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Old 11-17-2018, 05:23 PM   #21
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Originally Posted by steelyman View Post
0.28% seems like a very low fee. The Vanguard document referenced lists a total fee of 0.3% for assets under 10 million.
Yes, but it sounds like this is a very simple management of the trust. They probably pick some AA like 60/40, put it in their own index funds and let it go. So they make a bit on the ER. They charge extra to manage property (there was an "*", but I didn't see the fine print?).

Then they pay taxes and make distributions per the trust. That's not a lot of work, especially for people who do it every day - routine.

Hmmm, makes you wonder why an FA would ever need to charge more than 0.3%? I guess the 1% is for having to deal with a living person instead of a piece of paper that won't ask questions?


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Old 11-17-2018, 05:55 PM   #22
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I've been struggling with the same issue. I'm single, with no kids, and one smart niece, and one not dependable nephew.

I'm going to be distributing the money in a lump sum, and like you don't want to burden my niece with a lot of work. ....

The big issue that I had with them is the only handle financial assets. I'm not sure if the handle non-Schwab assets. In particular, they don't handle real estate, not even your house. This is a deal breaker for me, since I have rental properties in two states, and commercial real estate in Toronto, plus a house.

I also have some really complicated Angel investments, which I fear will be a nightmare to dispose of.
...
You probably won't like my suggestion, but for the sake of your niece, I think you should work towards getting out of those tricky assets. Each state, and obviously Toronto, will have different rules/requirements that would be a ton of work for someone unfamiliar with any of this.

Are they really providing income over and above plain-jane investments? And if they are, do you need that income?

If you need a gambling/adrenaline rush, go to the track (you play poker, right? Is that enough)?

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Old 11-17-2018, 06:29 PM   #23
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Pick a smart and HIGHLY TRUSTWORTHY trustee, and a couple back-ups, give them complete discretion. Don't micro-manage from the grave.
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Old 11-17-2018, 06:31 PM   #24
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OP here. This is an update on this topic....

I found out that Schwab does have trust services and I spoke with them this week. They can serve as a successor trustee (they have other trust services also) and will maintain our portfolio, make disbursements, and pay bills as per the instructions in the trust. They do this for a fee of 0.28% of AUM, which is not too bad. The fee does not start until they are activated as the successor. There are some limits on what they will do and the assets must be index funds and simple. I am getting those details from their trust department and will give it to our attorney to put in our trust documents.

So, we will likely name Schwab as the successor trustee and name my niece as the co-trustee. My niece would then be responsible for informing Schwab when they are activated as the successor. She will also keep an eye on things. And sell our house. I would rather pay her the 0.28% but she is just too busy and this would all be new to her.

So, this is the missing piece for us, what I have been trying to figure out. Hope this is helpful to others.
Thank you as my wife and I are Schwab clients, but have no children. We were wondering how to handle our affairs and this may prove helpful.
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Old 11-17-2018, 07:47 PM   #25
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Originally Posted by ERD50 View Post
Hmmm, makes you wonder why an FA would ever need to charge more than 0.3%? I guess the 1% is for having to deal with a living person instead of a piece of paper that won't ask questions?


-ERD50

I think a lot of the heavy lifting is expected to be done before you hand the car keys over to the firm, whether Schwab, Vanguard, or whoever.

Things like making sure taxes are up to date, retitling things appropriately, selling property, getting an EIN, retrieving any unclaimed property, etc. Iím sure there are many complicated stories people can tell.

But once all that is done, the fee structure is probably good for the firm who takes over the remaining tasks.
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Old 11-17-2018, 08:41 PM   #26
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The original scenario had two questions.
One was having a trustee to handle things if they became unable to make their own decisions. I won't address this.
The other was a niece and nephew they will leave money to--one of which is fiscally irresponsible.

The second situation is where a Special Needs Trust might be needed when my wife and I both expire. It is where the trust pays certain expenses monthly or yearly, and the niece/nephew doesn't get their hands on the entire estate balance until later. One thing the trust does is it isolates itself from recipients' creditors, judgments or even bankruptcies. Expenses paid out of the trust may be utility bills, health insurance, car payments and other recurring, normal living expenses. Many individuals with such a trust don't want withdrawals to be where the recipient can avoid working a job. And young adults can also fall to the powers of "friends" who will take advantage of them and "con" them out of trust funds if there is too much available money in the trust. Often, the recipients lack the judgment to make proper decisions, and a trust has to be setup to protect their long term financial well being.

We have two kids that would blow through any inheritance quickly. We have one daughter with an accounting degree, and she's stable and slated to be the trustee. Our concern is what expenses would be reasonable and proper for the trust to pay. And when to eventually turnover the entire trust balance to each. We want the stable daughter to have the trust written in stone so the two recipients cannot rag their sister for money all the time--"singing the blues."

