Wicked stepmothers are the stuff of Grimm’s fairy tales. Widowed stepmothers are the root of real-life inheritance wars. In fact, Alzheimer’s, widowed stepmothers and estate crime are the three biggest causes of inheritance messes, as veteran estate and trust attorney Michael Hackard tells ThinkAdvisor in an interview.
Financial advisors can play an important role in helping to sort out or even prevent these bitter feuds, says the founder of Hackard Law, whose new book is sweepingly titled “Alzheimer’s, Widowed Stepmothers & Estate Crimes: Cause, Action, and Response in Cases of Fractured Inheritance, Lost Inheritance, and Disinheritance” (Hackard Global Media, March 1, 2019).
Mostly, FAs should be on high alert for red flags, such as signs of client dementia, questionable asset transfers and sudden changes in risk profile.
“Family estate fights can truly feel like civil war,” writes Hackard, who in the book and our interview, peers into the nasty battles of showbiz legends such as Tony Curtis, Mickey Rooney and Jerry Lee Lewis.
(Related: How to Rein In a Client Who Strikes It Rich)
For example, Lewis’ seventh wife and third wife’s daughter have been slugging it out in court for almost two years now. Wife 7 claims that her stepdaughter financially and physically abused the famed rock singer, 83; the daughter countersued, charging her stepmother with drugging Lewis into incoherency.
This month Lewis’ health took a bad blow when he suffered a stroke. All upcoming shows are canceled, and he was just admitted to a rehab facility. In the interview, Hackard comments on what could come regarding his financial affairs in the not-too-distant future.
The attorney also discusses both the alarming increase in Alzheimer’s diagnoses every year and the high prevalence of second marriages characterized by blended families. Both realities set the stage for elder abuse, which the American Bar Association calls “the crime of the 21st century.”
ThinkAdvisor recently interviewed Hackard, on the phone from his office near Sacramento. The author of “Wolf at the Door” (2017), about undue influence and abuse of older people, discussed with us crooked conservators, cognitively impaired clients, disinherited children, and stepmoms freezing out their husbands’ kids from an earlier marriage, while changing Dad’s estate plan to their benefit.
Here are excerpts from our conversation:
THINKADVISOR: You write that the three main causes of “inheritances gone awry” are Alzheimer’s, widowed stepmothers and estate crimes. How can financial advisors try to prevent fractured inheritance?
MICHAEL HACKARD: Pay attention. The striking statistics are that over the next 20 or 30 years, $30 trillion of baby boomer assets are going to be transferred. More people are getting older, so the incidence of cognitive-related disease is higher. Advisors need to get smart about that because the more attention you pay to it the better off you and your clients will be.
What exactly is an “estate crime”?
The unauthorized, unlawful taking of someone’s assets while they’re alive. You can see that where property has been transferred prior to a death; for example, a personal representative — such as a trustee — suppresses assets and takes them for himself or herself. You can see it when people, particularly entrepreneurs or recent immigrants, have a lot of cash in a safe — maybe as much as half-a-million dollars — but that money almost always is gone at their death. These experiences are common. So if someone’s keeping a lot of cash around, they should have proof of it and give that documentation to a person they trust.
You write about high-profile celebrities whose estates have been subject to family fights and litigation. For example, rock ‘n‘ roll legend Jerry Lee Lewis, 83, is reportedly a victim of financial abuse. His seventh wife and third wife’s daughter are battling it out. Following a stroke on March 1, he resides in a rehab center. What will happen with that litigation at his death?
It seems like he’s cognitively impaired, and it gets down to: While cognitively impaired, what was he doing with his assets, and what influence was being exerted upon him for those assets? [Attorneys] would be looking for any transfers that occurred prior to the time he [will have died] and questioning whether they might have been a result of undue influence or undue pressure on him. They would also be looking at all his estate-planning documents, particularly later changes, those closer to his death or when his health was identified as being very precarious. They’ll be looking for medical records and doctors’ reports.
About asset transfers, would lawyers speak with Mr. Lewis’ financial advisor?
Absolutely. Financial advisors are great resources, especially now that the law has given them a little more power with regard to financial exploitation: FINRA Rule  allows them to seek out a trusted contact person for the client’s account, and Rule  allows them to put a temporary hold on disbursements.
Do you know of an example?
I had a litigation just resolved concerning a transfer of $5 million to a caregiver. We contacted the financial advisor and asked that they put a stay on funds. We followed up with a court order. It all worked [out].
Hollywood star Mickey Rooney, a victim of financial abuse, reportedly died with $18,000 to his name. Lawsuits claimed that his caregiver and stepson abused him physically and financially. Ultimately, a conservator took over his finances. How should an FA deal effectively with a client’s conservator?
If the conservator is good, there’s an annual accounting they might present to the local court. A conservatorship, or guardianship, as some states call it, can be the saving grace for someone if they’re losing everything and get a strong, honest, ethical conservator who’ll look out for them.
What could happen if it turns out the conservator is dishonest?
There have been cases where a conservator and an attorney have basically looted the conservatorship accounts. I had a case like that in which the other side was getting, like, $59,000 for one day’s mediation. Well, that money wasn’t coming out of the air. It was coming out of some poor old guy’s conservatorship account. So that situation can be very abusive.
Actor Tony Curtis, a year before he died, wrote a new will and redid his trust. This disinherited his five surviving children and left his entire $46 million estate to his sixth wife. The children — including actress Jamie Lee Curtis — filed suit alleging that their father was mentally impaired, but the case was dropped. What can an FA do if he or she suspects that a client plans to disinherit?
Any time a disinheritance is going on, justified or unjustified, it’s an invitation to a dispute. Reasonable inquires to the client would be: “If you’re disinheriting people, they often want to challenge your estate. Have you thought about that? Have you talked to your lawyer about this?” In the case of Curtis, it’s possible that his children’s suit was settled confidentially.