Here's my situation:A recently widowed mother, who has asked me to manage her finances. A previously established living trust that now requires spltting the living trust into successor trusts: one will have about $600K in assets and the other, somewhat more. I'm the trustee of both. Of course I need to look after the needs of my mother, but I the better I do at managing the trusts over the next few years, the more my sister and I will eventually inherit.Here's the problem: There is a lot of advice on how to plan for retirement; there is plenty of info on getting started growing your own portfolio from scratch. But I haven't found very much help at all on how to deal with big sums especially with this mix of objectives. At least one "full service" broker is advising me to let him "handle it". But I wouldn't be posting messages here if I accepted his advice. So where should I look for guidance on "instant trust management"?I think this will be a fairly common situation over the next decade when boomers begin to inherit the trillions accumulated by their WWII parents.
On Thu, 03 Apr 97 13:11:41 -0600, trmccoy wrote:<<Here's my situation: A recently widowed mother, who has asked me to manage her finances. A previously established living trust that now requires spltting the living trust into successor trusts: one will have about $600K in assets and the other, somewhat more. I'm the trustee of both. Of course I need to look after the needs of my mother, but I the better I do at managing the trusts over the next few years, the more my sister and I will eventually inherit. Here's the problem: There is a lot of advice on how to plan for retirement; there is plenty of info on getting started growing your own portfolio from scratch. But I haven't found very much help at all on how to deal with big sums especially with this mix of objectives. At least one 'full service' broker is advising me to let him 'handle it'. But I wouldn't be posting messages here if I accepted his advice. So where should I look for guidance on 'instant trust management'? I think this will be a fairly common situation over the next decade when boomers begin to inherit the trillions accumulated by their WWII parents. >>You're right - this will certainly be an increasingly common situation. I have been in exactly your situation for about five years and have a great deal of practical advise - too much for one message on a message board. However, let me pick out a few bits of immediate advise.1. The basis of every investment in your father's "bypass trust" went up to the value at his death. This means that you can sell any investment in the bypass trust with little if any capital gains, if you want, or if you sell that investment at a future date, at least the capital gains will be lower. When dividing your parent's assets into the "bypass" and "survivor's" separate trusts, place assets with the highest appreciation into the bypass trust. If you are lucky enough to have chosen parents who lived in a community property state, the basis of both halves of the trust rose, and you are starting out managing the trusts at a great advantage.2. Under no circumstances give any control of the assets to a full service broker, or anyone else! A broker "handled" the investments in the trust I manage, and he made more money than the trust did for two years until I developed enough confidence to take control of the investments. I lost a lot of money in "back end loads" when I sold all the investments and moved to a discount broker.3. If I were in your present situation, I would sell every asset whose basis rose, (no capital gains) and park all the money in a money market account until I could educate myself and be sure I knew what I was doing! This may take months, but you'll never regret it. Start reading. As a matter of fact, one of my most valuable places of learning is right here in the Fool's School. 4. Invest enough of a portion of your mother's trust in safe income strategies, like US Treasuries or conservative muni's, to insure that she has enough income to live comfortably for her remaining years. The rest of her trust can be invested in stocks if that's what you eventually decide. Remember that your mother will be paying income taxes for both trusts; your father's taxes will be reported on an IRS form 1041, which means that the income is reported on your mother's 1040 at her tax rate. I know this is complicated, but after a time, it will become clearer. The result is that for as long as your mother lives, her portion of the trust will perhaps dwindle because of the drain of her living expenses and her big income tax burden. This is exactly what you want, for two reasons. One is that your father's trust can now grow ESTATE TAX FREE as long as his trust exixts, and when the money is eventually distributed to you and your sister, ALL of his trust will be distributed. The other reason is that it would be good for your mother's trust to be reduced, by the time of her death, to less than $600,000, so that no Federal Estate tax would be due on her trust (Federal Estate Taxes are real killers). If it appears that her estate will NOT dwindle to under the $600,000, encourage her to gift ou $10,000 each year to was many people as she wants in order to accomplish this goal.5. Retain a really competent accountant to do the taxes each year. The expense is negligible. Also find yourself a good attorney who specializes in taxes and estates - you don't need him now, but if you ever do, you want to know where to find him (he's expensive!). You can get along fine without him now, and if you read enough, you may never need him. Your parents were clever enough to set up a living trust, which makes life much easier for the inheritors.6. Ask me some more questions - if I can be of help, pick my brain (remember, I'm not a lawyer, but just a fortunate beneficiary like you).
