Race from $2M to $4M...and Beyond!

[Bateaux]

Made a move more heavily into stock today.  I was hedging with cash and bonds.  Now I'm hedging with employment for a couple of more years. 

[Car Jack]

Made a move more heavily into stock today.  I was hedging with cash and bonds.  Now I'm hedging with employment for a couple of more years.

What do you mean moving?

Did you change your asset allocation numbers?  I'm pretty Boglehead in my approach with some variation, but documented.  For me, 50/50 stock/bond with international floating from about 3 years ago, meaning that I've got international, but don't control what it's sitting at.  It sat originally at 25% of equity and today, it's 20%.

The only moving I do is when I put money in to buy more, either actively for my taxable and Roth or passively with my 401k.  I always wait until after my tax return is complete before putting my Roth money in.  I was in the phase out area due to income one year and pulling the money out with the penalties is something I'm unwilling to do again.

[Fomerly known as something]

Made a move more heavily into stock today.  I was hedging with cash and bonds.  Now I'm hedging with employment for a couple of more years.

What do you mean moving?

Did you change your asset allocation numbers?  I'm pretty Boglehead in my approach with some variation, but documented.  For me, 50/50 stock/bond with international floating from about 3 years ago, meaning that I've got international, but don't control what it's sitting at.  It sat originally at 25% of equity and today, it's 20%.

The only moving I do is when I put money in to buy more, either actively for my taxable and Roth or passively with my 401k.  I always wait until after my tax return is complete before putting my Roth money in.  I was in the phase out area due to income one year and pulling the money out with the penalties is something I'm unwilling to do again.

My solution to this was to just go with a backdoor Roth even if I might be able to qualify.

[ysette9]

I haven’t been on this thread in a while but decided to swing by after updating our numbers yesterday. It is ridiculous how at this point money just seems to grow on trees with how the stock market has rebounded since March.

We are at lucky $2.88M. As @itchyfeet was discussing upthread, the first million took way longer. In our case it was about 10 years for the first, 5 for the second, and we are on track to have the third in about 2 years.

Mind blown.

[Bateaux]

Made a move more heavily into stock today.  I was hedging with cash and bonds.  Now I'm hedging with employment for a couple of more years.

What do you mean moving?

Did you change your asset allocation numbers?  I'm pretty Boglehead in my approach with some variation, but documented.  For me, 50/50 stock/bond with international floating from about 3 years ago, meaning that I've got international, but don't control what it's sitting at.  It sat originally at 25% of equity and today, it's 20%.

The only moving I do is when I put money in to buy more, either actively for my taxable and Roth or passively with my 401k.  I always wait until after my tax return is complete before putting my Roth money in.  I was in the phase out area due to income one year and pulling the money out with the penalties is something I'm unwilling to do again.

Back in February I hot the dumb idea of retiring early.  I decided to move to a position of greater safety.   I think I over did it and have since move back to a bit more agressive position.  Currently 65 percent stocks and 35 percent bonds. For decades I held about 90 percent stocks.  I'll probably work till mid 2023 now. 

[GreenEggs]

We now have 3 $1.2M lake lots under contract.  Now we only have 2 left. 


Seems that the wealthy are in the mood to spend.  :)

[couponvan]

We hit the $2.0 million liquid number yesterday. It wasn’t at all exciting. At one point I said $2.0 million and a paid off house for retirement. Now it’s $3.0 million and a paid off house, and paid off college.

[Buffaloski Boris]

Made a move more heavily into stock today.  I was hedging with cash and bonds.  Now I'm hedging with employment for a couple of more years.

What do you mean moving?

Did you change your asset allocation numbers?  I'm pretty Boglehead in my approach with some variation, but documented.  For me, 50/50 stock/bond with international floating from about 3 years ago, meaning that I've got international, but don't control what it's sitting at.  It sat originally at 25% of equity and today, it's 20%.

The only moving I do is when I put money in to buy more, either actively for my taxable and Roth or passively with my 401k.  I always wait until after my tax return is complete before putting my Roth money in.  I was in the phase out area due to income one year and pulling the money out with the penalties is something I'm unwilling to do again.

Back in February I hot the dumb idea of retiring early.  I decided to move to a position of greater safety.   I think I over did it and have since move back to a bit more agressive position.  Currently 65 percent stocks and 35 percent bonds. For decades I held about 90 percent stocks.  I'll probably work till mid 2023 now.

2023? I’m skeptical. 2023 will become 2025 and 2027. And what of it? If you’re happy and fulfilled doing your job, why quit?

I thought I’d be 2021 but now that I’ve decided that I’m FI and have had some time to reflect on it, I doubt I will be retiring at all. I like my job and will continue so long as I do like it and they’ll allow me to work from home. While I do foresee taking my pension at some point, I think my actual retirement will be delayed until the day they nail down the lid. Some people are just wired to work and I think I’m probably one of them.

[Bateaux]

Made a move more heavily into stock today.  I was hedging with cash and bonds.  Now I'm hedging with employment for a couple of more years.

What do you mean moving?

Did you change your asset allocation numbers?  I'm pretty Boglehead in my approach with some variation, but documented.  For me, 50/50 stock/bond with international floating from about 3 years ago, meaning that I've got international, but don't control what it's sitting at.  It sat originally at 25% of equity and today, it's 20%.

The only moving I do is when I put money in to buy more, either actively for my taxable and Roth or passively with my 401k.  I always wait until after my tax return is complete before putting my Roth money in.  I was in the phase out area due to income one year and pulling the money out with the penalties is something I'm unwilling to do again.

Back in February I hot the dumb idea of retiring early.  I decided to move to a position of greater safety.   I think I over did it and have since move back to a bit more agressive position.  Currently 65 percent stocks and 35 percent bonds. For decades I held about 90 percent stocks.  I'll probably work till mid 2023 now.

2023? I’m skeptical. 2023 will become 2025 and 2027. And what of it? If you’re happy and fulfilled doing your job, why quit?

I thought I’d be 2021 but now that I’ve decided that I’m FI and have had some time to reflect on it, I doubt I will be retiring at all. I like my job and will continue so long as I do like it and they’ll allow me to work from home. While I do foresee taking my pension at some point, I think my actual retirement will be delayed until the day they nail down the lid. Some people are just wired to work and I think I’m probably one of them.

For me some of it is lifestyle creep.  I'm not as willing to deny myself things as in the past.  There are some material things I want more than early retirement.  I realize that health care costs are going to go up in the future.  I realize that I will get old and have to hire people to do much of what I have always done in the past myself.  Old age care will be hundreds of thousands of dollars.  Taxes and insurance are going to go up. The majority of the time I like my job.  Honestly, the thought of selling shares to create a paycheck versus buying more each month terrifies me.  I'd rather drive a dagger into my heart than watch my accounts deplete. 

[Buffaloski Boris]

Made a move more heavily into stock today.  I was hedging with cash and bonds.  Now I'm hedging with employment for a couple of more years.

What do you mean moving?

Did you change your asset allocation numbers?  I'm pretty Boglehead in my approach with some variation, but documented.  For me, 50/50 stock/bond with international floating from about 3 years ago, meaning that I've got international, but don't control what it's sitting at.  It sat originally at 25% of equity and today, it's 20%.

The only moving I do is when I put money in to buy more, either actively for my taxable and Roth or passively with my 401k.  I always wait until after my tax return is complete before putting my Roth money in.  I was in the phase out area due to income one year and pulling the money out with the penalties is something I'm unwilling to do again.

