Critical Account

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pascalwager
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Critical Account

Post by pascalwager » Tue Sep 11, 2018 11:11 pm

Awhile back, I gave someone $5,000 to put in her personal credit union savings account (0.35% APY). She's 15 years younger than me (I'm 76) and if I were to die, she would absolutely depend on this money and her credit card for a few weeks for living expenses until she inherited something like $2.3 million (she's the sole beneficiary on all of my investment and bank accounts) and my house.

This money is intended to be unused until my demise and I'd like to see it growing in VG Prime MMF rather than the credit union savings account, although she's more comfortable with being able to get the money out faster from her local and familiar credit union.

(I'm also considering giving her another $5,000 for this purpose, as she may need to pay off the credit card before she actually receives any of the various inheritances.)

Any opinions relative to credit union versus money market fund in this case?
Overall AA: 51/37/12 | Portfolio 1: total world stock market, short-term TIPS | Portfolio 2: global large value, global small cap, ultra short-term global bonds | Cash: Treasury money market

123
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Re: Critical Account

Post by 123 » Tue Sep 11, 2018 11:22 pm

Why not put the money you think she needs immediately in a joint account (you and her) and put it wherever you feel is best. Joint account owners still have access to the account if one person passes away in most circumstances. The way you're doing it now could make it difficult for you to get your money back for alternative arrangements if she predeceases you.
The closest helping hand is at the end of your own arm.

pascalwager
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Re: Critical Account

Post by pascalwager » Wed Sep 12, 2018 1:17 am

123 wrote:
Tue Sep 11, 2018 11:22 pm
Why not put the money you think she needs immediately in a joint account (you and her) and put it wherever you feel is best. Joint account owners still have access to the account if one person passes away in most circumstances. The way you're doing it now could make it difficult for you to get your money back for alternative arrangements if she predeceases you.
Yes, that would be more sensible. I guess we wanted to move fast awhile back, she already had the CU account and we were focused only on my own mortality and not her's.
Overall AA: 51/37/12 | Portfolio 1: total world stock market, short-term TIPS | Portfolio 2: global large value, global small cap, ultra short-term global bonds | Cash: Treasury money market

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Earl Lemongrab
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Re: Critical Account

Post by Earl Lemongrab » Wed Sep 12, 2018 2:19 pm

How soon would she need access to the money? Is this strictly a contingency? A better suggestion might be an account in your name with her as a POD beneficiary. That requires a copy of the death certificate, which can take a few days.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

pascalwager
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Re: Critical Account

Post by pascalwager » Fri Sep 14, 2018 2:03 am

Earl Lemongrab wrote:
Wed Sep 12, 2018 2:19 pm
How soon would she need access to the money? Is this strictly a contingency? A better suggestion might be an account in your name with her as a POD beneficiary. That requires a copy of the death certificate, which can take a few days.
Yes, my own sizable bank checking account is already set up for POD in her name. But this doesn't provide immediate cash.
Overall AA: 51/37/12 | Portfolio 1: total world stock market, short-term TIPS | Portfolio 2: global large value, global small cap, ultra short-term global bonds | Cash: Treasury money market

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Earl Lemongrab
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Re: Critical Account

Post by Earl Lemongrab » Fri Sep 14, 2018 11:45 am

pascalwager wrote:
Fri Sep 14, 2018 2:03 am
Earl Lemongrab wrote:
Wed Sep 12, 2018 2:19 pm
How soon would she need access to the money? Is this strictly a contingency? A better suggestion might be an account in your name with her as a POD beneficiary. That requires a copy of the death certificate, which can take a few days.
Yes, my own sizable bank checking account is already set up for POD in her name. But this doesn't provide immediate cash.
How immediate are we talking? Basically POD requires a copy of the death certificate and a trip to the bank. I was POD on my mother's accounts and the money was available quickly.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

donall
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Re: Critical Account

Post by donall » Fri Sep 14, 2018 1:26 pm

Just have a joint checking account with wife. Make sure that you also have beneficiaries on that account.