I would be asking for an attorney's fixed price for setting up such a Special Needs Trust--including new wills. And I'm sorry, but we can get such work done for less than $300 or $495 per hour.
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Old 11-17-2018, 09:36 PM   #27
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....

We have two kids that would blow through any inheritance quickly. We have one daughter with an accounting degree, and she's stable and slated to be the trustee. Our concern is what expenses would be reasonable and proper for the trust to pay. And when to eventually turnover the entire trust balance to each. We want the stable daughter to have the trust written in stone so the two recipients cannot rag their sister for money all the time--"singing the blues."
Please think long and hard before saddling the responsible daughter with this task. It could be a nightmare for her.

The other two could resent her for being 'controlling', and feel that any payment she received was 'stolen' from them. Regardless if it is warranted or not, the other two may still rag on their sister for 'their' money. It probably is not fair to put the responsible one between her siblings and their inheritance.

Have you discussed this with her?

I suggest you strongly consider having special needs trusts set up for the two, and having them administered by a 3rd party.

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Old 11-17-2018, 09:41 PM   #28
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I've been looking at both Vanguard and Schwab quite a bit. Based on what I have read, the person who called in to Schwab is getting quoted a better rate that what is on their website. Schwab's site says .5% up to $5 Million, with a $5000 minimum, while Vanguard is .55% up to 5 Million with a $3500 minimum. I probably need to see if I can get a better rate by talking to someone.
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Old 11-18-2018, 08:17 AM   #29
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Originally Posted by Bamaman View Post
The original scenario had two questions.
One was having a trustee to handle things if they became unable to make their own decisions. I won't address this.
The other was a niece and nephew they will leave money to--one of which is fiscally irresponsible.

The second situation is where a Special Needs Trust might be needed when my wife and I both expire. It is where the trust pays certain expenses monthly or yearly, and the niece/nephew doesn't get their hands on the entire estate balance until later. One thing the trust does is it isolates itself from recipients' creditors, judgments or even bankruptcies. Expenses paid out of the trust may be utility bills, health insurance, car payments and other recurring, normal living expenses. Many individuals with such a trust don't want withdrawals to be where the recipient can avoid working a job. And young adults can also fall to the powers of "friends" who will take advantage of them and "con" them out of trust funds if there is too much available money in the trust. Often, the recipients lack the judgment to make proper decisions, and a trust has to be setup to protect their long term financial well being.

We have two kids that would blow through any inheritance quickly. We have one daughter with an accounting degree, and she's stable and slated to be the trustee. Our concern is what expenses would be reasonable and proper for the trust to pay. And when to eventually turnover the entire trust balance to each. We want the stable daughter to have the trust written in stone so the two recipients cannot rag their sister for money all the time--"singing the blues."

I would be asking for an attorney's fixed price for setting up such a Special Needs Trust--including new wills. And I'm sorry, but we can get such work done for less than $300 or $495 per hour.
I think you have your trust names confused. I have one kid who would blow the trust if allowed. This is not a special needs trust, but a spend thrift trust. You've described it nicely. I've also provided for paying the taxes caused by the trust distributing to the beneficiary.

I have a friend who has set up for his kid that has downs syndrome. IIRC these generally pay for a person's needs up to just below where it would cause the beneficiary to loose government aid. This is where you need provide for people with medical conditions or accidents that make them need significant care for much of their life, not just someone who not just because they can't defer gratification.

OP, While you may not be getting correct and concise info, you are getting a sense of what can be done. I'd like to throw out another thought on pricing. We did our first trust in 2005 and then it just sat. Kids were minors at that time. We just did new trusts. The old ones were out of date because of life changes as the kids are now 30+, married, etc. Obsolete as tax law has changed, no need for the bypass trust in our case. And so on. We found a lawyer (firm) who charges a bit more, but the fee includes updates, periodic reviews, questions by phone or in office. So I won't be asking how much now to update the trust. When the law changes, update is covered. It is best to keep it up do date.

One other item, what you your plans for IRA/RIRA? Can't just throw them in any trust, but some work. What's you plan for your spend thrift if they are last alive of all ?

One last comment, it is difficult to control from the grave. You can't anticipate everything. Things change that you would not expect.
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Old 11-18-2018, 02:23 PM   #30
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What I really need is somebody to monitor me, and give me nudge that your mind is slipping it is time to let somebody else step in and start handling your financial affairs. Long before I need be put into a facility. Did you find a solution for this issue?

This is probably worth its own thread, but I have been intensively living this nightmare for the last 7-8 months and this is very raw.



While you (may) have all your marbles now, there is no guarantee and probably a smaller chance, that a "nudge that your mind is slipping it is time" is all its going to take and you will willingly hand over control.


84 yr old Dear old Dad has all the right things setup, POA, trusts, etc. BUT. The wording is (paraphrased) "when a Dr rules me incapacitated".