Back in February I hot the dumb idea of retiring early.  I decided to move to a position of greater safety.   I think I over did it and have since move back to a bit more agressive position.  Currently 65 percent stocks and 35 percent bonds. For decades I held about 90 percent stocks.  I'll probably work till mid 2023 now.

2023? I’m skeptical. 2023 will become 2025 and 2027. And what of it? If you’re happy and fulfilled doing your job, why quit?

I thought I’d be 2021 but now that I’ve decided that I’m FI and have had some time to reflect on it, I doubt I will be retiring at all. I like my job and will continue so long as I do like it and they’ll allow me to work from home. While I do foresee taking my pension at some point, I think my actual retirement will be delayed until the day they nail down the lid. Some people are just wired to work and I think I’m probably one of them.

For me some of it is lifestyle creep.  I'm not as willing to deny myself things as in the past.  There are some material things I want more than early retirement.  I realize that health care costs are going to go up in the future.  I realize that I will get old and have to hire people to do much of what I have always done in the past myself.  Old age care will be hundreds of thousands of dollars.  Taxes and insurance are going to go up. The majority of the time I like my job.  Honestly, the thought of selling shares to create a paycheck versus buying more each month terrifies me.  I'd rather drive a dagger into my heart than watch my accounts deplete.

Well then you probably should put together a solid estate plan cuz you’re going to leave a lot behind. (Hmmmm. Should probably take more of my own advice.)  The more I think about this FIRE the more it’s FI!...re notsomuch. The FI part is beginning to sink in and I realize that I’ll survive regardless of whether I work any more. Maybe not saving as much as I have been, but isn’t the idea of saving to spend at least some of it eventually?

So every day it’s a choice to work, not so much an imperative. That makes it more fun. Based on what I’ve seen of your NW in the past I think you’re gonna survive just fine.

[Much Fishing to Do]

We hit the $2.0 million liquid number yesterday. It wasn’t at all exciting. At one point I said $2.0 million and a paid off house for retirement. Now it’s $3.0 million and a paid off house, and paid off college.

Sounds like us.  Though we were excited by both $1M (b/c it was $1M and it wasn't that many years before we couldn't imagine ever being "millionaires") and $2M (b/c we knew at that point we definitely felt like we could never work again) and celebrated both. 

In the end the final target was $3M + paid off house + 12 years college tuition/room/board (for the 3 kids) + Enough cash to live off of for first 3 years of FIRE (I added this last goal just when it became possible and because I had planned to live off of cash within that $3M anyway for a few years so as I thought that would help me not watch the stock market so closely those first couple years.  Looks like I should hit that final goal (a 5% increase in the market would likely do it), but in the end I've chosen a FIRE date based off of work responsibilities and not what I have, so who knows.

[UnleashHell]

Well then you probably should put together a solid estate plan cuz you’re going to leave a lot behind. (Hmmmm. Should probably take more of my own advice.) 

This!!! We are currently dealing with my others halfs mothers estate. Some of it s easy - some of it is a pain in the arse. 4 IRAs? not even big ones. (roll them into one ffs). 8 financial institutions!


The other side of it - when to stop work is something we are still planning. For us its more about straightening out some of the rough edges of our future - like do we want to be landlords. what cars do we need. What are the real answers to healthcare - not just guessing!

a lot we have sorted - not much wasteful spending - got a house we like and is well set for us and various kids/visitors that turn up.
Its the smaller stuff that we have to get to and then we can think about quitting work.


We both ended up being landlords last years kind of accidentally and now we suddenly have issues like trusts and wills and POA's and beneficiaries and stuff to sort out. A little more in the stash would help with travel in the future but its not urgent - and as we can't travel anyway then we have to time to sort the rest.

Now officially in this club on a joint basis - possibly on a liquid basis - still need to sit down and work all that out - when we can reduce the number of banks we are dealing with.

[rmorris50]

My spouse and I are going to set up a revocable trust next year and have it be the beneficiary of all our assets. Hopefully that will make distribution easier to relatives when the time comes.

I hate my job, but my profession is changing fast and once I quit it's almost 100% certain the big paychecks and career is over. I am losing the youthful energy to transform myself to keep up, and to deal with corporate kool-aid and politics. However, our lives still have a lot of changes going on with one time expenses (do those ever end though?), so I hope I can hold on for a year or so, but it's going to be painful.

Has anyone in this group done the "barista fire" approach, and how are you finding the experience? I actually want to work, just something that's not nearly as stressful and crazy and let's me be on my feet and move much of the day. I've thought about tutoring math for $15 an hour (yes, that's sitting), or heck even work at like a Amazon or other warehouse. I actually use to do factor work as a teenager and college kid, and didn't mind it. Do your job, you're moving all day and when you leave you can forget work. I do remember though the people in the auto-factory I worked with who did that a life-long career looked like life had beat them up, so gotta be careful not to let on you "don't need the job and are doing it for extra money".

Anyway, anyone go from corporate big career to more of that low paying job just to stay engaged and get that "beer/vacation" money?

[Buffaloski Boris]

My spouse and I are going to set up a revocable trust next year and have it be the beneficiary of all our assets. Hopefully that will make distribution easier to relatives when the time comes.

I hate my job, but my profession is changing fast and once I quit it's almost 100% certain the big paychecks and career is over. I am losing the youthful energy to transform myself to keep up, and to deal with corporate kool-aid and politics. However, our lives still have a lot of changes going on with one time expenses (do those ever end though?), so I hope I can hold on for a year or so, but it's going to be painful.

Has anyone in this group done the "barista fire" approach, and how are you finding the experience? I actually want to work, just something that's not nearly as stressful and crazy and let's me be on my feet and move much of the day. I've thought about tutoring math for $15 an hour (yes, that's sitting), or heck even work at like a Amazon or other warehouse. I actually use to do factor work as a teenager and college kid, and didn't mind it. Do your job, you're moving all day and when you leave you can forget work. I do remember though the people in the auto-factory I worked with who did that a life-long career looked like life had beat them up, so gotta be careful not to let on you "don't need the job and are doing it for extra money".

Anyway, anyone go from corporate big career to more of that low paying job just to stay engaged and get that "beer/vacation" money?

Why take a low paying job? Have you considered doing side gigs or a side biz? Hopefully your boss won’t suck if you’re self employed.

[BeanCounter]

My spouse and I are going to set up a revocable trust next year and have it be the beneficiary of all our assets. Hopefully that will make distribution easier to relatives when the time comes.

Make sure you really research this. You may be over complicating things and it won’t make distributions any easier. Trusts are expensive. They are legal entities that have to be managed and have to file taxes etc. They should only be used in very specific circumstances.

[rmorris50]

My spouse and I are going to set up a revocable trust next year and have it be the beneficiary of all our assets. Hopefully that will make distribution easier to relatives when the time comes.

Make sure you really research this. You may be over complicating things and it won’t make distributions any easier. Trusts are expensive. They are legal entities that have to be managed and have to file taxes etc. They should only be used in very specific circumstances.

Thanks for the heads up. Our financial advisor is advocating for one. We are a gay couple, no kids, spouse has no beneficiaries on his side, and not sure we want to be the gay couple that leaves everything to my family (they’d hit the jackpot, but we’d leave something to them of course) Our financial advisor thought I’d is cleaner to set up a revocable trust and put all our assets in it. But I’ll go in with eyes wide open and be diligent about costs, taxes, other pros and cons. Thanks!