pascalwager
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Re: Critical Account

Post by pascalwager » Fri Sep 14, 2018 7:57 pm

Earl Lemongrab wrote:
Fri Sep 14, 2018 11:45 am
pascalwager wrote:
Fri Sep 14, 2018 2:03 am
Earl Lemongrab wrote:
Wed Sep 12, 2018 2:19 pm
How soon would she need access to the money? Is this strictly a contingency? A better suggestion might be an account in your name with her as a POD beneficiary. That requires a copy of the death certificate, which can take a few days.
Yes, my own sizable bank checking account is already set up for POD in her name. But this doesn't provide immediate cash.
How immediate are we talking? Basically POD requires a copy of the death certificate and a trip to the bank. I was POD on my mother's accounts and the money was available quickly.
I can't remember how long it took to get my mother's death certificate and I didn't need to test POD as my name was also on her bank account.

I guess a few days transition would be OK. She could use her credit card for necessities.
Overall AA: 51/37/12 | Portfolio 1: total world stock market, short-term TIPS | Portfolio 2: global large value, global small cap, ultra short-term global bonds | Cash: Treasury money market

pascalwager
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Re: Critical Account

Post by pascalwager » Fri Sep 14, 2018 8:18 pm

donall wrote:
Fri Sep 14, 2018 1:26 pm
Just have a joint checking account with wife. Make sure that you also have beneficiaries on that account.
I'm not married, but I spent about three weeks this summer making sure that all of my assets had the same named beneficiary. The one exception was my car, but she would get that due to a particular state law. (But the car must just sit and gather dust for about 45 days.) The house TOD recording process took most of the time.
Overall AA: 51/37/12 | Portfolio 1: total world stock market, short-term TIPS | Portfolio 2: global large value, global small cap, ultra short-term global bonds | Cash: Treasury money market

keepingitsimple
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Re: Critical Account

Post by keepingitsimple » Fri Sep 14, 2018 8:19 pm

pascalwager wrote:
Tue Sep 11, 2018 11:11 pm
Awhile back, I gave someone $5,000 to put in her personal credit union savings account (0.35% APY). She's 15 years younger than me (I'm 76) and if I were to die, she would absolutely depend on this money and her credit card for a few weeks for living expenses until she inherited something like $2.3 million (she's the sole beneficiary on all of my investment and bank accounts) and my house.

This money is intended to be unused until my demise and I'd like to see it growing in VG Prime MMF rather than the credit union savings account, although she's more comfortable with being able to get the money out faster from her local and familiar credit union.

(I'm also considering giving her another $5,000 for this purpose, as she may need to pay off the credit card before she actually receives any of the various inheritances.)

Any opinions relative to credit union versus money market fund in this case?
Losing someone is very stressful and losing someone on whom you are dependent even more so. If the ease and familiarity of having the money accessible in a credit union brings her comfort, then perhaps it is worth considering leaving it there. Peace of mind may outweigh potential monetary gains.

FoolMeOnce
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Re: Critical Account

Post by FoolMeOnce » Fri Sep 14, 2018 8:26 pm

You are leaving her $2.3m. I don't think you should waste energy or create discord over interest on $5k.

pascalwager
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Re: Critical Account

Post by pascalwager » Fri Sep 14, 2018 8:37 pm

keepingitsimple wrote:
Fri Sep 14, 2018 8:19 pm
pascalwager wrote:
Tue Sep 11, 2018 11:11 pm
Awhile back, I gave someone $5,000 to put in her personal credit union savings account (0.35% APY). She's 15 years younger than me (I'm 76) and if I were to die, she would absolutely depend on this money and her credit card for a few weeks for living expenses until she inherited something like $2.3 million (she's the sole beneficiary on all of my investment and bank accounts) and my house.

