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Hi rkseiple:

***"Does this seem like a reasonable way to manage the money or can we do better and maintain relatively low risk?"***

NO! Totally unreasonable money management! You can do much better than that if the trustor made provision for you to do so. If he did not, you still have options.

Pixy and others mentioned that you need to start with the Trust agreement, to find out what your options are. If you don't have a copy, then you have a right to see it at the trustee's office or through the mail. If the trustee bank refuses to let you see it, call an attorney and find out if that is the correct response where you live. If it is not, have the attorney send them a letter. I presume that the trustor in this case is not yourself but more than likely your grandfather, and has already passed on. Some trusts can be rolled over to a new trustee at request of the beneficiary when the trustor is dead, some cannot. If grandmother was named as trustee, cotrustee, manager or comanager, she should be able to roll over on the basis of her own signature. If your grandmother is aged beyond being able to understand what is going on, you may have to go to court and get a conservatorship declared so that you can act for her. If your grandmother can roll over, you and she will need to first sellect another trustee, ask them for their paperwork to accomplish a rollover, fill it out and send the signed and notarized copy to the new trustee, and let them do the rest of the work. I can assure you that your current trustee will hang onto the money for dear life, and will not let it transfer untill the last legal second, however once you send the paper in, they will transfer. It may take as long as six months, but the transfer will happen, and no income that is being paid now will be interrupted. You may get a one month income interruption as the money changes trustees, but the new trustee will catch up as quickly as their wheels can turn.

****"She needs about $400/month income from her money, is this even possible while maintaing the principle?"****

Your grandmother's trust would yield between $4000/yr ($333/mo) (5%)and $5600/yr ($466/mo) (7%) in income, which is an average of $400/mo. if invested in Vanguard Total Bond Index Fund as a trustee. (The bond funds tend to be cyclic, so what you see in one month never is true all year). This investment is with reasonable safety (for most people at least), so I disagree with the previous poster that you should be in government bonds. I am not particularly recommending that fund, it just happens to be one that I have a bunch of money in that is producing a big chunk of my monthly income, and I have direct experience with its performance. Of course you can get much the same information as well, simply log on to:

They have a wide selection of fixed income funds, as do most of the large Mutual houses. I would want you to read up on several before making any selection of trustees. They all have web sites for you to access. In defference to the previous poster, I would advocate that you research the government bonds as well, so that you are makeing the best choice for you and your grandmother.

That asside, however with the fee structure of the trustee in this case subtracted from any good Bond Fund income, you would have $2800/yr ($233/mo)to $4400/yr ($366/mo) in income, not good enough. While you are in their hands, unless you can do some real jawboning on the trust manager, you are stuck with the 4.33% ($3464/yr or $289/mo). Hopefully you can roll over to Vanguard or some other low cost trustee and get your grandmother on the road to a better income.

If you can't roll out of the current trustee, get ahold of the trust account manager and become the worst burr under his butt that he has ever known. He can do better than 4.33$% with very little effort.

***"In the example "retiree portfolios" at the bottom of each table is listed "cash". What does this mean?"***

The portfolio is a real money portfolio, so a large chunk of money ($100,000 if I rember correctly) was deposited to the brokerage account in in the form of cash. Then the investments were bought, using that money. Not all of it was invested, and in addition to that, the current investments pay dividends at odd times. These dividends and the residual of original investment are kept in a money market account paying money market interest, which is reported as "CASH".

Have a great prosperous day, and

Fool on rksieplefool

The Nerdifool
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