What would you think upon answering a phone call and hearing, “How would you like to make 21% on your money, guaranteed?”

“Hmmm, sounds interesting, so what’s the catch? Is this a Ponzi scheme?” you would probably wonder. Or, you might think, “Wow! Sure! How do I get in?”

That’s what Ponzi scheme operators are banking on — a way to get a return on your money that no one else can offer.

As a legal affairs columnist, I had to listen to the pitch because no doubt lots of people were hearing the same song, and so I replied, “This sounds like a Ponzi scheme, but can you explain why what you are offering isn’t one?”

Recall Bernard Madoff’s Ponzi scheme?

The largest Ponzi scheme in U.S. history was run by Bernard Madoff, who took investor money promising steady returns. Instead, he defrauded thousands of people out of an estimated $65 billion over the course of 17 years, paying early victims with money from later victims until it all came crashing down in December of 2008.

Many lost their entire life savings. There were suicides. Bernie died in prison. The key that he was running a Ponzi scheme was that he promised steady returns that never varied.

In the real world of investments, that’s now how it works.

Ever Hear of Bitcoin Mining?

“Mr. Beaver, I’m sure you are well acquainted with the digital currency, Bitcoin,” “Iggy” began.

“I work for a digital asset creation organization, based in Austin, Texas and mine Bitcoins with powerful computers.

“We arrange for you to buy computers that we lease from you and use them to mine cryptocurrency, paying a fixed and consistent monthly cash flow. After five years, we buy back the computers for what you paid.

“We make our money by selling the bitcoins that your computers generate.”

(As he was talking, I Googled “cryptocurrency, Ponzi scheme, bitcoin mining scams’ and came up with several articles warning about bitcoin mining scams.)

“I replied, ‘If I understand correctly, these computers solve mathematical riddles and, out of thin air, create something that exists in the digital realm —something I can’t hold in my hands, can’t deposit in my bank, that isn’t tangible and when Donald Trump was President, he declared bitcoin was ‘not money’ and criticized it as ‘highly volatile and based on thin air.’”

Thinking to myself, “Hang on, the price of Bitcoin has never been stable, so how can they guarantee a 21% steady return?”

Beautiful Advertising Material

I asked for, and Iggy immediately emailed, documentation on his company. It is as smooth as a newborn’s behind, describing company philosophy, how the purchase-leaseback works, and shows photos of the contracts customers sign, but they were unreadable.

As it was clear to Iggy that I just didn’t understand this new world of digital currency, the following day one of his managers phoned. Over about a half an hour I listened to a polished explanation of why something I could not touch was the next greatest thing.

“Look at our online reviews. They are all excellent,” he boasted. Most were, but fake reviews can be purchased.

“Well, it is obvious that you are old school, Mr. Beaver. I’ll bet that years ago if someone told you about an investment in cellular networks, or Wi-Fi, you would have had the same skeptical attitude,” he said with a condescending tone of voice.

I replied, “Not at all. Those thing exist! They are real! I can make a cell call! But I do appreciate your time.”

Request from a Reader and Former Client

The next day, a reader and former client phoned our office having received the 21% sales pitch from this company, asking if I knew anything about them, and would I review the company’s contracts for them.

The reader is a retired pharmacist, but my former client sustained a brain injury in an accident and receives monthly checks from an insurance settlement that he wanted to cash in and invest. That scared me.

So, I called Iggy and requested a specimen of their contract to review. And then it became worthy of a Saturday Night Live skit.

The same manager again phoned and explained that everything is DocuSigned online, so there is no sample contract available.

“Oh, so you can’t just run off a blank one?”

“No, we only process a contract after you become a client of ours and are ready to invest.”

And the kicker?

“Besides, we will not have any computers to sell until November.”

“Really? What does that have to do with sending me a sample contract?” He did not answer.

So, is this a Ponzi scheme, a scam or is it legit? I do not know. But anytime someone wants me to invest, lease a building, or establish an ongoing financial relationship, I want to see their contract and have it reviewed by my financial adviser and CPA.

If refused, my answer is no.

Dennis Beaver Practices law in Bakersfield and welcomes comments and questions from readers,
which may be faxed to (661) 323-7993,
or e-mailed to Lagombeaver1 – at – Gmail.com.

The post Is this a ponzi-bitcoin mining scam? appeared first on Dennis Beaver.

“Jerry,” my 65 year-old father, is beating himself up over failing to get out of the stock market months ago when it was so high. He is obsessed with making money and now consumed with regret and guilt.

“He has always been impulsive, not wanting to miss out on a hot stock, and I am afraid now he is vulnerable to making a wrong decision to get back what he lost. Dad is becoming a stranger to the family.

