I've posted before about this topic, also on Fool. This is a x-post of one I posed in TMF.
http://boards.fool.com/Message.asp?m...6470&post=true
I thought I'd put this issue to rest, but no! The Mommy Trust, or more precisely, the Trustee (BTATS = Bank that ate the South, name changed to protect the guilty) recently sent a letter basically trying to negotiate a newer, higher fee schedule. The trust officer had told me earlier of such a possibility, but this was the first written communique.
SO, to further entertain you, and heck, it might even be applicable somehow in your life, read on.
My options are at least these:
1. BTATS is managing the Trust at a loss (boo-hoo!). They'd like me to agree to a new "reasonable" schedule. Perhaps, but not too quickly...
It still annoys me that the law (apparently) allows them to even consider doing this. It amounts to over-riding one of the terms of the trust document, which to me seems like violating the terms of a contract. However, an attorney I spoke with says that, yes, it is commonly done, and the court usually approves such a request if the fees are "reasonable."
2. I can search for a different Trustee (must be a Bank) to manage the trust, no guarantee it'd be at the cheap rate; apparently they would want a rate hike too.
3. BTATS would have to go to court to ask the authority to charge the higher fees. And, it turns out some earlier poster here was right, that in such a case, the legal fees would come out of the Mommy Trust, or so said the Officer.
Other options:
1. Ask for the trust to be terminated (and all the loot goes to me). I've tried this. THe Officer's answer was "no way"; according to BTATS, that would open them to risk of lawsuits by potential beneficiaries or even me. The Attorney poo-pooed this idea, so it's unclear which is true. In any case, I checked the fine print and BTATS gets a 1% of assets, $2500 min., fee for terminating or transferring the account. So they have no incentive to disburse to me.
In fact that is a worry: that they'll drop the business, and collect an extra 1% of fees, and I'm stuck with some new Trustee possibly assigned by a court, and at a higher ("Reasonable" of course!) fee! Jeez, what a racket! [Memo to parents: your child can have a bright place being one of the Wise, or a trust attorney!]
2. Shop for a new Trustee. This was the Attorney's advice, and I'm pursing it. I was surprised that the new Trustee could be out of state.
Hair-brained ideas, but cost nothing to consider:
1. I force the issue into court. After keeping the business for several years, why is the fee schedule suddenly so unrewarding? Have they in fact been keeping the proper fees over the years? I have BTATS admission in writing that they've screwed up the accounting in 2006 and they're making a refund. How many other errors went unchallenged? Perhaps a full audit is in order. Why can the court demand a higher schedule, in clear violation of the intent of the Trust document, yet the other clauses remain binding (e.g. their stingly distribution provisions)? If BTATS is really losing money on the deal, they have the option to terminate the Trust and their problem is solved. (I'm not sure if all trusts have that provision, but Mommy Trust does.)
Sure, litigating would cost both sides a lot of dough, but the potential payoff to me is huge, if I stood a chance.
2. Appeal to GREED. This might be a win-win situation. After all, my intent is to milk the Trust for as much as I can get. BTATS would like to have ongoing business, at a profit presumably. I dont' know if this is possible, but certainly worth asking for: If I can agree to a higher schedule, why can't I agree to a schedule that is more rewarding even that what you've proposed, on the highest side to be considered "reasonable," (say) just one calendar year? If I'm happy with the service, we can renew or re-negotiate for another year. If not, then the old (el cheapo, money losing) fee schedule kicks back in. Left unsaid, at least in the binding (?) written contract, is my pay-off: you'll be more generous in giving me income; might as well give me some say in the investment mix while I'm at it. That would be cool! I've no idea if this is possible, but this costs nothing ask.
Your comments welcome. Thanks.
"Don't give in without a fight" -- Pink Floyd "Hey You"
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