A Conversation with an Experienced Estate Attorney and Trustee
At Wealthspire Advisors, there are several senior advisors who also serve as trustee for their clients. Mike Delgass is one such advisor. Mike is a Managing Director and has been with the firm since 2005. Before Wealthspire, Mike practiced as a trusts and estates attorney and was a partner at two nationally recognized law firms. Mike draws from his extensive legal experience not only to help his clients navigate complex tax planning, but also in his role as personal trustee for some of the families with whom he works.
Though there are many reasons to seek the services of a professional trustee, concerns that families and individuals have around mental health make this service especially valuable. In this interview, Nicole Hart, Managing Director of Trusts and Estates, discusses with Mike the ways in which he pulls from his personal and professional experience when serving as trustee, particularly in situations where a mental health condition is present.
Nicole Hart: Let’s first discuss the situations in which clients may look to you to serve their family in a trustee capacity. Where can it be helpful to have a non-family member like you step into that role?
Michael Delgass: One situation is where there’s a gap that needs to be filled. The client may not want to expose information to the rest of the family. It might be a privacy concern; it may be a capabilities concern. For that matter, there may be mental health issues or other disabilities in the more senior generation that means that there aren’t good options.
A second general scenario will be when there’s a legally driven need. That could simply be documents that just require an independent trustee because that’s how they were drafted. But it may be that those documents were drafted that way to gain a particular legal advantage like creditor protection. There appear to be some areas of the country where having a disinterested trustee is becoming more and more important in terms of achieving creditor protection. That can be for things like special needs trusts also, which are a kind of creditor protection tool because there the creditor is more often the state agencies and there is a need to make sure those assets are removed from the count of what’s available to the beneficiary in terms of assessing eligibility for a variety of programs.
The third might be where family dynamics or other special situations really demand it. This is where we most often see mental illness come into the picture because there might be benefits in removing the financial decisions from the other sets of decisions that people need to make. That can alleviate some of the tensions between parent and child where the child has a mental illness and parents are trying to limit the areas of discord. And if finances are one of those, it can be good to have a third party run interference and provide a bulwark between parents and child so they can focus on other issues and take out those things that cause other problems.
NH: You practiced as a trusts and estates attorney before you became an advisor, so you have many years of legal experience as it relates to estate and tax planning, as well as trust law. Tell us about your professional background, how it influences your perspective as an advisor and trustee, and what led you to do this sort of work?
MD: My background as a trusts and estates attorney led to a lot of conversations around those three scenarios discussed above. You lead people through the pros and cons, and you’re talking about the possible ways to structure a trust, and the client is very interested in having the protections of the trust. Then you get to the question of “and who would you like to serve?” and they kind of cast their eyes upward and muse about it for a while, and realize they don’t really have anybody that they would want to act in that capacity. Then they say, “but you do that”, and you have to think about it because it is a real job, with real responsibilities and real liabilities. There are things you need to make sure you can do it in the first place. In order to do a good job, you have to have good recordkeeping capabilities, you have to understand the tax issues around trusts and how to plan for the administration of the trust. It’s one thing to get trusts started, but then it’s another thing to actually make them work well in practice. And there are opportunities that people miss if they don’t really know how trusts work from an income tax standpoint.
There are also things that you need to do from an investment standpoint. That was one of the things that led me to leave the practice of law and move into wealth management – so that I could have more tools to help clients. Because there was a point in the legal world where you had to hand it off to someone who would carry the investment piece forward. But you lost some level of connectivity there. As you were trying to figure out “alright how do I make distributions to this beneficiary and how do I ensure I have a smooth set of cash flow to this person, et cetera” – that is directly connected to the investment approach. And it’s very helpful to have a connection and be able to aggregate all of those things together so that you can ensure you have a real plan for that liquidity need and you’re not just turning to someone outside of the firm and hoping that they’re doing a good job. Because that’s a bit harder to manage and supervise.