“We have told him for years to work with a financial advisor, but he is a know-it-all. Do you know of anything he can read which might help him feel less angry with himself over his decisions and encourage working with a financial advisor? Thanks, ‘Liz.’”

I certainly do: The Power of Regret – How Looking Backward Moves us Forward by New York Times bestselling author Daniel Pink, published this year, and Your Total Wealth: The Heart and Soul of Financial Literacy, by Lyle Sussman and David A. Dubofsky, which came out in February of 2021.

When I Say “Regret,” What Comes to Mind?

Think about some of the things you’ve regretted, and how things today might have been different if what happened back then didn’t. Or, if instead of doing something, you held back.

Was it that person you so wanted to meet, something — a feeling — came over you that this just might be the one? But, you didn’t take that step forward, didn’t say, “Hi,” and moved on with your life, wondering, always wondering what might have been?

Pink made clear during our interview, an understanding of what we regret can open doors to a better, more secure tomorrow — especially in a confused financial world.

He describes four categories of regret that are universal — people all over the world have these same regrets that have special applicability to financial planning.

(1) Foundation Regrets

These are failures to be responsible, conscientious, prudent, and they leave you thinking, “If only I had done the work.” A lot of finance- and health-related regrets are in this category.

(2) Boldness Regrets: Inaction

These include opportunities not taken, such as applying to medical school, starting a business, “chasing” a true love, and leave us thinking, “If only I had taken that chance.”

(3) Moral Regrets

They leave you wondering, “If only I had done the right thing.”

(4) Connection Regrets

These regrets happen when we neglect the people who matter to us; “If only I had reached out.”

How Being Aware of our Regrets Helps us

Pink says, “Our regrets are a great source of information and part of who we are. They can be helpful when, for example, business leaders say to their teams, ‘Here is what I regret about where we are and what we need to discuss.’ This candor earns that person respect and positive change for the organization.”

Avoiding Financial Regret in the First Place

If, when Jerry was about 25 or 30, someone had given him a copy of Your Total Wealth: The Heart and Soul of Financial Literacy, and he had taken the authors’ advice to heart, I would not have this story to write.

But, of course, it only came out in early 2021.

A theme runs through the book that applies to so many people obsessed with seeing their portfolios go up in value. Sussman tells us, “It is a simple truth; you can minimize financial regret and guilt by understanding the cost of obsessively focusing on monetary wealth.”

Dubofsky adds, “If you are consumed by making money, and greed, you lose family, self-esteem, happiness. These things often become unintended consequences of acquiring financial wealth.”

Suffering from FOMO

Sussman sees Jerry as the poster child for FOMO.

“Liz describes her father as someone with an almost pathologic fear of missing out – that’s FOMO,” Susman says. “When the stock market was going up, acting on the tips he got combined with his own FOMO issues, he made money.

“Now, Jerry is at great risk for getting on the bandwagon of some stock that is hyped as helping investors recover their losses. He admits to suffering financial regret, which essentially is someone saying, ‘I should have done something with my money that I did not, and therefore, I am missing out on something I should have had.’

“He is in an extremely dangerous situation.”

How a Financial Adviser Can Help

“Financial advisers help us deal with uncertainty, and the best advisers are skilled with finance and psychology, helping their clients achieve financial stability. That’s what a good financial plan does,” Dubofsky points out.

“A growing group of advisers are in the ‘protection business’ and focus on clients who are vulnerable to being scammed. They build firewalls between a client’s portfolio and their poor investment decisions. The objective is to make sure that the portfolio isn’t going to be drained.”

A Prescription to Sleep Better

The authors suggest these steps for families to take during these financial times:

(1) If adult children are financially savvy, they need to be aware of what Mom and Dad are doing.

(2) Increase your due diligence. FOMO is very powerful and invites taking financial risks that will break your heart and your portfolio.

(3) Have a long-term perspective.

(4) Our country has survived a lot of bad calamities in its 200+ years of existence.

(5) Companies will always figure out how to make money.

(6) If you have a long term horizon before retirement – 20 years or more – don’t sell right now and even consider buying. But with a 5-year horizon, it could be more problematic.

These Two Books are Especially Relevant Today

Especially now, both of these books are relevant, practical and so helpful. Also, each is a great read!

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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“Three of my employees were involved in a very serious auto accident which will result in a large settlement to provide for future care, loss of income and general compensation.

“They are out of a job and will have trouble finding employment going forward. Financially, they are not sophisticated and look to me for advice.

“What should they do with the money?

That question has become a real family fight. Their adult children want them to put the proceeds into an investment account with a large brokerage firm, and others want the funds deposited into bank CD’s and checking accounts. We are talking well in excess of a million dollars.

