Alyssa Milano and people who lose everything

[Scarlett]

She is just the latest example, but how is it so many people get swindled out of millions. She claims in a lawsuit her manager wasn't paying her mortgage or her federal taxes. I can't imagine ever being rich enough to turn that over completely to someone else.

 

Color me naive I guess.

[kitten18]

I can completely imagine turning that stuff over to someone else. My DH has, it just happens to be me that takes care of it.

Many celebrities work nearly constantly and don't have the time and or expertise to manage their financial stuff.

[OneStepAtATime]

FWIW, DH has a cousin that, through her job, ended up very wealthy.  She works long hours and she and her husband travel frequently (as in all over the U.S. and the world at least 2-3 times a month).  They own multiple properties and have several business investments and charities.  They physically do not have the time to take care of all of their bills.  They hired a financial manager.  

 

I remember Billy Joel was swindled out of millions by his business manager.  He traveled a lot to perform and attend events and to see his daughter.  He did not have the physical time to handle all of his investments, which because of the various contracts he was under during various times in his life, was very complicated (royalties for songs, etc.).  He was unaware of how much had been lost for quite a while because enough was coming in to cover the debts his manager was running up...until it wasn't.

 

For people with a lot of money, and I think especially performers that have to travel or perform long hours, it isn't just a few bills.  It is many times many bills that come in and the taxes can be really tricky.  Hiring a professional financial manager can be a huge help in preventing someone from getting in trouble with the IRS as well as keeping bills paid on time.

[Scarlett]

FWIW, DH has a cousin that, through her job, ended up very wealthy. She works long hours and she and her husband travel frequently (as in all over the U.S. and the world at least 2-3 times a month). They own multiple properties and have several business investments and charities. They physically do not have the time to take care of all of their bills. They hired a financial manager.

 

I remember Billy Joel was swindled out of millions by his business manager. He traveled a lot to perform and attend events and to see his daughter. He did not have the physical time to handle all of his investments, which because of the various contracts he was under during various times in his life, was very complicated (royalties for songs, etc.). He was unaware of how much had been lost for quite a while because enough was coming in to cover the debts his manager was running up...until it wasn't.

 

For people with a lot of money, and I think especially performers that have to travel or perform long hours, it isn't just a few bills. It is many times many bills that come in and the taxes can be really tricky. Hiring a professional financial manager can be a huge help in preventing someone from getting in trouble with the IRS as well as keeping bills paid on time.

I don't buy that busy rich people don't have the time to keep an eye on their money. I think it is really no different than the Dh of Kitten, and mine for that matter that turns everything over to a wife.

 

I have very wealthy friends. I promise you he knows what is going on with his wealth.

[Scarlett]

I know I could never let someone else have total control of my money. There have to be some checks and balances to stop thieves.

[Butter]

It's pretty common for actors and other wealthy people to turn over all the managing of their money to someone else.  Shannen Doherty's manager didn't pay her health insurance premium and that became a huge issue when she was diagnosed with breast cancer.

[kitten18]

I don't buy that busy rich people don't have the time to keep an eye on their money. I think it is really no different than the Dh of Kitten, and mine for that matter that turns everything over to a wife.

 

I have very wealthy friends. I promise you he knows what is going on with his wealth.

But my dh doesn't keep an eye on anything. He asks me every once in a awhile what is going on with things but it's really no different than if he had a manager doing it.

 

Like with Alyssa Milano, she was paying for a service. Her manager was supposed to be paying her bills, filing taxes, taking care of investments, etc.

[sassenach]

We had a former pastor who had a pay phone business (back in the day) to supplement his very low pastoral income. He hired someone to manage it. When the business started to wane (because of cell phones), the guy didn't say anything and instead started to load up the credit cards to pay the bills. By the time it was discovered, they were over 100k in the hole. He ended up losing his house and having to file BK.

 

Here's what I don't get- I understand having a financial manager. I don't understand never looking over your accounts. Even with a manager, I want to see my books.

 

Also, if I had that much money, I would hire an auditor occasionally.

[Scarlett]

But my dh doesn't keep an eye on anything. He asks me every once in a awhile what is going on with things but it's really no different than if he had a manager doing it.

