[USER]

Looking for advice from like minded people. I am listed as POD or co owner on a relative’s accounts. They are elderly and not comfortable with any level of risk, so most of it is in CD’s at local banks. A good bit of it is at one bank and greatly exceeds the FDIC protection amount. What’s not in CD’s is in annuities or general savings accounts. The total amount is in the neighborhood of 1 million.

1- We have a few of the CD’s maturing soon and they are willing to entertain the idea of rolling them over to a high yeild savings to get a better rate. What banks have a good rate and good customer service? I’ve heard of banks locking people out and such. Something like that would cause a great deal of anxiety for them, so I want to be careful about who we use. (Theyre almost 100 years old and lived thru the Great Depression and that’s not something you forget)

2- Also. what can I do to offset tax penalties upon my relative’s death? I have a great relationship with them and hope they live forever, but I want to be responsible with this incredible and life changing gift.

If it matters, I am married with 3 children in the house. One is disabled. Out debt is $125,000 on our house and about $10,000 on student loans. No auto, credit card or other debt. Our net worth on our own is around 600,000. We are mid 40’s.

Thanks for your advice!

[Cullin]

Advise #1. This should be in a revocable living trust with you as the trustee and the account owner as the beneficiary with instructions in the trust on who subsequent beneficiaries are upon the death of the primary beneficiary etc. etc.. we have done that with my parents assets with two trustees and my Mom as the sole surviving beneficiary–it passes seamlessly to succeeding beneficiaries when my mother is no longer with us.

[Christopher]

Consider the $18,000 annual gift that is tax exempt. Perhaps all 5 members of your family could receive this in 2024. Then do it again in early 2025.

[Sandy]

You might want to consider a custodian like Fidelity or Schwab. You can buy CD’s or invest in Treasuries or a Money Market account. If you want to buy CD’s, you can have FDIC protection on the entire amount by using different banks all available on the Fidelity platform.

If they live in a state that assesses an income tax, Treasuries may make more sense. If they have Traditional IRA’s and are in a low tax bracket, you may want to have them do Roth conversions or take additional withdrawals.

There may also be tax planning opportunities on the annuity. Try talking to the broker to explore, but it is likely worth the expense to engage a CFP on an hourly basis to take a look at everything and make some recommendations.

There shouldn’t be any penalties upon their death- make sure all accounts and as many assets as possible have a beneficiary or POD designation.

Have you seen: What’s the best high yield savings?

[Shawn]

I would probably get a brokerage account and buy treasuries and money market funds. I have some relatives with similar money patterns.

I understand the urge to nudge but you also have to be careful doing something they understand and are comfortable with. The problem with high yield savings accounts is that they change over time. You also still risk exceeding the FDIC limit.

If you do go with a bank account there are a few that partner with multiple banks to offer FDIC coverage to a million or more.

[Rio]

Marcus Goldman Sachs and my local credit union are offering some of the best rates right now. Setting up a trust with you as one of the trustees with them is the safest.

[Author]

Posts