This money is intended to be unused until my demise and I'd like to see it growing in VG Prime MMF rather than the credit union savings account, although she's more comfortable with being able to get the money out faster from her local and familiar credit union.

(I'm also considering giving her another $5,000 for this purpose, as she may need to pay off the credit card before she actually receives any of the various inheritances.)

Any opinions relative to credit union versus money market fund in this case?
Losing someone is very stressful and losing someone on whom you are dependent even more so. If the ease and familiarity of having the money accessible in a credit union brings her comfort, then perhaps it is worth considering leaving it there. Peace of mind may outweigh potential monetary gains.
Agreed, but I do want to propose a more remunerative option if it still meets her particular accessibility needs.
Overall AA: 51/37/12 | Portfolio 1: total world stock market, short-term TIPS | Portfolio 2: global large value, global small cap, ultra short-term global bonds | Cash: Treasury money market

pennylane
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Re: Critical Account

Post by pennylane » Fri Sep 14, 2018 9:50 pm

FoolMeOnce wrote:
Fri Sep 14, 2018 8:26 pm
You are leaving her $2.3m. I don't think you should waste energy or create discord over interest on $5k.
This.

Seriously, why is this even a consideration????

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celia
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Re: Critical Account

Post by celia » Fri Sep 14, 2018 10:10 pm

There must be another issue involved here. If this relative can't support herself for a few months on her own assets until she becomes a multi-millionnaire, how is she going to (mentally) process/ invest an inheritance that large if she can't manage a smaller amount now? Have you addressed that?

Do you have an executor/trustee that will manage the assets while giving her a steady income stream? Or are you leaving it all up to her to figure it out?

keepingitsimple
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Re: Critical Account

Post by keepingitsimple » Fri Sep 14, 2018 11:04 pm

pascalwager wrote:
Fri Sep 14, 2018 8:37 pm
keepingitsimple wrote:
Fri Sep 14, 2018 8:19 pm
pascalwager wrote:
Tue Sep 11, 2018 11:11 pm
Awhile back, I gave someone $5,000 to put in her personal credit union savings account (0.35% APY). She's 15 years younger than me (I'm 76) and if I were to die, she would absolutely depend on this money and her credit card for a few weeks for living expenses until she inherited something like $2.3 million (she's the sole beneficiary on all of my investment and bank accounts) and my house.

This money is intended to be unused until my demise and I'd like to see it growing in VG Prime MMF rather than the credit union savings account, although she's more comfortable with being able to get the money out faster from her local and familiar credit union.

(I'm also considering giving her another $5,000 for this purpose, as she may need to pay off the credit card before she actually receives any of the various inheritances.)

Any opinions relative to credit union versus money market fund in this case?
Losing someone is very stressful and losing someone on whom you are dependent even more so. If the ease and familiarity of having the money accessible in a credit union brings her comfort, then perhaps it is worth considering leaving it there. Peace of mind may outweigh potential monetary gains.
Agreed, but I do want to propose a more remunerative option if it still meets her particular accessibility needs.
Perhaps the solution is as simple as providing written instructions as to the exact process for withdrawing funds from VG Prime MMF. The brokerage account holding these funds could be linked to her credit union account, allowing for easy withdrawal / transfer when needed. Alternatively, if you give her an additional $5,000 for the stated purpose (for a total of $10,000), perhaps you could place $2,000 in her credit union account and the remaining $8,000 in the proposed MMF. If she is reluctant to options outside of her credit union account it may be she is unfamiliar or insecure with the process for gaining access. Financial transactions can be intimidating for some.

Additionally, I am sure you are aware of the benefits of having her listed as POD and TOD beneficiary on the relevant accounts and investments. I just want to reiterate this will make the process of transferring your assets to her far easier for her. Also having written instructions for the steps she'll need to take for transferring assets (including phone numbers, account numbers, addresses, etc.) will be helpful. I realize this is outside the scope of the question you posted but thought I would include as an aside.

pascalwager
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Re: Critical Account

Post by pascalwager » Sat Sep 15, 2018 12:17 am

celia wrote:
Fri Sep 14, 2018 10:10 pm
There must be another issue involved here. If this relative can't support herself for a few months on her own assets until she becomes a multi-millionnaire, how is she going to (mentally) process/ invest an inheritance that large if she can't manage a smaller amount now? Have you addressed that?

