What to do regarding my 97 year old father’s portfolio
I am the Power Of Attorney and son for a 97 year old father. I want to make sure I manage his finances and investments correctly and plan for his long term care for the remaining years he is with us. He is heavily invested in municipal bonds and I would estimate his net worth is between 3 and 4 million dollars. He wants me to reinvest and buy more bonds. I think that’s a mistake and do not want to tie up money that is needed to pay for living in an assisted living facility as well as having a 24/7 personal caretaker which amounts to approximately $26K per month. Any advice?
Terry Says
That’s a real job — and congrats to your Dad on being so alert at this age. But you are correct! The money from maturing bonds should be placed in a MM fund, and used for his care.
But, you have a bigger and more important job. I’m hoping you have a complete inventory of all his holdings.
In fact, since he is so old, I’m betting that some of those bonds are the old paper “bearer” bonds. You need to know where EVERYTHING is!
I’m glad you have power of attorney. But has he updated his estate plan in recent years? There is no way to transfer all those assets into a revocable living trust at this stage, so every single asset he owns will go through probate under his will! That means you will be working hard for months, maybe years to sell or transfer those assets in his name after his death.
AND, please consult with an estate planning attorney, but under current law you won’t want to sell those assets now to make your job easier — because under current law those bonds get a “step-up” basis at the date of his death. That is, (unless Congress acts to change this provision, which it is discussing), the new “cost basis” of these assets will be their value at the date of his death. Any future sales, would pay capital gains taxes only on increases from the date of death value!
So since muni bond prices are no longer reported in newspapers, you’ll want to make a list of their trading symbols. You can get that information at the FINRA website (use this hyperlink) where you can also get historic prices. There are several commercial services that will do this for you if you google “Price Muni Bonds” —
Better to be prepared in advance with a list of holdings and their prices — and then write down the prices as of the date of his eventual death.
And YES, do keep a joint money market fund to collect any maturing bond cash and interest checks.