| Re: I Feel Old [message #308457 is a reply to message #308442] |
Wed, 13 January 2016 21:46   |
jack
Messages: 83
Registered: February 2012
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"Lawrence Statton" <lawrence@senguio.mx> wrote in message
news:87pox5nf62.fsf@redbull.i-did-not-set--mail-host-address--so-tickle-me...
> Stephen Sprunk <stephen@sprunk.org> writes:
>>
>>> There are, in most places, also clear limits to how much of the fund
>>> payment that can go to buy the company shares; with limits on the
>>> order of 15% or so.
>>
>> Even that is questionable to me; if your employer goes bankrupt, it's
>> bad enough that you lose your income, but also 15% of your pension?
>>
>
> This is a case where a neutral fund manager would be to your
> advantage -- if you work for ReallyStableCorp (I would like to think of
> an example from today, but I can't)
The most obvious example is Microsoft.
Not Apple tho, it came within an ace of going bankrupt.
> having 15% in your own company might
> actually be a perfectly reasonable risk.
Yes, it clearly would have been with Microsoft.
And plenty who worked for Microsoft ended up millionaires and
I doubt to many of those care much about their pension scheme.
> Imagine an extreme case thought experiment -- the fund manager has no
> idea who the employers of the participants actually is -- they are
> nothing more than account numbers.
>
> If investing in the company that happened to employ you were a good
> risk, for John Smith who works at OtherCorp, it should be a good risk
> for you, too.
The difference is that they wouldn't normally stay
invested in that company for the whole of your
time employed there or as a pensioner there,
particularly if that operation started to look
like it was nothing like it once was like with
DEC or IBM etc.
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| Re: I Feel Old [message #308463 is a reply to message #308442] |
Wed, 13 January 2016 23:17 |
Morten Reistad
Messages: 2108
Registered: December 2011
Karma: 0
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In article <87pox5nf62.fsf@redbull.i-did-not-set--mail-host-address--so-tickle-me>,
Lawrence Statton <lawrence@senguio.mx> wrote:
> Stephen Sprunk <stephen@sprunk.org> writes:
>>
>>> There are, in most places, also clear limits to how much of the fund
>>> payment that can go to buy the company shares; with limits on the
>>> order of 15% or so.
>>
>> Even that is questionable to me; if your employer goes bankrupt, it's
>> bad enough that you lose your income, but also 15% of your pension?
>>
>
> This is a case where a neutral fund manager would be to your
> advantage -- if you work for ReallyStableCorp (I would like to think of
> an example from today, but I can't) having 15% in your own company might
> actually be a perfectly reasonable risk.
> Imagine an extreme case thought experiment -- the fund manager has no
> idea who the employers of the participants actually is -- they are
> nothing more than account numbers.
This is precisely what happens. The 15% applies to any company. (it
varies a bit, some have 10%, some 12% etc; but the general EU rules are
15% max investment in any one company; shares and bonds alike.).
> If investing in the company that happened to employ you were a good
> risk, for John Smith who works at OtherCorp, it should be a good risk
> for you, too.
-- mrr
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| Re: I Feel Old [message #308520 is a reply to message #308449] |
Thu, 14 January 2016 15:09 |
Stephen Sprunk
Messages: 2166
Registered: March 2013
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On 13-Jan-16 20:22, Stephen Sprunk wrote:
> One exception would be during a transition from employer pensions to
> trust pensions, since the most logical way to do that would be for the
> employer to fund the trust with newly-issued equities representing its
> existing obligations. However, I would expect the trusts to then swap
> equities around so that they were all properly diversified.
Oops; that should have been "securities", not "equities".
I'd think bonds would generally be more appropriate, but there may be
cases where stocks could be acceptable, e.g. when issuing enough bonds
would itself put the employer at risk of bankruptcy.
Note that moving to trust pensions also puts those assets out of the
reach of corporate raiders (or corrupt execs), which radically reduces
the odds of the employer going bankrupt in the first place!