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[rmorris50]

My spouse and I are going to set up a revocable trust next year and have it be the beneficiary of all our assets. Hopefully that will make distribution easier to relatives when the time comes.

I hate my job, but my profession is changing fast and once I quit it's almost 100% certain the big paychecks and career is over. I am losing the youthful energy to transform myself to keep up, and to deal with corporate kool-aid and politics. However, our lives still have a lot of changes going on with one time expenses (do those ever end though?), so I hope I can hold on for a year or so, but it's going to be painful.

Has anyone in this group done the "barista fire" approach, and how are you finding the experience? I actually want to work, just something that's not nearly as stressful and crazy and let's me be on my feet and move much of the day. I've thought about tutoring math for $15 an hour (yes, that's sitting), or heck even work at like a Amazon or other warehouse. I actually use to do factor work as a teenager and college kid, and didn't mind it. Do your job, you're moving all day and when you leave you can forget work. I do remember though the people in the auto-factory I worked with who did that a life-long career looked like life had beat them up, so gotta be careful not to let on you "don't need the job and are doing it for extra money".

Anyway, anyone go from corporate big career to more of that low paying job just to stay engaged and get that "beer/vacation" money?

Why take a low paying job? Have you considered doing side gigs or a side biz? Hopefully your boss won’t suck if you’re self employed.

I have thought about side gigs, but I’m jaded on the finance industry (its cold, just engineering numbers to make stockholders money while charging high fees to clients). I’d rather produce something tangible, or help others, and interact with other people. The low paying job isn’t about the low pay, it’s about feeling productive or helping someone else and just staying connected to people.

[Buffaloski Boris]

My spouse and I are going to set up a revocable trust next year and have it be the beneficiary of all our assets. Hopefully that will make distribution easier to relatives when the time comes.

I hate my job, but my profession is changing fast and once I quit it's almost 100% certain the big paychecks and career is over. I am losing the youthful energy to transform myself to keep up, and to deal with corporate kool-aid and politics. However, our lives still have a lot of changes going on with one time expenses (do those ever end though?), so I hope I can hold on for a year or so, but it's going to be painful.

Has anyone in this group done the "barista fire" approach, and how are you finding the experience? I actually want to work, just something that's not nearly as stressful and crazy and let's me be on my feet and move much of the day. I've thought about tutoring math for $15 an hour (yes, that's sitting), or heck even work at like a Amazon or other warehouse. I actually use to do factor work as a teenager and college kid, and didn't mind it. Do your job, you're moving all day and when you leave you can forget work. I do remember though the people in the auto-factory I worked with who did that a life-long career looked like life had beat them up, so gotta be careful not to let on you "don't need the job and are doing it for extra money".

Anyway, anyone go from corporate big career to more of that low paying job just to stay engaged and get that "beer/vacation" money?

Why take a low paying job? Have you considered doing side gigs or a side biz? Hopefully your boss won’t suck if you’re self employed.

I have thought about side gigs, but I’m jaded on the finance industry (its cold, just engineering numbers to make stockholders money while charging high fees to clients). I’d rather produce something tangible, or help others, and interact with other people. The low paying job isn’t about the low pay, it’s about feeling productive or helping someone else and just staying connected to people.

Seems to me like you’re limiting your expectations. I just heard a podcast the other day about a company that essentially crowdsources loans to home flippers. Good, solid financial stuff that lowers the cost to flippers (needed liquidity) and provides better rates to investors (needed yield). There are win/wins out there although it’s clear to me that most of the finance industry consists of amoral scumbags. So I get why you’d want to get out of the industry. Participating in Disruption is a fun way to stick it to the evil twits.

[Fomerly known as something]

I don’t call it barista FI, but I am considering taking gig jobs at national parks, at ski hills, at REI, maybe even to assist in leading group trips.

I call it being a national park bum.

[SwordGuy]

I don’t call it barista FI, but I am considering taking gig jobs at national parks, at ski hills, at REI, maybe even to assist in leading group trips.

I call it being a national park bum.

Lot of jobs in Alaska during the tourist season.   Some folks camp out at the parks to save money.   Wish I had known about that when I was in school!

[rmorris50]

I don’t call it barista FI, but I am considering taking gig jobs at national parks, at ski hills, at REI, maybe even to assist in leading group trips.

I call it being a national park bum.

Sounds awesome, and a very free way to live!


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[rmorris50]

My spouse and I are going to set up a revocable trust next year and have it be the beneficiary of all our assets. Hopefully that will make distribution easier to relatives when the time comes.

I hate my job, but my profession is changing fast and once I quit it's almost 100% certain the big paychecks and career is over. I am losing the youthful energy to transform myself to keep up, and to deal with corporate kool-aid and politics. However, our lives still have a lot of changes going on with one time expenses (do those ever end though?), so I hope I can hold on for a year or so, but it's going to be painful.

Has anyone in this group done the "barista fire" approach, and how are you finding the experience? I actually want to work, just something that's not nearly as stressful and crazy and let's me be on my feet and move much of the day. I've thought about tutoring math for $15 an hour (yes, that's sitting), or heck even work at like a Amazon or other warehouse. I actually use to do factor work as a teenager and college kid, and didn't mind it. Do your job, you're moving all day and when you leave you can forget work. I do remember though the people in the auto-factory I worked with who did that a life-long career looked like life had beat them up, so gotta be careful not to let on you "don't need the job and are doing it for extra money".

Anyway, anyone go from corporate big career to more of that low paying job just to stay engaged and get that "beer/vacation" money?

Why take a low paying job? Have you considered doing side gigs or a side biz? Hopefully your boss won’t suck if you’re self employed.

I have thought about side gigs, but I’m jaded on the finance industry (its cold, just engineering numbers to make stockholders money while charging high fees to clients). I’d rather produce something tangible, or help others, and interact with other people. The low paying job isn’t about the low pay, it’s about feeling productive or helping someone else and just staying connected to people.

Seems to me like you’re limiting your expectations. I just heard a podcast the other day about a company that essentially crowdsources loans to home flippers. Good, solid financial stuff that lowers the cost to flippers (needed liquidity) and provides better rates to investors (needed yield). There are win/wins out there although it’s clear to me that most of the finance industry consists of amoral scumbags. So I get why you’d want to get out of the industry. Participating in Disruption is a fun way to stick it to the evil twits.

I’ve think I heard of the crowdsource funding before, but never researched it. I agree there are surely lots of unique opportunities to do something different and I don’t know what they are.


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[GreenEggs]

My spouse and I are going to set up a revocable trust next year and have it be the beneficiary of all our assets. Hopefully that will make distribution easier to relatives when the time comes.

Make sure you really research this. You may be over complicating things and it won’t make distributions any easier. Trusts are expensive. They are legal entities that have to be managed and have to file taxes etc. They should only be used in very specific circumstances.

Besides having to file separate taxes what's expensive? 


I have a phone meeting scheduled with our estate attorney this coming week.  I'll ask what level of assets he considers to be the minimum that is worthwhile for creating a Trust.


In 2016 he charged $1200, if my memory is correct, to help with all of my father's estate planning, which consisted of a Will, Trust, Financial PoA, and Medical PoA.  That was in NC.  (I believe his rates may be lower than average.  He works solo, not even a secretary, but is top notch, so his overhead is lower than other attorneys.)  I'm happy to share his contact info privately.

