Bond Allocation in a Credit Shelter Trust - Municipal vs. Taxable

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huskyscream
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Joined: Wed May 26, 2021 6:59 am

Bond Allocation in a Credit Shelter Trust - Municipal vs. Taxable

Post by huskyscream »

What types of bonds do you recommend for a trust? I'm assisting the trustee on the fund allocations in a credit shelter trust. Currently, there's $150k in the account setup in the below asset allocation:

30% VTEB, Vanguard Tax-Free Municipal Bonds
45% VTI, Vanguard Total Stock Market
25% VXUS, Vanguard Total International Stock Market

The question surrounds there being more money coming into the trust, roughly another $150k. There's a desire to not invest in lump sum, but lean heavier on bonds and then dollar cost average to the stock allocation - so $100k bonds, $60k stocks, and over the next few months reallocate to 70% stocks. Originally tax-free bonds were chosen due to the high income taxes on trusts, but the low yields of taxable bonds is making me consider adding a total bond market fund to the mix for diversification, such as BND. Is this advisable?
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