best investment choices for small trust accounts

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Topic Author
jbinpa59
Posts: 150
Joined: Wed Jul 10, 2019 3:29 pm

best investment choices for small trust accounts

Post by jbinpa59 »

tried searching but didn't find what I'm looking for, if some can point me in the right direction, I would appreciate it.
I realize the following is a lot to unpack but feel the details may drive the discusion
If you want to skip to the actual questions go to the second ===== line
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b]========================================================================================================[/b]

Wife has inhiereted two smallish irrecoverable trusts 1 @ from her Aunt and Uncle
both well below any amount that justifies a Corperate Trustee being used (~$98k combined)
but they will be self directed and held at Fidelity

She is both Sole Trustee and Primary Beneficiary of both Trusts which nominally reqire the HEMS Standards be met

Both Trusts were drawn up and specify that will they remain under the laws of NYS and so specify Trustee AUM% payouts (~1% )
and Both Trusts thave the normal boilerplate 21yrs past "known" successor beneficary's lifetime duration language
so are not "Dynasty Trusts" but "Her issue" our 2 sons would be Her Succesor Benificiaries (both are in their 30"s)
Her Family has longevity genes so the Trusts easily could run on another 70-80 plus years

Both Trusts are non-resident for NYS taxing purposes as both Grantors moved out of NYS to CT before either death converted
the recoverable trusts to ir-rocoverable status

Our Fed Marginal tax rate managed to top of the 12% bracket by arbitage of Income to Trad vs Roth Tax advantaged space
and will do till RMDs push us up one bracket due to SS taxation
She is aware of the compressed Tax Brackets for Trusts
we live in PA 3.08 flat rate taxe
in a Low cost area
Our Total Investments 1.2 Mil AA ~ 70/27/3 EQ/FI/$
No Debt at this time
we will assume a vehicle loan in 2022 (if Ford ever builds it)

I'm a 62yo Postal employee eligable to retire whenever/ with a vested diet cola'd Fed pension (cola'd 1% LESS than SS)
so once I start SS at 70 our needs and wants are more than covered by SS + Pension
Healthcare Now and after retirement will be continuation of existing plan with same premium split as working

She is 60yo and is retired not likely to return to paid work planning to take SS at 62-63
as she's currently being a nonpaid (her choice) Live in Granny Nanny to our 1st Grandchild in Ca
as such Her basic living needs (room & board and such transport as she needs) are met by our son/dil

She was unawre of the either trust's existance so we always planned to make our own way never counted on any bequests
and She does not at this time need any of the funds in the trusts for anything

==========================================================================================================

so beyond pulling actual trust admin expenses like Trust Tax Prep/Trust paid taxes /Trustee's 1% AUM commision out
she wishes to maximize growth of Principal while minimizing Trust's Taxation and Interm volitality isn't a major concern

So whats her best investment & AA options ?

putting 80-90% of funds into a S&P500 Index with auto reinvestment turned OFF and Specific Lot Basis Costs turned ON
thus sweeping Divs/Cap Gains to SPAXX MM for withdrawl or reinvestment
would an etf be a better choice?

She's against Small Caps / International / Tilts / Most Sector Plays

and the rest in a Short Duration Govt Bond Fund to cover a moderate HEMS needs/desires ?
Rebalance as needed consitent with minimizing taxes?

Maybe manage Tax Gain Harvesting to arbitrate the Tax Lot Basis' within the trust's Tax Bracket if its a down year?
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Sandtrap
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Joined: Sat Nov 26, 2016 5:32 pm
Location: Hawaii No Ka Oi - white sandy beaches, N. Arizona 1 mile high.

Re: best investment choices for small trust accounts

Post by Sandtrap »

One option with a focus on simplicity.
1. Read the forum wiki on "total returns approach" (vs focusing on dividend/interest yield, etc).

2. Consider the Fidelity equiv. (or use Vanguard as your brokerage) of the "Balanced Index Fund" at 60/40 with an appropriate allocation to cash or cash like. The use of a single self balancing fund simplifies everything.
(Also, turn on "auto reinvest".

3. You mention "self directed" and also a AUM fee. Can that remain in the account funds and drawn as needed as part of the total returns approach withdrawal rate (4% baseline).?

This is one small option amongst zillions of opinonions.
j :D
Wiki Bogleheads Wiki: Everything You Need to Know
Topic Author
jbinpa59
Posts: 150
Joined: Wed Jul 10, 2019 3:29 pm

Re: best investment choices for small trust accounts

Post by jbinpa59 »

Sandtrap wrote: Fri Dec 03, 2021 7:43 am One option with a focus on simplicity.
1. Read the forum wiki on "total returns approach" (vs focusing on dividend/interest yield, etc).

2. Consider the Fidelity equiv. (or use Vanguard as your brokerage) of the "Balanced Index Fund" at 60/40 with an appropriate allocation to cash or cash like. The use of a single self balancing fund simplifies everything.
(Also, turn on "auto reinvest".

3. You mention "self directed" and also a AUM fee. Can that remain in the account funds and drawn as needed as part of the total returns approach withdrawal rate (4% baseline).?

This is one small option amongst zillions of opinonions.
j :D
Thank you I'll look into that wiki topic
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