[ysette9]

My spouse and I are going to set up a revocable trust next year and have it be the beneficiary of all our assets. Hopefully that will make distribution easier to relatives when the time comes.

Make sure you really research this. You may be over complicating things and it won’t make distributions any easier. Trusts are expensive. They are legal entities that have to be managed and have to file taxes etc. They should only be used in very specific circumstances.

Besides having to file separate taxes what's expensive? 


I have a phone meeting scheduled with our estate attorney this coming week.  I'll ask what level of assets he considers to be the minimum that is worthwhile for creating a Trust.


In 2016 he charged $1200, if my memory is correct, to help with all of my father's estate planning, which consisted of a Will, Trust, Financial PoA, and Medical PoA.  That was in NC.  (I believe his rates may be lower than average.  He works solo, not even a secretary, but is top notch, so his overhead is lower than other attorneys.)  I'm happy to share his contact info privately.

We had a trust put together a year or so ago. While it was paid for as a benefit through my husband’s company, I didn’t get the impression it would have cost us more than a few thousand dollars if we had done it ourselves. My family members all have trusts, including my grandmother who only had a few hundred thousand dollars to her name by the time she died.

[secondcor521]

Besides having to file separate taxes what's expensive? 

Trust income tax rates are much more aggressive than individual income tax rates.  For example, a trust with $13,050 in taxable income in 2021 is already in the 37% bracket, whereas an individual with that income is in the 12% bracket.  MFJ at that income level is in the 10% bracket.

The standard deduction for a trust is also much smaller - $100 or $600 depending on the kind of trust, vs. $12,550 for an individual, and $25,100 for MFJ.

Trusts can deduct some things, like attorney and tax preparation fees, without any limitation, unlike an individual.  But those income tax brackets probably more than offset this minor advantage.

[GreenEggs]

Besides having to file separate taxes what's expensive? 

Trust income tax rates are much more aggressive than individual income tax rates.  For example, a trust with $13,050 in taxable income in 2021 is already in the 37% bracket, whereas an individual with that income is in the 12% bracket.  MFJ at that income level is in the 10% bracket.

The standard deduction for a trust is also much smaller - $100 or $600 depending on the kind of trust, vs. $12,550 for an individual, and $25,100 for MFJ.

Trusts can deduct some things, like attorney and tax preparation fees, without any limitation, unlike an individual.  But those income tax brackets probably more than offset this minor advantage.

Although that's how I read it too, my accountant explained that isn't how it actually works.  The individual rate is the rate used. 

[EscapeVelocity2020]

@BeanCounter et al

Reading through this last little bit of the thread about trusts and such, does anyone have any good advice about how to go about finding the right accountant / tax attorney to make sure my spouse (that has no interest in finance) is comfortable with the idea that I might pass away and leave her 'in charge'?  I really need someone that I can trust and will basically be conservative and protect the money, not take on risk and ultimately leave her (or my heirs) destitute.  The distributed annual funds can be spent on any risky ventures or whatever.

I've been putting this whole thing off probably far too long...  But how do I find a third party that doesn't just want to make a bunch of money while I'm alive moving investments around, criticizing my Mustachian LBYM ethic, etc.?

I'm pursuing lots of avenues (co-workers, other online ideas), but I'm interested to hear if folks here have had luck finding something.  MMM seems to have something like what I'm looking for in 'The Wealthy Accountant'...

[2sk22]

Sounds like us.  Though we were excited by both $1M (b/c it was $1M and it wasn't that many years before we couldn't imagine ever being "millionaires") and $2M (b/c we knew at that point we definitely felt like we could never work again) and celebrated both. 

In the end the final target was $3M + paid off house + 12 years college tuition/room/board (for the 3 kids) + Enough cash to live off of for first 3 years of FIRE (I added this last goal just when it became possible and because I had planned to live off of cash within that $3M anyway for a few years so as I thought that would help me not watch the stock market so closely those first couple years.  Looks like I should hit that final goal (a 5% increase in the market would likely do it), but in the end I've chosen a FIRE date based off of work responsibilities and not what I have, so who knows.

This sounds very familiar! At one point, round about 2005, I recall pondering what it would take for me to feel financially secure. At that time, my goal was college education for the kids, paid off house and at least a million dollars in post-tax savings.

Well, we blew past all of those goals by a wide margin since then.  Finally this year I decided that enough was enough and retired. The tag line on my posts sums up how I feel: "Irgendwann reicht es" which means "At some point it is enough" :-)

[rmorris50]

The taxation of trusts is interesting, sounds like I need to understand that much better. What I don’t know is how much of assets we put in the trust while my spouse and I are alive, verses the trust being the beneficiary on most of our assets. Maybe that makes a difference?

I’m using a lawyer that specializes in gay clients. Should only cost a couple thousand I think to set up.


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[ysette9]

@BeanCounter et al

Reading through this last little bit of the thread about trusts and such, does anyone have any good advice about how to go about finding the right accountant / tax attorney to make sure my spouse (that has no interest in finance) is comfortable with the idea that I might pass away and leave her 'in charge'?  I really need someone that I can trust and will basically be conservative and protect the money, not take on risk and ultimately leave her (or my heirs) destitute.  The distributed annual funds can be spent on any risky ventures or whatever.

I've been putting this whole thing off probably far too long...  But how do I find a third party that doesn't just want to make a bunch of money while I'm alive moving investments around, criticizing my Mustachian LBYM ethic, etc.?

I'm pursuing lots of avenues (co-workers, other online ideas), but I'm interested to hear if folks here have had luck finding something.  MMM seems to have something like what I'm looking for in 'The Wealthy Accountant'...

We named a professional fiduciary to manage the trust in the event of our death. We got the name from a list provided by our attorney. As it was explained to us, nothing happens until the event that both of us die. Only then does this fiduciary step in and manage the financial part of distributing the trust until it is closed out. In the event that we leave mi or children, it would be when they reach majority. The reason for this was we wanted the person we name to care for our children to not also be burdened with all the financial stiff. The fiduciary would take 1% yearly for their effort but that doesn’t kick in until we are both dead. I’m ok paying that to relieve the burden from the person I want focusing on caring for my children.

In the meantime we manage our money exactly as we did prior to setting up the trust. No changes there.

[JoJoP]

I don’t call it barista FI, but I am considering taking gig jobs at national parks, at ski hills, at REI, maybe even to assist in leading group trips.

I call it being a national park bum.

That sounds really fun! 

[JoJoP]

@BeanCounter et al

Reading through this last little bit of the thread about trusts and such, does anyone have any good advice about how to go about finding the right accountant / tax attorney to make sure my spouse (that has no interest in finance) is comfortable with the idea that I might pass away and leave her 'in charge'?  I really need someone that I can trust and will basically be conservative and protect the money, not take on risk and ultimately leave her (or my heirs) destitute.  The distributed annual funds can be spent on any risky ventures or whatever.

I've been putting this whole thing off probably far too long...  But how do I find a third party that doesn't just want to make a bunch of money while I'm alive moving investments around, criticizing my Mustachian LBYM ethic, etc.?

I'm pursuing lots of avenues (co-workers, other online ideas), but I'm interested to hear if folks here have had luck finding something.  MMM seems to have something like what I'm looking for in 'The Wealthy Accountant'...

