Skip to main content
No. of Recommendations: 0
My father passed away a little over a month ago. He had his retirement in CDs, IRAs,savings/checking accts, and 1 money market. The sum total being just under $300K, all of which are in a trust. We (my Mom & brothers) are in the process of deciding what to do with all these accounts. The CDs are not getting much of a return; the money market is getting hammered and the money in the saving/checking accounts are just not being invested. I would like to consolidate and move this money around so it can grow with minimal risk and minimal tax implications, but I'd also like her to be able to access the money whenever she wants.

Thanks in advance,

MM
Print the post Back To Top
No. of Recommendations: 0
We need more information to make a good recommendation. If the money can be needed at any time, then you can't invest in stocks. You have to choose short term vehicles. So its best to work out some sort of plan. When will the money be needed? How much payout per year? Over how long? Etc.

From there you can work out a plan. If the horizon is long term--over 5 years, then Fools would suggest that most of the money be in stocks. An S&P 500 Index fund is a good choice, but that can be combined with other stock investments to provide further diversification.

For the short term portion, a laddered maturity bond portfolio of investment grade corporate bonds is probably best. Fools would suggest constructing the portfolio with 5 years of expenses (or expected payout from the account). If you are concerned about stocks, then the fixed income proportion can be increased. What is the income tax situation for the trust? If it pays income tax, then tax free municipal bonds could be ideal--depending on its expected tax rate.

Note that timing can be a consideration in this case. Interest rates are somewhat low right now and likely to rise a bit over the next 6 mo or so. So rather than buying all the fixed income investments right now, phasing them in slowly over time as existing investments mature may be better.

Similarly, some think stocks are likely to go up as the economy recovers (now is the time to buy), while others are uncertain and think there may be more bad news (better wait). Over the long term stocks are likely to rise, but short term is uncertain. Therefore, you could park the funds in money markets or CDs and wait until the stock environment is more settled.

Best of luck to you.
Print the post Back To Top
No. of Recommendations: 0
I'm pretty sure that you can withdraw CDs upon death of the account holder...but that may not be the best move.

What rate are the CDs earning? As long as they're beating inflation (after taxes), leave 'em be.

With that amount of dough you might want to hire a pro (for instance, Vanguard has a portfolio consultation for $300 I believe). Especially since you want to minimize tax headaches.

One thing to keep in perspective is that it's not the amount of tax you pay; it's the amount you have left over after paying taxes (and tax advisors) that counts.
Print the post Back To Top