Investing for elderly

[fetch33]

My father recently passed leaving my 85 year old mother with a decent estate. My sister wants to invest about 500k in conservative American Fund mutual funds. I am thinking that with a 10k sales charge and all of the risk with the stock market ( especially with the uncertainty coming up with this election ) we just need to sit on the cash. Any thoughts?

[Kellkell]

I'm with you on this. At 85, her need is now. Investing is for the future. I would save the 10K and place that money into money market accounts where if the need is there for it, it can be gotten.

[sisterpine]

I agree that you mom has no need of investments. Put her money someplace safe so you can get to it to provide for her needs/wants etc.

[Belfrybat]

I agree with what others have said -- we invest for the future. Your mother's future is here now. Park it in a money market acct. or even regular savings. You won't make much .75 - 1%, but you won't lose it either.

If you do choose to invest it, there are funds out there that do not have an upfront load. I use both Vanguard and PAX World funds. Neither has a fee upfront. I particularly like PAX World balanced fund -- it's done about 18% this year, but like other funds are still playing catchup from the crash of 2008.

[PFS farmer]

I think money market is probably gonna be the mutual ground for everyone to be happy.

We almost lost a family member and one thing I was told was if I did it all over I wouldnt save any money.......I thought WHAT? Then I listened some more. There was bout $20,000 cash and land left and on medicare, but wouldnt go to medicaid. OK I was clueless so I listened some more. Well they had drug their feet all these years and never transferred anything into anyones names and come to find out that medicaid is like the dang IRS. They can go back X amount of years and take things like money, property, etc. So they started transfering names and now has to live for X amount of years so the state cannot take it.

Of course I do not know how much of this is right or wrong, but is something to consider also.

[Michael W. Smith]

While her needs and retirement are now - she could live to be 110. If she ends up in a high end nursing home that runs $4000.00 / month, her $500,000 is going to last for about 10 years.

While I would say the majority should be in cash - I would put $120,000.00 in laddered CD's. For the next 12 months, put $10,000.00 in a 1 year CD. That will get her about 1.00% yield - each CD will make about $100.00 / year.

You do NOT need to invest in a mutual fund company that takes a chunk of your money to do business with them! Look into The Vanguard Group - you can invest it yourself and Vanguard has the lowest fees around. Of course, the majority of $ should just sit in the bank in a savings or checking account.

With Vanguard, you may want to look at a bond fund like Vanguard High Yield Corporate Fund. If you would invest $36,000.00 in that, your mother would make around $180.00 / month.

Does your Mother have a will? If not, now would be the perfect time to get one set up.

Now, concerning what PFS Farmer has said - I wouldn't suggest gifting out her whole estate - but if your Mother is living with you or your sister, bear in mind you may want to get a agreement set up by a lawyer where since your Mother can't stay by herself, and she is staying with you (or your sister), she could be paying for her care that is keeping her out of a nursing home to you. The going rate of a local assisted living or nursing home would be good.

While I understand PFS Farmer's intentions - if the estate is eventually to go to the heirs anyway, why not distribute some now so you don't have to pay estate taxes on it?

While I agree with that statement - it isn't really right to take all of the estate money and then leave your loved one penniless and depending on Medicaid to cover her nursing home expenses - at taxpayer's expense.

After all, your parents saved this money for their retirement. Your Mother is in retirement NOW and that is HER money. No matter what you have done - a child does not "deserve" an inheritance.

So to sum it up, I would (my opinion) invest $36,000.00 with Vanguard, invest $120,000.00 in laddered CD's, and the remaining $344,000.00 put in a savings or checking account that earns interest.

[fetch33]

My mother has a will.....she also has Alzheimer's and heart disease, she won't live to 110. Most of the money is in a trust, about 250k is already in American Funds where my father invested it. I am nervous about the money that is already in the market and would like to talk the other siblings into cashing it out. She doesn't need an income from her trust fund as she gets enough social security to cover her monthly needs. I think CD's are probably the best option for her.

[plowjockey]

Since it appears DM has plenty of money, to last her for the rest of her life, it sounds like the concern, is over inheritance, IMO, even better, since your siblings are already disagreeing, over money which is not yours.

DF was smart enough (IMO) to keep at least some of the money in mutual funds, which crashed (like everything else) during the 08' recession, but have came back very well, recently.

Selling a half million dollars of decent investments, for 1-2% CD rates, is ludicrous, IMO.

With that kind of money in their estate, your Dad, sounded like he knew what he was doing.

I'd let it ride.

[Michael W. Smith]

Originally Posted by fetch33

My mother has a will.....she also has Alzheimer's and heart disease, she won't live to 110. Most of the money is in a trust, about 250k is already in American Funds where my father invested it. I am nervous about the money that is already in the market and would like to talk the other siblings into cashing it out. I think CD's are probably the best option for her.

Ah, I guess I thought your sibling wanted to invest into mutual funds - I didn't know it was already there. As plowjockey said - mutual funds aren't a bad thing to be in - they will certainly make more money over the long run than your saving's or CD's.

How familiar are with you investing? You seem to be afraid that all that money is just going to disappear overnight. It would take an EXTREME thing to cause that - and even then, it's not going to disappear. (Well, I guess it COULD, but if that's the case, your money in the bank isn't going to worth anything either.

