69 YO sister was sold $2M in deferred annuities… left with just $200K in checking?

General
1

My sister was sold about $2 million in annuities through her bank after she told them she wanted a safe investment with no risk to her principal. They set her up with $1.2M at 5.15% and $800K at 3%.

Her mortgage is at 2.75% with $10K monthly payments on a $1.1M loan. After fees, the 3% annuity barely covers her mortgage, and they’re saying it’s good for a tax deduction on mortgage interest.

Now, I’m the trustee on her accounts, and I was shocked to find they tied up about 90% of her funds, leaving her only $200K. Her expenses run around $50K a month. She has around $10M net worth, but now only 2% is accessible, and she can’t touch the rest for 3-5 years.

She lives in California and is dealing with frontal temporal dementia, so her time is unfortunately limited to around 3-5 years. While her salary barely covers her monthly costs, she also has a $5M stock merger from her company sale she can’t sell for two years.

It feels like the bank took advantage of her, tying up her cash in products she can’t access in her situation. The bank won’t break the annuities without a penalty, and I’ve expressed to them that this wasn’t in her best interest.

The California attorney general’s site mentions elder abuse for bad financial sales over age 65. Since she has dementia, I’m wondering if pursuing legal help is the best step?

2

Sounds like something to ask a lawyer about, not this forum.

3

Brett said:
Sounds like something to ask a lawyer about, not this forum.

Definitely agree, talk to a lawyer right away.

4

Brett said:
Sounds like something to ask a lawyer about, not this forum.

Looks like the consensus is a lawyer… Should I go directly to the CA Attorney General too, or would that be tipping my hand too early?

5

@Morgan
Bring in the lawyer first, but also, reach out to a local politician. This is a story they’d love to support — the bank really overstepped here, taking advantage of your sister’s condition.

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Drew said:
@Morgan
Bring in the lawyer first, but also, reach out to a local politician. This is a story they’d love to support — the bank really overstepped here, taking advantage of your sister’s condition.

Doubt any lawyer would take this pro bono with a $2.75M house in the picture.

7

@Yan
They don’t have to be pro bono. A lot of lawyers take cases like these on contingency, meaning they only get paid if you win.

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Pax said:
@Yan
They don’t have to be pro bono. A lot of lawyers take cases like these on contingency, meaning they only get paid if you win.

Right… no money upfront.

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Pax said:
@Yan
They don’t have to be pro bono. A lot of lawyers take cases like these on contingency, meaning they only get paid if you win.

Usually capped at 40% or so. But yeah, still worth considering for big cases.

10

@Yan
Yep, some lawyers work on a contingency up to around 40%. Depends on the state and specifics though.

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Arun said:
@Yan
Yep, some lawyers work on a contingency up to around 40%. Depends on the state and specifics though.

Here in Wisconsin, my attorney had 1/3 on contingency.

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Pax said:
@Yan
They don’t have to be pro bono. A lot of lawyers take cases like these on contingency, meaning they only get paid if you win.

“Works on contingency? No, money down!”

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Pax said:
@Yan
They don’t have to be pro bono. A lot of lawyers take cases like these on contingency, meaning they only get paid if you win.

Maybe threatening the bank and asking for a refund of fees could be a start. I’m not a fan of jumping straight to lawsuits, but this seems clear-cut.

14

@Yan
A lawyer isn’t free, but if they can at least help protect some of her assets, it might be worth the expense.

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Drew said:
@Morgan
Bring in the lawyer first, but also, reach out to a local politician. This is a story they’d love to support — the bank really overstepped here, taking advantage of your sister’s condition.

Lawyer, absolutely.

16

@Morgan
California’s Department of Insurance regulates these things. You can reach out to them since they oversee annuity sales.

17

Tamsin said:
@Morgan
California’s Department of Insurance regulates these things. You can reach out to them since they oversee annuity sales.

That sounds like the right call here.

18

@Morgan
With this much money at risk, you really need to speak with a lawyer.

19

@Morgan
I’d also recommend a lawyer but if you really want to avoid it, you could file complaints with the Federal Reserve or Consumer Financial Protection Bureau. They take complaints of this nature very seriously.

20

@Eli
A lawyer’s opinion might speed things up, though.