Estate Planning

A Bronx Story: $20 million lost by public administrators

By Hull & Hull LLP

Speaking of risky U.S. investments...

Public administrators of estate monies appear to have lost around $20,000,000.  The place?  The Bronx, NY.  When a New York resident dies intestate (without a will), his or her assets are managed by these public administrators until there is a court-approved settlement.  This is roughly the equivalent of monies paid into Court in Ontario.  The investments are even overseen by a judge.  

Similar to Ontario, the monies ought to be invested in low-risk investments like Treasury bills.  But apparently that principle was ignored by the public administrators, who instead bought auction-rate securities, the market for which collapsed in February.   

The lesson?  First, nothing happens on a small scale in New York, not even in the Bronx.  Second, a "risky" investment means that one might lose money.  A tough concept to grasp?  Third, someone else always gets paid: see page 2 of the article.  Where there are investments to be made, there are fees to be paid. 

Luckily for the beneficiaries, it appears that ultimately the city (ie, the taxpayers) will pay, not the various estates' beneficiaries. 

Thanks for reading,

Chris Graham

Full post as published by Toronto Estate Law Blog on July 21, 2008 (boomark / email).