“Their lawyers insist the money is put into insurance annuities–Structured Settlements–but today’s interest rates are so low. What is your recommendation? Thanks, Theo from Chicago.”

Structured Settlement = Safety and Security

I ran Theo’s question by Washington D.C. based Peter Arnold who has been in the structured settlement field for over 20 years and is a former Deputy Director of NSSTA, the National Structured Settlement Trade Association.

“In 1982 the United States Congress passed legislation that to this day is helping accident victims live financially secure lives, benefitting from the many advantages of a Structured Settlement,” Arnold explains, adding, “and perhaps the main one is that funds are paid completely tax free, both federally and at the state level.

“Instead of handing an accident victim hundreds of thousands of dollars and told to manage the funds, with a structured settlement a secure stream of payments over a lifetime can be obtained through the purchase of an annuity issued by a highly rated life insurance company. They are ideal for:

–Persons with temporary or permanent disabilities;

–Guardianships for minors or persons found to be unable to manage their money;

–Workers compensation;

–Wrongful death where the surviving spouse and/or children need monthly income;

–Severe injuries, especially with long-term needs for medical care, living expenses and replacement income to support the family.

Mechanics of How a Structure Works

If I woke up tomorrow morning, turned on the radio and heard that they were now required in all major personal injury cases, that would make me–and I believe most attorneys–very happy campers for one reason alone: Flexibility and Safety.

“With a structured settlement, present and future needs of the injured person can be addressed. This can include money to pay for medical care now and, with a child, funds to pay for college or help with housing expenses years down the road. Payments can be scheduled almost any way imaginable.”
Ask Yourself – What’s More Important – Safety or a Higher Interest Rate?

“I get it,” you’re thinking. “The case settles and funds go into an insurance annuity which are paid out over the years. But interest rates today are next to nothing, and I assume that applies to insurance contracts as well. So, when you consider inflation, in reality the funds held in that insurance contract may lose purchasing power over the long-run. Am I correct?”

–That’s right, and, from my perspective–and that of the many lawyers I’ve discussed these issues with–the lowered amount of interest earned is completely irrelevant to the safety and other benefits a structure offers. Arnold observes:

“As structured payments are guaranteed, the ups and downs of the stock market do not affect annuity payments. Those regular, steady annuity payments will remain constant.

“Before structures, stories of accident victims–just like lottery winners–spending the money in a couple of years were common. And let’s not forget family and friends who held their hands out for loans which were never repaid.

“But with a structured settlement, the funds themselves are not reachable by the accident victim; instead, they are paid according to the terms of the contract. This keeps greedy hands away from the money.

“So it is important to understand that the main selling point of a structured settlement isn’t the financial return, rather, it is the security offered the accident victim and tax-free status. However, some insurance companies offer an inflation-adjusted cost of living adjustment.

And if the Economy–And the insurance company–goes into a tailspin?

“Any company can go bankrupt,” you might be thinking, “so what happens if the life company that issues the annuity goes bust? What about the people who have structured settlements with them? Would they lose everything?”

“It’s a great question,” Arnold notes, “But each state has an insurance guarantee association that steps in to cover all or part of payments due. This information can’t generally be used in the sale of an insurance policy, but it is a strong level of protection.”

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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Who is responsible–and what should you do–when a repair crew from your local power utility negligently causes a power surge and all of your appliances–everything that has wires and plugs into the wall–is fried?

That was the question from 82 year old Thelma who resides in a small California desert community that is serviced by a small electricity utility. Her email began, “Where we live there isn’t a lot of excitement, but several of us who live in a small cul-de-sac were treated to a show that, at first, reminded me of the hysterically funny Jackass series of movies.”

Anyone who likes those insane films is A-OK in my book.

Thelma was in her front yard watching a crew replace a power pole and related equipment when, “Suddenly, their rig jerked forward and the supervisor began screaming, ‘You idiot! Stop! Stop!’ but the driver kept on slowly moving and then, there was this huge, bright flash. At that same time I heard the strangest sounds come from inside my house, and when I came back in, there was a burnt smell in the air.”

All of her appliances, television, clock-radios–everything electrical was nuked, even though, “I had surge protectors throughout the house.”

“We’ll Take Care of You”

Within an hour a representative of the power company was at her door, promising to take care of the damage. He gave her a complaint form to fill out, which she did that very day, sent it in, and then, if you know the saying, “I’m from the government and am here to help you,” that’s where she found herself.

“They were very prompt in getting back to me, saying that everything destroyed would be paid for, but at ACV, and that means Actual Cash Value–depreciated in other words!

But everything destroyed was many years old, which means that I would get virtually nothing!