We named a professional fiduciary to manage the trust in the event of our death. We got the name from a list provided by our attorney. As it was explained to us, nothing happens until the event that both of us die. Only then does this fiduciary step in and manage the financial part of distributing the trust until it is closed out. In the event that we leave mi or children, it would be when they reach majority. The reason for this was we wanted the person we name to care for our children to not also be burdened with all the financial stiff. The fiduciary would take 1% yearly for their effort but that doesn’t kick in until we are both dead. I’m ok paying that to relieve the burden from the person I want focusing on caring for my children.

In the meantime we manage our money exactly as we did prior to setting up the trust. No changes there.

I think you are wise to pay someone to manage your estate on behalf of your minor children.   The financial care of your children is not something that you want to be burdensome. 

We've had a trust for over 10 years.  Our children are no longer minors, so some tweaks are overdue.   Having managed estates or just witnessed the train wrecks, I'd say a Revocable Living Trust is one of the easiest ways to simplify life for those who you've left behind.   We have all the RE in the trust, and just a simple pour over will.   It's very easy to change the distributions (simple codicil) as you'd like, making major OR minor changes as you see fit.   Stocks, annuities and bank accounts can go into the trust or simply have named beneficiaries on the accounts themselves. 

Edited to add:  I think the going rate for a fairly simple Living Trust is still less than $2500.  It would be helpful if you had  a rough list of assets and had an idea of where you'd like them to go.   Then be sure to put the items, such as RE, into the trust.   I once heard the analogy that a trust is like an empty suitcase.  You've got to put the things into it to get them to their destination. 

[secondcor521]

Besides having to file separate taxes what's expensive? 

Trust income tax rates are much more aggressive than individual income tax rates.  For example, a trust with $13,050 in taxable income in 2021 is already in the 37% bracket, whereas an individual with that income is in the 12% bracket.  MFJ at that income level is in the 10% bracket.

The standard deduction for a trust is also much smaller - $100 or $600 depending on the kind of trust, vs. $12,550 for an individual, and $25,100 for MFJ.

Trusts can deduct some things, like attorney and tax preparation fees, without any limitation, unlike an individual.  But those income tax brackets probably more than offset this minor advantage.

Although that's how I read it too, my accountant explained that isn't how it actually works.  The individual rate is the rate used.

There is something called DNI, and that is probably what the accountant is referring to.  Basically, if a trust earns income, it can distribute that income to the beneficiaries, where it is taxed on the beneficiaries' return(s) at the beneficiaries' rates and brackets.  But then those funds are outside the trust.  It seems one has to choose between retaining assets/income in the trust and getting taxed aggressively or distributing assets/income to beneficiaries and getting taxed less aggressively.

DNI is calculated on Schedule B of Form 1041 (trust equivalent of Form 1040) and deducted from trust income on line 18 of Form 1041 (2019 version).  It then gets reported to beneficiaries on a Form 1041 Schedule K-1.

[BeanCounter]

I'm a CPA, but my knowledge of estates and trusts are from my own personal experience and continuing education classes. I know enough to be dangerous but am by no means an expert. Trust and estate tax law is complicated and this is only a quick outline. And I'm not going to try and cover all the trust types and reasons one might use them. ALSO I am in the United States.
 
In general these days, trusts are used for two reasons
-Complicated estates with multiple beneficiaries and assets like a business, real estate, vacation property or the like. Where you can't just TOD the property to one beneficiary and let them decide what to do with it.

AND/OR- for situations where you want to control assets "from the grave". Meaning the assets don't transfer directly, they go into trust upon your death and then the trustee controls them according to your wishes laid out in your will. This could be for minor children, or to protect assets from a spouse's marriage after your death, or to control assets so that the beneficiaries can only have the income each year and no more-protecting the principle into perpetuity, or for a special needs trust where the beneficiary is also on Medicaid and the assets would make them ineligible for other services/benefits.

It's important to note that you absolutely can pass all of your assets outside of probate with a proper will and TOD/PODs on your accounts and property. (this includes your vehicle, lots of people forget to properly TOD their vehicle and estates end up in probate over a $10k car)
Let me repeat that- YOU CAN TRANSFER ASSETS EASILY OUTSIDE OF A TRUST WITHOUT GOING TO PROBATE. I was the beneficiary of a $1M estate with no trust and I did not have to go to probate. It just takes a little work and proper planning. Remember, estate tax threshold is $11.5M. Very few estates will be subject to estate tax. Estate taxes used to be the one of the big reasons to set up a trust. But with a $11.5M threshold it's usually not necessary.

Setting up a trust is not really expensive but once the assets transfer to the trust it the fiduciary and attorneys will have to get paid to manage it. It's typically around 1% of assets. In the case of a living trust for minors, this would be necessary and worth it. In the case of your spouse, or adult children, maybe not. Each situation is different.

On top of the 1% fees going to fiduciary and attorneys, the trust has to file taxes (and pay for them to be prepared). If the trust fails to distribute all of its income each year, then it is taxed at rates for the trust. AND THEY ARE HIGHER THAN THE INDIVIDUAL RATES. You can look them up easily to see. But if the income is distributed annually to the beneficiaries the income is then taxed as INCOME for each of the beneficiaries. At each beneficiaries rates. Each beneficiary gets a K-1 at year end for their distributions.
I am also the beneficiary of my grandmothers trust and let me tell you this is a pain. That is income that I have ZERO control over. I have to take it and pay the taxes on it like it or not. (or let it stay in the trust and be taxed at 37%) This can make planning for things like the ACA or Medicare complicated. And it has pushed me into another tax bracket several times. Whereas with my investments I can choose not to sell something or harvest losses to cover the capital gains. Also, the trust income is taxed as INCOME not capital gains.

So you need to do your own research and see if the negatives of a trust are worth it. It really depends on what you are trying to achieve. I cringe every time I see someone saying that since they have a lot of assets they NEED a trust. That's simply not true.

[BeanCounter]

Besides having to file separate taxes what's expensive? 

Trust income tax rates are much more aggressive than individual income tax rates.  For example, a trust with $13,050 in taxable income in 2021 is already in the 37% bracket, whereas an individual with that income is in the 12% bracket.  MFJ at that income level is in the 10% bracket.

The standard deduction for a trust is also much smaller - $100 or $600 depending on the kind of trust, vs. $12,550 for an individual, and $25,100 for MFJ.

Trusts can deduct some things, like attorney and tax preparation fees, without any limitation, unlike an individual.  But those income tax brackets probably more than offset this minor advantage.

Although that's how I read it too, my accountant explained that isn't how it actually works.  The individual rate is the rate used.

There is something called DNI, and that is probably what the accountant is referring to.  Basically, if a trust earns income, it can distribute that income to the beneficiaries, where it is taxed on the beneficiaries' return(s) at the beneficiaries' rates and brackets.  But then those funds are outside the trust.  It seems one has to choose between retaining assets/income in the trust and getting taxed aggressively or distributing assets/income to beneficiaries and getting taxed less aggressively.

DNI is calculated on Schedule B of Form 1041 (trust equivalent of Form 1040) and deducted from trust income on line 18 of Form 1041 (2019 version).  It then gets reported to beneficiaries on a Form 1041 Schedule K-1.

Correct. And the trust still has to pay to have a tax return prepared and filed every year as do the beneficiaries and it's TAXED AS INCOME. Both are disadvantages IMHO.

