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Fiduciary responsibility of beneficiary
Old 05-02-2004, 01:41 AM   #1
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Fiduciary responsibility of beneficiary

I am the beneficiary of and manage my 91 year old mother's estate which is currently invested in the following Vangaurd index funds:
40% Total Stock Market
20% Total International Stock
15% REITs
20% Short-Term Bonds
5% Cash

She draws a little under 3% annually for living expenses.

I have the nagging feeling that it might be, or at least seem to be, more prudent to put all except the 5% cash in Vanguard's Wellington Fund, reinvesting dividends and selling shares as necessary to replenish the 5% cash. But I understand that fund is sensitive to rising interest rates.

Advice sought.

db
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Re:  Is your grandmother still participating?
Old 05-02-2004, 09:46 AM   #2
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Re:  Is your grandmother still participating?

If your grandmother is still involved in managing her finances, and if she's still sleeping at night (or at least doesn't care) then there's no reason to mess with it. If she's nervous or if she wants to try out what she just read in "Four Pillars" then maybe it's worth altering the mix.

There are more opinions than posters on this board, but it seems that she has a decent allocation with an incredibly low withdrawal rate. I don't believe that portfolios should move to bonds with rising age. There's a tremendous amount of wiggle room in her portfolio but no NEED to change anything.

So unless she's itching for a change then she probably don't need to mess with success. I say this because at her age she could change the portfolio a lot and still be close to a 100% success rate.

After all, if the whole portfolio blows up, you'll assume the responsibility for her care & feeding, right?
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Re: Fiduciary responsibility of beneficiary
Old 05-02-2004, 11:21 AM   #3
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Re: Fiduciary responsibility of beneficiary

db, I have to say that is the most sensible and modern portfolio I have ever seen held by a 91 year old. Most of the old folks I know rely on the advice of a broker and have a weird mix of assets.

I wouldn't mess with her portfolio, even after you inherit it. That is basically a text-book allocation, low cost approach, and bullet-proof withdrawl rate.
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Re: Fiduciary responsibility of beneficiary
Old 05-02-2004, 12:09 PM   #4
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Re: Fiduciary responsibility of beneficiary

Nords & Wabmester,

I guess I hadn't made it clear that I'm the one who did the current asset allocation. Previously, the portfolio had been at PaineWebber, invested in high management fee, loaded funds with low Morningstar ratings that lined the pocket of their broker. Ater my dad died, I moved my mother's portfolio and the IRA I inherited to Vanguard. Mom has 3 siblings: 97, 98, and 102.

I'm the sole heir, so I suppose any second guessing of fiduciary sense would be done by me. She is the survivor of their living trust, of which I'm the beneficiary.

db
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Re: Fiduciary responsibility of beneficiary
Old 05-02-2004, 12:36 PM   #5
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Re: Fiduciary responsibility of beneficiary

Unless the work of rebalancing is worrysome - I join the previous posters - YOU DONE GOOD - and would leave it as is.
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Re: Fiduciary responsibility of beneficiary
Old 05-02-2004, 01:05 PM   #6
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Re: Fiduciary responsibility of beneficiary

I wish my 88 year old depression era mother would tolerate something similar.

Cheers,

Charlie
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