 

Like with Alyssa Milano, she was paying for a service. Her manager was supposed to be paying her bills, filing taxes, taking care of investments, etc.

That was my point. Doesn't matter if you are like you and me or if you have millions. If you don't keep an eye on it someone could rip you off.

[Scarlett]

We had a former pastor who had a pay phone business (back in the day) to supplement his very low pastoral income. He hired someone to manage it. When the business started to wane (because of cell phones), the guy didn't say anything and instead started to load up the credit cards to pay the bills. By the time it was discovered, they were over 100k in the hole. He ended up losing his house and having to file BK.

 

Here's what I don't get- I understand having a financial manager. I don't understand never looking over your accounts. Even with a manager, I want to see my books.

 

Also, if I had that much money, I would hire an auditor occasionally.

Exactly. I think it is just foolish to never check things out.

[OneStepAtATime]

I guess we will have to agree to disagree.  

 

Dh's cousin gets statements and looks them over but she absolutely does not have time to go through every bill coming in.  She works long hours and travels frequently.  So does her husband.  They both have careers that are exceedingly time consuming and have investments around the world.  And she and her husband own multiple houses.  I struggle to just keep up with the finances DH and I have to deal with.   I can't imagine having to handle properties around the world plus investments, etc. and understand all the legal and financial ramifications of decisions I am making.  It isn't just oh pay the mortgage and the electricity bill and the utilities and the taxes and boom you are done.  Her business manager works for them full time.  It is a full time job.  If she wanted to quit doing the work she loves to strictly work on financial management sure, she could probably do that.  She doesn't.  She loves her career.  So does her husband.  So they hire someone else to do the financial management part and they check in on things periodically.  

 

But reports can be forged.  Perhaps Milano was getting false reports.  I agree that it makes sense to have an outside audit upon occasion.  

[Joker]

My dh doesn't even know how much he makes a year. Every year at annual review time he is surprised and asks me if it's correct. He also has no idea what we pay out each month in bills. I don't even know if he remembers who holds our mortgage. I can see it happening easily with wealthy, busy celebrities.

[Pawz4me]

I don't really understand it either, but I'll say this -- We have a close family member who is a professional athlete in a big money sport. He has a manager who pretty much handles everything for him. But I think his dad keeps a pretty close eye on what the manager is doing, including meeting with said athlete's manager a few times a year. And that's for two reasons: (1) the athlete simply does not have the time. It doesn't matter if you (generic) believe it or not, but for about nine months a year he's pretty well occupied 24/7 either by playing his sport, practicing his sport, making mandatory public appearances, traveling or sleeping. it's not at all comparable to a normal career where someone works 40-80 hours a week. His "hours" are way more than that. And (2) even though athlete isn't fresh out of high school he's still pretty young. It can be difficult for young people who come into large sums of money to even begin to know what they should be looking out for. That's probably especially true of people who come from poor/low income families who've never had the experience of having any extra money to speak of. Now Milano's far from a kid and so one would assume she's had time to gain some smarts over the years. But she did come to stardom pretty much as a child didn't she (I'm pretty clueless about celebs, so maybe I'm thinking of someone else)? Maybe it happened at such a young age that for her having a manager to handle things seems so normal that it never really occurred to her to keep close watch.

[aggieamy]

My dh doesn't even know how much he makes a year. Every year at annual review time he is surprised and asks me if it's correct. He also has no idea what we pay out each month in bills. I don't even know if he remembers who holds our mortgage. I can see it happening easily with wealthy, busy celebrities.

 

This is the case in our family also. I guess it's a bit more extreme than that even because DH and I are self employed so I do all the financials for the business also. He literally has no connection at all with what he makes or what is spent. It works for him and for me - I keep him updated periodically if I make a big payment on the house or up our retirement contributions but otherwise he's uninvolved.

[Joker]

But that just isn't wise. Yes, my husband is a man of integrity. Yes, he is better at money, particularly investments. But I cannot imagine not looking things over as well. That just seems really, really stupid no matter how much I love or trusted my spouse.