[BeanCounter]

@BeanCounter et al

Reading through this last little bit of the thread about trusts and such, does anyone have any good advice about how to go about finding the right accountant / tax attorney to make sure my spouse (that has no interest in finance) is comfortable with the idea that I might pass away and leave her 'in charge'?  I really need someone that I can trust and will basically be conservative and protect the money, not take on risk and ultimately leave her (or my heirs) destitute.  The distributed annual funds can be spent on any risky ventures or whatever.

I've been putting this whole thing off probably far too long...  But how do I find a third party that doesn't just want to make a bunch of money while I'm alive moving investments around, criticizing my Mustachian LBYM ethic, etc.?

I'm pursuing lots of avenues (co-workers, other online ideas), but I'm interested to hear if folks here have had luck finding something.  MMM seems to have something like what I'm looking for in 'The Wealthy Accountant'...

We named a professional fiduciary to manage the trust in the event of our death. We got the name from a list provided by our attorney. As it was explained to us, nothing happens until the event that both of us die. Only then does this fiduciary step in and manage the financial part of distributing the trust until it is closed out. In the event that we leave mi or children, it would be when they reach majority. The reason for this was we wanted the person we name to care for our children to not also be burdened with all the financial stiff. The fiduciary would take 1% yearly for their effort but that doesn’t kick in until we are both dead. I’m ok paying that to relieve the burden from the person I want focusing on caring for my children.

In the meantime we manage our money exactly as we did prior to setting up the trust. No changes there.

I think you are wise to pay someone to manage your estate on behalf of your minor children.   The financial care of your children is not something that you want to be burdensome. 

We've had a trust for over 10 years.  Our children are no longer minors, so some tweaks are overdue.   Having managed estates or just witnessed the train wrecks, I'd say a Revocable Living Trust is one of the easiest ways to simplify life for those who you've left behind.   We have all the RE in the trust, and just a simple pour over will.   It's very easy to change the distributions (simple codicil) as you'd like, making major OR minor changes as you see fit.   Stocks, annuities and bank accounts can go into the trust or simply have named beneficiaries on the accounts themselves. 

Edited to add:  I think the going rate for a fairly simple Living Trust is still less than $2500.  It would be helpful if you had  a rough list of assets and had an idea of where you'd like them to go.   Then be sure to put the items, such as RE, into the trust.   I once heard the analogy that a trust is like an empty suitcase.  You've got to put the things into it to get them to their destination.

The easiest way to simplify life for those you've left behind is to name them as a direct beneficiary on each asset and put property as TOD. It saves the expense of the trust. They don't have to go to probate. They just transfer and liquidate each asset as they see fit and they're done.

[BeanCounter]

@BeanCounter et al

Reading through this last little bit of the thread about trusts and such, does anyone have any good advice about how to go about finding the right accountant / tax attorney to make sure my spouse (that has no interest in finance) is comfortable with the idea that I might pass away and leave her 'in charge'?  I really need someone that I can trust and will basically be conservative and protect the money, not take on risk and ultimately leave her (or my heirs) destitute.  The distributed annual funds can be spent on any risky ventures or whatever.

I've been putting this whole thing off probably far too long...  But how do I find a third party that doesn't just want to make a bunch of money while I'm alive moving investments around, criticizing my Mustachian LBYM ethic, etc.?

I'm pursuing lots of avenues (co-workers, other online ideas), but I'm interested to hear if folks here have had luck finding something.  MMM seems to have something like what I'm looking for in 'The Wealthy Accountant'...

So you are wanting to control assets from the grave? If that's the case then you need a trust and a fiduciary and you can use a bank or fidelity to do that. But you'll pay. Like 1% maybe a bit more for attorney and tax fees. And your wife will have to go to that fiduciary anytime she needs money beyond the income for the year and ASK FOR IT. I personally would find this offensive and cost prohibitive. You're basically saying you don't trust her to make smart decisions.

My spouse has very little interest in finance. So he needs a PERSON he can call in the event of my death. This is why we don't use Vanguard. We use Fidelity and we qualify for their "Private Client Group" which gives him an advisor he can call to get advice on rebalancing, taking distributions and where to take it from for the best tax advantage. It's free, but you have to do all of the management, they just provide the advice and you do the work. Our advisor has been perfectly supportive of love of index funds. He's given great advice around taxes and drawdown strategy. I think you need something like this PLUS a good tax accountant.

[rmorris50]

So I think I just got scared away from a trust. Not sure why revocable trusts get passed off as easy and something one should do. Our main reason would be to avoid probate. While our estate is large it’s not complicated or unusual by any means. Big reason I was given is to avoid probate.

Bean counter you’re perspective is the first I’ve heard on revocable trusts. Our assets are:

Primary residence
Pretax retirement accounts
A couple Pensions (lump sum option available)
Couple Roths
Deferred comp
Savings
Life insurance policies

Maybe having the trust be the beneficiary of all these accounts and then direct how to distribute is simpler?


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[BeanCounter]

My spouse and I are going to set up a revocable trust next year and have it be the beneficiary of all our assets. Hopefully that will make distribution easier to relatives when the time comes.

Make sure you really research this. You may be over complicating things and it won’t make distributions any easier. Trusts are expensive. They are legal entities that have to be managed and have to file taxes etc. They should only be used in very specific circumstances.

Besides having to file separate taxes what's expensive? 


I have a phone meeting scheduled with our estate attorney this coming week.  I'll ask what level of assets he considers to be the minimum that is worthwhile for creating a Trust.


In 2016 he charged $1200, if my memory is correct, to help with all of my father's estate planning, which consisted of a Will, Trust, Financial PoA, and Medical PoA.  That was in NC.  (I believe his rates may be lower than average.  He works solo, not even a secretary, but is top notch, so his overhead is lower than other attorneys.)  I'm happy to share his contact info privately.

See my long post. It's not the amount of assets that make it worthwhile or not worthwhile to set up a trust. It's about the kind of assets and how you want them distributed or not distributed to your heirs.
Trusts are expensive because they become an entity that has to be managed by a fiduciary and has to file and pay taxes (on anything not distributed). You have to ask yourself, in the event of my death, for what purpose will this entity serve?

[rmorris50]

I did read thanks. Suzi Orman says we should have one ;-) I appreciate the perspective, definitely making me pause and think.


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[BeanCounter]

So I think I just got scared away from a trust. Not sure why revocable trusts get passed off as easy and something one should do. Our main reason would be to avoid probate. While our estate is large it’s not complicated or unusual by any means. Big reason I was given is to avoid probate.

Bean counter you’re perspective is the first I’ve heard on revocable trusts. Our assets are:

Primary residence
Pretax retirement accounts
A couple Pensions (lump sum option available)
Couple Roths
Deferred comp
Savings
Life insurance policies

Maybe having the trust be the beneficiary of all these accounts and then direct how to distribute is simpler?


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How many beneficiaries do you have and how do you want things split?  I mean I believe you can pass all of those outside of probate without a trust. The trust ABSOLUTELY makes it more complicated and time consuming. It might be worth it depending on what you want to achieve.
I believe in each of the items listed above you can just name a beneficiary (or two, or four or whatever) and then the executor just calls and submits your death certificate and will to each and it's distributed. Obviously primary resident is a bit more complicated if your splitting that between beneficiaries.
You just need to go see an attorney (or two) and tell them you want a will and estate plan that does not include a trust and will bypass probate.
(also- the pension will have rules of its own depends if it's your spouse or child. My mother's pension gave me a small payout upon her death and then was done) She had every one of the assets you named, except for deferred comp and we transferred them without a trust outside of probate. I was executor. Took me about 8 weeks, but I did have to file her personal taxes after her death as well.

