my situation

[tikitoast]

Hi, I'm new here. I tried to start a new topic like the instructions say but I'm not absolutely sure I'm in the right place.

Retiring early is a deeply involving interest of mine and I've lurked on here for a couple of years. Great board. I'm in need of some money advice, not necessarily related to retirement though. Please bear with--I wanted to get your responses because I respect all the posters here very much.

It's very simple...I've only recently begun to be responsible about money after having not thought about it at all. I'm now in my early 40's and am married three years to a guy younger than me. He's got about 15K of debt which he's been hammering away at for some time...most of it school loans, and the rest incurred while trying to help his parents out of bankruptcy (losing cause, that's for another thread). Anyway, so here he is, still in debt, and while I have no debt I haven't actually been much of a saver either, until very recently. He works full time, I work part-time. No kids, but getting by has been tough.

My father died in 1992 and left about 80K after the sale of his house to be invested by my uncle. This account will devolve to me in June. I just received the statement and there's only $64K in there now. I'm a bit surprised, because at one point my uncle was sending my statements that reflected a balance of about 110K. That was ten years ago. I realize the market's been up and down but I'm still kind of sick to my stomach about this. I should have been more insistent on getting information about the trust, but I felt my rights were limited--and I've never gotten along well with this particular uncle.

Anyway, I want to ask him for some documentation regarding what's been happening with the trust fund since it was first established. I'm so nauseated about this, I can barely type. Did I screw up by not speaking up or trying to be a part of this? Dad thought my uncle was a good money guy. I wanted to play good girl and just be patient until the day came when this money would come to me finally. It's a letdown...

Otherwise, I have only myself to blame for being in such a shaky position financially at this late stage of life. There's a huge descrepancy between where I want to be and where I am. Knowing I've got so little after all of this time is a real wake-up call.  Anyway, I'll stop blathering and get to the question: What do you recommend I do? We wanted to pay off the rest of my husband's debts and have something for a down payment on a house, but if we do that, there's nothing left over.

Also, legally, do you think there's anything I should respond with? Did my uncle mismanage this? Or should I just put it behind me and work with the reality I've got here?

Thanks for any ideas,
tiki

 

[Cut-Throat]

What to do now? - Get the Cash that is left as fast as you can!

Did your Uncle Screw you? - Either him or the Broker. - Someone probably got about $50K and spent it on themselves.

 

[JPatrick]

Welcome Tiki
I have no idea what happened with your uncle, but you have the right to know.  The stock market breeds happy and sad stories, both of which can come to pass through completely natural causes.  If you and your uncle are on reasonable terms, I'd simply express my shock that the amount had declined so much and ask to see complete documentation.  If that won't work, then you are in lawyer territory.
Regarding your inlaws, it is honorable to help them out, but ill advised to do so when it is at your own peril.  Yes, I know that's cruel 

 

[KB]

If I were you, I would ask for all the statements that will show how the loss occurred. It may have been a bad investment, but if that...why didn't the broker do something. Ask your uncle to explain how your trust increased and decreased, both. Good luck.

 

[TromboneAl]

Once you've given reasonable effort to finding out what happened with that money, it will be time to put it behind you and get started with your financial plan.  You guys are still young, and have been lucky to see the light about saving and retirement.  Many never understand.

So, time to read up on investing and frugal living.  Get hubbie on board.   Become an expert and use this forum for advice.  If you become a real tightwad, you might be able to retire early (get The Complete Tightwad Gazette from the library).

 

[Coach]

Hi Tiki, and welcome. You may have come to thinking about saving for retirement later that you would like, but you're still ahead of a lot of folks. If you develop a plan now you might be pleasantly surprised by how much you can accomplish in the next 10 or 15 years.

I'm sorry to hear about the trust issues. I would try and get as much information from your uncle as possible, about the trust itself and what's happened to the assets held by the trust. If it looks like any hanky panky going on, I'd check with a lawyer. But I'd bet you will end up just taking what's left and letting go. But stop beating yourself up about it -- it's water under the bridge.

Coach

 

[ash]

Just for reference:

Adjusted for splits and dividends, the DOW closed at 3301.11 on 12/31/92 and is currently at $11,220.18. Not considering costs or taxes, $80K invested over the same period at the same rate of return would be $271,912.90.

 

[Dawg52]

Just for reference:

Adjusted for splits and dividends, the DOW closed at 3301.11 on 12/31/92 and is currently at $11,220.18. Not considering costs or taxes, $80K invested over the same period at the same rate of return would be $271,912.90.

I'm sure that makes her feel better. But who knows, he may have had good intentions and invested some in Enron or Worldcom. We all know how those 2 turned out.   

Ask for the all previous statements as has been recommended. Then you will know.