S
--
Stephen Sprunk "God does not play dice." --Albert Einstein
CCIE #3723 "God is an inveterate gambler, and He throws the
K5SSS dice at every possible opportunity." --Stephen Hawking
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| Re: I Feel Old [message #308558 is a reply to message #308520] |
Fri, 15 January 2016 09:51 |
jmfbahciv
Messages: 6173
Registered: March 2012
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Stephen Sprunk wrote:
> On 13-Jan-16 20:22, Stephen Sprunk wrote:
>> One exception would be during a transition from employer pensions to
>> trust pensions, since the most logical way to do that would be for the
>> employer to fund the trust with newly-issued equities representing its
>> existing obligations. However, I would expect the trusts to then swap
>> equities around so that they were all properly diversified.
>
> Oops; that should have been "securities", not "equities".
>
> I'd think bonds would generally be more appropriate, but there may be
> cases where stocks could be acceptable, e.g. when issuing enough bonds
> would itself put the employer at risk of bankruptcy.
>
> Note that moving to trust pensions also puts those assets out of the
> reach of corporate raiders (or corrupt execs), which radically reduces
> the odds of the employer going bankrupt in the first place!
And then the companies in charge of those trusts go bankrupt.
/BAH
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| Re: I Feel Old [message #308565 is a reply to message #308558] |
Fri, 15 January 2016 10:48 |
Stephen Sprunk
Messages: 2166
Registered: March 2013
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On 15-Jan-16 08:51, jmfbahciv wrote:
> Stephen Sprunk wrote:
>> Note that moving to trust pensions also puts those assets out of
>> the reach of corporate raiders (or corrupt execs), which radically
>> reduces the odds of the employer going bankrupt in the first
>> place!
>
> And then the companies in charge of those trusts go bankrupt.
So what? A new trustee gets appointed, and everything is fine.
S
--
Stephen Sprunk "God does not play dice." --Albert Einstein
CCIE #3723 "God is an inveterate gambler, and He throws the
K5SSS dice at every possible opportunity." --Stephen Hawking
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| Re: I Feel Old [message #308567 is a reply to message #308565] |
Fri, 15 January 2016 11:26 |
Morten Reistad
Messages: 2108
Registered: December 2011
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In article <n7b46p$k89$1@dont-email.me>,
Stephen Sprunk <stephen@sprunk.org> wrote:
> On 15-Jan-16 08:51, jmfbahciv wrote:
>> Stephen Sprunk wrote:
>>> Note that moving to trust pensions also puts those assets out of
>>> the reach of corporate raiders (or corrupt execs), which radically
>>> reduces the odds of the employer going bankrupt in the first
>>> place!
>>
>> And then the companies in charge of those trusts go bankrupt.
>
> So what? A new trustee gets appointed, and everything is fine.
What you Leftopondians need to understand is that there is absolutly
no reason to accept that your employer or any other limited company
is in ownership of your pensions. None. Whatsoever.
There are lots of different, sane structures to have pensions in.
Like trusts, these 401k's you have as a special semi-corporation,
coops, unions[*], etc. etc.
There is no reason why you should go for complicated management of
these pensions. There are no complicated management that has proven
it's muster. The only rules that work are very simple ones where
you shift instruments according to the business cycle.
Otherwise just stay invested in some index fund that takes around 1/100th
of a percent margin every year, be it stocks or bonds.
If the caretaker of all your pensions goes bust the worst that should
happen is a hundred dollars in setup fee for a new one.
-- mrr
[*] Please remember that lots of organisations outside the US has
incorporated as unions. You need 8 people here to make one. You get
barganing power, to the extent that that is useful, but you also get
lots of legal protection and tax free investments. (They are taxed as
they are paid back out). They can supply you with extra education
grants, unemployment and sick grants, not tax free but at sensible
tax rates. All legally isolated from your employer and yourself.