[BeanCounter]

I did read thanks. Suzi Orman says we should have one ;-) I appreciate the perspective, definitely making me pause and think.


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And Suzi Orman received a kick back from the financial industry to tell you that. :)

[secondcor521]

Let me repeat that- YOU CAN TRANSFER ASSETS EASILY OUTSIDE OF A TRUST WITHOUT GOING TO PROBATE.

While this is generally true - most assets can transfer via beneficiary designation, TOD, POD, community property, or successor custodianship - there are some cases in some states where it is not true.  In my state, for example, real property such as houses and cars owned by a decedent must go through probate because my state does not permit TOD/POD on those types of assets.  (Or at least, it did not allow it when I last looked a few years ago.)

But your general point is true.  A $100M IRA at Vanguard can pass via beneficiary designation very easily.  A $100M bank account can pass via TOD very easily.  It's not the size of the assets but the type of account and what your state allows for non-probate transfer methods.

So I think I just got scared away from a trust. Not sure why revocable trusts get passed off as easy and something one should do. Our main reason would be to avoid probate. While our estate is large it’s not complicated or unusual by any means. Big reason I was given is to avoid probate.

Bean counter you’re perspective is the first I’ve heard on revocable trusts. Our assets are:

Primary residence
Pretax retirement accounts
A couple Pensions (lump sum option available)
Couple Roths
Deferred comp
Savings
Life insurance policies

Maybe having the trust be the beneficiary of all these accounts and then direct how to distribute is simpler?

I agree with @BeanCounter's reply to your post above.  If you can name a trust as beneficiary or TOD for any of these, you very likely can also use that same mechanism to name a beneficiary / transferee.  I also emphatically agree that having a trust as the intermediate beneficiary is more complicated, slower, and more expensive.

You may want to investigate transferring the life insurance into an ILIT.  That way your beneficiaries own the policy, not you.  This is advantageous as it gets the proceeds of the life insurance out of your estate, and thus reduces your estate tax exposure.  Although again, an ILIT involves setting it up with an attorney, so depending on how much life insurance and your overall exposure to the estate tax (probably low now, but they're talking about lowering the estate tax exemption federally, and your state and your beneficiaries' states might also impose inheritance and/or estate taxes), it may or may not be worth it to do so.

As noted above, your state may or may not let you add TOD/POD on your primary residence.  My state doesn't allow it but other states do, so I'm not sure how common or uncommon that aspect is.

An aspect of a trust that *might* be helpful is the ability to have more complicated distribution setups.  In my case, I have three kids and when I die they each get one third of each account.  This is easy to do without a trust and still avoid probate.  If you want a family vacation home to stay in the family, or you want to set it up so that your kids get money at certain times, or want to let someone live in a property until they die and then have the property get sold, then those more complicated things might require a trust just to establish those rules / timeframes / oversight / etc.

[ysette9]

I wonder if we are talking about different types of trusts and getting ourselves confused? We have a revocable living trust, same as my parents and my aunt & uncle and my grandmother before she died. There are no ongoing maintenance fees, it just cost money with a lawyer to set it up initially. It is pretty much a pass-through entity for taxes and we file our tax returns as individuals using our SSNs, with the same tax rates as before. I double checked with my mother (CPA) today just to make sure I wasn't misremembering or otherwise getting it wrong.

My father was the executor of my grandmother's trust and it was fairly straightforward to close out. Then again, she didn't have that many assets and they made sure that all the assets she did have were inside the trust before she died.

As for the fiduciary to handle things once we die, we had initially thought that Vanguard would be a good choice. Our lawyer explained that the services Vanguard would provide is for money management, like actively managing the portfolio. The person we chose is called a fiduciary successor trustee more full service stuff like filling out all the paperwork and disbursing money to pay for the care of our children per the stipulations we set out in the trust. The idea is that they take care of all the legal and logistical stuff so the guardian caring for the kids doesn't have to think about any of it.

I am definitely not a lawyer and definitely don't understand all the fine points of trusts and whatnot. I am only sharing what my personal experience is and what I have seen with my family members.

[EscapeVelocity2020]

@BeanCounter et al

Reading through this last little bit of the thread about trusts and such, does anyone have any good advice about how to go about finding the right accountant / tax attorney to make sure my spouse (that has no interest in finance) is comfortable with the idea that I might pass away and leave her 'in charge'?  I really need someone that I can trust and will basically be conservative and protect the money, not take on risk and ultimately leave her (or my heirs) destitute.  The distributed annual funds can be spent on any risky ventures or whatever.

I've been putting this whole thing off probably far too long...  But how do I find a third party that doesn't just want to make a bunch of money while I'm alive moving investments around, criticizing my Mustachian LBYM ethic, etc.?

I'm pursuing lots of avenues (co-workers, other online ideas), but I'm interested to hear if folks here have had luck finding something.  MMM seems to have something like what I'm looking for in 'The Wealthy Accountant'...

So you are wanting to control assets from the grave? If that's the case then you need a trust and a fiduciary and you can use a bank or fidelity to do that. But you'll pay. Like 1% maybe a bit more for attorney and tax fees. And your wife will have to go to that fiduciary anytime she needs money beyond the income for the year and ASK FOR IT. I personally would find this offensive and cost prohibitive. You're basically saying you don't trust her to make smart decisions.

My spouse has very little interest in finance. So he needs a PERSON he can call in the event of my death. This is why we don't use Vanguard. We use Fidelity and we qualify for their "Private Client Group" which gives him an advisor he can call to get advice on rebalancing, taking distributions and where to take it from for the best tax advantage. It's free, but you have to do all of the management, they just provide the advice and you do the work. Our advisor has been perfectly supportive of love of index funds. He's given great advice around taxes and drawdown strategy. I think you need something like this PLUS a good tax accountant.

Thanks for all the info.  I definitely don't WANT my spouse to feel like she is being put on financial probation.  On the flip side, you hear about sweet old ladies being ripped off by scammers and contractors here all the time.  God love her, she is such a soft heart and pays for things up front - I can totally see her trusting a contractor and paying too many bills early (because he needs to buy materials, and had a project go bad, and needs float, etc.).  It's also a bit sad to admit, but if she got scammed for 20 or 30k, she probably wouldn't tell anybody.

Most of our assets can be handled using beneficiaries and it's a good reminder to update my will for property that has changed.  Also it's just helpful to discuss this stuff, I should definitely spend more time with the spouse and kids educating them on how to handle money, but right now they have very little interest.  I just want to ensure there isn't some colossal mistake made like withdrawing too much too quickly or moving a 401k to after tax not realizing the tax implications.

I'll need to study up more on this Revocable Living Trust idea.  I bank with Chase (Preferred Client, although I avoid talking too them when they call me) and have a lot of assets with Vanguard, would either of these be the right place to start the search for a fiduciary?  I see a lot of people referencing Fidelity (which my Dad also uses).

[rmorris50]

The revocable living trust is what I was talking about. Not sure if that is also what Bean Counter is referring to or a different type of trust.


