Help me help my 92 yo grandfather

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j7se
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Joined: Fri Jan 01, 2016 11:16 pm

Help me help my 92 yo grandfather

Post by j7se »

My grandfather has been investing in individual stocks for as long as I can remember. He and I were talking recently about investing and I showed him my portfolio and told him many things that I've learned from this forum. He told me that he would like me to manage* one of his accounts for him as he has lost interest in investing. He said that this account will be what he will be leaving to his children when he passes. There are several questions I am needing help with. The account has 15 individual stocks for a total of 320k, 110k of which is unrealized gains and 82k of that is in one stock. 30k is in money market. Dividends do not reinvest. He is at a brokerage which charges $30/trade (buy or sell). I have thought about getting him to transfer out of this brokerage but I think it would be too hard for him to have to learn a new system and as long as we can minimize trades there isn't a huge cost of doing business there. I do not know anything about his tax situation as I'm trying not to be too involved. If I had to guess, I would guess he is at 15% marginal or maybe low end of 25%. At his age, he has no need to take the risk, but is willing and has the ability to do so as he never even withdraws from this account.

1. First and foremost, should I even get involved with this since this will be affecting my dad and his siblings at some point?

2. I was thinking the easiest thing may be just to use the mmkt account and buy a life strategy or target date fund and contribute to it annually to cut down on trade costs and complexity. He could also sell 6 of the stocks for a total of 6k taxable gains.

3. I have seen most of my grandfather's accounts and he is almost entirely in equities. Should I use an aggressive fund or conservative fund? If it were just going to be for my grandfather I would probably use aggressive but since this will affect his children I think a conservative one would be better, maybe 40/60 or 50/50. Thoughts?


*Manage in this sense will be to advise him to buy/sell stocks or fund and how often to reinvest. I do not want anymore responsibility than this.
bayview
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Re: Help me help my 92 yo grandfather

Post by bayview »

j7se wrote:My grandfather has been investing in individual stocks for as long as I can remember. He and I were talking recently about investing and I showed him my portfolio and told him many things that I've learned from this forum. He told me that he would like me to manage* one of his accounts for him as he has lost interest in investing. He said that this account will be what he will be leaving to his children when he passes...

1. First and foremost, should I even get involved with this since this will be affecting my dad and his siblings at some point?

*Manage in this sense will be to advise him to buy/sell stocks or fund and how often to reinvest. I do not want anymore responsibility than this.
Boy, that sounds like the answer right there... I'd be incredibly wary of this, although I do believe that you're trying to help.

Unless he's astonishingly spry, his portfolios may become inheritances pretty soon. It seems like it would be a lot simpler for the heirs to move to BH-type investing when they inherit (avoid a lot of the tax issues, etc.)
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri
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Watty
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Re: Help me help my 92 yo grandfather

Post by Watty »

For the stocks with significant capital gains it likely makes sense for him to just keep them until they go to his estate since the estate would get them at a stepped up cost basis and the capital gains taxes would never need to be paid.

If he supports a charity then it could give them shares of the stock with a lot a capitol gains instead of cash.

For the stocks with a loss or minimal capital gains selling them and buying low cost ETF's or mutual funds where he is at now would be reasonable.
Avo
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Re: Help me help my 92 yo grandfather

Post by Avo »

I would not take on any management/advice duties. I absolutely positively would not do anything with tax consequences when you have no idea what his tax situation is!

But: does he have an estate plan? What happens to his accounts if he can no longer manage them at all due to cognitive decline?

A living trust with an incapacity clause and a named successor trustee seems like a really good idea to me.

I worry that none of this is in place, because if it was he should be talking to the successor trustee about management issues.

The best thing you could do is get him to see a qualified lawyer and make an estate plan ASAP, if I am right that this has not been done. This would be money very well spent, far more valuable than any investment strategy.
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celia
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Re: Help me help my 92 yo grandfather

Post by celia »

j7se wrote:*Manage in this sense will be to advise him to buy/sell stocks or fund and how often to reinvest. I do not want anymore responsibility than this.
This is my definition of "manage" (along with taking the corresponding actions).
What is your grandfather's definition?