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| Re: I Feel Old [message #308575 is a reply to message #308558] |
Fri, 15 January 2016 12:20 |
Anne & Lynn Wheel
Messages: 3156
Registered: January 2012
Karma: 0
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Senior Member |
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jmfbahciv <See.above@aol.com> writes:
> And then the companies in charge of those trusts go bankrupt.
recent saga is ENRON. preventing regulation of CDS were originally
billed as gift to ENRON. #2 on time's list of those responsible
for economic mess:
http://content.time.com/time/specials/packages/article/0,288 04,1877351_1877350_1877330,00.html
when head of CFTC proposed regulating CDS, quickly replaced by the
senator's wife (who blocked regulating CDS), while the senator gets
legislation preventing CDS regulation ... after which the wife resigns
and joins ENRON board and the audit committee.
http://www.garlic.com/~lynn/submisc.html#enron
Congress then bills Sarbanes-Oxley as preventing future ENRONs and
guaranteeing executives (& auditors) would do jail time ... but
it required SEC to do something
http://www.garlic.com/~lynn/submisc.html#sarbanes-oxley
possibly because even GAO didn't believe SEC was doing anything, it
started doing reports of public company fraudulent financial filings,
even show they increased after SOX goes into effect (and nobody doing
jailtime).
http://www.garlic.com/~lynn/submisc.html#financial.reporting .fraud
then CDS grambling bets play a role in the economic mess ... initially
paying for triple-A rating eliminated any reason to care about
loan/mortgage quality. The triple-A rating also opens the market for
toxic CDOs to large funds restricted to "safe" investments (like large
retirement funds, claims that it resulting in 30% fall in the funds and
shortfall of trillions for pension payouts) contributing to being able
to do over $27T 2001-2008.
http://www.garlic.com/~lynn/submisc.html#toxic.cdo
Then they realize that they can securitize mortgages designed to fail,
pay for triple-A rating, sell to their victims and then take out CDS
gambling bets that they would fail (creating enormous demand for bad
mortgages). Yesterday had latest announcement of billions in "deferred
prosecution" fines for activities during the economic mess (trivial
amounts compared to the tens of trillions that were involved).
https://en.wikipedia.org/wiki/Deferred_prosecution
These fines have being turned over to organizations created to help
victims of the mortgage practices ... but huge amounts appear to be
siphon off with little actually reaching the victims.
and on-going saga of calpers
Why is CalPERS Understating Its Cost of Investing in Private Equity by
Roughly $1.6 Billion, Meaning 80%?
http://www.nakedcapitalism.com/2016/01/why-is-calpers-unders tating-its-cost-of-investing-in-private-by-roughly-1-6-billi on-meaning-80.html
after they got such a bad reputation during the S&L crisis, the industry
changed its name to "private equity" (and junk bonds became "high-yield
bonds") ... past posts
http://www.garlic.com/~lynn/submisc.html#private.equity
it is like the joke why do crooks rob banks ... because that is where
the money is ... similarly the large pension funds have large amounts of
money and have been attractive target for all sorts looking at
skimming&looting money (armed bank robbing is typically measured in
thousands, wallstreet looting is measured in hundreds of billions and
tens of trillions).
--
virtualization experience starting Jan1968, online at home since Mar1970
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| Re: I Feel Old [message #308577 is a reply to message #308558] |
Fri, 15 January 2016 12:44 |
Andrew Swallow
Messages: 1705
Registered: January 2012
Karma: 0
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Senior Member |
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On 15/01/2016 14:51, jmfbahciv wrote:
> Stephen Sprunk wrote:
>> On 13-Jan-16 20:22, Stephen Sprunk wrote:
>>> One exception would be during a transition from employer pensions to
>>> trust pensions, since the most logical way to do that would be for the
>>> employer to fund the trust with newly-issued equities representing its
>>> existing obligations. However, I would expect the trusts to then swap
>>> equities around so that they were all properly diversified.
>>
>> Oops; that should have been "securities", not "equities".
>>
>> I'd think bonds would generally be more appropriate, but there may be
>> cases where stocks could be acceptable, e.g. when issuing enough bonds
>> would itself put the employer at risk of bankruptcy.
>>
>> Note that moving to trust pensions also puts those assets out of the
>> reach of corporate raiders (or corrupt execs), which radically reduces
>> the odds of the employer going bankrupt in the first place!