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[BeanCounter]

Nope. I’m not getting confused. :) though it is a confusing topic. Your “revocable living trust” becomes irrevocable upon your (the grantors) death. At that point it’s its own living, breathing taxable entity. Until the trustee distributes all the assets and closes down the trust. In the case of the old school A, B trusts that were set up to try and bypass estate taxes, the estate is split and when one spouse dies their assets go into trust “for the benefit” of the surviving spouse and beneficiaries, but that trust stays as a living breathing entity for the rest of the surviving spouse’s life. So you can see in that case you’ve essentially lost control of the trust. It’s making distributions, filing taxes and incurring fiduciary expenses for as long as the surviving spouse is alive.

Trusts are not wrong. They aren’t a scam. But in many cases they aren’t needed. If you ask an attorney or a financial advisor if you need one, they’ll likely say yes because why not? Just like if I ask someone in insurance if I need life insurance they’ll say yes. But my own personal NW (I don’t count the trust I’m beneficiary of FWIW) is >$3M. Do I really need life insurance, no. Can it hurt to have it, no.

[BeanCounter]

@BeanCounter et al

Reading through this last little bit of the thread about trusts and such, does anyone have any good advice about how to go about finding the right accountant / tax attorney to make sure my spouse (that has no interest in finance) is comfortable with the idea that I might pass away and leave her 'in charge'?  I really need someone that I can trust and will basically be conservative and protect the money, not take on risk and ultimately leave her (or my heirs) destitute.  The distributed annual funds can be spent on any risky ventures or whatever.

I've been putting this whole thing off probably far too long...  But how do I find a third party that doesn't just want to make a bunch of money while I'm alive moving investments around, criticizing my Mustachian LBYM ethic, etc.?

I'm pursuing lots of avenues (co-workers, other online ideas), but I'm interested to hear if folks here have had luck finding something.  MMM seems to have something like what I'm looking for in 'The Wealthy Accountant'...

So you are wanting to control assets from the grave? If that's the case then you need a trust and a fiduciary and you can use a bank or fidelity to do that. But you'll pay. Like 1% maybe a bit more for attorney and tax fees. And your wife will have to go to that fiduciary anytime she needs money beyond the income for the year and ASK FOR IT. I personally would find this offensive and cost prohibitive. You're basically saying you don't trust her to make smart decisions.

My spouse has very little interest in finance. So he needs a PERSON he can call in the event of my death. This is why we don't use Vanguard. We use Fidelity and we qualify for their "Private Client Group" which gives him an advisor he can call to get advice on rebalancing, taking distributions and where to take it from for the best tax advantage. It's free, but you have to do all of the management, they just provide the advice and you do the work. Our advisor has been perfectly supportive of love of index funds. He's given great advice around taxes and drawdown strategy. I think you need something like this PLUS a good tax accountant.

Thanks for all the info.  I definitely don't WANT my spouse to feel like she is being put on financial probation.  On the flip side, you hear about sweet old ladies being ripped off by scammers and contractors here all the time.  God love her, she is such a soft heart and pays for things up front - I can totally see her trusting a contractor and paying too many bills early (because he needs to buy materials, and had a project go bad, and needs float, etc.).  It's also a bit sad to admit, but if she got scammed for 20 or 30k, she probably wouldn't tell anybody.

Most of our assets can be handled using beneficiaries and it's a good reminder to update my will for property that has changed.  Also it's just helpful to discuss this stuff, I should definitely spend more time with the spouse and kids educating them on how to handle money, but right now they have very little interest.  I just want to ensure there isn't some colossal mistake made like withdrawing too much too quickly or moving a 401k to after tax not realizing the tax implications.

I'll need to study up more on this Revocable Living Trust idea.  I bank with Chase (Preferred Client, although I avoid talking too them when they call me) and have a lot of assets with Vanguard, would either of these be the right place to start the search for a fiduciary?  I see a lot of people referencing Fidelity (which my Dad also uses).

If you discuss this with your spouse and she says “yes, I want the assets in trust and I want to pay someone to manage it all because I don’t trust myself and don’t want to make a mistake.” then fine do it. But if my spouse talked about me as you did above, basically saying I’m just so nice I’m stupid, I’d face punch him and then kick him in the balls. I mean does your wife have a actual cognitive impairment, or do you just think these things because she’s a women?
I mean that with love. Just calling you out to reevaluate your thinking.

[EscapeVelocity2020]

If you discuss this with your spouse and she says “yes, I want the assets in trust and I want to pay someone to manage it all because I don’t trust myself and don’t want to make a mistake.” then fine do it. But if my spouse talked about me as you did above, basically saying I’m just so nice I’m stupid, I’d face punch him and then kick him in the balls. I mean does your wife have a actual cognitive impairment, or do you just think these things because she’s a women?
I mean that with love. Just calling you out to reevaluate your thinking.

I knew I'd take flak for that, I've been blasted many times on this forum for similar statements, but we have arrangements that work just fine and she does not complain and feels very fortunate.  There's a lot of nuance that gets lost when I discuss these things, but why dance around it and write a novel when our arrangements and backstory is not the point.  For instance, she does not trust herself with millions of dollars in retirement accounts and she has been scammed by contractors to the tune of a few thousand just last year.  She didn't know she'd been scammed (I was working overseas a lot in 2019), and she knew that the demands for more money to finish the job didn't seem right, but he said he underestimated the job, was losing money, yadda, yadda...

Anyway, I do appreciate the help you have given me and of course I don't think anyone is stupid, just not interested in managing finances and not hardnosed when it comes to financial transactions.  Suddenly having lots of millions of dollars and no one that she trusts to give her answers are way up there when it comes to shit she does not want to deal with, and she will tell you that point blank.  If I live long enough and interest rates ever go up, I'll turn a chunk of our retirement funds into an annuity because she would love nothing more than to have a perpetual paycheck to simplify the money stuff and let her focus on her passions, interests, and hobbies.

I also worry that she may also worry too much about spending and needlessly deprive herself, but this probably isn't the forum to talk about that either :)  And the big issue about that is that we have one child that is currently a spendthrift and it would suck to dump millions into her lap too soon.  I'm hoping that the real world teaches her the value of a dollar and gives me a chance to impart wisdom about how to grow or at least conserve her stache as opposed to living paycheck to paycheck and going on windfall spending sprees.

[JoJoP]

For young, spendthrift types, getting a bunch of unearned money can derail them more than you'd think.      I know 2 people who essentially are counting on inheritances to bail them out.  They've literally always known the money is coming someday, and arranged their lives accordingly.   For an older person or spouse who is not really financially savvy, I think it's good to have those tough conversations.  It's a big responsibility and there are financial predators out there.

It's just a shame that money wherewithal is so tough to pass down or teach.  Why, I don't know... In the best "lead a horse to water" style, I send my kids, close friends and spouse various interesting articles-- MMM and the like-- about getting ahead, saving, growing wealth, etc.   It just doesn't hold their interest the way it does mine.  Only one member of our immediate family seems to have that type of drive. 

My husband is all about the work, I'm all about getting ahead.   I like the challenge of money making money, of making something out of very little, of spotting and developing opportunities.      When we first met, his relatively small business was owed 10's of thousands of IOU's. He used to deliver a product and not be willing to spend the time to send the bill.   No invoices, no delivery signatures, etc.  Months would go by.   I was appalled, since he worked so tremendously hard, and yet... isn't the money the whole idea?  I stopped bankrolling the customers, and bill collected the debts for a couple of years until we got (mostly) paid.

 In a nutshell, if I predecease him, I have no idea how our estate will go.   It's a big estate now, and hopefully he'd simplify it if we hadn't already.  Money management is not his thing.    He could live much more simply/frugally, and on far less, than we currently own.