Posted: Sun Sep 25, 2011 10:59 am?? ?Post subject:
expenses are 2.5% of initial so anything not too conservative or aggressive would work. me:
25% VXUS
25% VTI
25% VAIPX (if in a tax-protected account)
25% VBMFX (or use a tax-free option if taxable)
rebalance once per year or anytime any percentage is outside the 20-30% range.
These are the instructions we left for our estate.
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am
Joined: 30 Sep 2007 Posts: 801 Location: Illinois
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livesoft
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am
Joined: 30 Sep 2007 Posts: 801 Location: Illinois
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bluemarlin08
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kenner
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Valuethinker
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BruceM
Joined: 08 Aug 2008 Posts: 1599 Location: Manzanita, Oregon
Posted: Sun Sep 25, 2011 4:17 pm?? ?Post subject: Re: life insurance money question
am wrote:
What investing instructions would you leave to your spouse if your policy was 3 mil and monthly expenses were 6k. Say you wanted the money to last her entire lifetime potentially 50 years+.
You don’t provide enough information. Is the required $72K/yr what the LI proceeds would have to provide by itself, or is this gross of all income sources, such as a job or other savings? If the latter, it sounds like the LI policy is acting as a sort of lottery ticket, providing an unneeded large windfall should you unexpectedly die.
Things start getting complex with a 3-4MM estate and modest consumption needs. Gifting to family or charity, along with income tax, asset protection and perhaps estate tax issues will become primary concerns. It sounds like DW is not interested iin tackling this without you there and there may be conflicts of interest if she considers remarriage after your death.
Given these potential issues, I think I’d start talking to a Fee-Only financial planner, experienced on these (and other matters), so you can have at least a basic plan for her to work from you die.
BruceM
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kenner
Joined: 01 Mar 2008 Posts: 1180
Posted: Sun Sep 25, 2011 8:02 pm?? ?Post subject: Re: life insurance money question
BruceM wrote:
am wrote:
What investing instructions would you leave to your spouse if your policy was 3 mil and monthly expenses were 6k. Say you wanted the money to last her entire lifetime potentially 50 years+.
You don’t provide enough information. Is the required $72K/yr what the LI proceeds would have to provide by itself, or is this gross of all income sources, such as a job or other savings? If the latter, it sounds like the LI policy is acting as a sort of lottery ticket, providing an unneeded large windfall should you unexpectedly die.
Things start getting complex with a 3-4MM estate and modest consumption needs. Gifting to family or charity, along with income tax, asset protection and perhaps estate tax issues will become primary concerns. It sounds like DW is not interested iin tackling this without you there and there may be conflicts of interest if she considers remarriage after your death.
Given these potential issues, I think I’d start talking to a Fee-Only financial planner, experienced on these (and other matters), so you can have at least a basic plan for her to work from you die.
BruceM
Perhaps the life insurance will not be part of the estate. That’s how many – perhaps most – people would set it up.
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relentless
Joined: 14 Mar 2011 Posts: 228
Posted: Sun Sep 25, 2011 8:34 pm?? ?Post subject: Re: life insurance money question
kenner wrote:
Perhaps the life insurance will not be part of the estate. That’s how many – perhaps most – people would set it up.
I think you are missing the larger point, which is that spouse needs to manage a large amount of money whether it goes directly to her or to a trust.
My own life insurance policy will go into a trust, which I think is defitinely something to consider to protect your widow should she get remarried and your children if you have any. You would want to discuss with a dedicated estate attorney. Our comprehensive estate plan including revocable trusts was pretty inexpensive (less than 2K).
I have given my wife and the backup trustee the name and contact information for one of the regularly posting Boglehead financial advisors, so that they can have his firm manage the insurance money in case of my/our demise. I think 25 basis points/year for AUM is pretty reasonable (and probably far less expensive than the alternatives).
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am
Joined: 30 Sep 2007 Posts: 801 Location: Illinois
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relentless
Joined: 14 Mar 2011 Posts: 228
Posted: Sun Sep 25, 2011 9:32 pm?? ?Post subject:
am wrote:
Is there a way from some scum bag wasting the money meant for her and the kids?
A couple nightmare scenarios that I considered:
1) widow gets remarried and then passes away. New husband now gets everything and either spends it all or leaves all the money to his own kids, disinheriting yours.
2) Widow gets remarried and doesn’t sign prenup. They get divorced and he takes part of her inheritance (probably state dependant).
3) widow gets remarried, he spends all the money then they get divorced leaving her with nothing.
Yes, there are ways to mitigate. You probably want a trust. Talk with a good estate attorney (I am not an attorney).
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fishndoc
Joined: 11 Apr 2007 Posts: 2113 Location: Kennesaw, GA
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Watty
Joined: 10 Oct 2007 Posts: 1077
Posted: Sun Sep 25, 2011 10:22 pm?? ?Post subject:
Quote:
A couple nightmare scenarios that I considered:
1) widow gets remarried and then passes away. New husband now gets everything and either spends it all or leaves all the money to his own kids, disinheriting yours.
I have seen this one happen with what was apparentely a faily large estate, the wierd thing was that he actually had more money than she did but he was just greedy.
With that amount of money you really need to work with an estate planning lawyer to set up a trust, even if she is able to handle the money now using your instruction when she is 80 she may not beable to manage it.
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Posted: Sun Sep 25, 2011 10:59 am?? ?Post subject: 