Well, dh is far from stupid and I have the ability to understand people can do things differently than I and even do them well. Dh's parents have the same arrangement and it's worked beautifully for them the past 56 years. They are both retired and living comfortably.

[OneStepAtATime]

But that just isn't wise.  Yes, my husband is a man of integrity.  Yes, he is better at money, particularly investments.  But I cannot imagine not looking things over as well.  That just seems really, really stupid no matter how much I love or trusted my spouse. 

It may be really unwise but not everyone has the understanding and patience to deal with personal finances.  DH is brilliant but he is abysmal at handling finances.  When we married he turned it all over to me.   Before we married he was awful at handling his finances. Actually, he still is. Do I think it is wise for one spouse to handle everything and the other spouse to willfully remain in the dark?  No.  But I don't think this is an uncommon event.  Different people have different strengths and weaknesses and interests and abilities.  Not everyone has the patience and understanding to wade through personal finances.

 

But your average citizen is in a much different situation than someone who is extremely wealthy and has lots of investments.  That just adds a whole other level of complication.  I do think it is important, even if you have to hire someone else to handle things, to not blindly trust the people you hired.  I agree, it makes more sense to periodically check in on things and have some sort of outside audit upon occasion.  I absolutely understand hiring someone else to do the business/financial management side of things, though.

 

And I do think that some professional business managers can get very good at hiding things going on behind the scenes ("cooking the books" as my dad would say).  That is why an outside audit makes sense upon occasion.  

Edited June 22, 2017 by OneStepAtATime

[shawthorne44]

And also, it could be that they are REQUIRED to have someone else manage the bills.   We have some older friends that inherited a trust that was supposed to pay for all the standard bills.  The trust is managed by UMB.   Everything was fine when the original person was managing it, then he retired or died.   The new person saw a wealthy old lady and started to churn the investments in order to wrack up fees.  When they complained and tried to get the trust moved, UMB said that they wouldn't approve the move and then didn't pay for things like income taxes and property taxes.   The UMB started to collude with a couple of the kids to get her (very sharp and no dementia) into a Medicaid Nursing Home.   Which then involved lawsuits and the court mandating a business manager.   They have had major money stolen from them and there is nothing they can do about it.  

[Tap]

I think a lot of time, it is the types of bills and income they have that gets confusing.  When you have a typical family with a couple of paychecks and maybe a few investments....then adding in taxes, write offs, new investments, property maintence, medical etc.  It can get confusing but still doable.

 

 

For celebrities....the income can be coming and going in the same directions but 10 fold the volume.  It would be very easy to get overwhelmed and just let someone who claims to know what is going on to handle it.  It isn't like they have a traditional paycheck every week.  There is feast and famine, so they are used to seeing big increased and decreases, but hope it all averages out in their favor in the end. 

 

I have a few very wealthy friends.  A couple handle all the details themselves and really enjoy that. One of my friends has a $20,000 tax bill a month  on a single investment property. He pays all of his bills, including routine things like dinner out, with a check.  He balances his account dailyl  and keeps tabs on every dollar.  He is very generous, so it isn't a miserly trait, he just wants to know where it is going and coming from. A couple others just. do. not. understand money and money management.  There are some people who really need help to figure out who to pay, when to pay it and how to get what they need.  They don't understand investments, or write offs, long term planning, or how much fun money they can spend each month.  They hire someone to do it for them. 

[Bluegoat]

I don't have a hard time believing it.  When people have that kind of money, it is not like running household finances.  It is like running a business, perhaps quite a large one.  I don't have the expertise to run the money side of a business.  I have served on boards where we look over the money every month.  I am still completely at the mercy of the people handling the money, unless I actually do their job and look at each account, calculate the returns, check each bill, and so on. 

 

This is why we audit every few years, and as a charitable group that is required, but it looks a bit different with a private situation.

 

Do people think the family who owns Walmart actually knows everything that is going on in their business?  It isn't actually possible even if they are financially literate.  These are smaller versions of the same problem.

[Carrie12345]

I think a lot of time, it is the types of bills and income they have that gets confusing.  When you have a typical family with a couple of paychecks and maybe a few investments....then adding in taxes, write offs, new investments, property maintence, medical etc.  It can get confusing but still doable.

