Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
Hi All,
I talked to some friends who told me how they set up a generational fund (for their future descendants) based on their rental properties. They essentially transferred all their real-estate into a trust and the trust dispenses the rental income (after expenses) to the trustees but there is a provision in the trust that the real estate can't be liquidated. What a great idea to bozo-proof your money.
Now I don't have much property but I do have a good $2M in Vanguard mutual finds in non-retirement accounts. Is there anyway I can set these up to achieve the same aim? One challenge I see is that moving these funds into a trust would require selling the funds (along with a huge capital gains bill) which I
I talked to some friends who told me how they set up a generational fund (for their future descendants) based on their rental properties. They essentially transferred all their real-estate into a trust and the trust dispenses the rental income (after expenses) to the trustees but there is a provision in the trust that the real estate can't be liquidated. What a great idea to bozo-proof your money.
Now I don't have much property but I do have a good $2M in Vanguard mutual finds in non-retirement accounts. Is there anyway I can set these up to achieve the same aim? One challenge I see is that moving these funds into a trust would require selling the funds (along with a huge capital gains bill) which I
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Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
OP, do you have any children, siblings, etc. you could leave your assets?
Me, I have zero desire to leave assets of any kind to people I won't even know.
My father left inheritance to his children, we will hopefully leave to our children and our grandchildren. And, should a great-grandchild come along, we could give to them.
Who knows what the character of a person a couple of generations out might be?
Broken Man 1999
Me, I have zero desire to leave assets of any kind to people I won't even know.
My father left inheritance to his children, we will hopefully leave to our children and our grandchildren. And, should a great-grandchild come along, we could give to them.
Who knows what the character of a person a couple of generations out might be?
Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go." - Mark Twain
Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
This sounds like one of the worst ideas ever.MrCheapo wrote: ↑Fri Jun 18, 2021 10:19 am They essentially transferred all their real-estate into a trust and the trust dispenses the rental income (after expenses) to the trustees but there is a provision in the trust that the real estate can't be liquidated. What a great idea to bozo-proof your money.
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Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
I agree - why force the hand?gwe67 wrote: ↑Fri Jun 18, 2021 11:03 amThis sounds like one of the worst ideas ever.MrCheapo wrote: ↑Fri Jun 18, 2021 10:19 am They essentially transferred all their real-estate into a trust and the trust dispenses the rental income (after expenses) to the trustees but there is a provision in the trust that the real estate can't be liquidated. What a great idea to bozo-proof your money.
"I would rather die with money, than live without it...." - Bogleheads member Ron |
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A time to EVALUATE your jitters https://www.bogleheads.org/forum/viewtopic.php?p=1139732#p1139732
Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
Now that's an interesting view of the situation. You are saying leave it to the next generation to decide who gets the money? But what happens if you leave the money to your child and after you pass they marry a bozo who wants to liquidate the assets and use it to fund his crazy business ideas?
I like the idea of the trustees only having to get the income because:
a) It prevents bozo-descendants from ruining your hard work accumulating assets
b) It gives your descendants money but not TOO much money that they turn into spoilt brats and not useful members of society.
Now I would be interested if one could write a trust to ONLY give money to my children and their children (i.e. leaving out spouses). With so much divorce ...
I like the idea of the trustees only having to get the income because:
a) It prevents bozo-descendants from ruining your hard work accumulating assets
b) It gives your descendants money but not TOO much money that they turn into spoilt brats and not useful members of society.
Now I would be interested if one could write a trust to ONLY give money to my children and their children (i.e. leaving out spouses). With so much divorce ...
Broken Man 1999 wrote: ↑Fri Jun 18, 2021 10:45 am OP, do you have any children, siblings, etc. you could leave your assets?
Me, I have zero desire to leave assets of any kind to people I won't even know.
My father left inheritance to his children, we will hopefully leave to our children and our grandchildren. And, should a great-grandchild come along, we could give to them.
Who knows what the character of a person a couple of generations out might be?
Broken Man 1999
Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
I'm not sure I understand. What do you mean by forcing the hand?bmelikia wrote: ↑Fri Jun 18, 2021 11:05 amI agree - why force the hand?gwe67 wrote: ↑Fri Jun 18, 2021 11:03 amThis sounds like one of the worst ideas ever.MrCheapo wrote: ↑Fri Jun 18, 2021 10:19 am They essentially transferred all their real-estate into a trust and the trust dispenses the rental income (after expenses) to the trustees but there is a provision in the trust that the real estate can't be liquidated. What a great idea to bozo-proof your money.
