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Fidelity question #2 (They say my step mom is incompetent.)
Old 04-23-2016, 11:01 AM   #1
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Fidelity question #2 (They say my step mom is incompetent.)

My dad has Alzheimer's, and my step-mom has his power of attorney. Most of their assets are at Fidelity, with ownership in their trust.

She recently got a letter from Fidelity saying that she has to add an additional trustee to the trust accounts because she is no longer capable of managing the funds. For my dad's rollover IRA, which is the biggest IRA, they want her to be removed completely and someone else be given power of attorney.

Apparently this all arises from two phone calls she made to Fidelity. On 12/29, she took the RMD from the IRA. They are saying that she directed them to send the money to her checking account. Her intention was to have it sent to the trust account, then reinvested.

On 1/15, she noticed the money in her checking account and called to ask them why it was there. She asked them to suck it back into the trust and invest it in Contra.

Because she didn't remember telling them to pay it out two weeks earlier, they are saying she's not competent. I guess she must have forgotten which account she was talking about, because for the investments in Dad's separate property account, they are holding dividends in cash to pay for his long-term care.

By the way, the consequence of being deemd incompetent by Fidelity is that she can't open any new positions, which she doesn't plan to do anyway. She can sell existing positions, and she can withdraw the money. But they say that if she doesn't add a new trustee/POA by 6/24, they may take other action including closing the accounts.

Here are the questions:

Has anyone else had this experience?

Can they do this? She hasn't been found to be incompetent by any doc or court.

Outside of getting lawyers involved, is there any way to resolve this without doing what Fidelity wants? Her lawyer says Fidelity can't do this, but it seems to me that getting lawyers involved would not be worthwhile.

By the way, she is 82 and she is under a lot of pressure because of Dad's situation, but she is pretty up on their financial workings, and I have absolutely no worry that she will be swindled, which I know is common for older folks.

I've pointed out to her that the consequences of adding another signer to the accounts is small, since she can trust us to do what's needed, but she is just really angry at Fidelity.

Thanks for your insights.

Dave
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Old 04-23-2016, 12:07 PM   #2
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What you posted makes no sense at all to me. How could Fidelity (or any financial institution for that matter) make a determination that she is not competent to manage the funds simply because of a miscommunication? Besides, they are not psychiatrists.

It seems to me that you have a couple courses of action.

One would be for you to join her on a call to Fidelity and discuss the situation and either convince them to back down or agree to add a trustee.

The other would be to move everything that does not cause you any adverse tax consequences to another vendor, add someone to the remaining Fidelity accounts and drain them down as you see fit.

I would lean towards the latter only because I'm a spiteful prick with respect to things like that. I'd probably threaten to sue them too, just for fun.
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Old 04-23-2016, 12:16 PM   #3
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What they did makes no sense to me either.

I was in San Diego recently and joined her for a face-to-face visit with the folks in that office. They gave us the impression that, though there was a process to go through, everything would turn out as we wished.

However, when they got the Risk Department involved, they wouldn't relent. She can be a difficult personality, so maybe they just decided they are ready to let her and her accounts go.

I am assuming that we could move everything in-kind to Schwab, with whom I do most of my business. If that's true, there would be no tax consequences. But it's just one more thing for her to have to worry about, and she is one of the people who seems to need to worry about everything, until they get sick over it. She has enough legitimate worries without another unnecessary one.

As far as bringing a lawsuit, if I were a lawyer I might do it just for sport, but there's really nothing to be gained, and it would just be yet another thing for her to worry about.
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Old 04-23-2016, 12:20 PM   #4
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Wouldn't the easiest thing be to just add you? Keeps the morons at Fidelity happy and more importantly, many less things for her to worry about.

In fact, if you go that direction perhaps you can (if you are willing) just take over managing the whole thing for her and keep her informed so she can focus on more important things.
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Old 04-23-2016, 12:25 PM   #5
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I can sympathize. I had a situation with Morgan Stanley, where I wanted to change the TOD beneficiary. I had the account prior to my recent marriage, but their Risk or whatever name they call it would not let me do it until i got my now wife to sign off on it.
My broker argued with them and pointed out it was my separate property, but they would not relent. Rather than getting into a contest with them, it was simpler to have my now wife sign off on it.
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Old 04-23-2016, 12:27 PM   #6
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I've never heard of anything like that ever! My DF was a long-term Fidelity customer and was suffering from dementia. It got to the point where he would call daily and speak to a rep about forgetting his password. My sister overhead him and claimed he could get boaderline abusive to the reps.

They never did anything likes being suggested.
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Old 04-23-2016, 12:31 PM   #7
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Slow but steady - Could there be more of a history with issues between your step mom and Fidelity than what you have been told about?
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Old 04-23-2016, 12:32 PM   #8
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Originally Posted by pb4uski View Post
Wouldn't the easiest thing be to just add you? Keeps the morons at Fidelity happy and more importantly, many less things for her to worry about.
It would be the easiest thing, but she doesn't like being called incompetent. It's the principle of the thing to her, rather than any real damage being done.
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Old 04-23-2016, 12:40 PM   #9
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Slow but steady - Could there be more of a history with issues between your step mom and Fidelity than what you have been told about?
I know of one other incident. When my dad was removed as a signatory, the statements describe the account ownership in a way that wasn't satisfactory to her. They told her that the correct ownership was in their computer, and that in any case, the ownership is described in the trust documents, not the statements. She just couldn't accept that, and really gave them hell about it, even though I said it was OK.

