keeping track of basis for a small investment

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notmyhand
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keeping track of basis for a small investment

Post by notmyhand » Sun Feb 25, 2018 10:23 am

A relative of mine has squirreled away 40k that she wants to invest. She has no technology knowledge and doesn't speak much English plus she does not want her spouse to know about this money so she has asked me to invest it in my accounts. I have spoken with her kids who are okay with me doing so even if it goes down. However, I am trying to prevent family quarrels in the future in case the market goes down or when taxes will be due upon withdrawal. Is there a good way to keep track of basis in such a small investment so I know exactly how much is theirs versus mine 20 years down the line? I was planning on just purchasing VTSMX and hoping twenty years down the line I could tell what their shares are.

Alternatively, any knowledge on investing that would not show up on a tax return? No earned income so can't do an IRA/401k so it has to be taxable. She doesn't want statements going to the house but we can have it going to one of her kids but I have no idea how she can invest without her spouse knowing. Bad situation all around and I am just trying to help without family problems or too much work keeping track of everything.

Any advice would be great. Thanks!

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F150HD
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Re: keeping track of basis for a small investment

Post by F150HD » Sun Feb 25, 2018 10:45 am

notmyhand wrote:
Sun Feb 25, 2018 10:23 am
A relative of mine has squirreled away 40k that she wants to invest. She has no technology knowledge and doesn't speak much English plus she does not want her spouse to know about this money so she has asked me to invest it in my accounts. I have spoken with her kids who are okay with me doing so even if it goes down. However, I am trying to prevent family quarrels in the future in case the market goes down or when taxes will be due upon withdrawal. Is there a good way to keep track of basis in such a small investment so I know exactly how much is theirs versus mine 20 years down the line? I was planning on just purchasing VTSMX and hoping twenty years down the line I could tell what their shares are.

Alternatively, any knowledge on investing that would not show up on a tax return? No earned income so can't do an IRA/401k so it has to be taxable. She doesn't want statements going to the house but we can have it going to one of her kids but I have no idea how she can invest without her spouse knowing. Bad situation all around and I am just trying to help without family problems or too much work keeping track of everything.

Any advice would be great. Thanks!
someone vastly smarter then I will comment, but, I think this is a really, really bad idea.

if you're tracking basis, this must be a taxable account. Who'll be paying taxes on dividends each year? you?

if you are inclined to do this, consider opening a new account at a separate brokerage specifically dedicated to this and buy VTI (ETF for total market). Don't intermingle your $$.

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goingup
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Re: keeping track of basis for a small investment

Post by goingup » Sun Feb 25, 2018 10:51 am

Any broker will track the cost basis. That really isn't the biggest problem in this scenario.

You're getting involved in something akin to financial infidelity, which may be for all the right reasons, but is a tangled web. There are statements, and addresses of record, and taxes to be paid on interest and dividends. I don't have any surefire suggestions on how to hide assets and it seems like a bad idea. Perhaps a CD at a local credit union or a safety deposit box at a bank. I'd stick with low tech and local.

But to reiterate--it's not a great idea!

notmyhand
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Re: keeping track of basis for a small investment

Post by notmyhand » Sun Feb 25, 2018 10:53 am

F150HD wrote:
Sun Feb 25, 2018 10:45 am
notmyhand wrote:
Sun Feb 25, 2018 10:23 am
A relative of mine has squirreled away 40k that she wants to invest. She has no technology knowledge and doesn't speak much English plus she does not want her spouse to know about this money so she has asked me to invest it in my accounts. I have spoken with her kids who are okay with me doing so even if it goes down. However, I am trying to prevent family quarrels in the future in case the market goes down or when taxes will be due upon withdrawal. Is there a good way to keep track of basis in such a small investment so I know exactly how much is theirs versus mine 20 years down the line? I was planning on just purchasing VTSMX and hoping twenty years down the line I could tell what their shares are.

Alternatively, any knowledge on investing that would not show up on a tax return? No earned income so can't do an IRA/401k so it has to be taxable. She doesn't want statements going to the house but we can have it going to one of her kids but I have no idea how she can invest without her spouse knowing. Bad situation all around and I am just trying to help without family problems or too much work keeping track of everything.

Any advice would be great. Thanks!
someone vastly smarter then I will comment, but, I think this is a really, really bad idea.

if you're tracking basis, this must be a taxable account. Who'll be paying taxes on dividends each year? you?

if you are inclined to do this, consider opening a new account at a separate brokerage specifically dedicated to this and buy VTI (ETF for total market). Don't intermingle your $$.
I already own a brokerage account with Vanguard that owns VTI. Can I open another account to keep it separate? I didn't see that option. I will be paying taxes and reimbursing myself and that has been discussed with the kids. I've asked the kids to do it instead but none of them want to. How to help, how to help...

notmyhand
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Re: keeping track of basis for a small investment

Post by notmyhand » Sun Feb 25, 2018 10:55 am

goingup wrote:
Sun Feb 25, 2018 10:51 am
Any broker will track the cost basis. That really isn't the biggest problem in this scenario.