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Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
Your foremost concern should be: Can my immediate hiers live out their lives comfortably ? Life can unexpected turns until the very last moment. Someone who is doing great could become bankrupt in a few short years even if all the financial decisions at that time may have seemed right. Someone who is healthy can became quadriplegic - requiring special home, special car, 24/7 care.
You want to provide for that flexibility.
Instead of making provisions over several generations, focus on the immediate generation and pass on your values of hard work, thrift and self-protection. They will carry your legacy onto their hiers and so on.
You want to provide for that flexibility.
Instead of making provisions over several generations, focus on the immediate generation and pass on your values of hard work, thrift and self-protection. They will carry your legacy onto their hiers and so on.
Last edited by WarAdmiral on Fri Jun 18, 2021 12:28 pm, edited 2 times in total.
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Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
And honestly the way humans multiply - you need to be rich like the Rockefellers or Gates' to provide for fabulous wealth for each member several generations down. Absence of this wealth - Let each parent take care of their immediate child.
Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
You do realize that inheritance is not considered community property, right?
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Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
This!WarAdmiral wrote: ↑Fri Jun 18, 2021 12:21 pm Your foremost concern should be: Can my immediate hiers live out their lives comfortably ? Life can unexpected turns until the very last moment. Someone who is doing great could become bankrupt in a few short years even if all the financial decisions at that time may have seemed right. Someone who is healthy can became quadriplegic - requiring special home, special car, 24/7 care.
You want to provide for that flexibility.
Instead of making provisions over several generations, focus on the immediate generation and pass on your values of hard work, thrift and self-protection. They will carry your legacy onto their hiers and so on.
Though I do want any legacy for the grandchildren to not go thru parents. And, no, this doesn't mean I have a trust issue with DDs.
Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go." - Mark Twain
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Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
Bozo proof? Perhaps but there is one entity that can force a liquidation - the government. Thinking a trust can not be pierced is folly.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
Many states have abolished the rule against perpetuities.
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Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
There is always the possibility that the bloodline might produce Bozos!Grt2bOutdoors wrote: ↑Fri Jun 18, 2021 1:02 pm Bozo proof? Perhaps but there is one entity that can force a liquidation - the government. Thinking a trust can not be pierced is folly.
Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go." - Mark Twain
Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
Suppose that 50 years after your friends die, things have changed so much (zoning laws or whatever) that the land could be sold for millions of dollars but can't generate rental income, but the heirs are prohibited from selling it. Who's the bozo then?MrCheapo wrote: ↑Fri Jun 18, 2021 12:21 pmI'm not sure I understand. What do you mean by forcing the hand?bmelikia wrote: ↑Fri Jun 18, 2021 11:05 amI agree - why force the hand?gwe67 wrote: ↑Fri Jun 18, 2021 11:03 amThis sounds like one of the worst ideas ever.MrCheapo wrote: ↑Fri Jun 18, 2021 10:19 am They essentially transferred all their real-estate into a trust and the trust dispenses the rental income (after expenses) to the trustees but there is a provision in the trust that the real estate can't be liquidated. What a great idea to bozo-proof your money.
Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
What if the heirs don't want to be landlords?Halicar wrote: ↑Fri Jun 18, 2021 1:26 pmSuppose that 50 years after your friends die, things have changed so much (zoning laws or whatever) that the land could be sold for millions of dollars but can't generate rental income, but the heirs are prohibited from selling it. Who's the bozo then?MrCheapo wrote: ↑Fri Jun 18, 2021 12:21 pmI'm not sure I understand. What do you mean by forcing the hand?bmelikia wrote: ↑Fri Jun 18, 2021 11:05 amI agree - why force the hand?gwe67 wrote: ↑Fri Jun 18, 2021 11:03 amThis sounds like one of the worst ideas ever.MrCheapo wrote: ↑Fri Jun 18, 2021 10:19 am They essentially transferred all their real-estate into a trust and the trust dispenses the rental income (after expenses) to the trustees but there is a provision in the trust that the real estate can't be liquidated. What a great idea to bozo-proof your money.
What if the heirs don't want to live in the same state or country as the property?
What if local rules change and don't allow leasing?
What if the property falls into disrepair and city condemns it for destruction?
What if state buys the property using eminent domain?
What if the property becomes not financially viable?
What if the improvements burn down?
What if any/all of the above and/or other issues cause squabbles among relatives and damage relationships?
Looks like the only winners will be the lawyers, accountants, and property managers.