There may be other incidents I'm not aware of.
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Old 04-23-2016, 12:51 PM   #10
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This is a good example of why not to put all your eggs in one brokerage.
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Old 04-23-2016, 01:09 PM   #11
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This is a good example of why not to put all your eggs in one brokerage.
I agree with that 1000%. I don't worry about much when it comes to the security of the fund/transfer agent, this is different. We got locked out of our brokerage account for ~6 months because of a TOD into it. Luckily it was then plan B, now it's plan A. Thanks for the wakeup.
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Fidelity question #2 (They say my step mom is incompetent.)
Old 04-23-2016, 01:16 PM   #12
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Fidelity question #2 (They say my step mom is incompetent.)

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Originally Posted by GrayHare View Post
This is a good example of why not to put all your eggs in one brokerage.

Vanguard is worse from my experience. I dread calling them for anything.


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Old 04-23-2016, 01:25 PM   #13
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It would be the easiest thing, but she doesn't like being called incompetent. It's the principle of the thing to her, rather than any real damage being done.
Hopefully you can just gently convince her that while they are wrong and morons that given all the other things going on in her life that it isn't worth fighting over so it is easiest just to do it and be done (and much easier than moving everything).
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Old 04-23-2016, 02:20 PM   #14
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.

One would be for you to join her on a call to Fidelity and discuss the situation and either convince them to back down or agree to add a trustee.

The other would be to move everything that does not cause you any adverse tax consequences to another vendor, add someone to the remaining Fidelity accounts and drain them down as you see fit.

I would lean towards the latter only because I'm a spiteful prick with respect to things like that. I'd probably threaten to sue them too, just for fun.

Yep. I'd go for number two as well. Just pay an attorney to poke around and ... Don't distract her from care giving and taking care of her husband. But the lawyers will likely have a ball with fidelity.
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Old 04-23-2016, 02:50 PM   #15
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In times of high stress, mistakes like what your mom did are much more common. Aside from the insult of being called incompetent, their idea of oversight isn't bad. Is this part of our new fiduciary rules that have them cya'ing?
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Old 04-23-2016, 05:35 PM   #16
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Thanks for the input, everyone.

I'm trying to convince her that this is not worth getting a stomach ache over, but she is still quite upset with Fidelity. Maybe after a few weeks pass, she will be able to let it go. I hope so.
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Old 04-23-2016, 07:08 PM   #17
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In reading this I'm trying to understand what is going on. The one who had to get the present wife to sign off on a TOD change. It is law on retirement plans (401ks and I think even IRAs) for the wife (spouce) to sign of when not being the beneficiary. With you it may not have been a retirement account, but I bet they are just covering their butts.

to the OP, I expect that Fidelity is doing the same. They likely can't call your mother incompetent, but they can be concerned about it happening. And if there are signs, I could see from a risk standpoint I could see them putting up the request. Note they did not say get another trustee and remove your mother. They just wanted one added. It likely would be wise to add one .. or at least a contingent one for when your mother is incompetent.

I will have fun with this one as my MIL slows down. The question is how forgetful is incompetent?
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Old 04-23-2016, 07:16 PM   #18
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In reading this I'm trying to understand what is going on. The one who had to get the present wife to sign off on a TOD change. It is law on retirement plans (401ks and I think even IRAs) for the wife (spouse) to sign of when not being the beneficiary. With you it may not have been a retirement account, but I bet they are just covering their butts.
I go along with covering their butts. It was not an IRA or 401K, just a regular taxable investment account
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Old 04-23-2016, 08:14 PM   #19
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Ok - I'm approaching this from a different POV than most folks here. Not only is Fidelity covering their butts - they might have your parents fiduciary interest in mind. Dementia has a wide range... and unfortunately, we'll all likely be there some day. That's why it's so important to have POAs and other docs in place LONG before you need them.

My first step would be to have your mother issue you (or someone else of her choice) POA. She will not be able to issue POA after she *is* showing signs of dementia.

The next issue is your dad's separate assets (IRA)... He can't issue POA to her or anyone else since he has alzheimers. He is incompetent. The best issue there is to have the RMDs managed in an automatic manner. (Transferred to the jointly owned taxable trust). If it's automatic then no-one needs to do anything with the IRA.

For anything jointly owned or in your mom's name only (eg IRA) - get a POA in place.

I say all this having seen my husband have to take his parents to court to get legal guardianship. MIL fought tooth and nail and is still angry (when she remembers). But FIL had health issues as well as dementia... she'd been an excellent caregiver until her own increasing dementia impacted this capability. His care had to change and she refused to admit it - in part because her own dementia clouded her judgement. (Social workers were involved, it was bad.) POAs aren't transferable. FIL had dementia so he couldn't sign up a new POA... so the only route was guardianship.

Talk your mother into getting the POA now - before she really is deemed incompetant.

Edited to add: She can keep physical custody of the POA - and only turn it over to you when you need to use it. (This presumes she trusts you and will turn it over when the time comes. ).

We have POAs naming my sister... but she doesn't have a copy or access to our accounts... When the kids are older/more mature we'll switch the POAs to them... Again, keeping the paper in our possession until it's needed.
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Old 04-23-2016, 11:59 PM   #20
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Tell her she shouldn't feel like the Lone Stranger. Been trying to move money from TIAA to Discover for the superior interest, then close the TIAA accounts. Failing to accomplish that task. Discover said I'd exceeded the rolling 30 day maximum ACH transfer limit. sigh. can't even accomplish closing an account in a bank approved manner. Flippin' weird a** rules.
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