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Started By
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What to do with half mill?
Posted on 4/26/14 at 10:51 am
Posted on 4/26/14 at 10:51 am
Father in law just called me complaining that he's only getting less than half a percent on his money in a credit union savings account. He and his wife are in their lower 80s. Six kids. Wants to know what else he could do with his money to gain more interest but with very little risk. Both are relatively healthy at this point. Pretty certain they have no recurring debt. House and vehicles are paid off.
Advice?
Advice?
4
Posted on 4/26/14 at 10:54 am to purpngold
A CD would offer no risk and better return than a savings account.
Posted on 4/26/14 at 10:59 am to oklahogjr
Lendingclub.com
Posted on 4/26/14 at 11:08 am to oklahogjr
Agree. Any advice on where to shop for best CD options?
Posted on 4/26/14 at 11:15 am to purpngold
They shouldn't overlook payable on death options.
They spent their entire life accumulating this asset, in my opinion, in addition to keeping it in a safe investment vehicle, they should also spend some of it and enjoy it.
They spent their entire life accumulating this asset, in my opinion, in addition to keeping it in a safe investment vehicle, they should also spend some of it and enjoy it.
Posted on 4/26/14 at 11:24 am to Iowa Golfer
quote:
What to do with half mill?
They shouldn't overlook payable on death options.
They spent their entire life accumulating this asset, in my opinion, in addition to keeping it in a safe investment vehicle, they should also spend some of it and enjoy it.
This chunk is in addition to a checking account they have that provides them with enough to pay monthly bills and go camping occasionally. They are enjoying retirement and living comfortably.
Please elaborate on "payable on death options"
Posted on 4/26/14 at 11:31 am to purpngold
LINK
This is a general overview. Obviously you should seek the advice of a competent and trusted advisor. Having said that, I have POD provisions on my Simple IRA, Roth IRA, brokerage accounts, commodity accounts and bank accounts and I'm 47.
Many seem to get all caught up in placing assets in a trust. There are some reason to be very careful with this including every time an asset is purchased after the trust is created one needs to remember to place it in the trust, otherwise it isn't in the trust. Many advisors and attorneys disagree with this, many Judges do not.
This is a general overview. Obviously you should seek the advice of a competent and trusted advisor. Having said that, I have POD provisions on my Simple IRA, Roth IRA, brokerage accounts, commodity accounts and bank accounts and I'm 47.
Many seem to get all caught up in placing assets in a trust. There are some reason to be very careful with this including every time an asset is purchased after the trust is created one needs to remember to place it in the trust, otherwise it isn't in the trust. Many advisors and attorneys disagree with this, many Judges do not.
This post was edited on 4/26/14 at 11:33 am
Posted on 4/26/14 at 11:58 am to purpngold
How much does he need the money? They need it to live on? Or he just trying to grow it for his heirs?
Posted on 4/26/14 at 12:02 pm to SmackoverHawg
quote:
How much does he need the money? They need it to live on? Or he just trying to grow it for his heirs?
This pot of money is strictly to be passed on to heirs. They have living expenses covered in their checking account. No recurring debt. They don't do much other than trips to doctor appointments. Don't eat out much.
Posted on 4/26/14 at 12:04 pm to purpngold
quote:
Please elaborate on "payable on death options"
Basically, it has a beneficiary so the money spent go thru probate and get taxed heavily.
Why diesnt he do something like gift the max amount to each kid each year, I think it's $13k/year (double if kid is married). It's tax free and it's a way to transfer it to whoever he wants.
Talk to a financial guy you trust. They will explain how to keep it away from taxes. If he dies w that much cash, the tax man cometh!
Posted on 4/26/14 at 12:08 pm to purpngold
quote:
This pot of money is strictly to be passed on to heirs. They have living expenses covered in their checking account. No recurring debt. They don't do much other than trips to doctor appointments. Don't eat out much.
In that case, land and or blue chip dividend stocks. No sense in pissing away growth. The risk is nil in the long term. Make sure dividends are reinvested. You are losing money to inflation otherwise.
Posted on 4/26/14 at 12:26 pm to GeeOH
quote:
Why doesnt he do something like gift the max amount to each kid each year, I think it's $13k/year (double if kid is married). It's tax free and it's a way to transfer it to whoever he wants.
If my wife and I are in a similar situation, this is probably what we'll do. I'd much rather see my kids enjoy my gift while I'm living
Posted on 4/26/14 at 12:31 pm to purpngold
Basically, it has a beneficiary so the money spent go thru probate and get taxed heavily.
I'm not sure this is accurate. Federal estate taxes begin at about $5MM don't they?
I'm not sure this is accurate. Federal estate taxes begin at about $5MM don't they?
Posted on 4/26/14 at 12:36 pm to purpngold
quote:
This pot of money is strictly to be passed on to heirs.
If so then there's no reason to be invested in CD's or savings accounts. One option is to buy target retirement fund ETF's with target dates near the expected retirement dates of the heirs.
Or he could be more aggressive than that since the cost basis will reset when inheritance takes place.
Posted on 4/26/14 at 1:25 pm to foshizzle
Ally online account is great. I get 1% pretty much for doing nothing with no risk. Online might hold the old folks back though. Otherwise CDs.
Posted on 4/26/14 at 1:47 pm to purpngold
With that much money, a single premium whole life policy would be perfect for what he's looking to do. He should check with New York Life, Northwest Mutual, Met Life, Mutual of Omaha, or even State Farm.
Posted on 4/26/14 at 1:59 pm to TDsngumbo
@ Mutual of Omaha and State Farm. That's just dumb. Neither are players in that market.Posted on 4/26/14 at 3:58 pm to iknowmorethanyou
Louisiana muni bond. Triple tax free. Get your money back when it matures.
Posted on 4/26/14 at 4:54 pm to purpngold
at his age long term CD- I would split it up.
20% in a 5 year
20% in 3 year
20% in 2 Year
20% in 1 year
20% in 6 month
If he wants security -- also it should be in two separate banks
20% in a 5 year
20% in 3 year
20% in 2 Year
20% in 1 year
20% in 6 month
If he wants security -- also it should be in two separate banks
Posted on 4/26/14 at 5:37 pm to GeeOH
quote:
Basically, it has a beneficiary so the money spent go thru probate and get taxed heavily.
The primary reason to title/name an account with POD designation is to AVOID probate. The person named as the POD recipient gets a stepped-up basis with no personal income tax or gain implications.
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