NH: I’d like to pivot from your professional background and experience to the personal. I know that your background influences your perspective on serving as trustee, particularly with respect to serving where a mental health issue is present. You’re also a father of four children. How do you draw from your personal experience when serving as trustee?
MD: So, without divulging private information that belongs to other people, I think some folks in my family would be fine with me saying that we have some mental illness in the family; it’s not something to be ashamed of. I hope that it’s something we talk more about so that we can remove the stigma of it and address it in a medically intelligent and compassionate way. I think it’s actually important to talk about. I’m not going to identify people and talk too much about the details because those details belong to them, but at the same time I know they’d want me to say that it’s important in our family that we remove some of that stigma and talk about some of the ways of addressing some of those conditions head on in ways that help the people suffering from them move forward and ensure their integration into society.
So that’s been really important in the specific example of how mental illness impacts acting as trustee. The issues we’ve had have been chronic to critical and acute, so we’ve seen a lot of things in our family and that means that when we see them in a professional context, I have some familiarity with them and I certainly have a lot of empathy and compassion for the people going through them – both for the parents watching their children suffer and for the children who are suffering.
I also think being a parent helps a bit when you’re acting as trustee because in some ways, you’re bringing to bear similar skills. I’ve had four tries at parenthood and that’s given me some experience on how to work with people, especially when they’re entering adulthood and with respect to the special issues they have at various ages.
NH: What do you find most challenging about serving as trustee in a situation where a mental issue may be present?
MD: You have to recognize when there’s an acute, critical situation that exceeds your ability as a non-medical professional. There are times when we’ve asked people who are specially trained as interventionists to help us when it comes to speaking to a beneficiary who has a current acute substance abuse problem or a current acute mental health crisis. We all try to practice good first aid in the mental health world, but we recognize that we are not medical professionals there. And there are plenty of times when we have to ensure that people come into that relationship and provide additional assistance there.
That’s one of our roles – making sure that there’s money available for that and that we bring those experts in when it’s appropriate and ensure that they get paid. And that they’re online and available as needed when the situation becomes acute and critical.
NH: Let’s delve into a hypothetical situation to explain what this type of situation might look like more specifically. You talk about bringing in outside professionals and being able to recognize when you have an urgent situation. How might this manifest itself when acting as trustee? Can you walk us through this? So, mom or dad calls, or beneficiary calls, or you’re just recognizing something based on behavior?
MD: That is one of the benefits of long-term relationships with clients – you recognize what behavior is typical and you recognize what behavior is atypical because you have a baseline to measure it against. That could be somebody who’s acting differently because of a substance abuse problem, it could be somebody who is going through a serious psychotic episode, or somebody who’s in a manic phase, or in clinical depression and unresponsive. There could be somebody who is usually very on top of things and responsive but we know that there’s a background history of depression or something like that and if we can’t reach them or find out where they are or they don’t show up to a meeting, we know that that’s a potential sign of something to worry about.
It can also go the other way, and you get twenty calls from the same person in the space of a couple hours on something that objectively is not an emergency, but is something that all of the sudden has become very important to them and they’re becoming fixated on it. That may be a sign that there’s something going on that needs to be addressed.
You have to be respectful too, though, of the needs and desires of somebody with mental illness. And there are totally legitimate things that people can be focused on that aren’t problematic and not a symptom of anything that is something to worry about. But it could be affected by whatever they’re struggling with. So you have to tease out the difference between the focus on a particular problem or issue – and respect that – and also appropriately deal with the overall relationship and make sure that that’s not becoming something that is undermining their mental health and something that’s a symptom of a broader issue.
NH: How do you educate yourself when you might be dealing with a situation that you haven’t yet had personal or professional experience with? What if you encounter something that you haven’t seen before?
