Help - Safety Stow $ as family Trustee?

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Tryn2C
Posts: 4
Joined: Wed Jun 20, 2018 8:07 pm

Help - Safety Stow $ as family Trustee?

Post by Tryn2C » Fri Aug 10, 2018 11:45 am

Hi All,

I am a trustee for a large family estate, with the associated fiduciary responsibility.

I have opened a Scwab acct., and $5M+ funds have been deposited into it.

Schwab is suggesting their SNAXX as the BEST SAFE PLACE to stow these funds for 30-120 days.

You all pros know best.

Diversity into several money market funds, bond funds?

Which ones?

Thanks in advance!

Gill
Posts: 4728
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: Help - Safety Stow $ as family Trustee?

Post by Gill » Fri Aug 10, 2018 11:56 am

I wouldn't risk an entire $5 million trust in a commercial paper fund. In the interest of safety I'd suggest US Treasury Bills as a temporary investment until you more permanently invest the trust.

In your earlier post you asked about the investment of $3.5 million which you inherited. Is this different than the trust you are now discussing? In that post you acknowledged your general lack of knowledge and interest about investment matters. You were given a lot of good advice on that thread but you never returned. Have you read it?

Are you sure you want to take on the responsibility of managing this trust? It is a big job with potential landmines and the possibility of personal liability to trust beneficiaries. There is no obligation to accept an appointment as trustee.
Gill

Tryn2C
Posts: 4
Joined: Wed Jun 20, 2018 8:07 pm

Re: Help - Safety Stow $ as family Trustee?

Post by Tryn2C » Fri Aug 10, 2018 12:35 pm

Thanks Gil,

T-Bills it is folks?

NotWhoYouThink
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Joined: Fri Dec 26, 2014 4:19 pm

Re: Help - Safety Stow $ as family Trustee?

Post by NotWhoYouThink » Fri Aug 10, 2018 12:39 pm

You're not giving us much to work with. What happens after 30-120 days? You invest in a long-term portfolio? You split it up into 3 trusts, one for each of 3 individual beneficiaries? You disburse it to the beneficiaries free of trust? You blow it all in Vegas?

Tryn2C
Posts: 4
Joined: Wed Jun 20, 2018 8:07 pm

Re: Help - Safety Stow $ as family Trustee?

Post by Tryn2C » Fri Aug 10, 2018 1:20 pm

I will disburse the funds as late as 11/01/18; the most likely date. It could be sooner, not likely.

Until 11/01/18, the $ must be stowed as safe as possible, from my point of view.

Sorry for my ignorance on the topic folks. I contribute in other forums, that I have a deep interest in the topics... perhaps better written, a love for the topics. I have answered 1,000's of forum Q's on those topics, but this topic area, not so fun for me. Congrats... and my deepest gratitude to youall.

Back to the case at hand. I visit my local Schwab office (or set up account access on line?). I should buy specifically what?

Thanks again!

GAAP
Posts: 604
Joined: Fri Apr 08, 2016 12:41 pm

Re: Help - Safety Stow $ as family Trustee?

Post by GAAP » Fri Aug 10, 2018 1:35 pm

In my personal opinion (IANAL), your concern should be primarily with preservation of principal, not returns on that principal. It sounds to me like the absolute maximum term in your case is 120 days. I doubt that anyone would fault you for using money market funds for that short a period.

The fund has consistent net inflows and a good yield. It sounds reasonable to me.

Gill
Posts: 4728
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: Help - Safety Stow $ as family Trustee?

Post by Gill » Fri Aug 10, 2018 2:30 pm

Is this trust being distributed and not a continuing trust? If so, I wouldn't risk one cent and therefore would buy nothing but US Treasury Bills. I think I get it now. The $3.5 million you mentioned in the earlier post is part of this $5 million. Correct?
Gill

Grt2bOutdoors
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Location: New York

Re: Help - Safety Stow $ as family Trustee?

Post by Grt2bOutdoors » Fri Aug 10, 2018 2:42 pm

Tryn2C wrote:
Fri Aug 10, 2018 12:35 pm
Thanks Gil,

T-Bills it is folks?
+1 to Gill. The safest money market instrument are USTreasury Bills. Highly liquid, AAA rated, the US dollar is the worlds reserve currency.

Look to 2008/2009 as to what happened in the commercial paper markets, there was a liquidity crisis - the oldest money fund, it broke the buck.

Buy the 90 Day Treasury already trading - buy the current issue that matures prior to the date you need the money.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Gill
Posts: 4728
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: Help - Safety Stow $ as family Trustee?

Post by Gill » Fri Aug 10, 2018 3:39 pm

When you are distributing a trust in such a short period of time, you don't want to take the slightest bit of risk in the interim. Your job is not to enhance principal or even to obtain a reasonable return. It is strictly to preserve principal. Nothing makes a beneficiary angrier than to tell them on August 10 you are distributing $5,000,000 and then to tell them at the time of distribution on November 1 the funds available for distribution are now $4,950,000 or whatever. The fund you mentioned at Schwab has this risk potential. I can't stress enough - US Treasury Bills are the only investment you should consider.
Gill

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PalmQueen
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Re: Help - Safety Stow $ as family Trustee?

Post by PalmQueen » Fri Aug 10, 2018 6:21 pm

Tryn2C wrote:
Fri Aug 10, 2018 1:20 pm
Back to the case at hand. I visit my local Schwab office (or set up account access on line?). I should buy specifically what?
If if were me, I'd make an appointment to meet with a rep at the local Schwab office. They may have additional advice on how to accomplish your objectives beyond what to buy.

Assuming your end goal is distributing funds to beneficiaries, rather than an ongoing trust, now's a good time to think ahead to the distribution step.
Not sure how many beneficiaries are involved and what relationship you have with them. If it happened that they all had (or could open) accounts with the same firm where the funds are being held, that would streamline the transfer at time of distribution.

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