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IF YOU’RE LIKE ME, you aren’t eager to spend down your investments. What fun is that? Aren’t you curious to see how big your portfolio could grow? Of course, you are.
After my wife and I are gone, my son will have dibs on the money we’ve amassed. We’ve set up a special needs trust to provide him with income when we’re no longer around. My son has no siblings, so we needed the trust to make sure he’s taken care of.
But until then, I view our portfolio as a beautiful garden that I need to nurture. I believe many investors are like me, and don’t really enjoy spending. Instead, they cultivate their wealth with an eye to passing it on to their heirs or their favorite causes.
But what about those investors who don’t have anybody lined up to take over their money after they’re gone? We’ve had wealthy celebrities, like Prince and Aretha Franklin, who died without clear instructions for how their estate should be handled.
I don’t understand such neglect. You’ve been caring for your portfolio with the goal of seeing how big it can get before you “kick the bucket.” That’s great. But you also have a responsibility to make sure your efforts don’t go to waste. You should have a plan in place for this thing you’ve enjoyed owning for so long.
Some investors say, “Oh, I don’t care what happens after I’m gone.” That’s the wrong attitude. You owe it to your wealth to see that it’s put to good use after your death. Just find someone or some cause that you feel would benefit from all your hard work.
Maybe your beneficiaries will fritter away your money. Maybe they’ll show respect for what you’ve done and keep your wealth growing. Maybe they’ll put it to good use and help many others with this gift you’ve given.
But no matter how your beneficiaries behave, the important thing is that you do your part—and have a plan for what happens after you’re gone. Once you’ve done that, you can go back to tending to your investment garden and making sure you don’t mess it up for the next owner.
I’m almost 75, my only close relatives are an older brother in assisted living and a 65-year-old sister. None of us have any children. I have managed to accumulate enough such that I’m unlikely to run out of money and my sister is in a similar situation. I already have a will and IRA beneficiaries in place, most of my assets will go to non-profits.
My sister won’t need any assistance from me, but I currently plan to leave her some money to take care of our brother if necessary. I don’t plan to leave any money directly to my brother, he wouldn’t be able to manage it anyway. If he dies before I do, I’ll probably redirect part of that money to the non-profits. My sister and I have discussed this, so it won’t be any surprise.
I would like to give as much money as possible to the non-profits while I’m still alive. My problem is trying to decide how much is prudent.
The short time I spent as a insurance agent I came across several parents of special needs kids who hadn’t set up trusts. Your articles are often a good reminder to do so. I’m not one to offer unsolicited advice but this is one area where I will make an exception.
We’re all different. I am not very interested in how big my portfolio gets, instead I am very interested in not running out of money. I do have a will, and it would be nice if there was something left for my heirs (none of whom are biological children) but it is not my first priority.
You have alluded to not running out of money a few times. Is that a practical concern for you living in a CCRC?
Although if I was living off accumulated assets alone, I think I would share your concern no matter what.
My CCRC promises to keep residents if they run out of money, and has a track record of doing so. I would still much prefer that I didn’t need that help. I have a pension with no COLA and Social Security but I will finally start spending from my portfolio this year.
An easy and efficient way to make sure your heirs have immediate access to your accounts is to have up-to-date beneficiaries and/or co-owners, which I learned right here, as well, of course, as having a will that accurately reflects your wishes for other assets. The attorney who just helped update my will also suggested naming secondary beneficiaries.
There’s a difference between co-owners & co-signers, co-owners can empty your accounts. There are also “transfer on death” signoff docs at your bank\F.I.
Yes, all true, Margaret, and thanks for amplifying my comment. I have two bank accounts with different co-owners (adult children) whom I trust but I’m still hedging my bets by not putting all the eggs in one basket – my apologies for two clichés in one sentence. Also want them to be able to handle my finances when/if I become unable to do so. That will be their judgement call.
Beyond wills make sure you have appropriate medical and financial POAs in place. Sadly, they can be needed rapidly. And these documents need to be kept up to date. My mother has emergency brain surgery – 2 days before we found her executor was my ages uncle who lived 500 miles away. Luckily we knew an attorney who drew up a new will in her hospital room.
Very accurate and very good advice David.
The thing is, it’s so easy to at least have a will. If you don’t have one, grab yourself an online template for your state today and get it done. Don’t you need a lawyer? Isn’t a trust better? Maybe and maybe, and you can explore these or change your own will later. Meanwhile, don’t die intestate.