Death of trustee - brokerage house wants to segregate assets

[ombskid]

One trustee of a ps plan died. The spouse, who is the other trustee, wishes to move the plan assets to another investment group. Brokerage (the back office) says they have to segregate the deceased's assets into a new account. We say it is none of their business, if trustee wants to move the whole trust, he/she has the right. There are other participants in this pooled, balance forward plan.

Plan allows one trustee to act for both (not that there is a "both" anymore)

Ever heard of this? see any reason/grounds they would have for forcing this instead of moving the assets as directed?

[Lou S.]

They are being a pain in the butt. Show them the document that allows 1 trustee to act independently and ask them why they aren't following the written direction. You might also mention that their failure to follow the trustee's written direction might make them a fiduciary of the assets. Not sure how far that will get you but it sometimes get them moving.

[Mike Preston]

Go further up the food chain.

[mbozek]

Not exactly.

Why does the spouse want to fight with the brokerage's lawyers and trust officers? It could be expensive. You need to review the trust document to see what happens when a co-trustee/participant dies. Easiest solution is to ask brokerage if the remaining trustee can sign a waiver of liability and agree to indemnify the brokerage if the assets are transferred to another financial institution. Or appoint a successor trustee who can consent to transferring the assets.

[jpod]

I agree that sometimes it's best to take the path of least resistance but you would need to go up (way up) the food chain anyway to start getting involved with indemnifications and liability waivers.

Assuming there is a very nice amount of money in the plan, here is my suggestion: get someone at the transferee financial institution to intervene on the trustee's behalf. If they want the new business bad enough they will find a way to find out how to get this done.

[mbozek]

Just who do you think will intervene on behalf of the trustee and agree to negotiate for a party that is not a client? Financial firms do not represent parties in legal disputes.Crafting documents exonerating the financial institution from liability to a customer is something brokerage attorneys excel at. This aint their first rodeo. There is a document template that can be filled in with just a few additions. Its a lot easier than trying to force the firm to give up the money which is in their possession. Of course the surviving trustee will need to hire counsel.

[Mike Preston]

mbozek is needlessly complicating things. At this point there is no need for an attorney. Just politely point out to the financial institution representative that the surviving Trustee has the right to move the investments and provide the documentation that supports that position. Go up the food chain until somebody with a brain is found. It is a pooled fund, balance forward plan. There is nothing to segregate.

Hopefully, the account was established by both Trustees. It is a bit more complicated if the account was established by the deceased Trustee alone, but not fatal.

[mbozek]

Trying to find that one person in the food chain who will agree with the position of the surviving trustee could take months or longer. Or even worse they will not agree. Best way to expedite a resolution is to find out what the other side will accept to allow the transfer of the pension plan assets, not keep trying to find a way around the rules.

Without knowing what is in the trust documents no one can opine on what rights the trustee has to transfer the funds. No brainer.

Enough said.

[ombskid]

Move up the food chain is the answer. After politely (mostly) explaining to several layers that this is not an individual brokerage account but a trust separate from the trustees who have the power to control it, it got easier.

There were no rules that we needed to find a way around. The financial institution needed to be reminded that their position was to operate at the pleasure of the trustee. And the surviving trustee had all the status he/she needed. The receiving institution had already jumped through many hoops but got nothing from the existing brokerage. In the end I don’t think they were just trying to hold onto assets (my cynical thought along the way), they just have too many layers of bureaucracy – sounds like our government.

I’m real happy to have brought this to this group. I needed some confidence that I wasn’t out in left field thinking this just should be done. As is often the case, a little discussion backs up the right answer (which isn’t always my answer)