Maybe it is to make the trades that he decides on.
Maybe it is to come up with the purchase or sales price (for a limit order) rather than accept the market price for that day.
Maybe it is to locate current news on the companies he owns and is thinking of owning (my dad requests this from me as he doesn't use a computer).
dbr
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Re: Help me help my 92 yo grandfather

Post by dbr »

He wants to bypass his own children who will inherit the money and ask a grandchild to "manage" things????

I wouldn't touch this with a million mile pole. Is your father aware of this?
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Pajamas
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Re: Help me help my 92 yo grandfather

Post by Pajamas »

Since it is your grandfather and presumably he has closer relatives and beneficiaries of his will and he is 92, just make sure he has a will and designated beneficiaries named on any financial accounts and then spend as much time with him as you can, focusing on things that he enjoys. Any other interventions in his finances will probably not actually be of any benefit to him or to you but spending time with him will be.

Edit: I was thinking about this some more. Basically what I was trying to say is "don't meddle in your 92 year old grandfather's financial affairs."

What you might do is ask him for financial advice based on his own experience over 92 years. Since he was born in about 1925, he lived through the Great Depression, the WWII economy, the post-war boom, the 1960s leading into the inflationary period of the 1970s, the failure of the Reaganomics of the 1980s, etc. He probably could give you some really useful advice.
Last edited by Pajamas on Sat Jun 24, 2017 2:47 pm, edited 1 time in total.
Jack FFR1846
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Re: Help me help my 92 yo grandfather

Post by Jack FFR1846 »

If I were asked about this, I'd say to leave it all as is, no trading, not reinvest dividends.
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inbox788
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Re: Help me help my 92 yo grandfather

Post by inbox788 »

What are you "managing"? It's one account among many, so what is the goal of this one account as it fits in the the whole portfolio of accounts? Are you trying to maximize investment returns? After tax returns? Are you trying to diversify or can he accept some concentration in stocks for other benefits? Who is this money going to and what tax bracket are they in? If the money is going to someone else in a lower tax bracket, he can consider gifting some now or wait for the step up basis at death. I hope he lives to a ripe old age, but sounds like one day, there will be an inheritance to pass on, and I hope he has his will/living trust/etc. in order. Given what is know about the gains, doing nothing is probably the best investment course and taking the step up basis. Of course, additional information and clarification about the situation can lead to another recommendation.
dbr wrote:He wants to bypass his own children who will inherit the money and ask a grandchild to "manage" things????

I wouldn't touch this with a million mile pole. Is your father aware of this?
It's either a sign of senility or genius. He may recognize that his grandson is an investment wizard and has found the optimal investment plan that's better than any financial advisor he has encountered in his many years investing. If only he had known all this when he was younger, he could be doing so much better and living the simple life.

Seriously, if grandfather is like many typical investors, he has 5 funds that perform with varying degrees, some beating the market and other losing out. He'll watch grandson portfolio for a few years with middling results, each year losing out to the best performing fund and conclude that grandson isn't on to something worth keeping and give up on the strategy.
Last edited by inbox788 on Sat Jun 24, 2017 2:13 pm, edited 1 time in total.
GoldenFinch
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Re: Help me help my 92 yo grandfather

Post by GoldenFinch »

dbr wrote:He wants to bypass his own children who will inherit the money and ask a grandchild to "manage" things????

I wouldn't touch this with a million mile pole. Is your father aware of this?
I agree. Some things are better left alone.
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2pedals
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Re: Help me help my 92 yo grandfather

Post by 2pedals »

j7se wrote:1. First and foremost, should I even get involved with this since this will be affecting my dad and his siblings at some point?
Probably not. What would his siblings do if the assets lost say 50%? Would they hold it against you and your family? Sometimes things can get quite nasty. But on the other hand it seams to me your grandfather respects you and loves you dearly. He reached out for your help and I think you want to do whatever you can to help him. Did your grandfather ask his children for help before he approached you? I think it all depends on the family dynamics in this case. Perhaps you should be asking your aunt or uncles and father and mother what they think about this before you get too involved. If they become contentious I would avoid managing this account.
Topic Author
j7se
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Re: Help me help my 92 yo grandfather

Post by j7se »

I figured staying out would be the general consensus and after speaking with my father decided I will keep out of this. Thanks for your help.
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