If all you siblings are arguing over what is best to do - here is a suggestion. Divide the assets by the number of heirs.

Exmaple - If you have two sister's and yourself, divide them up by 3. You can put "your" third in whatever investment you want, and your sister's can do the same with theirs. As money is needed for your Mother's care - you sell off the same amount off each third to pay the bills. Upon your Mother's death - each of you then get your part of the money.

Now, this would have to be agreed upon by ALL heirs, and it would be understood if your sister's mutual funds ended with a balance of $150,000.00, your CD's ended with a balance of $80,000.00, and your other sister's balance ended with $125,000.00 - each of you only get the amount of YOUR investment.

You can't complain to your sister - it's not fair that you are getting $70,000.00 more than what I am. Because at one time the amount of money was the same and the same amount was taken out for bills - it's just how well each investment did.

But it's really all going to depend on WHO has the Power of Attorney and makes the financial decisions. If all of you are listed - then you can battle it out and maybe do the above scenario. But if your sister is POA - there isn't much you can do about it. (Likewise if YOU are POA, - sister can't do anything on what you deem best) - however, that's not to say you won't be fighting about it!

I think I can see where this is already headed!

[fetch33]

Sister is POA but we are reasonable people. She won't do anything without all of us agreeing. There are 4 of us. Another sister agrees with me that investing more money in the stock market isn't the way to go. A brother isn't involved. We will spread the money out in CD's. Thanks for the opinions.

[PFS farmer]

Originally Posted by Michael W. Smith

While her needs and retirement are now - she could live to be 110. If she ends up in a high end nursing home that runs $4000.00 / month, her $500,000 is going to last for about 10 years.

While I would say the majority should be in cash - I would put $120,000.00 in laddered CD's. For the next 12 months, put $10,000.00 in a 1 year CD. That will get her about 1.00% yield - each CD will make about $100.00 / year.

You do NOT need to invest in a mutual fund company that takes a chunk of your money to do business with them! Look into The Vanguard Group - you can invest it yourself and Vanguard has the lowest fees around. Of course, the majority of $ should just sit in the bank in a savings or checking account.

With Vanguard, you may want to look at a bond fund like Vanguard High Yield Corporate Fund. If you would invest $36,000.00 in that, your mother would make around $180.00 / month.

Does your Mother have a will? If not, now would be the perfect time to get one set up.

Now, concerning what PFS Farmer has said - I wouldn't suggest gifting out her whole estate - but if your Mother is living with you or your sister, bear in mind you may want to get a agreement set up by a lawyer where since your Mother can't stay by herself, and she is staying with you (or your sister), she could be paying for her care that is keeping her out of a nursing home to you. The going rate of a local assisted living or nursing home would be good.

While I understand PFS Farmer's intentions - if the estate is eventually to go to the heirs anyway, why not distribute some now so you don't have to pay estate taxes on it?

While I agree with that statement - it isn't really right to take all of the estate money and then leave your loved one penniless and depending on Medicaid to cover her nursing home expenses - at taxpayer's expense.

After all, your parents saved this money for their retirement. Your Mother is in retirement NOW and that is HER money. No matter what you have done - a child does not "deserve" an inheritance.

So to sum it up, I would (my opinion) invest $36,000.00 with Vanguard, invest $120,000.00 in laddered CD's, and the remaining $344,000.00 put in a savings or checking account that earns interest.

Yea what he said!...lol. That is kinda what I was getting at. I say I agree with most everything Michael W. Smith said. Sorry I am not good at that sorta thing.

One thing I will add is what they did was do a Love and Affection Deed with a Living Estate.

Love and Affection - what happens here is the deed is transferred and name changed on it.

Living Estate - this says the elderly person resides there and has say so till they pass away and you keep all current tax benefits such as Ag exempt and over 65.

Now when the person passes they have to take the death certificate to a lawyer to get the Living Estate part taken off.

Yes, our tax payers shouldnt have to pay. This particular situation was only $20,000 and a small piece of land. NO life insurance at all. The funeral and what not was paid years ago so no need for it and the younger generation is older doing their own thing so the money of the life insurance would probably be nice, but not necessary. Also this is a poor family and doing this good is amazing knowing where they came from.

Also that $4,000 a month for nursing home aint gonna last long. Like everything else cost is gonna go up. Ridiculous they can charge that.

Anyways hope this helps. Good Luck.

[PFS farmer]

O and one more thing secure everything you can because even the slightest thing may make a relative you dont know show up and claim it. When there is a lot involved it can get UGLY.

Again Good Luck.

[Yvonne's hubby]

Originally Posted by PFS farmer

O and one more thing secure everything you can because even the slightest thing may make a relative you dont know show up and claim it. When there is a lot involved it can get UGLY.

Again Good Luck.

There really doesnt have to be much involved... I have seen some pretty ugly situations among families when the parents died who had little to nothing to fight over. Amazing what some people will turn into a fistfight during a funeral!

[clovis]

I am a strong proponent of stock market based investing, but NO WAY am I giving $10,000 to any mutual fund company...not in a million years.

Like MWS said, Vanguard is a good choice for mutual funds.