Elderly Mom’s investment strategy
Hi Terry,
I love listening to you on WGN!
I handle my 94-year-old mother’s finances. She is in an assisted living facility and has declining health. She has approximately 50% of her assets in low-risk Vanguard mutual funds that she has owned for many years, 40% in CDs that are all maturing within the next 6 months, and 10% in cash reserves that, along with her minimal Social Security, will pay her bills for the upcoming 12 to 18 months.
My conundrum is what to do with the money in the CDs as they come to maturity. It pains me to buy CDs at the current dismal interest rates!
Thank you in advance for any advice you might give me!
Terry Says
It may pain you, but reinvesting in staggered maturities of CDs of less than 1 year duration is exactly what you should do.
AND, you should do much more!
1. You should make sure that she has an “estate plan” — preferably a Revocable Living Trust, but a current will at a minimum.
2. You should make sure those CDs are properly “titled” — either in the name of the RLT, or in joint name with you, or her other children, so that if she cannot act on her own behalf to withdraw money for her care, you can do it for her.
3. You should have her Power of Attorney for all things financial — or be named successor trustee of her RLT.
4. You should have her sign a healthcare power of attorney — and give copies to her physician, and the assisted living facility.
5. She should sign a living will — giving her wishes about extended end-of-life care.
All of these papers should be facilitated by an estate planning attorney –and properly notarized and witnessed, especially because of her age and declining health.
When it’s all over =- and if there’s any money left — you and your siblings, or her other heirs — can decide how much risk you want to take with investments. But right now it is your DUTY to be conservative and keep her assets liquid to pay for her care.
PS Interest rates are starting to rise anyway!!