 

 

For celebrities....the income can be coming and going in the same directions but 10 fold the volume.  It would be very easy to get overwhelmed and just let someone who claims to know what is going on to handle it.  It isn't like they have a traditional paycheck every week.  There is feast and famine, so they are used to seeing big increased and decreases, but hope it all averages out in their favor in the end. 

 

Yes!

Tomorrow is a "financials" day for me, and I dread it every two weeks. In theory, I would love to hand it over to someone else, because I have 82 other things to take care of.  And I'm just a normal person!

 

I'm pretty sure I would do everything in my power to stay on top of my finances if I were filthy rich, but I don't doubt that it would be a real struggle to do so.

[OneStepAtATime]

I guess I see financial education at least as important if not more important than sex ed. 

I agree.  

 

FWIW, my DH's father was an accountant and at one point was the County Auditor for his county.  He was excellent at financial management.  He worked hard to teach his kids responsible financial management.  They had several kids.  Most are great with finances.  2 are not.  DH is one of those two.  

 

My dad majored in finance.  He was terrible at personal finance.  Mom had to take over when he ended up putting us in terrible debt.  His mother was terrific at personal finance.  She was also a math teacher for 33 years.  She taught him a lot.  Didn't mean he was able to use that information on a day to day basis once he was in charge.

 

Teaching it does not mean it sticks.

 

 

As for Milano's issues, who knows what her financial background is, or whether she was trying to keep track of her finances. I have no idea.  I do not fault her at all for turning over the nitty gritty day to day stuff to someone else.  I do wish for her sake she had required an outside audit upon occasion.  

[Joker]

I guess I see financial education at least as important if not more important than sex ed.

In our case, even though I handle 100% of our finances, it doesn't mean dh can't do it. He has a math degree and is an executive in the finance department of a large well known company. He just has zero issues letting me completely handle things at home financially. He doesn't need more education. It's just how we do things.

[Jean in Newcastle]

So the purpose of this thread is to blame the person who lost everything?  Seems like kicking someone when they are down. . .   And I agree with the person who said that it is like hiring a business manager to run/manage a business, not personal finances.  Do business managers need occasional audits?  Probably.  But there is a reason why things like embezzling can happen - these positions do put people in a position of trust which can unfortunately be misplaced.  Blame the crook embezzler not the victim. 

[Scarlett]

My boss is quite well off and has his hand in all sorts of things. He is always buying selling or developing something. He has an accountant...I pick up stuff there a few times a year....but my boss handles all of his business money. He does payroll, he pays every bill. I have access to his checks but he certainly knows if I get one. I have a credit card in my name and he looks at the amounts on line although he never micromanages me.

 

I make deposits for him and I drop off payments for him at the bank. I know he checks it all on line after I do because he has asked me for the deposit slip when I've forgotten to give it to him and called me to verify a payment was dropped off by me because it didn't show up on line the next morning.

 

My best friend who is crazy wealthy......she has no big money sense....and I get that it is very complicated. Her husband, her son and their SIL make quarterly trips to a big city to go over everything with their team. Their son is going to school for Wealth Management.

 

So I think even the wealthiest people can and some do keep an eye on it.

[goldberry]

It's scary.  I totally understand how someone with that much money could not have a good idea what's going on. Maybe if you have THAT much money, it's worth hiring a separate person to randomly audit the finances.  It is something I would consider if I was in that position.  Any time one person has too much control, you are at risk.  As a bookkeeper, I want internal controls to protect myself.

[Jean in Newcastle]

No, more like a cautionary tale so it doesn't happen to anyone else.  That said, i can understand losing a lot of money.  I definitely see how that can happen, but everything?  With rare exceptions like the stock market crash of 1929, I guess I have trouble seeing how it could happen.

 

Most of us don't need to hire business managers.  The most some of us might need is a tax accountant or someone like that.  As far as Alyssa Milano goes, she isn't homeless and living in rags.  She has a very bankable career that has the potential to earn back even millions unlike most of us.  And she has assets like multiple million dollar houses that can be sold if necessary.  So don't read too much into the "lost everything" title. 