MD: Never say never – we’ve seen a lot of things because we’ve done this for a long time. But there are things that may come out of left field that will surprise you. The first step is to ensure transfer of information and make sure we’re allowed to ask questions of the people who might know. One of the things we might ask for when dealing with someone with a mental illness – particularly if someone is under a legal disability – is permission to speak to the people caring for them medically, whether that’s a therapist or a psychiatrist or somebody who’s in a position to give us a heads up and say there’s something going on right now that you should be aware of. That’s helpful.
Similarly, having a relationship with a parent or sibling or whoever might know what’s going on, what’s been a trigger for them in the past – that kind of thing can be very helpful. So, reaching out and establishing relationships with the rest of the family early on – before you need them – I think is really important.
NH: This is good practice as trustee, regardless of whether you think there may be a mental illness. This is something that you would do in any situation, right?
MD: Yes, this is good practice as trustee. There are a lot of people who are well-managed, they have their illness under control, and you wouldn’t be able to tell that there’s anything amiss unless you looked at a chart. Taking that general approach also takes out some of the stigma in making inquiries, because it’s just normal good practice for everybody in establishing those relationships and making sure you’re talking to the right people.
NH: You mentioned substance abuse earlier. And because there can be an overlap with mental illness and substance abuse, I wonder if you could speak to that because that’s obviously something that you deal with as a trustee. Is there anything else you want to add in that regard?
MD: Well, these are all challenging situations. You’re right that substance abuse sometimes goes along with mental illness, not always but sometimes. People try to self-medicate and that can lead to a whole other set of problems and issues. We try to help provide solutions there as well, helping families find the right professionals and pay for that in a way that doesn’t subject those payments to further abuse. Because if someone’s in a bad situation and is subject to all kinds of manipulation, then you don’t want to be dropping lots of money in their hands. For example, you want to make sure you pay for rehab directly.
The other thing you can add in addition to mental illness and substance abuse is victimization by third parties. It’s not just violence, but also all kinds of undue influence and other kinds of people trying to enter somebody’s life who they feel is financially secure but vulnerable for other reasons. So, we have to watch out for that. We’re trying to protect beneficiaries from a raft, a whole bunch of different potential injuries, some of them caused by themselves and some of them caused by third parties and the outside world.
Statistics on crimes against the mentally ill are just stunning. The chances of them being victimized criminally are enormously higher than the general population.
NH: From my vantage point in working and talking with you, it seems that you’re uniquely positioned to handle these types of situations because they are situations where you can make a huge impact by, for example, stepping in as a “compassionate gatekeeper” for the family. What’s your take?
MD: The mental health of all the members of a family dealing with mental illness is important. And setting boundaries and rules around the way we’re going to interact, particularly when somebody is going through a difficult phase, is important. And diverting some of those issues to people who are not within the family, and who can deal with them is helpful.
You have to be both dispassionate and compassionate at the same time. You have to deal with the objective reality of numbers and be able to say “that’s not something that the trust can support because there’s just not sufficient dollars in the trust to be able to do that on a regular basis.” But you also have to realize what people are going through and deliver that message in a compassionate way and try to navigate the impact that has for somebody who is going through a difficult period.
Though challenging, it’s easier for somebody who is not in the family. There are a lot of instances where the hard things – the things that would be impossible for the family – are the things that we end up doing.
NH: Can you please touch on what you get out of this work? What is it about this type of work that you find rewarding?
MD: As I said before, I think it’s important to try to take the stigma out of mental illness and I think that we bring a compassionate approach to these kinds of situations. I find it rewarding when we’re able to help. I mean, that’s why we’re in business – to try to do this. And when we can fill a need that wouldn’t otherwise be filled – maybe repair relationships, maybe be a bridge between generations that would otherwise have no connection – that’s incredibly rewarding. It is a way to keep some people safe and alive and maybe even getting toward happy, and maybe giving parents more peace of mind and protecting their own mental health from certain worries and issues and things like that. Having been through some of those things personally, I take a lot of satisfaction in trying to help where we can.