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Half baked million dollar business idea (needs work)
Old 05-18-2015, 09:07 PM   #1
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Half baked million dollar business idea (needs work)

We don't have any kids and very likely will outlive our parents. I was thinking of who we might leave our money if we die early or if the market is good and we don't manage to spend it all before time catches us.

What if there were a company that you could leave all or part of your assets when you die (if you don't really have any other relative or person you wish to leave an inheritance)? This company would randomly choose X people per year to award a inheritance, the pool of people chosen from those who have signed up to will their own assets. The company would siphon off a small amount (1% or so) as a handling fee. This is the million dollar idea part.

The half baked part is how to make it work in the real world, with less than honest people and greedy tax men.

In an ideal world, this would give you the chance to live a much more luxurious retirement with no downside risk (you leave your assets to the company AFTER you are dead...and it really is true you can't take it with you when you die). In an ideal scenario everyone would have the same net worth and be in the same risk pool and this would be a fair way to potentially receive an inheritance even if you never had a rich aunt.

So many flaws in the idea that it is likely unworkable, but I thought I would throw it out there.
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Old 05-18-2015, 10:28 PM   #2
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Yea, the first flaw is trying to get the money from a dead person who changed their will just before dying (or their beneficiary designation even, which happens before the will).... AFTER getting some good money from others who followed the rules...
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Old 05-18-2015, 10:48 PM   #3
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In order to be fair, there must be a way to require that people still have some money left over to "pay forward". That is they must be LBYM. And then of course, some have so little money to leave behind, while others have more.

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... this would give you the chance to live a much more luxurious retirement with no downside risk (you leave your assets to the company AFTER you are dead...and it really is true you can't take it with you when you die)
How about just buying a SPIA? I checked just now, and for our age of 58, a joint life SPIA would give us an annual income of 4.82%. It's better than the 3.5% that I plan to spend, but my kids would hate me.
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Old 05-18-2015, 11:07 PM   #4
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How about just buying a SPIA? I checked just now, and for our age of 58, a joint life SPIA would give us an annual income of 4.82%. It's better than the 3.5% that I plan to spend, but my kids would hate me.
My first thought was "why not an annuity instead?" but the current annuity rates are just horrible and not many are inflation adjusted. If you are retiring in your 40s like we are, I think you need a good mix of stocks to survive 50 years.

Still, we could be killed in an auto accident tomorrow. Our sizeable portfolio would go to nobody. While we are living, we will never get a inheritance because we have no relatives with means. It just seems like there is an opportunity to group benefit from having money and nobody to leave it.
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Old 05-19-2015, 02:31 AM   #5
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Perhaps you have (or can start) a community foundation which will manage and distribute funds to worthy causes within the community, assuming you have no one you wish to have inherit your assets.
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Old 05-19-2015, 05:31 AM   #6
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Perhaps you have (or can start) a community foundation which will manage and distribute funds to worthy causes within the community, assuming you have no one you wish to have inherit your assets.
+1


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Old 05-19-2015, 06:17 AM   #7
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Can you be more explicit what you are actually trying to achieve?

I don't have enough assets and my horizon is (hopefully) too far off, but I've been thinking along similar lines.

What I'd like to setup one day should I have excess assets is a sort of "Australia project" Manna, Chapter 1, by Marshall Brain

Idea is to give more people financial freedom as early as possible in life, basically through implementing a basic income of sorts among the beneficiaries. As little strings attached is possible, maybe just enough to encourage more people to go the same route.

Haven't looked into details much, yet I believe a foundation may be the best way to get the ball rolling. To avoid concentrating too much capital into a few hands, probably a growing network of foundations operating on identical principles.

Until a given government implements said basic income. At that point, they can have everything as the foundation becomes redundant.

What are your thoughts?
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Old 05-19-2015, 08:25 AM   #8
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Maybe my intention is more in line with what you are describing Totoro.

The devil is in the details, but if something like the following could be worked out legally and fairly:

A number of early retirees who agree to submit yearly net worth information take part in a giant trust. They agree to leave their assets to the trust (after both parties die for a couple). There is no stipulation on how much you spend each year of your own money, but you must update your net worth information each year.

At the start of the new year, money inherited by the trust from members is distributed to each member still alive, to spend or invest how they wish. The portion of money you receive is based on your previous year's net worth (how much money you had "at risk" to be inherited by the trust upon your death).

Take the example of 100 people in the trust, each with a net worth of $1 mil. One person dies, everyone else in the trust receives $10,000. Simple example with no taxes or fees or differences in net worth.
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Old 05-19-2015, 09:00 AM   #9
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Basically all you need to do is set up a insurance company that sells at the actuarially fair rate. Basically a non profit.

Or the "vanguard" of insurance. If it existed, it would be very popular.


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Old 05-19-2015, 09:08 AM   #10
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Basically all you need to do is set up a insurance company that sells at the actuarially fair rate. Basically a non profit.

Or the "vanguard" of insurance. If it existed, it would be very popular.


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But I don't want to use any of my money to buy insurance while I am living. I essentially want to buy insurance on everyone else while I am living using money in my estate after I am dead.

For this to work in an ideal situation, I should be able to sign up for this and see no change in my budget or investments, except that occasionally I would get a $10,000 or $20,000 check from the trust.
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Old 05-19-2015, 10:24 AM   #11
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Aren't you describing a tontine?

Seems to be illegal in the US and UK ..
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