The Moneyist: ‘I didn’t see how this could happen to my family — until now’: My brother drained $200,000 from my mother’s savings. How can I stop him?

I read and hear so much about adult siblings who always got along, but suddenly start fighting among themselves when they are about to inherit their parents’ estate. I didn’t see how this could happen to my family — until now. We’re not at that point, but things are getting tense.

I am the middle child of three. My older sister and I are in our 70s, and my brother is in his early 60s. Our parents were not wealthy, but they were able to sell their farm 10 years ago, and the proceeds have enabled them to comfortably cover all medical, assisted-living and long-term-care costs.

Our parents always told the three of us that they never wanted to be a financial burden to us kids, and that they wanted whatever might remain when they died to be divided among us equally. Their wills indicate that. Dad has since died, and Mom is at a very advanced age.

All three of us are married, and none of us has any children or heirs. I am retired and debt-free. My sister is in a similar situation. Neither of us is wealthy, but we feel financially secure.

My brother’s financial problems

We don’t discuss our personal financial details with one another, so I was shocked to learn about my brother’s situation. Five years ago, he was laid off from his job. It was just one of those corporate moves, and not anything performance-related.

The worst part is that he was in no hurry to get another job. He was very picky about location, salary and similarity to the type of work he had previously done — always holding out to get exactly what he wanted, and unwilling to settle for less.

He would not even consider a lower-paying job temporarily just to pay the bills, or one that might require relocation or a longer commute. In time, he became “long-term unemployed,” so it was even harder to be considered for a job. This went on and on.

After a few months, he started asking our mother for cash — large sums, $10,000 at a time, repeatedly. I manage my mother’s finances, but I have always treated it as her money and not mine to spend or control. If she wants to give him money, she gives him money.

In total, my mother gave my brother $200,000

While I have advised her that these gifts are not wise, she says she just wants to help him. To date, she has given him nearly $200,000. She did agree to pause this when I informed her that if she did not, she would at some point run out of money for her own needs.

He is now broke, deeper in debt than ever and still out of a job. All the money she has given him is gone. It’s clear to me he is in a terrible financial situation and is hoping his inheritance will bail him out.

The thing is, there won’t be much inheritance for anyone, at the rate he’s going. He has owned his home for 32 years, but he has a current mortgage balance of more than triple his purchase price. His credit-card debt is astonishingly high. He has emptied his retirement account.

He had a six-figure salary, but he has been out of work four of the past five years, and this only tops off the fact that he has been living beyond his means for many years. While he doesn’t have a drug or alcohol or gambling addiction, it seems he has a spending or lifestyle addiction.

Taking advantage of our mother’s sympathy

I love my brother and I do want what is best for him, but I fear the financial hole he has gotten himself into is so deep he will never recover, let alone have any kind of retirement. In the meantime, he has taken advantage of our mother’s sympathy and financial resources.

This is where it gets sticky. My mother likely won’t live much longer. Am I being selfish to expect a third of what would have remained had my brother not taken all this cash from her? Technically, he didn’t steal it, since she gave it to him.

I don’t really need that inheritance, as I’ve lived my life without the expectation of inheriting anything. But my sister and I feel that we’re being cheated out of something just because we’ve managed our finances responsibly.

At one point several years ago, we three kids discussed this and agreed that we would just reconcile the gift giving when settling our mother’s estate, and just count what he has already received as part of his inheritance. This is not specified in her will.

Is there any way to patch up this situation before it goes off the rails?

Concerned Sister and Daughter

Also see: ‘Low-paying jobs are the economy’s way of saying you should get a better job’: I’ve decided to stop tipping, except at restaurants. Am I wrong?

“You need a wake-up call as a family. The time for standing by and ‘normalizing’ his behavior by complaining about it after the fact is over.”

MarketWatch illustration

Dear Concerned,

It has already gone off the rails.

It’s time to spend less time thinking about your brother’s financial situation and his reasons for doing what he does — which could be related to a family dynamic that is hard to break — and more time focusing on your mother’s long-term-care needs and finances, and how long the money will last.

Your brother will continue to put his priorities first. He is a master manipulator, whether or not he recognizes it in himself and whether or not he has malicious intent, so your mother needs to see her assets in their entirety and an illustration of what percentage has been given and now spent.

You need a wake-up call as a family. The time for standing by and normalizing his behavior by complaining about it after the fact is over. Arranging a family meeting with an attorney, and putting your mother’s finances on paper, is a start. How much money has she set aside for an emergency fund?

Undue influence, duress or pressure on an individual who lacks mental capacity could constitute elder abuse. First, it’s a favor here and a favor there — a little money to tide a sibling over; a tale that pulls at the heartstrings. Next, it’s large checks, clothing, jewelry and expensive artworks.

Writing a will that takes this $200,000 into account

Another lesson for your mother (and everyone else): A will should be updated every year or two, and your mother’s attorney and/or whoever has power of attorney should advise her to deduct the $200,000 she has given to your brother from his remaining inheritance.

There are several reasons: The money he has been given is now gone, so there is no point in throwing good money after bad; enabling your brother by giving him preferential treatment has only led to more requests; and it’s fair and equitable to treat these gifts as inheritance.

As your mother grows more frail and vulnerable, your brother may see her bank account as a last-chance saloon to bolster his dwindling finances. One of the hallmarks of elder financial abuse is isolation, but you can help prevent this with some simple measures.

If your mother has at-home caregivers, you can ask them to keep you in the loop on visits or requests by family members, and you can — and probably should — add yourself as a cosigner on your mother’s bank accounts so your brother will need to go through you for future requests.

Financial elder abuse is vastly underreported

The National Center on Elder Abuse, a government agency affiliated with the U.S. Administration on Aging, and the nonprofit National Adult Protective Services Association both have resources that can guide you through the steps for reporting any alleged abuse.

Given the amount of money involved, this situation could get worse before it gets better. Elder abuse affects an estimated 5 million Americans annually, according to the National Council on Aging, and multiple agencies say that number is both increasing and underreported.

Studies show that seniors lose $2.6 billion a year due to elder financial abuse — and possibly a lot more, according to one estimate that only one in 44 cases is actually reported. NAPSA says victims of elder abuse are three times more likely to die compared with non-victims.

Elder abuse can happen slowly and with great manipulation. Your mother could be under some kind of undue influence or duress, even if she doesn’t see it that way herself. The fact that it’s been going on for so long, and has led to her giving away such a large amount of money, is concerning.

Start the ball rolling on that family meeting.