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anybody leaving a trust/foundation behind?
Old 07-12-2013, 10:30 AM   #1
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anybody leaving a trust/foundation behind?

Hi folks.

I sometimes view my possible financial situation in retirement as levels, such as this:
  1. savings run out before death
  2. savings last until death, but not much left over
  3. at death there is a tidy sum (ie. $500K - $2M) left over that could make life easier for your heirs
  4. at death this is a large amount left; more than heirs would need

Running firecalc provides a wide range of outcomes, number 4 being a distinct possibility. My wife an I are not the kind of people that will live extravagantly in retirement, regardless of how much money we have. We just aren't the yacht and $3M house type of people.

If we're fortunate enough to reach number 4, I dream of leaving a trust/foundation behind that could be self-perpetuating that does good deeds, such as donating to causes that we care about.

Anybody else have such fantasies? Has anybody here taken steps to make such a dream a reality?

Thanks.
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Old 07-12-2013, 10:45 AM   #2
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I do (day)-dream about it. In the 90's, with the market going wild, I dreamed more often. But you are right, we focus on the low running lines and failures in FIRECALC to prepare for the worst, but there are very many lines reaching to what seems like the stratosphere.

I guess if it looks likely when I get older, I might just put something in my will to split by %, with some minimum amount to heirs, and any 'excess' going towards increased amounts to charities. That could be set up as a foundation, if maybe it exceeded some base amount to make that worthwhile (I think there are some tax reporting and admin costs).

I'm not there yet (or maybe that should be )

-ERD50
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Old 07-12-2013, 10:50 AM   #3
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You have a lot of choices and opportunities to do what you would like to do.

It sounds like you need to do some estate planning either now or in the future. You can set up trusts for family members, charities, or just about anyone else. You also have to consider the enjoyment you would receive by giving while you are still here. And, you have to look at the tax consequenses of whatever you put together.

I have trusts for my kids, a trust for my wife if I pass away 1st, a trust for a friends special needs child, and am looking at a lifetime annuity with the remainder going to a charity after my death. I haven't spent a lot but I have spent a few thousand putting everything together.

If you have a favority charity or University that might be a good place to gain basic information. Every major University or charity will have an individual to meet with someone like yourself. Or, if you don't mind spending a few bucks, a CPA or estate planner might be the way to go.

It appears that your heart wants to do some good for someone with part of your wealth......that's really nice. I wish I could be more helpful but you have so many options I can't really be more specific with the info you provided. Good Luck!

finally, maybe some one can suggest a good book that would be helpful or you could spend an hour or two at Barnes and Noble and I'm sure you would find one.
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Old 07-12-2013, 10:58 AM   #4
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I have thought about it.... I would want to leave a trust that would provide scholarships to students that attended my university... since my DW just got her Master degree from the same university, we could add two degree paths to it...


But, at this time we are not even at the level where we can retire.... so it will remain a dream for now.... I am not willing to put a lot of effort into it unless I see the assets starting to spike and it looks like #4 can be a reality....
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Old 07-12-2013, 12:18 PM   #5
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I have no wife or kids, and am not sure whether I will want to leave much or anything to a partner or family. There is no one significantly younger than me to execute my estate, so I'm in a bit of a pickle. One option is to leave the residue of my estate to charity, but the sticky problem of who can execute it remains. I'm wondering if a charity would do this, if they will be the ones benefiting - or the main beneficiaries?

This is not really a question to other forum members; I am merely thinking aloud, as I have not begun to research this yet.
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Old 07-12-2013, 12:53 PM   #6
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I think what would typically happen is that unless you appoint an executor in your will, the probate court would appoint and executor to wind down your financial affairs and distribute the estate consistent with the provisions of your will. The executor would be compensated for their services.
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Old 07-12-2013, 01:43 PM   #7
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I've been thinking about it. No kids. No nieces or nephews on DW's side of the family. Only one on my side, but I think she'll get enough as it is from her grandparents. And a very good chance of leaving a substantial estate.

I have already funded a donor-advised charitable fund with Fidelity. So perhaps, I can simply make the fund our primary beneficiary and appoint a successor advisor to help disburse the money. I like the fact that Fidelity thoroughly vets each proposed donation, which should eliminate any risk of misappropriation by the successor advisor.
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Old 07-12-2013, 02:07 PM   #8
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I have already funded a donor-advised charitable fund with Fidelity. So perhaps, I can simply make the fund our primary beneficiary and appoint a successor advisor to help disburse the money. I like the fact that Fidelity thoroughly vets each proposed donation, which should eliminate any risk of misappropriation by the successor advisor.
It is posts like this that illustrate why continuing to come here is a particularly valuable exercise for me. My entire portfolio is with Vanguard and thanks to your post, I just discovered that they have a company that is closely allied with them called Vanguard Charitable, for the same purposes.

Much to think about. Thank you FIREed.
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Old 07-12-2013, 02:09 PM   #9
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Several years ago I set up a donor advised fund with my financial institution. I developed a mission statement and funding guidelines and appointed an advisory board of three (consenting) friends and relatives who have the requisite skills and are likely to outlive me. To date I have not put any money into the fund, but when I reach the age at which RMDs will dramatically increase my tax liability, I plan to make some tax deductible donations to the fund, at minimal net cost to me. My will leaves my estate to the fund, with my financial institution as the executor. Yes, they will get paid to execute the administer the fund, but that's OK. The fund should be able to operate in perpetuity if it starts with substantial assets.