 

[Nords]

Welcome to the board, Tiki. Sorry to hear about the trust situation.

Maybe you could phrase the request as coming from your accountant, who wants to review all previous statements to ensure that there are no tax issues before you pay down the debt. You'd "hate to pay off debt" only to "find out you owe more taxes". You can claim complete ignorance of everything but trying to keep your CPA happy.

If I remember correctly, don't trusts have to file tax returns? I don't know if the IRS charges for copies or if there's another way to get at the state returns, but this might be a lower-cost way to obtain independent verification.

It's easy to believe that $110K in the '90s has only come back to $64K now. I know people who heavily invested in the tech wreck and were busted all the way back to the 1980s. Whatever the amount, this is pretty much found money.

If you haven't been involved in the trust for the last few years then the misconduct (if any) is going to be difficult to recover. There's no penalty for being an incompetent or wasteful trustee, only for being criminally negligent or stealing. Unfortunately this is a situation where the justice dispensed will depend on the amount of money you have to spend on getting it, and it could be a Pyrrhic victory...

 

[justin]

Legally, the trustee of the trust has to act in the best interests of the beneficiary. That may have been "buy hot dot.com stocks" around 1999 though.

You, as the beneficiary, have a legal right to an "accounting" of the trust. Where it was invested, transactions that occurred. These records could be doctored.

 

[astromeria]

Welcome, tiki.

Did your father leave you a copy of the original trust documents (from when the trust was set up)? Maybe your uncle was permitted to withdraw some percentage each year as payment for managing the trust?

In any event, you are not alone in having a bad decade in the market. When I started at my last company in 1998, the 401k plan had few choices and I evenly divided my contributions among all of the all-stock funds. That was 4 mutual funds--all domestic managed funds, no indexes. I had no company match, and when I retired in 2005, I rolled over hardly more than I had put in over those 7 years (I had put in the max). As it turns out, I probably would've done better with any of the bond funds. But I didn't choose them because of our taxable savings in money market accounts and bank CDs, so I figured I had enough fixed income.

I think I'm one of the few people I know who invested nothing in Worldcom or Enron. Of course, I had plenty in my startup  :

 

[Texas Proud]

From someone who used to deal with trust taxes.... there should be a history of the trust.  The problem will probably be that your Uncle is the only one who has this information and he might not be a good record keeper... and there is the possibility that he charged a very high 'fee' for managing the trust.

Let me give an example.. and this was with millions of dollars.  The grandmother left the money for her grandkids in trust with the father as trustee.  Well, he was a drunk and womanizer and lived off of all the money his family had... but he might get a check from an oil company for $50,000 or so and just cash the check.. it was trust money, but never ever got into the trust...   well, the kids grew up and even though they were getting a few million, someone calculated that they should have over $100 million if invested at a normal rate...  they did sue their father as they did not like him anyway...

But, for Tiki, I think the lawyer fees will be pretty high for her... and if she sues before she gets the money, the Uncle can use the money in the trust to defend himself!!!  This is a lose - lose situation no matter what comes out of any decision.

 

[tikitoast]

I'm replying to myself here but I want to thank everyone who offered advice on my problem.

I don't know my uncle that well, and don't know whether the cause of the portfolio's decline was mismanagement or outright theft...but as one of you noted, a suit in this case would probably cost more than I'd recover...But I'm going to insist on that documentation just the same. I'm an introverted type and it's always been hard for me to stand up for myself. But I've got a right to the info. (Thanks for the tip about telling Uncs my CPA needs it. I like the non-threatening sound of that.)

I appreciate the thought that hubby and I are still young enough to get over this, and since we'll be able to get out of the debt hole at last, we're still coming out ahead. Fortunately my incredibly supportive husband is super-responsible with money and is very much on board with me financially. We'd love to retire or semi-retire sometime before senility sets in. We're not giving up!

Thanks again to everyone for your advice and support, you don't know how comforting it's been.

 

[TromboneAl]

I don't know if the IRS charges for copies

You can get the numbers for free. That is, a sheet of paper with "Line 5 was $32,000, Line 6 was $430, etc. You can request it online. To get an actual copy costs something like $40.

We'd love to retire or semi-retire sometime before senility sets in.

Well, that's a whole different issue, because it, um ... what were we talking about?

 

[tikitoast]

Thanks for the IRS tip.

The trust itself doesn't have my name on it yet, just my dad's, so I may not be able to access those records before the switchover. I'll see if I can track down what happened once all of this stuff is in my name. Good to know.

 

[old woman]

I will never leave a trust,fees and mishandling seem to be common. My father was left money in 1919 that he didn't get until about 1960 from his father and it was tiny after fees probably less than $100. I don't know what it started with but the trustees made money every year. I will leave my money I want minor child to have to adults I trust and hope they use it for the child's benefit.