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58 yr old separated homemaker looking for advice
Old 10-13-2015, 10:09 AM   #1
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58 yr old separated homemaker looking for advice

Hi, I am a 58 yr old woman, legally separated from my husband of 28 yrs. I have always been a stay at home mom. The last 7 yrs, along with raising kids, I have been caregiver to my elderly mom and aunt. My kids are now, 26, 24, and 17. My aunt passed away 2 years ago, leaving me with a small inheritance $100K. My mom just passed away in June of this year. I will be receiving a larger inheritance from her, approximately $300k. My husband and I have been separated for over a year. We are not going to get a divorce, but I have been working to protect myself financially from his actions. He is mentally ill and been unstable for the last several years. Because of that fact, he can ruin us financially. We have two houses. The one I am living in with the kids is now solely in my name. I have my own savings and checking account. I have been awarded half of his retirement savings through a QDRO. I have been considering what to do with all this newly acquired money in order provide myself with income if he were to lose his job. Right now, he is paying me spousal support that is covering me and kid expenses. I put the money I received from my aunt 50% Wellesley and 50% Wellington and have been very pleased with that. I don't know if it would be foolish to do the same with everything else? It would certainly make life easier for me if everything was in the same company and the same funds. Right now, my mom's money is in one company and the QDRO money is yet another company. I do want moderate growth, but I am not really in any position to put the money at too much risk.

Thanks for your thoughts. I am a long time lurker and have learned so much from all of you through the years. I wasn't sure where I could turn to brainstorm through this dilemma.
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Old 10-13-2015, 10:25 AM   #2
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First welcome to the forum. Lot of good smart financial advice on here. By splitting your funds between Wellesley and Wellington, you effectively have an approx 50/50 mix, which might be the right allocation mix for you. Nothing wrong with adding to those same accounts and keeping the mix. I would consolidate in one brokerage company, that makes keeping track a lot easier. Since the inherited funds are likely after-tax accounts, you might pursue some financial advisor time to understand any tax issues and maybe some different investment choices to limit tax liability. Get a fee-only advisor. You might be able to get some Vanguard, Fidelity, Schwab account advice for free with your account, once you consolidate under one of them.

Good job getting your assets under your name and out from potential problem from your husband's issues. Maybe too personal of a question, but since you are legally separated and already have split assets, why or what is the advantage to staying officially married?

I am sure others can offer good tips, and have better personal experience with similar circumstances.
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Old 10-13-2015, 10:42 AM   #3
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Thanks for answering. My inherited money is almost all after tax accounts. My mom had an IRA also. I don't think I can mix her IRA with the QDRO money which will be rolled over into an IRA if I move it to Vanguard. Right now that money is in a 401a. Talking to someone at Vanguard would probably be a good idea. I just wanted to get some unbiased ideas first. The $100k 50/50 split has been producing approximately $850 per quarter. Obviously, the after tax money would go into the after tax 50/50 split account and the 401a would go into an IRA 50/50 split account. I just worry that it might be too simplistic. I want to make sure I am not missing something that would work better.

My husband has been working on staying stable for the last 6 months or so. I am not comfortable kicking someone when they are trying to do the right thing. We have been together for a long time (30 yrs). It's difficult breaking the habit of taking care of someone after all that time. But, I have worked hard at making sure the kids and I would be protected if he goes off the deep end again and loses his job. We were very lucky he is a tenured full professor. He could have lost his job last year but was given a leave of absence with pay for a semester. He was hospitalized at that time.
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Old 10-13-2015, 01:09 PM   #4
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Hi, and welcome. You are correct that the inherited IRA from your mom and the QDRO funds are separate, and you will need to open an IRA to hold those QDRO funds. You can certainly do that at Vanguard and maintain your same asset allocation.

The taxable accounts are a bit different, and you will want to be sure you have the step up in basis homework done when you sell out of what's there to place it in the Wellington and Wellesley if that's how you go with it.

You are kind to look after your estranged husband as you are doing, and it seems you are working to ensure that your and your children's assets are protected. Time spent with a lawyer to review this would be well spent, though, especially since one child is still a minor.
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Old 10-13-2015, 01:29 PM   #5
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You've certainly been through some tough times. You have my sincere sympathy.

When it comes to asset allocation, you could consider keeping the equity portion of your portfolio in the taxable account and the bonds in the IRA. Capital gains and qualified dividends get favorable tax treatment which you won't be able to take advantage of for equities that are held in an IRA.

Of course, that would necessitate choosing separate bond and stock funds. If your life seems too complicated at the moment, you could make the change at some future date.