You're getting involved in something akin to financial infidelity, which may be for all the right reasons, but is a tangled web. There are statements, and addresses of record, and taxes to be paid on interest and dividends. I don't have any surefire suggestions on how to hide assets and it seems like a bad idea. Perhaps a CD at a local credit union or a safety deposit box at a bank. I'd stick with low tech and local.

But to reiterate--it's not a great idea!
Oh I know. I don't know how best to help. If money is kept in the house, addict spouse will find it and spend it and it is all she has.

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F150HD
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Re: keeping track of basis for a small investment

Post by F150HD » Sun Feb 25, 2018 2:56 pm

notmyhand wrote:
Sun Feb 25, 2018 10:53 am
I already own a brokerage account with Vanguard that owns VTI. Can I open another account to keep it separate? I didn't see that option. I will be paying taxes and reimbursing myself and that has been discussed with the kids. I've asked the kids to do it instead but none of them want to. How to help, how to help...
I meant open it AT A DIFFERENT FIRM. Etrade, Scottrade, Schwab etc....literally dozens of them to choose from.

notmyhand
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Re: keeping track of basis for a small investment

Post by notmyhand » Sun Feb 25, 2018 3:07 pm

F150HD wrote:
Sun Feb 25, 2018 2:56 pm
notmyhand wrote:
Sun Feb 25, 2018 10:53 am
I already own a brokerage account with Vanguard that owns VTI. Can I open another account to keep it separate? I didn't see that option. I will be paying taxes and reimbursing myself and that has been discussed with the kids. I've asked the kids to do it instead but none of them want to. How to help, how to help...
I meant open it AT A DIFFERENT FIRM. Etrade, Scottrade, Schwab etc....literally dozens of them to choose from.
Ah, I always forget vanguard funds are available elsewhere. That would work and probably would be best if I decide to proceed. Thank you.

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Pajamas
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Re: keeping track of basis for a small investment

Post by Pajamas » Sun Feb 25, 2018 4:06 pm

The real problem here is the "addict spouse" rather than how to keep track of the basis for an investment or even where and how to set up such an investment under the circumstances. That presumably adult children don't want to get involved is a red flag that you should be wary of getting involved, too, as they should be the obvious ones to help her. It would be best for her to talk to a lawyer about how to handle the financial aspects of the situation and protecting money from her spouse. Keeping it a secret is a different matter.

Seems to me that having a stash of cash might be the best solution for her as it is likely to come in handy at some point given her circumstances vs. an "investment".

notmyhand
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Re: keeping track of basis for a small investment

Post by notmyhand » Sun Feb 25, 2018 4:11 pm

Pajamas wrote:
Sun Feb 25, 2018 4:06 pm
The real problem here is the "addict spouse" rather than how to keep track of the basis for an investment or even where and how to set up such an investment under the circumstances. That presumably adult children don't want to get involved is a red flag that you should be wary of getting involved, too, as they should be the obvious ones to help her. It would be best for her to talk to a lawyer about how to handle the financial aspects of the situation and protecting money from her spouse. Keeping it a secret is a different matter.

Seems to me that having a stash of cash might be the best solution for her as it is likely to come in handy at some point given her circumstances vs. an "investment".
Yes, she has some cash but keeping it all in cash means the spouse might find it and spend it. She has no retirement accounts and thus is worried about what will happen when she has to retire. Adult children are in college and just out so not financially knowledgeable which is why they're not jumping at the chance. I will likely try to point them in the right direction instead.

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Pajamas
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Re: keeping track of basis for a small investment

Post by Pajamas » Sun Feb 25, 2018 4:13 pm

notmyhand wrote:
Sun Feb 25, 2018 4:11 pm

Yes, she has some cash but keeping it all in cash means the spouse might find it and spend it. She has no retirement accounts and thus is worried about what will happen when she has to retire. Adult children are in college and just out so not financially knowledgeable which is why they're not jumping at the chance. I will likely try to point them in the right direction instead.
That would seem to be best, to let the children handle any accounts rather than you getting involved. She should talk to a lawyer since it is her spouse.

sco
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Re: keeping track of basis for a small investment

Post by sco » Mon Feb 26, 2018 12:48 pm

So Purely from a procession standpoint, some things to think about.

A. The account is under her name, it is her money, she pays taxes gets statements. This could be problematic, given the backstory. You are just admin of the account for her. She would then be able to use a Roth, etc which would be prefered to a taxable account, all else being equal.

B. She gifts the money to you, it is your money you pay taxes, you get statements. And she trusts you to give it back someday, but if you fall over dead one day it is just another part of your estate that probate or a will/trust settles out. She may have no legal right to it.
The annual Gift exclusion without paperwork is 14k. She can give it to you all at once, but there is a form to fill out and it will come out her lifetime exclusion, it doesn't sound like that will be an issue for her.


Any brokerage with a Total Market Fund will work just fine.

And this is a bad idea :)

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