So, then I contacted my homeowners insurance company and was informed by my agent that I would be fully compensated at replacement cost value but that my rates would be doubled, so not to use the insurance! I’ve been insured with them for over 20 years, never had a claim and it would seem so unfair to use the insurance and then get penalized!

“And then I found you articles and called you. What should I do?”

Liability of the Utility for Negligence – ACV

In most states, when negligence of the utility’s employees causes damage, compensation is required. For example, Southern California Edison’s claims policy (summarized) states:

“Generally, we are responsible for losses that occur due to our negligence and not causes beyond our control.”

Across the country, most utilities have similar language and address how a claim will be evaluated with language similar to that of SCE, and there is nothing wrong with this:

“If Edison accepts responsibility for damage to a customer’s personal property, it will compensate the customer for the least cost of the following: repair, fair market value or replacement. For items that are not new and cannot be repaired, fair market value is determined by the estimated value the item would have just prior to the damage occurring.”

ACV – Actual Cash Value – can mean virtually nothing with a house filled with old but perfectly good, functioning appliances, which is Thelma’s situation. But fortunately she has homeowners insurance with Replacement Cost Coverage, and this means that, practically speaking, she has no real choice but to have her own insurance handle the claim, less her $1,000 deductible.

Her insurance company will turn around and seek reimbursement from the electric utility, including recovery of her deductible.

Wrongly Advised by Her Insurance Agent to Not File a Claim

So, why would her agent discourage her from using her homeowners insurance knowing that she only gets Social Security and does not have the money to replace all those things that were destroyed? I asked him that, well, didn’t really ask him that, instead, putting it this way and trying not yell:

“You want this 82 year old woman to just take what the utility offers her, right? You are trying to scare her with a claim that her rates will double! That is nonsense and you know it! The bottom line is that you don’t want a claim made because you think it will look bad for you with the carrier! That’s it, isn’t it?

“You are going to help her with that claim, and you are going to stop scaring her about her rates doubling next year just because of something that was not her fault. Are we clear?”

With a trembling voice, he replied, “Yes, yes, Mr. Beaver. I’ll fix it. Don’t worry.”

Worry is my middle name.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

The post When the Power Company’s Power Surge Nukes Your Appliances appeared first on Dennis Beaver.

“Earlier this year, while out running errands for my 83-year-old parents, “Sandy and Robert,” with whom I live, a solar salesman from Utah-based Mint Solar suddenly showed up at their home, and in no time, they signed a contract for a $20,000 lease financed with a 20-year loan. I only learned of this days later — after the three-day cooling period for in home sales had elapsed and then the system was installed but never hooked up to the Pacific Gas and Electric’s grid. Not only that, but we received a notice of Preliminary Lien from the installer who had not been paid. We’ve tried calling Mint, but get voice mail and no one returns a call. Can you help? Thanks, Terry.”

No research on Mint ever done 

Had the elderly couple taken just 60 seconds and Googled Mint Solar, they would have seen these comments: “Misappropriation of funds. Misleading and unqualified company. Lie after lie after lie. They don’t pay their employees! Lack of basic human decency.”

We learned that Mint is a real class act, ripping off the couple’s own salesman $30,000 in unpaid commissions. “I finally had to admit to myself having been duped by management, and there are salespeople and customers across the country in the same situation,” he told us. We confirmed his statement independently.

Our readers are visibly impaired, admitting to having significant memory and reasoning problems which should have been obvious, “But we believed the salesman,” Robert stated. Solar salespeople are famous for having their sense of honesty, ethics and morality surgically removed before being unleashed on America’s elderly.

It’s 3 p.m. What are your parents or grandparents up to?

If you do not protect them from themselves, who will before it’s too late? And, just what can you do? Stay with us, as Southfield Michigan-based Certified Financial Planner Sandra D. Adams – who also holds a Masters in gerontology – sets out a strategy for children and grandchildren to help steer their aging family members out of harm’s way.

Isolation leads to being scammed

“When adult children or grandchildren, like your reader, discover what happened, they will often yell, “Why did you do this? Why did you let the person in?” The answer is often found in one word: Isolation. Even when family are all in the same city, our nation’s aging population is more isolated than at any other time in our history,” Adams observes, adding:

“The need to talk with someone, to have human contact with a person who appears to care about their welfare, all of this leads to being scammed. But research shows when family maintain frequent and close contact, they will be phoned before that contract is signed.”

Make mom and dad aware of what’s out there

Will readers who like to be accused of being gullible or stupid, please raise your hands. Hmm, no one?

“The same applies in helping your aging relatives to see what dangers are out there. One way to do this by referring to a newspaper article, or what you ‘heard’ happened to a friend’s father, in an informative tone of voice. Remember, you want them to buy into the idea of running these kinds of decisions by family first. Without saying it directly, you are encouraging them to make sure their antennas are up, aware of potential traps.”

