No. of Recommendations: 21
I don't know if this is the right place...

Hi. I'm 36 years old and I have amyotrophic lateral sclerosis (ALS). I was diagnosed in April of 2015 and have a slow progression that has allowed me to work until this past November. I am now on short-term disability through an insurance company which will transition to long-term in a few months. I applied for Social Security Disability, which I am guaranteed to get with my diagnosis. Together, with the insurance, I will make 60% of my most recent salary. My parents just moved in with me to help with my care, as I will soon be in a wheelchair. My wife left me a few years ago and we have one 8-year-old daughter together.

I've been thinking a lot of my portfolio allocation. I have 56% of my money in various indexes (mostly S&P and TMI). I only have 3% in bonds. The other 40% is in various stocks, usually more growth-minded/risky.

The thing about ALS is that I don't know how much longer I will live. I have a very slow progression (thankfully!), the average ALS patient lives 3-5 years after diagnosis. I need my cash to last me an unknown amount of time, but I probably (maybe?) won't make it 10 years. After that, I want to leave as much as I can to my daughter.

I’ve already set up a trust and my will so my daughter gets everything at age 25 (assuming I’m gone by then). The executor has been instructed to leave everything as it is until that time. Then there are further instructions to her to hire a fee-based advisor if she needs help with investing. I have over $500k of life insurance that will pay to her if I go before I'm 55.

I'm going to cut my spending and increase my investments...but I'm struggling with my portfolio allocation. I want to maximize my returns, but I know that you should go more conservative as you near the end...but my nature is to be more aggressive.

Any thoughts from the experts here on how to go about my investing? Should I change to dividend stocks to supplement my income? I don't think I have enough invested that it would make a difference anyway. Should I just do what I want and let her have the insurance money and whatever is leftover?

I've come to grips with my diagnosis...just trying to figure out a way to go forward with an unknown time horizon. (I could be gone next year...or 20)

Thanks in advance!
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I would assume you’d invest like anyone with a short horizon - like a retired 80 year old. Safe and more bond or cash heavy. Maybe a fee only advisor could help. I might wait for an up in the market and move a bunch into cash.

So sorry about the diagnosis. My father in law had ALS. You’ll need a caregiver eventually, hospital bed (rent) and possibly a lift to get into and out of bed. Handicapped van and motorized wheelchair. Expensive items. Good you’re thinking ahead about expenses.

So sorry.
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No. of Recommendations: 3
I'd move everything to one of the Vanguard LifeStrategy Funds and be done with it. https://investor.vanguard.com/mutual-funds/lifestrategy/#/mi...

Probably Vanguard LifeStrategy Moderate Growth Fund (VSMGX).
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Thanks for the thoughts! I agree that I have a lot of big expenses coming up...luckily insurance will cover *some* of it.
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I want to maximize my returns, but I know that you should go more conservative as you near the end...but my nature is to be more aggressive.

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If you have a large enough portfolio to live off a 4% withdrawal, I don't see a problem with maybe a 75% stock portfolio. Your investment horizon is more like your daughter's lifespan than your own.

intercst
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No. of Recommendations: 5
You seem amazingly logical and detail-oriented for dealing with something so difficult. Here's what I might do. Since you are forecasting a max of 10 years of life remaining, I would bump it up to 15 (be optimistic and leave yourself a cushion) and calculate your anticipated annual cash needs for that period. Then I would move the money you'll need in the next 5-8 years into a cash or cash equivalent account (CD, Money Market) and the rest into income-driving investments, either stable, quality dividend paying companies, REITs or income-focused options plays.

For the money you do not expect to need in your lifetime, that's what you can afford to put in more aggressive growth equities to leave for your daughter. Here, I would focus on more stable mid and larger cap investments rather than higher risk small caps (though some small caps may be stable enough). The key consideration here is that if you are not keeping an eye on your investments and your daughter won't assume control until she turns 25, you don't want nobody to be in a position to act if something goes wrong.

Along those lines, I don't think I would be too strict with the instructions to the trustee to not touch anything between the time you can manage the portfolio and your daughter can do what she wants. Although TMF emphasises long term buy-and-hold investing, that does not mean never sell or don't watch. Companies will get acquired, external forces will impact operations, management will make mistakes. You need to have someone able to respond and deal with these situations.

Your trustee needs to be so empowered in your absence and if they are not capable, you might want to consider choosing your own wealth manager who would be responsible to the Trustee but would have the authority and skills to act on your behalf and in the way of your provided guidance. You just don't want your daughter to miss out on gains because your portfolio was unable to minimize losses or not take advantage of potential opportunities because nobody was minding the store.

Fuskie
Who notes the key thing is that you want your financial picture to be as stress free as possible and not worry about your living cash during a market downturn, correction or possible recession...

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I don't know if you have looked at this, but based on the diagnosis, I assume that Medicare may be appropriate, and Medicaid will be if you burn through your resources. To my knowledge, Medicare should be available regardless of income/investments, but Medicaid eligibility is strict. You may wish to consult with attorneys/financial planners, etc if you expect to eventually need Medicaid. There may be mechanisms to transfer some wealth to your daughter that does not get caught up in a look back period.

Good luck
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Sad to hear what you have to deal with.

If Medicaid does become a possibility, now is the time to think about it - because of the "look back" period.

A regular trust will not help with Medicaid eligibility - only an Irrevocable Trust can shield assets from a Medicaid evaluation and only after 5 years.

The other option is a "Medicaid Annuity." I won't go into details because each situation is unique except to say it might be an option for you. It is something I keep looking at because my wife's family has a history of dementia and extended time in nursing homes and I hate the idea of blowing through $700K or more.

Best wishes,

Paul
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danbobtx writes,

I don't know if you have looked at this, but based on the diagnosis, I assume that Medicare may be appropriate, and Medicaid will be if you burn through your resources. To my knowledge, Medicare should be available regardless of income/investments, but Medicaid eligibility is strict. You may wish to consult with attorneys/financial planners, etc if you expect to eventually need Medicaid. There may be mechanisms to transfer some wealth to your daughter that does not get caught up in a look back period.

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I'm pretty sure that Medicare only covers you for End-Stage Renal Disease (e.g., dialysis and kidney transplants) if you're under age 65.

Thankfully Obamacare is available today and even multi-millionaires can structure their portfolio income to get a $0/month premium -- whether they're healthy or disabled. Though it does depend on what state you live in. Premiums are higher if your state hasn't done the Obamacare Medicaid expansion.

Obamacare Repeal? My amazing story of drastically lower premiums.
http://www.retireearlyhomepage.com/obamacare_2017.html

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intercst
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@cmf_fuskie - Thanks for the thoughtful response! You've certainly given me a lot to consider!

Also -- I wasn't this rational 4 years ago...I've had some time to adjust and get used to it.
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All -- I qualify for Medicare as soon as I'm approved for Social Security Disability. ALS is one of the few diseases without a waitlist.
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I'm pretty sure that Medicare only covers you for End-Stage Renal Disease (e.g., dialysis and kidney transplants) if you're under age 65.
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No, it is also for severely disabled. ESRD is explicitly written in, but many others have medicare and are under 65. I've had pregnant patients on medicare.

Kristi
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I agree that I have a lot of big expenses coming up...luckily insurance will cover *some* of it.

I'm sorry to hear about your diagnosis.

Not a financial recommendation, but if you haven't done so already, contact your local ALS chapter. They usually have some expensive ALS-related equipment you can use for free. And they're great to work with.

Good luck,
AW
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