[Arcadia]

As for Milano's issues, who knows what her financial background is, or whether she was trying to keep track of her finances. I have no idea.  I do not fault her at all for turning over the nitty gritty day to day stuff to someone else.  I do wish for her sake she had required an outside audit upon occasion.

  

Do business managers need occasional audits?  Probably.  But there is a reason why things like embezzling can happen - these positions do put people in a position of trust which can unfortunately be misplaced.  Blame the crook embezzler not the victim.

I agree with 3rd party audits but books can be cooked and auditors can be bought. A girlfriend was working in PwC (PriceWaterhouseCoopers) and that company is often in embezzlement lawsuits. When there are huge amounts of money involved, the temptation is always there.

 

E.g.

"For six years from 2002, PwC auditors consistently gave Colonial Bank a clean bill of health, until the bank collapsed.

 

PwC has struggled in recent years. It is still defending its involvement in the enormous LuxLeaks scandal, in which a whistleblower claimed the auditor consistently looked the other way when clients behaved badly." https://www.forbes.com/sites/jwebb/2016/08/25/pwc-sued-for-missing-2-9-billion-scam-do-auditors-have-a-public-responsibility-to-prevent-fraud/#6917409172e8

[Scarlett]

So the purpose of this thread is to blame the person who lost everything? Seems like kicking someone when they are down. . . And I agree with the person who said that it is like hiring a business manager to run/manage a business, not personal finances. Do business managers need occasional audits? Probably. But there is a reason why things like embezzling can happen - these positions do put people in a position of trust which can unfortunately be misplaced. Blame the crook embezzler not the victim.

I doubt she is reading a homeschool chat board. She is public figure and I only used her as an example of what I see often with wealth people and celebrities. I wondered if I was the only one who thinks it unwise to turn over everything to another person.

 

Of course it is the embezzler fault that they embezzled. But we can still look at ways to prevent it from happening.

[Scarlett]

Most of us don't need to hire business managers. The most some of us might need is a tax accountant or someone like that. As far as Alyssa Milano goes, she isn't homeless and living in rags. She has a very bankable career that has the potential to earn back even millions unlike most of us. And she has assets like multiple million dollar houses that can be sold if necessary. So don't read too much into the "lost everything" title.

Most of us may not need business managers but on this thread alone were several who said their mate knows nothing about their personal finances.

[Caroline]

If he is doing his own payroll by himself, then his business is not all that big.

 

My boss is quite well off and has his hand in all sorts of things. He is always buying selling or developing something. He has an accountant...I pick up stuff there a few times a year....but my boss handles all of his business money. He does payroll, he pays every bill. I have access to his checks but he certainly knows if I get one. I have a credit card in my name and he looks at the amounts on line although he never micromanages me.

 

I make deposits for him and I drop off payments for him at the bank. I know he checks it all on line after I do because he has asked me for the deposit slip when I've forgotten to give it to him and called me to verify a payment was dropped off by me because it didn't show up on line the next morning.

 

My best friend who is crazy wealthy......she has no big money sense....and I get that it is very complicated. Her husband, her son and their SIL make quarterly trips to a big city to go over everything with their team. Their son is going to school for Wealth Management.

 

So I think even the wealthiest people can and some do keep an eye on it.

[idnib]

That level of hands-on money management is very time consuming. Even if you take the time to go over reports it's a whole other level to verify the reports are accurate and nobody is ripping you off. An old friend of mine has made a lot of money (9 figures) and he enjoys managing it himself, but he quit his job to do it. It's literally his full time job to manage his own money.

[Scarlett]

If he is doing his own payroll by himself, then his business is not all that big.

 

 

It isn't. It is a small part of what all he has going on. But size of your payroll doesn't determine how much wealth you have. Edited June 22, 2017 by Scarlett

[kroe1]

I have been "swindled" twice. Yes, it is easy to lose everything.

[prairiewindmomma]

Why aren't they hiring bonded financial managers? As an attorney, I was required to be licensed, bonded, and insured against malpractice claims.