I can relate to your concerns because I have a Mother who I am looking after. Also, I'm an attorney who provides care for some elderly clients who can't manage their affairs, including but not limited to their investments.I think that you must first determine what your goals are with regard to your Mother's investments. If your goal is to manage her money so that when she dies, you and your sister have an inheritance, then obviously, you need to think in terms of growth--depending, of course, on your Mother's present health and life expectancy. If you are only thinking about using her funds for her care, then safe investments producing income make sense. I received a message from David Gardner, and he suggested that the Dow Divident approach works well for retirement investing. I would agree, depending on your Mother's health.Wyatt
I concur. Steps 2, 3, and 5 are particularly important to follow. It's very helpful to have an experienced Trust attorney who will exlain all the ins and outs and do all the paperwork correctly so as to avoid problems down the road. Never forget that your primary and most important responsibility is to your mother. God Bless her, and may she live forever and use up all the money and become a financial burden to you. But, Heaven forbid, the unthinkable happens, be frugal so you can pass these difficulties along to the next generation.
TrmccoyI agree with all the replies you have received. Motley Fool is a great place to get educated about investing. I also suggest you look into the American Association of Individual Investors, whose mission is investment education to facilitate beginning investors gaining confidence in managing their own portfolios. The annual membership fees are modest and they have a wealth of info on all aspects of investing.As others have posted, your first step should be to write down your specific investing goals and decide on a portfolio strategy which fits your risk profile From what you have described it sounds as though you will have two portfolios to assemble. Go slow and be patient. For each stock or fund in the present portfolio ask yourself whether it fits the goals for the portfolio and whether you would buy it today. The temptation will be to rush through this process so you can check it off your to do list. Resist this temptation. Don't make radical changes until you are confident that you understand why each change is beneficial to the portfolio.Bill
Everyone has made good points. I found a good resource in Vanguard.com which is where I have my accounts. I coordinate with the Fool's site. Reading both sites gives some good long term views as well as current market issues. Good luck, you are very fortunate to have had parents who are prepared.
If you are good at analyzing stocks, bonds, ETF, Mutual Funds and cash management strategies do it yourself. If your like 95% of the public who when put in a Fiduciary position of managing an estate to preserve and grow the estate, your better off utilizing an adviser that has an open architecture and can guide you through the capital allocation process utilizing a multi-strategist advisory platform. This puts the fiduciary responsibility square on the adviser and strategist(s)when it comes to the day to day responsibilities of monitoring the markets, opportunities and sticking to Grantor's investment objective(s), risk tolerance and financial needs of the Grantor(s) of the Trust. Transfer the management risk as far from you as possible, but sticking to a transparent relationship with your advisers. Good Luck!
My problem is: #1 I'M 95 YEARS old, nuff said.I'm in fairly good health, but no one lives forever. This seems to me to be my biggest obstacle to even considering investing? WHAT ARE YOUR THOUGHS?
Congrats on making it to 95. No one in my family has lived that long and most were long gone by then. Of the current generation , only 8000 or so out of 100,000 will live to 100. If you are 95, your 'average' life expectancy is 2.8 years for a male and 3.3 years for a female. That means half the folks your age will live that many years. Others will live longer. The oldest person in the US is about 116 years old. I wouldn't worry too much about investing. Or changing your investments. Hopefully you've got enough now to live on. Enjoy every day. There could be 20 years of them. t.
I see you have are new to the Fool. The post you have replied to was written in 1997. It's my guess that much has changed in the intervening 18 years. PF
Interesting timeline.1997 (3)2010 (2) -- 13 years later2014 (4) -- 4 years later.Then I looked more closely, the original post was the very first post on this board. That explains it.
Then I looked more closely, the original post was the very first post on this board. That explains it.Aha! Thanks for digging that up. I noticed the oddness of the thread dates as well, but "didn't make the connection".Draggon
"My problem is: #1 I'M 95 YEARS old, nuff said."^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^"With a little bit of luck,with a little bit of luck,We will live to see this problem too."(to be sung to the tune from "My Fair Lady")Howie52"I'm in fairly good health, but no one lives forever. This seems to me to be my biggest obstacle to even considering investing? "I have heard of folks living to 125 or so - but I have not heard anything about whether they were interested in investments, equitiesor bonds. They all did seem to be interested in foods, drinksand some few in cigars.What are your interests?
"I have heard of folks living to 125 or so - but I have not heardanything about whether they were interested in investments, equitiesor bonds. They all did seem to be interested in foods, drinksand some few in cigars.What are your interests? " - - ----\The oldest person in the USA is currently 116. About six people have had that honor in the last 3 years. They don't hold the record for long.Maybe in Kazakhstan or other far away places you might live to 120....but not 1 in 100,000 will if that.....maybe 1 in 10 million. I'm near 70, still like to travel (mostly in USA) - avoid airplanes and drive....and ham radio and accordions are what keep me busy. t.