“In fact, you can encourage asking for your recommendations by asking their advice, such as, ‘Gramps,’ I am considering about doing this. What do you think?”

“By expressing respect for his opinion, showing that you are vulnerable and open to asking for his advice, he will be more comfortable in bouncing decisions off of you when it is his turn.”

Current scams target new Medicare cards 

New Medicare cards are being issued without using Social Security numbers, reducing the chance of identity theft.

“Con artists are contacting the elderly and falsely insist on obtaining proper identification before the new card is sent out. The fear of not getting the new card leads to revealing all sorts of personal information. As this is pure gold, the crook opens a bank account in the elderly person’s name, establishes direct deposit with Social Security and steals their money.”

There is a time for ‘The Conversation’

Working with the elderly as a financial planner, Adams sees the results of parents and grandparents who seek to maintain control by refusing to keep their responsible children aware of what they own and where it is.

“The key is to ask for their help so that you will be there to help them, and keep in close contact. Prevention is the operative word,” she concludes.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

The post Are your parents about to sign a contract? appeared first on Dennis Beaver.

Ask any real estate agent who has been in business before the Great Recession to describe today’s home buyer, and the chances are good that you’ll hear these descriptive terms:

“Down to earth. Doesn’t need to have the fanciest house on the block. Not stretching themselves as much financially as we saw in the early 2000s. Does not see a home so much as an investment, instead as a place for families to live within their means.”

And if you next ask, “Is there any one aspect of home ownership that today’s first-time buyer does not adequately understand?” You’ll probably hear: “Because as renters they likely did not have renters insurance, they can find homeowners insurance to be confusing and may wind up not having buying adequate limits of protection.”

Required by lending institutions but be careful!

“Most lending institutions which make home loans require some form of property insurance,” La Jolla-California based Attorney Evan Walker tells You and the Law.

After law school he spent close to a decade as an insurance defense attorney, handling personal injury and property damage lawsuits. That experience served him well, as, now in private practice, “I learned how insurance companies bully people, deny valid claims, and getting your claim paid begins by having purchased the proper coverage and have prepared for a loss before one occurs.”

Walker advises shopping for homeowners insurance and to “Be aware that several options are available, so always do careful research in order to make the best decision for your family.” You may get a better deal if you have your auto insurance and homeowners insurance from the same company.

“Read through your policy at least once. Search online for advice on what to look for. At a minimum, you should know the type of policy and coverage provided.”

Of course, the reason lenders require the property to be covered under a Homeowner’s policy is to have their interest in your home protected. So, for example, in the event a fire destroys the house, their loan will be paid by insurance proceeds.

Walker advises, “Never let your policy lapse for non-payment because if that happens, the lender will buy its own insurance and add the cost to your loan. What they obtain could easily cost much more than what you would pay.”
Document a loss before one occurs

Before a loss, Walker recommends “Documenting your possessions and the condition of your home. Save receipts, invoices for repairs or upgrades to the property, and take a video of the home’s exterior, and interior, room-by-room.”

“Dennis, we can all imagine the shock that families who lost their homes in California’s wildfires experienced. Then, claims adjusters asked them to list all the items of personal property that were destroyed. From memory, no one can do that. But some homeowners had no trouble because they had videoed their entire house.”

Walker felt that a great way of doing this is “For one person to hold a Smartphone, another describes the contents of each room, opening every drawer and being detailed. Don’t just say, ‘Here are we have bathroom towels and sheets.’ Instead, ‘Here you see 10 bath towels and 6 sets of sheets,’ and so on. If items are a luxury brand, state that as well.”

One tactic claims adjusters use to reduce what they will pay is to ask for receipts on the items claimed. “As claims are paid according to proof of the loss, not having a receipt can be costly. And here is where your Smartphone once again can save the day. Just take a picture of receipts on all the things you buy for your house and store it someplace in the Cloud like Google Documents.”

Most Homes are underinsured and need higher limits of liability

Are you underinsured? In a recently released survey conducted by Nationwide Insurance, “About two-thirds of American homes are underinsured, some by up to 60 percent, with the average being 22 percent.”

Walker puts this into dollars and sense:

“Being underinsured means that you don’t have adequate coverage to protect you if your home is damaged or destroyed by fire or another disaster. Without replacement or rebuilding coverage, you might have to pay a large part of the repair costs out of your own pocket.”

But being underinsured has another dimension apart from the physical house itself, and that’s liability. Walker provides these cautionary words:

“One day a claim or lawsuit is filed against you by someone injured on your property. A family member or pet is responsible for hurting someone or causing damage to property. Are your liability limits high enough? Having low limits of homeowners insurance coverage is a false economy.”

