This really doesn’t apply to FIRE, but would appreciate the collective wisdom of this board’s comments.
Recently became the trustee of my deceased sister’s funds. I’m to set up a trust for the benefit of her two adult children. Half the value of the trust to be distributed in April 2010, other half (and trust terminated) in April 2015. No provision for distributing any trust income (interest, dividends, capital gains) at any other time. This will mean that the trust will have to pay income tax on current income in all years except 2010 and 2015. Trust income tax rates hit the 30% plus at around $10K taxable income.
Assets are about $200K. How to invest?? As I see them now, the prime issues are:
1. Minimize ordinary taxable income.
2. Have 3.5 year time horizon until first distribution.
3. Have 8.5 year time horizon when everything must be liquidated.
Current assets are invested:
American Funds:
EuroPacific 20K
New Economy 5K
Invest Co of America 30K
Income Fund of Amer 45K
Remaining 100+K in a tax exempt money fund.
Any comments, suggestions, or additional viewpoints are appreciated. I’m tempted to let the MM funds ride in anticipation of the 2010 payout, pull out EuroPacific and New Economy money and transfer to Investment Co. of America, start reducing exposure in all equities gradually after 2010 given my inclination of being conservative in my fiduciary responsibility.
Recently became the trustee of my deceased sister’s funds. I’m to set up a trust for the benefit of her two adult children. Half the value of the trust to be distributed in April 2010, other half (and trust terminated) in April 2015. No provision for distributing any trust income (interest, dividends, capital gains) at any other time. This will mean that the trust will have to pay income tax on current income in all years except 2010 and 2015. Trust income tax rates hit the 30% plus at around $10K taxable income.
Assets are about $200K. How to invest?? As I see them now, the prime issues are:
1. Minimize ordinary taxable income.
2. Have 3.5 year time horizon until first distribution.
3. Have 8.5 year time horizon when everything must be liquidated.
Current assets are invested:
American Funds:
EuroPacific 20K
New Economy 5K
Invest Co of America 30K
Income Fund of Amer 45K
Remaining 100+K in a tax exempt money fund.
Any comments, suggestions, or additional viewpoints are appreciated. I’m tempted to let the MM funds ride in anticipation of the 2010 payout, pull out EuroPacific and New Economy money and transfer to Investment Co. of America, start reducing exposure in all equities gradually after 2010 given my inclination of being conservative in my fiduciary responsibility.