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how to choose beneficiaries
Old 02-22-2012, 02:13 PM   #1
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how to choose beneficiaries

Lacking children, I'm struggling choosing beneficiaries for the bulk of what, if any, will be left after I depart after FIRE. My top choices are family/friends who are responsible but less fortunate, but no one quite fits! In general the responsible people are reasonably well off and appear to have built their own FIRE funds. The others have partied/gambled away whatever they earned or were given. Besides your children and charities, what other beneficiaries have you chosen?
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Old 02-22-2012, 02:23 PM   #2
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Lacking children, I'm struggling choosing beneficiaries for the bulk of what, if any, will be left after I depart after FIRE. My top choices are family/friends who are responsible but less fortunate, but no one quite fits! In general the responsible people are reasonably well off and appear to have built their own FIRE funds. The others have partied/gambled away whatever they earned or were given. Besides your children and charities, what other beneficiaries have you chosen?
There are always charities. WGBH even has an annuity scheme

WGBH Planned Giving - Charitable remainder annuity trust

I also have no children and I'll be leaving the bulk of my estate to a local independent cinema and a theater company. Smaller amounts will go to my nieces and my ex-wife.
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How about listing me? I'm responsible and not FI, lol
Old 02-22-2012, 04:04 PM   #3
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How about listing me? I'm responsible and not FI, lol

more seriously, my recommendation would be to list nieces/nephews or their children as beneficiaries. While you may think their parents are irresponsible with their money, that's not the kids' fault.

Donating money towards kids' college funds could be a supremely benevolent act that could ensure they go to college, grad school, and really make a positive impact in their life.
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Old 02-22-2012, 04:10 PM   #4
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I was at a retirement investing lecture last night. In response to a similar question, the speaker said make your beneficiary choices in a manner not to cause fights/problems within your family after you die.

Recently a friend of mine was bequeathed his aunt's entire estate (~$200K) and his sister got zero. This was supposedly due to the fact that twenty years ago the sister had married someone from another culture (and is still happily married to him). Both siblings seem to be about equally well-off (professionals with good incomes).
As a result of the aunt's choice to leave everything to her nephew and nothing to her niece, there's been some bad feelings between the siblings.

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Old 02-22-2012, 04:12 PM   #5
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Whatever's left when I'm gone will be used to set up a scholarship fund for math and science students from my home town high school.
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Old 02-22-2012, 04:16 PM   #6
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Old 02-22-2012, 04:17 PM   #7
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What is something that you are passionate about and would like to see as a legacy to your existence on this earth?

If I didn't have children I might create a scholarship fund of some sort as a legacy.
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Old 02-22-2012, 04:24 PM   #8
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I knew a guy that had a significant net worth; no kids, no siblings left. he left the estate to 2 colleges split equally. He requested that it only be used in the college of business or engineering. Not sure how to be sure the college would honor your request (being dead and all)
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Old 02-22-2012, 04:35 PM   #9
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more seriously, my recommendation would be to list nieces/nephews or their children as beneficiaries. While you may think their parents are irresponsible with their money, that's not the kids' fault.

Donating money towards kids' college funds could be a supremely benevolent act that could ensure they go to college, grad school, and really make a positive impact in their life.
Since I consider education important I like this idea. Something like a 529 plan helps oversee the funds are spent in a more responsible manner than they otherwise might. Doesn't address what to do with the final leftovers, but it at least whittles the amount down.
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Old 02-22-2012, 04:45 PM   #10
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Lacking children, I'm struggling choosing beneficiaries for the bulk of what, if any, will be left after I depart after FIRE. My top choices are family/friends who are responsible but less fortunate, but no one quite fits! In general the responsible people are reasonably well off and appear to have built their own FIRE funds. The others have partied/gambled away whatever they earned or were given. Besides your children and charities, what other beneficiaries have you chosen?
I'm in a similar situation. I'm leaning towards (dying totally broke if I can time it just right, but who knows?), or hopefully I live a long life and only have one or two surviving siblings (instead of several which is the case now) which makes the choice easier when the time comes.