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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“Mr. Beaver, many years ago you wrote a touching article about a young CPA who was horribly injured in a bicycle accident. Why, I cannot tell you, but for some reason I remembered that story.

“Two months ago my nephew, Brian, was struck by a pick-up truck owned by a power company. The driver was on his cell phone, distracted and did not see Brian or any of the other cyclists with him. The parallels of Brian’s injuries to your article are stunning, as are the potential family issues.

“If you can find that story, and your editors will run it again, a great public service will be accomplished, in addition, I hope, a message sent to my nephew’s family.”

We found the article.

There can be times when a parent must take charge, no matter how old their child has become. This is the story of one parent who did not.

In 1989 Rudy was a successful 28 year-old CPA. Handsome, a great sense of humor, a lovely girlfriend, Becky, nice car, in short, he earned many of the rewards that come with hard work.

Saturday afternoons were a special time for Rudy and Becky, as both enjoyed cycling. She was little more than 20 feet from him when he was struck by a bus that made an illegal left hand turn. She remained with him as he was air evacuated to a neurological intensive care unit in Sacramento.

Becky held his hand and talked to Rudy softly – through tears – for the weeks that he remained in a coma.

Upon awakening, it was to a world in which he would learn to walk with a cane, gaze at a paralyzed right arm, and to a voice which made him sound intoxicated. Brain damage can erase that which gives us our humanity, taking away logic, reasoning and self-control. These things were taken from Rudy. But through it all, his charm and strong personality remained. It would prove to be his undoing.

The lawsuit against the bus company was settled for several million dollars, enough to easily provide a comfortable life. But in the space of five years, Rudy’s net worth fell to $150,000. But how could this happen?

“My son’s first lawyer in Los Angeles urged him to put the money into insurance annuities which would pay out so much a month for life, with money left for his heirs,” Rudy’s mother explained. “But he insisted on managing his own finances, finding an investment adviser who helped him sink $500,000 into a failing bowling alley, then $250,000 in a mini-mall that was never built, and finally, almost $500,000 into various high risk investments, all of which failed.”

Rudy also was receiving $10,000 each month in “spending money,” as his parents explained. Craving attention and friends, spend, he did. To his impaired-mind, it was a way to retrieve lost self-confidence. “While the money lasted, our son had so many friends,” his mother related, adding, “He just would not listen to me.”

This bailiff had no sense of humor

Rudy was referred to our office following his court appearance for a reckless driving ticket which turned into ‘assault on a peace officer.’ With his one good arm, suddenly he began swinging the cane above his head, shouting, ‘I’m just raising a little Cain!’

“I didn’t know that bailiffs have such a poor sense of humor,” Rudy told me, oblivious to how close he came to being shot.

The nightmare was avoidable with a conservatorship.

When the extent of their son’s brain damage was known, this nightmare could have been avoided with a court-ordered conservatorship being established, as our legal system seeks to protect people from the effects of their own disabilities.

Had a conservator (or guardians as it is known in some states) been appointed, only safe investments would have been permitted. Rudy would have most likely been declared incompetent to manage his own affairs, safeguarding him from entering into most contracts. His conservator would have been required to see to it that some sense of order was maintained in his life. The power of our legal system would have been used to protect Rudy from others and from himself had his mother or other family members acted, then.

It is in the nature of things for parents to gradually let go, to replace “Mommy” with “Mom,” “Daddy” with “Dad,” a handshake or hug instead of a kiss.

Yet, in the hearts of good parents, our children are still young and small. And in need of our protection.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

The post Adult son needs mommy appeared first on Dennis Beaver.

If you have any type of insurance policy from MetLife – in fact from any insurance or annuity company – our story should cause you to take certain steps to protect future payments, and we begin with this question:

“Does the insurance company know where you live? Can they contact you or your family members?”

MetLife is one of the world’s largest insurance companies. Stand on any street corner from Hong Kong to cities in South America and in no time a bus will come by with an ad for MetLife.

While “big” may have advantages, it can also have considerable drawbacks, such as “too big” to know who they insure, and who is supposed to receive monthly annuity payments.

Last December, this mammoth insurance company announced that it had a little problem. MetLife admitted “Internal failures resulting in not making payments to tens of thousands of pensioners stretched back a quarter of a century.”

Downplaying the significance of this event, the company “Believed the group missing out on the payments represented less than 5 percent of about 600,000 people who receive a type of annuity payment with average benefits of less than $150 a month.”

“But that’s 30,000 workers harmed by this failure!” outraged New York attorney Edward Stone tells You and the Law. “Metlife does not even know how many years back these unpaid pension obligations go, but retirees were owed a defined amount of monthly income when MetLife took on responsibility for the pensions from their employers, which is known as pension risk-transfer or pension de-risking.”

