Hello again, everyone!
Soon it will be six months since mom died and I was bombarded with big decisions. This post is both to ask for your sage advice as well as to leave information for other bewildered (ex)caregivers and young beneficiaries.
I have almost completed the estate process, with just a little paperwork remaining. The financial end of things hasn't been so smooth. Right now mom's IRA is in an inherited IRA account with Vanguard and the ball is in my court to contact them and come up with a plan. The 401k she had at Mass Mutual turned into a mess. I sent in the paperwork, choosing to take the 5-year payout option for the ~$47k. Not an option, they came back and told me. The plan administrator at mom's old job said I had to take a lump sum....which I *really* didn't want to do. I said OK and voila, a week later there was a check in my hands....minus the federal 20% cut and a bit for the state. Almost $11k gone, just like that. Was this ignorance on my part? Was this avoidable? Can you give any advice for future readers to avoid this?
My dilemma is this: I now have that money, plus ~$50k life insurance, and ~$20k from closed estate accounts in my credit union money market account. Around $100k making me a whopping 1.00%. I'd like to put it someplace where it can work a little harder for me, however I need access. I don't know what I'm doing or where I'm going and I'm currently living completely off of that money. I have ~$30k left in student loan debt. I have an inherited house that is falling apart. I don't have any health insurance since I lost the tax credit when mom died (and WOW that sucked). In summary, I can't have it all locked away until I'm 59 1/2 :/ Are there any funds in particular you might recommend for a 28 year-old still stumbling through life? Or a general sense of what I should be looking for as I do my research?
I also wanted to share a link. I spent countless hours searching the internet with the keywords "brain cancer, "finances," and "clueless caregiver." I was disappointed to find so little information--this is in part why I came to this forum. http://itsthetumor.blogspot.com
is the link to the blog I maintained while my mother was ill, in which I tried to record some of the more practical issues that come up. I certainly don't intend this as self-advertisement, only for it to be left here as a resource for future caregivers, patients, etc.
Hello again! Thank you all for the advice and kind words in response to my original post. Shortly after I wrote the original message things began to change and we decided to leave her accounts as they were. She passed away last month and I'm having a bit of trouble sorting out the tax consequences of my various options. (I've read other posts about inherited accounts, however they all seem to involve *much* more money or are inherited by someone who is in a higher tax bracket). Aside from preserving as much as possible, I'd also like to know how accessible the money will be (I have no job, am now paying a mortgage, and have to do some reno before I'm able to sell her house, etc). All of the basic financial information that I gave in August below is more or less the same, and she was still 57 (and hadn't touched the retirement accounts) when she died.
1) The 401(k) is still around $40k. Rollover into an inherited IRA or take a lump sum? With the IRA, can I take distributions for a number of years less than my life expectancy? (Say, over 5 years instead of, oh, the next 40). And I *have* to start taking distributions after 5 years, correct? Or, since I'm currently in the lowest tax bracket, should I take it all now? What is this mandatory 20% I've seen in my research? That seems like a bit much...
2) The IRA. I spoke with Vanguard and it seems that I have only one option, and that is to go the inherited IRA route. Is it then treated the same as above--five years or all at once?
3) On a slightly different note, as the executrix as well as sole beneficiary, it's clear that her estate (her depleted savings, mainly) will not cover her medical bills (her only debt aside from mortgage). All of her accounts had me as a beneficiary, save for her savings/checking, which is now around $5000. I was told that creditors can request that the house be brought back into the estate in order to pay off debt. Is this common? Is it nearly as big a pain as it sounds? The deed to the house hasn't yet been put in my name--would doing that have any effect?
BTW, as far as taxes go, I won't be going back into the workforce and making a lot of $. I would like to get something low-key and part-time while I figure out what on earth I should do next...so my tax bracket should remain low over the next year-ish.
Thank you all!
So, my mom has brain cancer. It's aggressive and incurable, but currently being treated to extend life. Odds are against her being around too much longer, though. She was an avid Boglehead and very involved in her finances. She was a single mom working two jobs in order to put something together for her retirement, and to leave something for me. All that has kind of gone to hell. I left grad school (my only source of income) to move home and care for her. The two of us live off her SS disability check and our dwindling savings. In an ideal world, when I'm not shuttling her to appointments or cleaning up after her I'd be reading books on this sort of stuff. But, it's all I can do to drag myself out of bed in the morning, so I'm hoping you all can help me out a bit and forgo the "I've posted this a dozen times" and "read this book first" stuff. Thanks in advance!
Because we're living together, and her assets/debts will soon become mine, I've put us both on here.
Debt: ~$30k student loans
Tax status: Single
Tax rate: I don't even know. That's how out of my depth I am.
Roth IRA: $6k [target 2050] (at Vanguard)
Debt: ~$85k mortgage @ 4.375%, ~$12k medical bills (as of right now, may very well increase)
Tax status: Single
Tax rate: see above
Rollover IRA: $120k ($4k VMMXX [prime money market] , $116k VTTVX [target 2025]) (at Vanguard)
401k: $41k (at Hartford/Mass Mutual)
Money Market: $6k (at Capitol One)
Mutual Fund: $16k (PRUAX) (at Wells Fargo Advisors)
Life insurance: $50k
Income: $19500/yr SS disability
Her desire: to put everything she has into her Vanguard account. I don't know if she's thinking clearly anymore, though. Is this wise? Will there be many fees/tax consequences? Is the money accessible there?
1. My main concern is that fairly soon she will have to go into an assisted living facility. No doctor can tell us how long she has. Six months, six years...everyone is different. Her disability check will cover, most likely, half the monthly expenses. We need to draw from her funds to make up the difference. Which one? How?
2. I also need to sell her house. The upkeep and repairs are too much for me on top of everything else. Where should that money go? [I'll be renting something cheap nearby].
3. My student debt. Do I pay off all or part of it now (with her funds and permission) and avoid the interest?
4. When she's gone, what can the hospitals come after?
I had an introductory meeting with a trusted financial planner, but I'm not sure if that's the way to go. Is our situation so complicated that I should pay someone else to take care of it? I certainly leaning toward that option...what do you think?
I hope I didn't make too much of a mess of all that. I'm not sure you can possibly understand how much your advice will be appreciated!