Need some help making decisions for Dad's investments

[Bogie]

Ah, I hadn't thought of the CG making SS taxable. I'll have to keep this is mind. Thanks for bringing this up for all of us.

 

[gindie]

Ready:

Is your Dad a veteran of any war? There are veteran's benefits that could be looked into. The latest Kiplinger magazine had a short discussion on the pogram, which is not universally known. Just a thought.

Actually, the military requirements for the VA's Aid and Attendance pension are a little looser than that. A veteran with 90 days of active duty, 1 day of which was during a period of War, can be eligible.

However, there is an max. asset limit for the benefit that would come into play with Ready's father. That limit is around $80K, not including a primary residence.

 

[haha]

As my Dad’s dementia continues to get worse, I’m finding it necessary to manage more of his personal affairs. I’m trying to make some decisions regarding his finances and I could use some advice on how to handle things for him. Here is a summary of his situation:

His total net worth is about $225K, all held at Fidelity. $120K in cash, $5K in index funds, $34K in Franklin Income Class A (FKINX), and $65K in Exxon stock. The Franklin fund is a balanced fund with about 2/3 stock 1/3 bonds. It had a front load of 4.25%, presumably because he bought it from a greedy broker many years ago. It looks like I could sell it with only a small brokerage transaction fee, but it's probably not a bad fund at this point given that the up front fee is now a sunk cost.

He purchased the Exxon stock many years ago. I need to research the exact cost basis, but I’m assuming it will be about $32K in capital gains on the sale of $62.5K in stock. Intuitively, I know it makes no sense for him to have such a high concentration of his wealth in one individual stock. However, if I sell the stock now, he would have to pay 15% CG tax, or about $4,800. There is no state tax where he resides. If I were to sell the Exxon stock, I would put some of it back into index funds, likely by dollar cost averaging the purchases.

However, if I leave the stock in place, I have the potential to inherit it at the stepped up basis and avoid the CG taxes completely. So I’m trying to balance the risk of being so heavily concentrated in one stock, the CG taxes associated with selling, and the benefit of the stepped up basis if I were to leave it alone and eventually inherit it.

While his dementia is worsening, his physical condition is OK, so it’s possible he could live for many years this way. He needs about $1,000 per month on top of his social security and pension to cover his bills, so he is not using that much of his savings at this point.

Can I get some feedback on whether it makes sense to sell the Exxon stock and reinvest it in low cost index funds or just leave it alone and wait until I inherit it at the stepped up basis.

Thanks!

I have Exxon stock that when I pass will be on its 4th generational transfer.(I think it began with the Standard Oil Trust, then SO New Jersey, etc.

Not necessarily a bad idea to let it ride.

Ha

 

[rodi]

Not to pry to much - but with dementia do you have legal rights to make financial decisions for your dad? Do you have guardianship or POA?

I know my husband had to get guardianship before he could access/address issues with his parents finances. His dad has subsequently passed, but he manages his moms affairs and will continue. Her dementia has been increasing faster than we expected.

That said - she still lives in her own home. Her dementia has not impacted her hygiene, or ability to feed herself. She chooses not to leave the house because of her arthritis. The dementia has impacted her abilty to pay bills, do banking, remember names, though. She has daily visits from family who assist in anything that needs assistance. She's made it clear she wants to stay in her home as long as possible, so we're honoring that wish as long as we can.

 

[MRG]

Not to pry to much - but with dementia do you have legal rights to make financial decisions for your dad? Do you have guardianship or POA?

I know my husband had to get guardianship before he could access/address issues with his parents finances. His dad has subsequently passed, but he manages his moms affairs and will continue. Her dementia has been increasing faster than we expected.

That said - she still lives in her own home. Her dementia has not impacted her hygiene, or ability to feed herself. She chooses not to leave the house because of her arthritis. The dementia has impacted her abilty to pay bills, do banking, remember names, though. She has daily visits from family who assist in anything that needs assistance. She's made it clear she wants to stay in her home as long as possible, so we're honoring that wish as long as we can.

POA or equivalent is what we understood. The state where my DF was living in his last days, we had a letter frim his DR stating he was not capable of making decisions. According to his attorney 'DF could also go to an attorney, be observed in a moment of clarity', and change anything.

There's a process to have someone declared mentally incompetent, that's permanent. We were adviced to not do it, it's apparently very degrading to the elder.

I'm glad your choosing to honer MIL requests, its somtimes not easy.
There's a book 'The 36 Hour Day', that helps understand what it might be like to have or live with Dementia. It helped us.
Best wishes,
MRG

 

[Ready]

My Dad set up a durable power of attorney years ago. It named my mother first as POA, then my sister, and then myself. My mother is too old to handle his affairs at this point. My sister lives with my Mother, right down the street from my Dad. She was handling some of his affairs, and I was managing his financial matters. My sister informed me last week she no longer wanted to handle things for him, which is why some remaining things are now falling in my lap.

My mother and sister wrote a letter declaring they are both unwilling to be POA for my Dad. This, along with the DPOA, was sent to Fidelity last week to establish formal POA for me on his accounts. I'm still waiting for them to receive the forms. Until then, I have to log into his account directly to handle things for him. I know that's not the ideal situation, so I'm trying to correct it with the right paperwork.

I am the official Payable on Death (POD) beneficiary on his investment accounts. However, my sister expects to receive any money left over from his estate when he passes. I suppose there could be some drama down the road from that, but for now, I have no idea how much, if any will be left, so I am trying not to think about it.