While Stone is one of a handful of attorneys in the nation who deal with the consequence of life insurance companies getting in financial hot water, he was quick to point out that “No one is concerned about MetLife’s immediate financial viability, and policyholders shouldn’t panic and jump to another insurance company without careful thought, but these events are highly disturbing.”

Stone points out retiring workers with pensions were promised a defined amount of money from their employer, designed to last a lifetime. “Pensions are a very different animal today than in the past, and it is something that people working or retired need to be aware of.”

That’s because, in large part, over the past few years “It became apparent to companies that retirees were living much longer and costs were ballooning from having to write years of additional pension checks,” he notes, adding, “And the major life and annuity companies saw this fear as a huge source of new money, billions of dollars in new money and so they did something about it.”

And what they did was highly attractive to huge corporations with substantial pension obligations. “Some of the world’s largest life insurance and annuity companies approached industry and said, ‘We will take over paying benefits to your retired employees. Just give us the billions of dollars you are now managing, and we will assume responsibility for their monthly payments. We know what we’re doing, as we’ve been at it for years. We’ll invest the money and keep your retirees happy – and in the dark!”

The term “pension-risk transfer” means that, “The risk to the employers’ bottom line in being able to earn enough money to pay retirees gets transferred to an insurance company. This phenomenon has grown at a worrisome rate over the past few years. When this happens, pension benefits are no longer governed under ERISA and retirees become subject to non-uniform state law.”

An annuity is a promise by a life insurance company to pay out a certain amount of money to a policyholder for their lifetime or a set number of years. If you spoke with insurance company executives before the Great Recession they would have told you that funding an annuity is pretty simple.

As Stone explains: “Traditionally insurance companies would simply match fund liabilities with government or high-grade corporate bonds that paid out enough interest to satisfy what its payment obligations were to annuitants or certificate holders But with rates at virtually nothing these past few years companies are scrambling to earn more on their assets with things that are far less safe than highly rated corporate or municipal bonds.”

Edward Stone has this advice for all policyholders and their family members:

“Keep the company aware of where you are. Check in at least once a year. Prevent them from losing you by being pro-active.”

Edwardstonelaw.com is a website we recommend for anyone who can see themselves or their family affected by these issues.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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“My father died recently with no will or trust, and we are just going crazy trying to locate deeds to property, insurance policies, bank accounts and so on. We urged him to address these issues when he was first diagnosed with aggressive prostate cancer, however, being very old-fashioned Chinese, talking of death is taboo.

“We miss him so badly, but we are angry at him and yet feel guilty because we feel this way. You could do a public service by writing about the need to plan so that your loved-ones are not left in such a horrible situation. Thank you, Helen Chang.”

We ran Helen’s question by Boca Raton-based Elder Law attorney Howard Krooks, past president of the National Academy of Elder Law Attorneys, who practices in New York and Florida.

“Dennis, your reader beautifully stated the way so many families in this situation feel. Generally speaking, it is true that people do not like to talk about illness, loss of independence and death. When it comes to doing the things which will reduce the headaches for family members, people fall into one of five categories:

1. A failure to do anything. Some people think about, are urged by spouse and children to do something but still fail to plan or take action.

2. Some people don’t even think about planning. They’re living their lives and it just doesn’t occur to them to plan for what will happen when they are no longer here.

3. A third group, is aware of the need to do something, but are not sure what. Surprisingly, they do not consult with an estate planning attorney to talk about goals or objectives and to find out what it would take to implement their plan.

4. Some people go so far as to meet with a lawyer, find out what they can do and yet still choose not to go forward. This is frustrating to their family, and the lawyer who can see where things will wind up.

“Finally,” Krooks has praise for, “The doers, the people who find out what they can do and set their plan into action. The benefit of a well thought out estate plan — making life for heirs easier and more seamless when the individual is no longer here — is the greatest gift of all to their loved ones.”

You can just picture Helen’s family trying to make sense of dad’s financial life, searching for bank statements, deeds, safe deposit keys, all the result of his failure to organize and have the family’s financial records accessible. A loving memory has been tarnished.

Failure to organize financial affairs creates obstacles for the next of kin

I don’t think that a week goes by without a reader emailing, “My husband took care of everything. I don’t know what we own or what bills to pay. What should I do now?”

That happens, Krooks observes, “When there is a failure to organize your financial affairs. In one accessible place you need:
A list of all assets, including insurance, real estate, Social Security, IRA, bank and financial institutions. Where were the accounts opened? What branch? If you own shares of stock, where are they physically located, where are they held?”