"Maybe in Kazakhstan or other far away places you might live to 120....but not 1 in 100,000 will if that.....maybe 1 in 10 million. "^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^One is all that it takes - and if you are the one, you very might stillenjoy radio - accordions - traveling - and such things.I enjoy mountains, watching minor league hockey games, driving, air shows and art museums.But I can be very happy reading books.
"One is all that it takes - and if you are the one, you very might stillenjoy radio - accordions - traveling - and such things."The secret to living to 100 is having parents who lived into their 90s or beyond. Otherwise, if all your relatives kicked the bucket before 85, your odds aren't too good of reaching 120. There's 300 million in the USA and in the last 10 years.....the max has been about 116...and that has been females!.....I'll be happy to make it to 90 in good health. Uncle Bill made it to 94...doing good up till the last few months. Still driving at 92. Gave up car as didn't need it. Every other relative died before 80 on the male side, 85 on the female side. t.
The secret to living to 100 is having parents who lived into their 90s or beyond. Probably not, actually.Life spans, says James W. Vaupel, who directs the Laboratory of Survival and Longevity at the Max Planck Institute for Demographic Research in Rostock, Germany, are nothing like a trait like height, which is strongly inherited.“How tall your parents are compared to the average height explains 80 to 90 percent of how tall you are compared to the average person,” Dr. Vaupel said. But “only 3 percent of how long you live compared to the average person can be explained by how long your parents lived.”http://www.nytimes.com/2006/08/31/health/31age.htmlIf you want to live a long time you might be better off getting rich. Which will come in handy providing for your long life.Scientists have known for decades that poverty translates into higher rates of illness and mortality. But an explosion of research is demonstrating that social class -- as measured not just by income but also by education and other markers of relative status -- is one of the most powerful predictors of health, more powerful than genetics, exposure to carcinogens, even smoking.http://www.nytimes.com/1999/06/01/health/for-good-health-it-...
I've taken to looking over the obits in the paper - and thereseem to be a bunch of folks in their 90s and early 100s.course there are also some in their 30s, 40s and 50s.Howie52May you be exceedingly happy.
If you want to live to 100, don't be tall. Be average or slightly below. That's the best odds.
Of my mother's seven siblings, four lived to be 100 or more. My mother died last year unexpectedly at 101, after having experienced a normal day. Fifty-seven percent surviving to a 100 or more is long odds.At 79, I share with several of my cousins an appearance of being much younger than our age -- I encounter disbelief when I tell people my age, same with my mother when she was over 100.If not genetic, it's something weird.db
"If not genetic, it's something weird.db "^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^There is nothing wrong with weird.Genes are as God and your parents gave you.But a little slice here and a little radiant energy there and ahot spell or a cold spell at a given moment in time can adjustif the Spirit is willing.
Full Service Brokers will only recommend the stocks their Brokerage are likely paid to push, no proof, but it always felt that way to me. I use a Full Service Broker I have known for years, I want to do business with someone who knows me. I learned that from my Dad who had someone call his Broker saying he was me and wanted to transfer the cash and stocks in Dad's accounts to another Brokerage. The Broker called my Dad who called me and needless to say no investments were transferred. I follow Motley Fool investment recommendations as much as possible, although I cannot risk a few high risk Biotechnology Symbols. For me buying is easy, it has been when to sell that I struggle with and Motley Fool helps with that decision.
I follow Motley Fool investment recommendations as much as possible..... Motley Fool helps with that decision.Maybe you should mark your post as an advertisement.
Maybe you should mark your post as an advertisement. Especially when replying to a post from antiquity.
I can relate to your problem of struggling to sell some stocks. I, too mostly follow motley fools recommendation to buy as I am quite elderly at 85 years old since I cannot do much research and analysis. How do I decide when to sell stocks, any ideas?art
"I can relate to your problem of struggling to sell some stocks. I, too mostly follow motley fools recommendation to buy as I am quite elderly at 85 years old since I cannot do much research and analysis. How do I decide when to sell stocks, any ideas?art "****************************************************************One approach is to rank the contents of your portfolio - every so often. Considerthe diversity and apply a measure of risk or growth on the stocks/funds/ETFs.Some folks take the approach of selling "winners" or "losers" or both in order tosimplify and offset capital gains/loses. I tend to look for dividend payers and/or dividend growth and rarely use TMF recommendations.So my selling tends to be related to risks in the dividend picture or a better opportunity inthe same market sector. Howie52
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |