The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies

URL:  https://boards.fool.com/a-strange-circumstance-30215711.aspx

Subject:  A Strange Circumstance Date:  8/20/2012  11:51 PM
Author:  brucedoe Number:  116543 of 129380

A distant relative of mine has decided to disperse a part of her, apparently, sizable fortune. For the present consideration she has a large IRA and what was an equally large brokerage account. After certain gifts, however, the brokerage account is much reduced in size. As nearly as I can tell, she has no interest in bothering herself with investments. Apparently someone told her of my interest in investments as I have never met her. The bottom line is that she wants me to manage this account and, as payment, I am to be able to spend the income on the account but not the principle during my lifetime. I am to have a limited power of attorney to do this management. The income from this account is around $3,000/yr now which is fine. Upon my death the account is to be divided among her, now young, great grandchildren. Actually, I would be willing to do it for nothing, although she may feel that I will work harder if I get something.

So far so good, but the RMD from the sizable IRA goes into this account which, as nearly as I can tell, is around $12,000 - $15,000/yr. Of course for tax purposes, the RMD and short-term capital gains are considered income, but is that always the case? What I mean is that I will not be managing the IRA so is the RMD for other purposes income or an infusion of capital? I think the safe thing is to just withdraw dividends and interest.

I am also a little worried about liabilities. I don't know the family well, and I have some worries that if someone in the family thinks I have not done a good enough job they will sue me. I am a conservative investor, mainly in equities from companies with long periods of increasing their dividends (GPC, 3M, PG, etc.) and more recently in preferred stocks. I would manage this account much like I would manage my own. Someone might well think I should invest more in so-called growth stocks for such young children. I have not had success in my long investing career in doing this. I will see my lawyer about this concern but have yet to do so.

brucedoe
Copyright 1996-2019 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us