By not taking the time to do this, Krooks warns, “This creates obstacles for the next of kin. If you become incapacitated or die, it becomes extraordinarily difficult to put the pieces of a person’s financial life back together. And don’t forget digital assets, such as user names and passwords,” he underscores.

“The ability to access account information must be available. Today, many financial accounts are paperless, and without a password, significant assets could be overlooked. You also will need to shut down social media. So, all of this is part of document and financial affairs organizing making it easier for your next of kin.”

What is the greatest threat to an aging population who has acquired some assets?

Krooks cites, “Fraud and financial elder abuse as the greatest threat to our aging population. And it can come from anyone, but often there are three story lines. In the first, an adult child falls upon hard times, moves in with mom or dad, begins managing and spending down their finances, leaving nothing.

“In the second, the kids are out of state and a care giver is hired, quickly becoming the new best friend. This becomes a relationship where the care giver isn’t just paid for their services, but given even more money, out of the elderly and vulnerable person’s fear of losing them.”

Finally, Krooks describes the, “New boy or girlfriend who moves in, taking care of your loved one and then money is leaving the account in large chunks.”

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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In addition to all the other issues which revolve around getting older, a significant percentage of America’s aging population have more things to deal with, as the following email from Central California reader “Annie” describes:

“Paul, my husband, is 86 and I am 74. “Becky” our granddaughter has asked us to co-sign her student loan, but we don’t know the amount or repayment terms. In September she will begin her first year at a state college, but we don’t know where or what she plans to study.

“We are getting pressure to sign from her mother – our daughter — but are worried. What are your thoughts on the subject?”

All the signs of financial elder abuse

When we receive this type of a request – especially when from elderly readers — three words immediately come into mind: Financial elder abuse. “Call them immediately” are the next three announced to my staff. You would be surprised at how often we have to reply, “Please send us your telephone number! Don’t do anything until we talk!”Fortunately, Annie’s mail contained information enabling us to find their number. Within minutes the cast of characters in a recurring drama played out daily across America began to assemble, starring roles going to financially irresponsible daughter and, following mom’s example, granddaughter.

“Mom’s credit is poor and can’t be a co-signer so you have to!”

“Becky, and her mom phoned us,” Annie explained, “and said the student loan she is applying for needed a credit-worthy co-signer. But since “June,” our daughter, and her husband had filed for bankruptcy, they do not qualify. The message was clear: If we love Becky, then there should be no question. We must co-sign immediately.

”Annie revealed that June and her husband receive a large, monthly disability retirement check from working in the prison system but are not terribly responsible when it comes to paying bills, yet they drive expensive, new cars.“Their attitude is that we owe it to Becky, and I do not think that is correct,” Paul added.

“All we own is our house, modest savings, and receive Social Security. We do not want to wind up on the street just to prove that we love our granddaughter,” a very tough Annie added.

I felt confident these grandparents could stand up to the daughter’s pressure, but told them “If things get too hot, please call me. I’ll get your manipulative duo on the phone and tell them to back off.”

“I want my inheritance early”

“Lawyers often see situations just like this. It’s a variety of the ‘If you really loved me, then you would buy me that sports car,’ pressure put on parents by manipulative, still living-at home, adult children, Hanford-based attorney Ron Jones observed when we read him Annie’s email.

Jones sees real threats to the financial security elderly Americans have worked hard to establish, “Coming from those closest to them, a son or daughter who want their inheritance today. They often have a plan that involves mom’s or dad’s attorney, and it’s something your readers need to be aware of,” he notes.

In The Godfather, there’s a line “A lawyer with a briefcase can steal more than a man with a gun.” As you’ll see, when it comes to stealing from mom and dad, plotting children will attempt to use a lawyer in their plan to obtain an early inheritance, in part, unwittingly helped by soon-to-become victims who think they are doing the right thing.

“Let’s revise your old documents”

“It’s safe to say that more than at any time in the past, older Americans are fully aware of the benefits in having an estate plan. This could be a will or trust, but always:

1. An advanced health care directive/power of attorney for health care, and;

2. A durable power for financial purposes in the event they become incapacitated and cannot handle their own affairs correctly.

In the wrong hands, a power of attorney can render someone homeless, and this is no exaggeration,” he underscores.

“Generally, the durable power of attorney becomes operational when, for example, mom or dad has been diagnosed as impaired. Before that time the power of attorney has no legal effect, unless it has been prepared to give that authority at the time it is signed to become effective immediately, giving that son or daughter power over the checkbook and potentially everything else.

“It’s a sales pitch where unscrupulous adult children suggest the older documents need to be ‘revised,’ so they can ‘provide’ more help now. Help is the operative word – sometimes helping themselves to money and property.“So, Dennis, I hope that if any of this sounds familiar to your readers, alarm bells should be sounding.”

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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