Or, I could just spend it all!

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Old 07-12-2013, 02:26 PM   #10
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If something strange happened that put me into this happy situation, I think I'd rather give most of it away while I was alive. I don't have any desire to leave some sort of "perpetual" fund.
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Old 07-12-2013, 03:48 PM   #11
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It is posts like this that illustrate why continuing to come here is a particularly valuable exercise for me. My entire portfolio is with Vanguard and thanks to your post, I just discovered that they have a company that is closely allied with them called Vanguard Charitable, for the same purposes.

Much to think about. Thank you FIREed.
We started funding a VG DFA in 2007 and added to it in 2010; both were years when we had a spike in income and could take a substantial deduction using appreciated shares.

Our tax rate is down now. It will start to go up again in 5 years when pension starts and then red-line at 70.5 with RMD and SS.

I figure by the time we are 70 we will have a clearer view of our needs and at that time, we will start adding substantially to the DFA.
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Old 07-12-2013, 05:00 PM   #12
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we focus on the low running lines and failures in FIRECALC to prepare for the worst, but there are very many lines reaching to what seems like the stratosphere.
Don't forget that if we get lucky and follow the upper trending lines that folks who retired in our timeframe and with similar WR's and AA's will also be doing that. Lots of geezers will have lots of money (as compared to folks with similar timeframes, WR's and AA's all following the lines trending down). Imagine, some significant percentage of geezers all having done very, very well financially in their retirement.

Somehow, I don't see that coming......... But, who knows? I'm sure I'll be able to figure out what to do if that time comes.
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Old 07-12-2013, 08:39 PM   #13
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...

Somehow, I don't see that coming......... But, who knows? I'm sure I'll be able to figure out what to do if that time comes.

I'm afraid I'll be too old to know what to do with it. But then again, every once in awhile you see a story in the paper where some old geezer seems to have figured it out. I guess you go from investing in gold miners to gold diggers.

-ERD50
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Old 07-12-2013, 09:23 PM   #14
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Call me selfish, but I want to die without a dime
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Old 07-12-2013, 11:44 PM   #15
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Call me selfish, but I want to die without a dime
Gotta plan for that?


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How to die broke V 1.0
Old 07-12-2013, 11:58 PM   #16
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How to die broke V 1.0

If and when you develop a terminal illness, use all remaining funds to splurge to your heart's content. When the balance in the portfolio is approaching zero, take out a loan. Use the loan to fly to that famous tall bridge in New Zealand. sign up for bungee jumping and unhook the parachute before you leap off the bridge. Make sure to leave a suicide note so the operator will not get in trouble.

This should work well unless you are afraid of heights (which I am). Any other suggestions?
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Old 07-13-2013, 12:04 AM   #17
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Gotta plan for that?


-ERD50

That's the problem...I'm not sure when I will die
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Old 07-13-2013, 12:18 AM   #18
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DW and I are in the #4 category and will leave a significant estate to our kids in the form of living trusts. Our challenge is to figure out when and how to give them our estate without robbing them of their motivation to work and ruining their lives.

We don't plan on giving any money to charity. While I support charitable giving in general, I'd rather leave my money to my kids than anyone else.
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Old 07-13-2013, 07:59 AM   #19
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DW and I are in the #4 category and will leave a significant estate to our kids in the form of living trusts. Our challenge is to figure out when and how to give them our estate without robbing them of their motivation to work and ruining their lives.

We don't plan on giving any money to charity. While I support charitable giving in general, I'd rather leave my money to my kids than anyone else.
I set up trusts for my kids last year with the same objective. The trusts are substantial and they can take 1/2 of the growth in a good year or 1.5% of the trust while in their 40's. They can take 2% or 1/2 the gain in their 50's and 3% after they turn 58. The money will go to their kids upon their death. The goal is to enhance life but not rob them of their motivation. Vanguard manages them with rates starting at 70 basis points and going down to 20 if the trusts are in the 7 figures. They are age based conservative portfolios, currently 60% stock, 40% bonds.

Upon my death......many years from now I hope, the trusts will grow substantially. Vanguard approved and assisted in writing the trusts and I have a great lawyer and CPA that reviewed them. Hope this helps.
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Old 07-13-2013, 11:34 PM   #20
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I set up trusts for my kids last year with the same objective. The trusts are substantial and they can take 1/2 of the growth in a good year or 1.5% of the trust while in their 40's. They can take 2% or 1/2 the gain in their 50's and 3% after they turn 58. The money will go to their kids upon their death. The goal is to enhance life but not rob them of their motivation. Vanguard manages them with rates starting at 70 basis points and going down to 20 if the trusts are in the 7 figures. They are age based conservative portfolios, currently 60% stock, 40% bonds.

Upon my death......many years from now I hope, the trusts will grow substantially. Vanguard approved and assisted in writing the trusts and I have a great lawyer and CPA that reviewed them. Hope this helps.
Thanks Jerome. I didn't know that Vanguard provides trust administration and management services. I will look into it.

I was planning on giving my kids a lump sum distribution once the youngest turns 45, but I like your annual distribution idea better.
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