Would you invest $30k from a trust in a mutual fund?

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aprilcpa
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Would you invest $30k from a trust in a mutual fund?

Post by aprilcpa » Tue Feb 09, 2016 4:59 pm

The title pretty much says it all.

I am the trustee of a supplemental needs trust for my 70 year old aunt. The total assets of the trust will be about $38k after I prepay her funeral. I plan to keep 5-8k in a local savings account for immediate needs. She is currently on medicaid and I have spoken with an attorney about what the trust funds can be used for. I just can't imagine she would need more than $1,000 a year over the next five years.

After she passes, I am the beneficiary of the trust. Is there any reason for me NOT to invest this money?

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Aptenodytes
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Re: Would you invest $30k from a trust in a mutual fund?

Post by Aptenodytes » Tue Feb 09, 2016 5:36 pm

You are asking us to judge the quality of your imagination, and to tax our own imaginations in wondering whatever is going to happen in five years.

We are better at the financial stuff.

dbr
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Re: Would you invest $30k from a trust in a mutual fund?

Post by dbr » Tue Feb 09, 2016 5:44 pm

aprilcpa wrote:The title pretty much says it all.

I am the trustee of a supplemental needs trust for my 70 year old aunt. The total assets of the trust will be about $38k after I prepay her funeral. I plan to keep 5-8k in a local savings account for immediate needs. She is currently on medicaid and I have spoken with an attorney about what the trust funds can be used for. I just can't imagine she would need more than $1,000 a year over the next five years.

After she passes, I am the beneficiary of the trust. Is there any reason for me NOT to invest this money?
One could argue that your failure to imagine rises to the level of failure of fiduciary duty. The real question is would making that investment be in the best interests of your aunt, all contingencies taken into account.

Also, assuming one agrees with your assessment, five years into the future is not very long to be taking any significant risk. Maybe some proposals for exactly what mutual funds you have in mind would be useful. A retirement income fund that is 70% bonds or some such thing might be reasonably argued. Of course, by mutual fund is not excluded a short term bond fund, which has nearly no risk at all. What did you have in mind?

bigred77
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Re: Would you invest $30k from a trust in a mutual fund?

Post by bigred77 » Tue Feb 09, 2016 5:55 pm

I second a very conservative retirement income fund if you feel compelled to do something. I also see leaving it in a MM, CDs, or a short term bond fund as perfectly reasonable.

hudson
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Re: Would you invest $30k from a trust in a mutual fund?

Post by hudson » Tue Feb 09, 2016 8:09 pm

If I was a trustee for my aunt, I would opt for something very safe like a CD, MM, or the equivalent.
I consider 70 to be relatively young. If she is healthy, her life expectancy is 86.
I don't know that I would pre-pay her funeral...she might need that money more than she would need a prepaid funeral. I would guard that money like a hawk because she could well need every penny.
My mission would be to take care of her as priorities #1, #2, and #3.

2retire
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Re: Would you invest $30k from a trust in a mutual fund?

Post by 2retire » Tue Feb 09, 2016 8:25 pm

You should have talked to the lawyer about this. You probably need to talk to an elder care lawyer.

I suspect that that money needs to be treated like Social Security Representative Payee money. It can probably only be invested in interest bearing accounts like bank and CD accounts. Laws are created to prevent people from exploiting those that can't protect themselves.

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Toons
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Re: Would you invest $30k from a trust in a mutual fund?

Post by Toons » Tue Feb 09, 2016 8:26 pm

She is 70.
Keep the money liquid for HER Needs. :happy
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digarei
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Re: Would you invest $30k from a trust in a mutual fund?

Post by digarei » Tue Feb 09, 2016 9:02 pm

Toons wrote:She is 70.
Keep the money liquid for HER Needs. :happy
Yes, this works if the aunt will be needing the money this year or next. However, I think I'll come down on the other side.

This is a supplementary trust of modest size. What if the aunt were to live another 25-30 years? (I have several who did). An assessment by the OP of the aunt's current financial situation indicates that there are few pressing needs. If this were my aunt, I would honor the fiduciary relationship by ensuring that these funds had an opportunity for growth with the minimum expectation of exceeding inflation. An asset allocation reflected by a conservative growth life strategy fund, perhaps. At least 40% invested in an inexpensive broad market equity fund, the remainder in fixed income: short and intermediate term bond fund(s), and a small amount in liquid savings. This way, should the money be needed 20 years from now it will have a far better chance of equaling or surpassing its current value.

Depending on the cost, I would not pre-pay funeral expenses (unless this was requested by the aunt).
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