Monday, January 21, 2019

How should trusts handle (implicit) special needs beneficiaries, especially after an unexpected political or natural disaster crisis (the federal shutdown may matter!)

Should executors of inherited trust money be concerned that they might be asked to become involved in helping federal employees (and contractors) tide over during the “partial” government shutdown?
It sounds like a preposterous, shocking question, but I’m not being facetious.  It’s true, many federal employees are well-paid and ought to have savings, but some (like TSA agents) are not.

Presumably, credit unions can help for a while, although some say they can’t handle it all. Banks and financial institutions are offering forbearance programs.  By February 1, many employees will have hefty rent or mortgage payments. The media really hasn’t covered landlord (at least large apartment complexes) attitudes toward this. People who own rental properties might well be asked to accept much later rental payments.  And there is the whole world of payday loan companies, which I know nothing about (but got calls about during my post-employment period of the 2000’s).
For Coast Guard active duty members, if deployed they may be OK, but their families might not. 

There are specialty insurance companies, most of all USAA, whom one would expect to help them. 

The company I used to work for, Voya (which was ING-ReliaStar then) has a subsidiary, USL (United Services Life) which caters to the military and which might have unusual products that can help.

I won’t get into detail about my own trusts here (check my WP site).  But I can say what is common in many trusts passed on as inheritances.  Typically there are declared beneficiaries, and the executor has some fiduciary responsibility to protect the money (beyond necessary personal living expenses like housing) for them. Sometimes there a provisions for small incremental distributions.  Often there is attention to special needs beneficiaries. 

Normally, being targeted in political extortion would, in my book, qualify as a “special need”.  So if that does happen to a member of a family of a beneficiary, it would be common that the beneficiary could request a grant of up to 1% of the estate value per year (with multiple beneficiaries it would only work until used up, and it might only apply to non-real estate)   It is also possible for a charity (a non-profit) to request this for a client (or minor child of a client), but the client has to have an unusual need with compared to others of the charity, in a way that is meaningful to the trustee. 
In a sense, the inherited estate is expected to act as a private micro insurance policy to back up those in need when other systems fail them.  This is not (from an ‘Economic Invincibility” perspective) a particularly good place to be, but inherited wealth is not as morally secure as earned wealth.
Another idea to look at is socially responsible investing.  Right now I’ve stayed in conservative stocks and bonds and notes (I have some Dominion Power because I want to keep an eye on the power grid security issue). Some people like to assist small businesses, especially overseas, with kiva or microloans.  I am not in the business of playing micro-bank, but I have wondered if any intermediaries exist that could help trusts make loans in the cases of sudden special needs, even from political or natural disaster issues.  The novel nature of the current crisis might preclude the likelihood that much exists now, because it wouldn’t have been anticipated. However, in my case, the trust language explicitly allows making loans personally, even for ventures like real estate or perhaps AirBnb.

Wednesday, January 16, 2019

How to choose (or replace) an executor of a trust

I am in the position of having two trusts (my deceased mother’s and my own) with a previous executor who passed away.

Here are some considerations in picking another one, from the ABA. 

It is possible to hire a professional (like a law firm) as an executor.
Courts will appoint a disinterested party (a law firm) when the trustee (me) passes away before a replacement can be named.

Thursday, January 03, 2019

Apple report alone stokes more market volatility, and then there is the shutdown

Business Insider, for whom I recently signed up for the premium subscription, reports that a major Wall Street credit hedge fund, Marathon Asset Management, has hired a “veteran distressed debt trader”. That means that many of these funds expect a recession, according to a story by Dakin Campbell. 

Apple CEO Tim Cook reported lower earnings than expected his behemoth company just after the market close Jan. 2, and got up early in California this morning. Much of the problem seems to loop back to the trade war with China; but Apple seems to have bet its fortune and much of the entire stock market on our relationship with a Communist, post-Marxist country (in the middle of implementing a social credit score on all citizens). CNN's story is here.  "Your" retirement is tied to Communism and Xi Jingping.
 Maybe he could run for president in 2020 as he can move markets.  (OK, we’ll lowkey that “no place on our platform” speech.)  That was the reason for the initial drop, rather than the intransigence over the border issue between Trump and Congress. But it’s hard to believe that a deal wouldn’t help the markets. This Yahoo! report suggests that stock market pricing already has a 2019 recession start factored in. 

Both parties should talk to ranchers and businesses in the southern border states and find out what kind of security is most cost effective.  Most of these businesses are in Trump’s base. But it’s probably not a wall everywhere.

Thursday, December 20, 2018

Handling net worth during stock market volatility

I had a meeting Wednesday afternoon with a financial advisor, and I did get an idea of how investment planning for retirees based on expected lifespans works.

Planners are likely to expect to see active seniors in their 70s live 20 more years. They will tend to recommend “conservative growth” strategies vs. “conservative income”, that in my case can simulate a lifestyle earning about $80000. This sounds like “Economic Invincibility” indeed.

Because I have a mechanism to move personal annuity income back to the trust to pay it “rent” (though charitable donations) for my condo, there can be a gradual loss of net worth unless the annuity gains value to make up for it.  When the stock market (and derived money markets) rises, this will hide the “rent” and make it appear that net worth is staying steady.  But recently the volatility has wiped out most of the gains prior to this year, making the spending of the past years more conspicuous. .

Thursday, December 13, 2018

Baby boomers buy high-end CCRC condos with large entry fees not considered as part of the "real estate"

Scott James has a “Square Feet” article on p B6 of the New York Times on Wednesday, December 12, 2018, “Retirement Enclaves with 5-Star Amenities”, and the tag-line “Aging baby boomers create a surge in luxury communities that offer a range of heath care”.  Online the title is “Boomers create a surge in luxury care communities”. 

The article starts out by describing a property in the Napa Valley area (maybe exposed to wildfires?) before going to north Dallas.  What struck me as odd was that these were condominiums with entry fees on top (not part of the valuation of the apartment) which provided a deposit on future assisted living needs.

And some of them, even in Dallas, were outrageously expensive.  But the apartments tended to have large square-footages, compared to typical assisted living apartments for rental, as owned by chains. 
In the DC area (northern Virginia) a similar property in Goodwin House (two properties) which I have covered here before as CCRC’s.  But I believe those are rentals. 
A few of these properties, especially in New York and in California, have an outreach to LGBTQ persons. 
Picture: Near Lemon Ave and US 175 in Dallas. 

Tuesday, December 04, 2018

States are ranked as to their ability to protect senior citizens from caregiver or corporate abuse

The Wallet Hub has an email of the ten states with the best, and ten with the worst, eldercare protections, link back to this url that ranks all the states .   There is also a composite video link in the middle of the page. 

Virginia is in the middle of the pack on Prevalence and protection and low on resources.  Washington DC was second on resources. 

Most states have cities and counties operate “adult protective services” units.  It’s possible for adult children looking after elderly parents to get into trouble with these local regulatory enforcements.  For example, sometimes there are rules to the effect that people on certain memory medications should never be left home alone.

The state with the best overall score is Massachusetts, and the worst is South Carolina.

Monday, November 26, 2018

Elderly in Paradise CA are homeless after assisted living and nursing homes destroyed by Camp Fire

Alexandra S. Levine has a detailed story of the problems of the elderly and retired people around Paradise, CA, since it had been about 25% if the city. 

Five residence places (assisted living centers and nursing homes) were lost in the fire, which could mean they have to go back to live with adult children in other cities.

Also, many caregivers seem to have been lost.
And in many cases the very old will not be able to start over.

Wikipedia attribution: 
By NASA -, Public Domain, Link