Do you have an executor/trustee that will manage the assets while giving her a steady income stream? Or are you leaving it all up to her to figure it out?
She has a list of my accounts and investment company names. I've also sat down with her and showed her my PC investment screens to develop some familiarity. Last year I reduced my portfolio risk to accommodate her different financial situation. I'm also considering converting to combined stock/bond funds for simplicity. But the other two-thirds of my investment assets can't be simplified like this.

We'll probably have more discussions about the mechanics of investing. We'll have to do this.
Overall AA: 51/37/12 | Portfolio 1: total world stock market, short-term TIPS | Portfolio 2: global large value, global small cap, ultra short-term global bonds | Cash: Treasury money market

Vanguard Fan 1367
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Re: Critical Account

Post by Vanguard Fan 1367 » Sat Sep 15, 2018 7:24 am

I sure do love the current interest with my Vanguard Prime Money Market account. Nothing wrong with using 5k wisely and getting a little interest. If she can keep track of the checkbook with the account when you die she can write checks for 500 dollars or more and be on her way with having some cash.

pennylane
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Re: Critical Account

Post by pennylane » Sat Sep 15, 2018 8:42 am

celia wrote:
Fri Sep 14, 2018 10:10 pm
There must be another issue involved here. If this relative can't support herself for a few months on her own assets until she becomes a multi-millionnaire, how is she going to (mentally) process/ invest an inheritance that large if she can't manage a smaller amount now? Have you addressed that?

Do you have an executor/trustee that will manage the assets while giving her a steady income stream? Or are you leaving it all up to her to figure it out?

mouses
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Re: Critical Account

Post by mouses » Sat Sep 15, 2018 8:51 am

I would leave it in the credit union account so that she has immediate access to it without any hassle. The minor amount of additional money it would earn in the Vanguard fund is not worth the stress on her when she is also dealing with your passing.

I would also make it $10,000, as you are considering. Things happen with estates. trusts, and this seems like it would give her more of a cushion if there is any unexpected delay. It doesn't make a lot of sense for her to be having unnecessary money stress when there is a large amount of money coming down the road.

aristotelian
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Re: Critical Account

Post by aristotelian » Sat Sep 15, 2018 10:28 am

pennylane wrote:
Fri Sep 14, 2018 9:50 pm
FoolMeOnce wrote:
Fri Sep 14, 2018 8:26 pm
You are leaving her $2.3m. I don't think you should waste energy or create discord over interest on $5k.
This.

Seriously, why is this even a consideration????
+1, given her dependence on the funds, simplicity and ease of access are your top considerations. I would go with somewhere she already has an account so there is no risk of forgetting the password. The money is in her name, let her decide.

brokenmachine
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Re: Critical Account

Post by brokenmachine » Sat Sep 15, 2018 10:58 am

mouses wrote:
Sat Sep 15, 2018 8:51 am
I would leave it in the credit union account so that she has immediate access to it without any hassle. The minor amount of additional money it would earn in the Vanguard fund is not worth the stress on her when she is also dealing with your passing.
Absolutely agree. I just dealt with Vanguard regarding an estate. They had to physically mail me forms. They would not send them electronically, and I could not send them back electronically (email or fax). I had to get them notorized, and then physically mailed back with original death certs. All in all, the process has taken over a month and status updates have not been transparent. My own estate planning has changed to keep some cash totally optimized for easy access. Rate is unimportant to me in that calculation.

Side note: OP, If you value your loved one's sanity, don't leave them any money @ Ally bank. They've been a nightmare to deal with.

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