One more thing: if your husband is a professor, his pension may mean that he (and you) don't qualify for Social Security. If that's the case, you might consider whether some employment would put you in a position to collect an SS check. I don't know all the rules, but it's something to be aware of.
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Old 10-13-2015, 01:33 PM   #6
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Originally Posted by masd57 View Post
...My aunt passed away 2 years ago, leaving me with a small inheritance $100K. My mom just passed away in June of this year. I will be receiving a larger inheritance from her, approximately $300k. ...

I put the money I received from my aunt 50% Wellesley and 50% Wellington and have been very pleased with that. I don't know if it would be foolish to do the same with everything else? ....
How did you come to choose Wellesley and Wellington? Do the decision factors still hold? If so, yes, why not do the same with the rest of your nest egg.

Good luck, and welcome to the boards!
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Old 10-13-2015, 01:37 PM   #7
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My husband has been working on staying stable for the last 6 months or so. I am not comfortable kicking someone when they are trying to do the right thing. We have been together for a long time (30 yrs). It's difficult breaking the habit of taking care of someone after all that time. But, I have worked hard at making sure the kids and I would be protected if he goes off the deep end again and loses his job. We were very lucky he is a tenured full professor. He could have lost his job last year but was given a leave of absence with pay for a semester. He was hospitalized at that time.
Welcome to the forum. I just wanted to send you some kudos for standing by your man through better or worse. If he has mental illness it is not his fault. Obviously it is necessary to find a balance between support and managing risk. <<Hugs>>
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Old 10-13-2015, 03:14 PM   #8
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I would strongly suggest that you consult with a competent lawyer (one knowledgeable about this area of law) about what the law provides as to responsibility for your husband's debts and about what you need to do to best protect your money and to protect yourself in terms of any liability. This is something that varies from one state to another so you need to consult with a knowledgeable local lawyer.
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Old 10-13-2015, 03:15 PM   #9
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......... Since the inherited funds are likely after-tax accounts, you might pursue some financial advisor time to understand any tax issues and maybe some different investment choices to limit tax liability........... .
Good point and to expand on this, it is better to have bonds in a tax sheltered account like an IRA or 401(k) and stocks in an after tax account in order to minimize taxes. Wellesley and Wellington have stocks and bonds commingled, so you'd need to create a similar mix of stocks and bonds but in two accounts, pre-tax and after tax.


As stated, an adviser can guide you or folks here or at the Bogleheads forum can assist as well.
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Old 10-13-2015, 03:24 PM   #10
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I would strongly suggest that you consult with a competent lawyer (one knowledgeable about this area of law) about what the law provides as to responsibility for your husband's debts and about what you need to do to best protect your money and to protect yourself in terms of any liability. This is something that varies from one state to another so you need to consult with a knowledgeable local lawyer.
+1

Even though your funds and house are in your name only, in some states they may be "community property" and thus vulnerable to debts that your husband incurs.

You really, really, need to have a discussion with an attorney. And soon.
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Old 10-13-2015, 03:27 PM   #11
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Welcome to the board. In your position, I think one important action is to develop a longer term financial plan if you haven't done so already. The goal is to look at a couple of likely future scenarios and determine if you have enough assets to sustain you and any needs you feel obligated to the kids for. Also it should help suggest how you should manage and take withdrawals from various types of accounts (taxable, tax deferred, tax exempt). If you are relatively financially savvy, you can pull a plan together using calculations from Firecalc or I-ORP (or other tools) by exploring cases using different assumptions for each case and writing up a plan based on what makes sense. Tools like these crunch numbers but don't provide you active feedback like a good financial person could provide. So if you are unfamiliar with making a plan like this, Vangaurd or others could do this for you. Cost is relatively small (couple hundred?) or even free if you have enough invested with them.

A couple ideas that might be considered come to mind from the limited data we have in these notes. One is focusing in on expense outlook for your and your kids. You mention a house you and they live in. Given their ages, I was expecting a couple of them to be independent. But no matter if they are or not, would be good to estimate their future needs that you plan to cover and include that in the plan. Another idea is that you may wish to have a couple cases run....one with your husband working to full retirement and one where things go badly and he stops working very soon. One other thought is if your husband ends up needing long term care / support, make a plan for what (if anything) you are willing/able to do.

Also agree with the earlier comment someone made that seeking legal advice may be very useful as well. Especially if you choose to stay married but separate long term. I have no familiarity with what happens in such arrangements so am uncomfortable with risks involved.

Sorry life has thrown these challenges at you but sounds like you are moving in a good direction. Wish you the best.
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Old 10-13-2015, 04:20 PM   #12
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Thank you so much for all your responses. I really appreciate them.

I have spoken to my divorce lawyer who has said I should not be liable for any of his debts as long as we are legally separated, do not live together, and do not comingle assets. We own two houses. The house I am living in is in my name only. The house he is living in is held jointly, but I am aware I need to get my name off of that property. He is bringing tenants in there that are questionable, and not using good judgment in protecting himself for liability.