Or I can go with option three and sit down and do some soul searching .
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Old 02-22-2012, 04:55 PM   #11
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I knew a guy that had a significant net worth; no kids, no siblings left. he left the estate to 2 colleges split equally. He requested that it only be used in the college of business or engineering. Not sure how to be sure the college would honor your request (being dead and all)
One of the Bass family, I think Lee, made gift to Yale ($20mil?) IIRC contingent on its being used to create a Western Civilization Department or sub- department. They said no way, so he took his money back. Hard to do from the grave.
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Old 02-22-2012, 06:40 PM   #12
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I'm pondering exactly same problem as the OP. The charitable remainder annuity trust type deal Nun mentions in the post #2 sounds quite interesting. Looks like stock can be placed into the trust without capital gains tax liability, and still get a benefit of charitable contribution tax break. Also real estate is acceptable, but how would it be valued for annuity purposes? Has anybody done apples to apples comparison between something like this and an immediate annuity?
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Old 02-22-2012, 06:51 PM   #13
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I've been giving money away to people and causes (no relatives included).

Anything left over is already assigned to certain charities.

(If you want to know any individuals or groups, I'll be happy to inform you.)
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Old 02-22-2012, 06:58 PM   #14
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Whatever's left when I'm gone will be used to set up a scholarship fund for math and science students from my home town high school.
While I don't think I'll have the problem of finding family beneficiaries, the scholarship idea is a noble one.
I started one last year, and I fund it with dirty rotten market timing trader earnings. It makes all those hours at the computer much more meaningful, and when DW gets after me to do some chore, I just say "it's for the kid's Honey."
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Old 02-22-2012, 07:49 PM   #15
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100% of my money will stay in my family. Right now it's going to my parents. If i'm still here after they're gone it'll all go to my brother. After that, it'll be spread equally between all living first cousins and so on to the closest relative. I believe in keeping money in the family and will never give a large amount to any charity as long as I still have blood relatives among the living.
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Old 02-22-2012, 07:54 PM   #16
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Lacking children, I'm struggling choosing beneficiaries for the bulk of what, if any, will be left after I depart after FIRE. My top choices are family/friends who are responsible but less fortunate, but no one quite fits! In general the responsible people are reasonably well off and appear to have built their own FIRE funds. The others have partied/gambled away whatever they earned or were given. Besides your children and charities, what other beneficiaries have you chosen?
This is why people leave their money to universities. And to their cats.

If you're going to give your money to family kids who are still minors, it's probably best to set it up as a trust... and the trustee should be anybody but a family member. Perhaps you'd also want the trust to pay out when the kid is 18 or 21 or some other suitable adult number.

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I'm pondering exactly same problem as the OP. The charitable remainder annuity trust type deal Nun mentions in the post #2 sounds quite interesting. Looks like stock can be placed into the trust without capital gains tax liability, and still get a benefit of charitable contribution tax break. Also real estate is acceptable, but how would it be valued for annuity purposes? Has anybody done apples to apples comparison between something like this and an immediate annuity?
I don't think there's an apples comparison. The insurance company quotes you an annuity on the assumption that some of their annuitants will die way early, and they also price their quotes to make a profit. Meanwhile the CRT goes to a nonprofit that isn't even obligated to play by the same rulebook.

Now, if the charity purchased an annuity from an insurance company to pay out the contribution, that'd be an easier comparison. But then you'd also have to add in your benefit of the charitable deduction and your different income-tax levels.

A third question is whether you want any income from the donation at all. If you don't need to annuitize your income then you could just donate some assets each year-- or hold on to them to self-insure for long-term care and then give them away after you pass on.
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Old 02-22-2012, 10:36 PM   #17
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This is why people leave their money to universities. And to their cats.

If you're going to give your money to family kids who are still minors, it's probably best to set it up as a trust... and the trustee should be anybody but a family member. Perhaps you'd also want the trust to pay out when the kid is 18 or 21 or some other suitable adult number.

Note that the trust can be set up in a will as an alternative to the revokable living trust. You can then specify in the will what age you want the folks to get the money.
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Old 02-22-2012, 10:43 PM   #18
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100% of my money will stay in my family. Right now it's going to my parents. If i'm still here after they're gone it'll all go to my brother. After that, it'll be spread equally between all living first cousins and so on to the closest relative. I believe in keeping money in the family and will never give a large amount to any charity as long as I still have blood relatives among the living.
+1. Charity begins at home.
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Old 02-23-2012, 02:31 PM   #19
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Whatever's left when I'm gone will be used to set up a scholarship fund for math and science students from my home town high school.
This was along the lines of my idea. I went from a blue collar career (auto mechanic) to a professional one (Finance Director). The change was not easy...you get labeled as a grease monkey. I have thought about starting a scholarship fund for blue collar workers who want to get an education...although I've not thought through the specifics.

It's admirable that you're thinking about this, well done.
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