. Unfortunately, too many get away with the abuse because incidents go unreported.

As a real estate professional, your vigilance and awareness can significantly reduce financial elder abuse. Your ability to spot potential financial misappropriation or misrepresentations by any parties is crucial. Your feelings or voices are an acting guide to rightness or wrongness. Please don't ignore transactions that do not pass the conscience test. Your vigilance can make a profound difference in protecting older people and their assets.

The problem is that some people who are described as sociopaths or having antisocial personality disorder are said to lack remorse or filter decisions through a conscience. They generally have no bad feelings about their actions that harm others. In the U.S., between 6.25 and 17.7 percent of adults are considered sociopaths, with an average of about 12%. 12% of approximately 260 million adults equals 31 million. The walk among us; ponder that!

All involved parties should be self-aware and vigilant at first notice if a person cannot care for or make decisions for themselves. The self-aware person who notices through personal interaction that something is not right is a hero and a star! They notify related parties and take the necessary action to remedy the temporary or permanent situation. Their efforts are invaluable and often go uncredited.

Statistics suggest that only 1 in 44 financial abuse cases are reported, according to the National Adult Protective Services Association (NAPSA). Reporting is not just important; it's crucial. By reporting, you can help prevent these dire consequences. Elderly victims of financial abuse are three times more likely to die and four times more likely to enter a nursing home without sufficient funds to care for themselves. Your action can make a significant difference. Your vigilance and reporting can save lives and protect older people from financial exploitation.

Elders will be victims of financial crimes perpetrated against them for about 20% of $73 trillion or $14,600,000,000,000 (trillion with a capital T and 12 zeros)assets that otherwise should go to future beneficiaries will be misappropriated or stolen. This staggering figure underscores the prevalence and urgency of the issue. It's a call to action for all of us to be vigilant and report any suspicious activities to protect older people and their assets.

An estimate of the average baby boomer family wealth might be $2,000,000. The calculation means that there would be an estimated 20% of the wealth (14,600,000,000,000/2,000,000=7,300,000) separate incidents of elder financial abuse. This prevalence is alarming. For this estimate, let's assume this is over ten years +/—730,000 separate elder abuse incidences per year or 2,000 new every day. This awareness should prompt us to be more cautious and vigilant.

We have degraded our society to encourage entitlements, pursue unearned benefits, and engage in parasitic behavior, where criminal-based exploitation has little or no consequences. Eroding a person's lifetime earnings and financial stability is an unheard-of-terrible act. Any involvement by a fiduciary is a fraud.