As of right now, my daughter, 24, is finishing up her master's in biology. She should be done next summer and, should be moving out and getting a job in her field. She lives with me rent free and is paying her way through her degree. We live 10 minutes from the university. My youngest son is a junior in high school. He will most likely attend the same university and live at home. I am hoping to pay for his tuition if my husband won't pay for it. By living at home, we would only have to pay for tuition and fees which total around $8k per year. He is taking AP courses and community college courses to get some credits out of the way before graduating high school. My eldest son, 26, has been working down the mountain as assistant manager to a movie theater. He has had his own apartment and been really scraping by. The movie theater is new and has not been able to give him the hours and salary they had promised him. He is now planning on moving back home with me and commuting to work. He will live rent free and save his salary. He did not finish college. When he was in college, our family was going through a lot of upheaval with my aunt and mom needing a lot of care. He stepped in and filled in the gap of dad to my youngest who was in middle school at the time along with supporting me and helping out with eldercare. He had to take a psychological leave because it was way too much for him at that age to deal with. So, he is planning on going back to college next fall while living at home. He only has about a year left.

My husband does have social security. He has only had a 403b through TIAA CREF. He also has disability insurance and long term care insurance if he would need them. As of right now, I get monthly spousal support that covers all of my expenses along with whatever expenses I incur because of kids. When I reach FRA I will the spousal SS. My social security is small because it has worked for me to stay home and take care of everything while my husband takes care of his job. The times I have needed him to step up and help out at home, anything more than doing dishes, he would get overwhelmed and have problems. I have been thinking of taking my small SS at 62. I figure every little bit helps. I am hoping to invest all of this money so that when I do need it, it would generate dividends I would be able to live on.

I did not realize about equities and taxable accounts as opposed to bonds and sheltered or deferred accounts. Right now, my Wellesley and Wellington are in taxable accounts. I am reinvesting the dividends back into the accounts. Would it be better to have a Total Bond Fund IRA and a Total Stock Fund taxable? I am going to check if the accountant my husband and I have used for years is also a Certified Financial Planner. I agree, with the amount of money, and the fact I really need to depend on this for the rest of my life, I definitely need to do this right.
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Old 10-13-2015, 04:37 PM   #13
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Be careful of collecting your own SS. I believe that means you can't switch to spousal in the future.
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Old 10-13-2015, 04:43 PM   #14
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Really, I didn't realize that. I will have to check that out. Thanks for the heads up.
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Old 10-13-2015, 04:56 PM   #15
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Regarding social security, the claiming strategies are beaten to death every couple of weeks or so on bogleheads; if you were to post over there, Mike Piper or another expert would likely have the answers you want/need. Or, to educate yourself with a fairly approachable and easy (more/less) to understand book by Piper: http://www.amazon.com/Social-Securit.../dp/B009K7ZNDS
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Old 10-13-2015, 04:56 PM   #16
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Be careful of collecting your own SS. I believe that means you can't switch to spousal in the future.
On the same note - be careful taking early SS, you won't be able to delay if you wish later.

Also - Wellesley and Wellington funds, they need to be 'admiral' shares
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Old 10-13-2015, 05:10 PM   #17
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My Wellesley and Wellington are Admiral Shares. Why does it make a difference?
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Old 10-13-2015, 05:16 PM   #18
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My Wellesley and Wellington are Admiral Shares. Why does it make a difference?
Admiral shares have lower expense ratio.
Compare for example Wellesley's expense ratio:

Symbol VWINX VWIAX
Expense ratio 0.25% 0.18%

You need to invest $50K minimum thou I think.
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Old 10-13-2015, 05:19 PM   #19
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Yeah, that's what I have. And, I am planning on only having Admiral Shares with the rest of the money, too. The other money I am trying to figure out what to do with is invested in companies where the .25% Expense ratio looks extremely low.

I just looked up the Soc. Security info and ya'll are right. I won't be planning on taking any SS at 62. He will have to take it at FRA or later.
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Old 10-13-2015, 05:42 PM   #20
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................I did not realize about equities and taxable accounts as opposed to bonds and sheltered or deferred accounts. Right now, my Wellesley and Wellington are in taxable accounts. I am reinvesting the dividends back into the accounts. Would it be better to have a Total Bond Fund IRA and a Total Stock Fund taxable? I am going to check if the accountant my husband and I have used for years is also a Certified Financial Planner. I agree, with the amount of money, and the fact I really need to depend on this for the rest of my life, I definitely need to do this right.
If you are in a low tax bracket it may not matter, but it is worth understanding.
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