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Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
You can transfer fund assets in kind to a Trust, so you could essentially set up your Bozo plan if you desire. I think to do the same with RE could get messy for heirs down the road. The fundamentals of the property could/will change over time, and handcuffing the heirs from liquidating the asset could be a massive mistake for many reasons.
Good luck with whatever plan you decide on, but consider how if you were in your heirs shoes, how would you feel about your plan (aside from inheriting the asset(s)?
Good luck with whatever plan you decide on, but consider how if you were in your heirs shoes, how would you feel about your plan (aside from inheriting the asset(s)?
Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
Is it really that simple? I remember asking Vanguard about this 10 years ago and they said I would have to open up a brand new account in the Trust's name and sell the old funds and rebuy them. This would change my tax basis and trigger a huge capital gains charge.chw wrote: ↑Fri Jun 18, 2021 1:58 pm You can transfer fund assets in kind to a Trust, so you could essentially set up your Bozo plan if you desire. I think to do the same with RE could get messy for heirs down the road. The fundamentals of the property could/will change over time, and handcuffing the heirs from liquidating the asset could be a massive mistake for many reasons.
Good luck with whatever plan you decide on, but consider how if you were in your heirs shoes, how would you feel about your plan (aside from inheriting the asset(s)?
Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
Can’t speak to Vanguard, but at Fidelity I simply re-titled my brokerage account to the name of the Trust, and that was it. There was some paperwork complete, as well as providing info regarding the Trust.MrCheapo wrote: ↑Fri Jun 18, 2021 3:08 pmIs it really that simple? I remember asking Vanguard about this 10 years ago and they said I would have to open up a brand new account in the Trust's name and sell the old funds and rebuy them. This would change my tax basis and trigger a huge capital gains charge.chw wrote: ↑Fri Jun 18, 2021 1:58 pm You can transfer fund assets in kind to a Trust, so you could essentially set up your Bozo plan if you desire. I think to do the same with RE could get messy for heirs down the road. The fundamentals of the property could/will change over time, and handcuffing the heirs from liquidating the asset could be a massive mistake for many reasons.
Good luck with whatever plan you decide on, but consider how if you were in your heirs shoes, how would you feel about your plan (aside from inheriting the asset(s)?
Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
I know that five years ago it worked this way at Vanguard also, my father put his holdings into trust by retitling. No sales or taxes required.chw wrote: ↑Fri Jun 18, 2021 5:51 pmCan’t speak to Vanguard, but at Fidelity I simply re-titled my brokerage account to the name of the Trust, and that was it. There was some paperwork complete, as well as providing info regarding the Trust.MrCheapo wrote: ↑Fri Jun 18, 2021 3:08 pmIs it really that simple? I remember asking Vanguard about this 10 years ago and they said I would have to open up a brand new account in the Trust's name and sell the old funds and rebuy them. This would change my tax basis and trigger a huge capital gains charge.chw wrote: ↑Fri Jun 18, 2021 1:58 pm You can transfer fund assets in kind to a Trust, so you could essentially set up your Bozo plan if you desire. I think to do the same with RE could get messy for heirs down the road. The fundamentals of the property could/will change over time, and handcuffing the heirs from liquidating the asset could be a massive mistake for many reasons.
Good luck with whatever plan you decide on, but consider how if you were in your heirs shoes, how would you feel about your plan (aside from inheriting the asset(s)?
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Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
Tip - Stop talking to your friends...
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Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
Get legal counsel and handle with an estate plan.
Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
MrCheapo wrote: ↑Fri Jun 18, 2021 12:21 pmI'm not sure I understand. What do you mean by forcing the hand?bmelikia wrote: ↑Fri Jun 18, 2021 11:05 amI agree - why force the hand?gwe67 wrote: ↑Fri Jun 18, 2021 11:03 amThis sounds like one of the worst ideas ever.MrCheapo wrote: ↑Fri Jun 18, 2021 10:19 am They essentially transferred all their real-estate into a trust and the trust dispenses the rental income (after expenses) to the trustees but there is a provision in the trust that the real estate can't be liquidated. What a great idea to bozo-proof your money.
I was just meaning "forcing the hand" as in. . .having cemented the inability for future heirs to make changes or control the outcome. . .
"I would rather die with money, than live without it...." - Bogleheads member Ron |
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A time to EVALUATE your jitters https://www.bogleheads.org/forum/viewtopic.php?p=1139732#p1139732
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Re: Bozo-proofing: Setting Up the Framework for Generational Wealth For EXISTING non real-estate assets?
It's called a trust fund, and any estate attroney can draw up the documents necessary to do it. The stipulaton would simply be that your heir(s) would be the beneficiary of the income of the trust and not the principle.