A previously intelligent man (has a masters degree, was the chairman of the board of a 1000 person organization for several years, etc) now has no clue that he just signed a loan for $7K of hearing aids that he thought were loaners. In one 15 minute phone call he had to be reminded of the lawyers name THREE TIMES. The list of mental malfunctions and hallucinations now literally fills a file folder (as I'm typing this he just called... he can't tell what part of a forwarded 6 month old email is new and what part is old... but he's preparing to create and administer 5 LLCs by himself).



According to the PCP Dr and 3 social workers "there is nothing they can do". The Dr relies on the MMSE (link to the test below) take it yourself...
The 3 social workers all said "you have to wait until something bad happens and just hope its not too bad". His estate atty, who drew up the POA that would allow me to take over won't discuss competancy with me due to "conflict of interest" and will only point to the documented "when a Dr rules him incapacitated".


I'll stop ranting with this summary. You don't get to chose what you're going to forget and when. You are one medication change, stroke, or diet change from being Mr/Ms Hyde instead of Dr. Jekyll... any hint of a "nudge" by referencing problems in a joint checking account is a betrayal, a stab in the back, "throwing me under the bus... I didn't give you access to my accounts to throw it back in my face".



Either you trust your trustee to take over when needed without a court order, or you need a different trustee. (I know, easier said than done).



You have to consistently fail this test before a Dr will pursue any competency issues.
skim to page 10 for the questions

https://www.ncbi.nlm.nih.gov/project...id=phd001525.1
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Old 11-18-2018, 02:41 PM   #31
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^^^^ Great post.

It is indeed a thorny problem. We are trusting our niece (as co-trustee), and friends, to put 2 and 2 together. But who knows if it will work as planned? Probably not.
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Old 11-19-2018, 12:02 PM   #32
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This is probably worth its own thread, but I have been intensively living this nightmare for the last 7-8 months and this is very raw.



While you (may) have all your marbles now, there is no guarantee and probably a smaller chance, that a "nudge that your mind is slipping it is time" is all its going to take and you will willingly hand over control.


84 yr old Dear old Dad has all the right things setup, POA, trusts, etc. BUT. The wording is (paraphrased) "when a Dr rules me incapacitated".


https://www.ncbi.nlm.nih.gov/project...id=phd001525.1
As far as POA's are concerned, the type that require doctors to make incapacity decisions are termed "Springing" POA's. My lawyer told me that these kinds of POA's are extremely difficult to use, as Doctors are very reluctant to sign off on them. Fortunately, my dads POA was of the "immediate" type and I had no problems using it when the time came. Of course, you have to be able to trust your POA agent with these types, as they can do some real damage if they want to.

I'm not sure about how Trusts are worded, as far as incapacity goes.
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Old 11-19-2018, 04:53 PM   #33
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As far as POA's are concerned, the type that require doctors to make incapacity decisions are termed "Springing" POA's. My lawyer told me that these kinds of POA's are extremely difficult to use, as Doctors are very reluctant to sign off on them. Fortunately, my dads POA was of the "immediate" type and I had no problems using it when the time came. Of course, you have to be able to trust your POA agent with these types, as they can do some real damage if they want to.

I'm not sure about how Trusts are worded, as far as incapacity goes.

Interesting. I'll have to dig into that some more. From what I've found so far the immediate POA is next to worthless. In order to "take over" one still needs to go to court to be appointed as a guardian and the subject declared incompetent. With a POA, banks, insurance, etc. still want their own forms that have to be signed by the "incompetentee".
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Old 11-22-2018, 01:58 PM   #34
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You probably won't like my suggestion, but for the sake of your niece, I think you should work towards getting out of those tricky assets. Each state, and obviously Toronto, will have different rules/requirements that would be a ton of work for someone unfamiliar with any of this.

Are they really providing income over and above plain-jane investments? And if they are, do you need that income?

If you need a gambling/adrenaline rush, go to the track (you play poker, right? Is that enough)?

-ERD50

It's a fair point. Up until this year, I wasn't doing better than regular investment (worse actually). But this year I had one huge windfall, which has changed the equation, plus four other investments that are paying 10-20% returns. (There is still a decent chance that at some point they will stop paying).

I play a lot less poker, stopped buying individual stocks, so I guess this is my new gambling substitute and I really enjoy it.

Do I need the money? no. But it benefits her and her children if I make more since she is beneficiary. My life expectancy is 24 years so all but one of the investments will be finished by then. But stuff happens and who knows, I could get hit by the proverbial truck today.

The whole point of naming a co-trustee is to make life easier for my niece for exactly the reasons you point out.

One thing that did occur to me reading this thread, is that for once in my life, I'm a lot more interested in the quality rather the low fees. Over a period of couple of years to get the estate settled the difference between .5% and 2% isn't that big a deal.
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