>
> And then the companies in charge of those trusts go bankrupt.
>
> /BAH
>
Preventing the trust managers from spending the money on themselves is
important.
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| Re: I Feel Old [message #308587 is a reply to message #308577] |
Fri, 15 January 2016 13:57 |
Stephen Sprunk
Messages: 2166
Registered: March 2013
Karma: 0
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On 15-Jan-16 11:44, Andrew Swallow wrote:
> On 15/01/2016 14:51, jmfbahciv wrote:
>> Stephen Sprunk wrote:
>>> Note that moving to trust pensions also puts those assets out of
>>> the reach of corporate raiders (or corrupt execs), which
>>> radically reduces the odds of the employer going bankrupt in the
>>> first place!
>>
>> And then the companies in charge of those trusts go bankrupt.
>
> Preventing the trust managers from spending the money on themselves
> is important.
There are hundreds of years of common law and experience around keeping
trustees honest; provided the trust is constructed competently, that is
simply not an issue in practice.
S
--
Stephen Sprunk "God does not play dice." --Albert Einstein
CCIE #3723 "God is an inveterate gambler, and He throws the
K5SSS dice at every possible opportunity." --Stephen Hawking
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| Re: I Feel Old [message #308589 is a reply to message #308577] |
Fri, 15 January 2016 13:15 |
Morten Reistad
Messages: 2108
Registered: December 2011
Karma: 0
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In article <6tWdnbjxzYFrsgTLnZ2dnUU78UudnZ2d@giganews.com>,
Andrew Swallow <am.swallow@btinternet.com> wrote:
> On 15/01/2016 14:51, jmfbahciv wrote:
>> Stephen Sprunk wrote:
>>> On 13-Jan-16 20:22, Stephen Sprunk wrote:
>>>> One exception would be during a transition from employer pensions to
>>>> trust pensions, since the most logical way to do that would be for the
>>>> employer to fund the trust with newly-issued equities representing its
>>>> existing obligations. However, I would expect the trusts to then swap
>>>> equities around so that they were all properly diversified.
>>>
>>> Oops; that should have been "securities", not "equities".
>>>
>>> I'd think bonds would generally be more appropriate, but there may be
>>> cases where stocks could be acceptable, e.g. when issuing enough bonds
>>> would itself put the employer at risk of bankruptcy.
>>>
>>> Note that moving to trust pensions also puts those assets out of the
>>> reach of corporate raiders (or corrupt execs), which radically reduces
>>> the odds of the employer going bankrupt in the first place!
>>
>> And then the companies in charge of those trusts go bankrupt.
>>
>> /BAH
>>
>
> Preventing the trust managers from spending the money on themselves is
> important.
Don't ever give them spending access to the trust.
Billing, yes. Direct spending; no.
-- mrr
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| Re: I Feel Old [message #308595 is a reply to message #308567] |
Fri, 15 January 2016 14:19 |
Stephen Sprunk
Messages: 2166
Registered: March 2013
Karma: 0
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Senior Member |
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On 15-Jan-16 10:26, Morten Reistad wrote:
> In article <n7b46p$k89$1@dont-email.me>, Stephen Sprunk
> <stephen@sprunk.org> wrote:
>> On 15-Jan-16 08:51, jmfbahciv wrote:
>>> Stephen Sprunk wrote:
>>>> Note that moving to trust pensions also puts those assets out
>>>> of the reach of corporate raiders (or corrupt execs), which
>>>> radically reduces the odds of the employer going bankrupt in
>>>> the first place!
>>>
>>> And then the companies in charge of those trusts go bankrupt.
>>
>> So what? A new trustee gets appointed, and everything is fine.
>
> What you Leftopondians need to understand is that there is absolutly
> no reason to accept that your employer or any other limited company
> is in ownership of your pensions. None. Whatsoever.
I totally agree; that's the sort of thing trusts were _created_ for.
> There are lots of different, sane structures to have pensions in.
> Like trusts, these 401k's you have as a special semi-corporation,
> coops, unions[*], etc. etc.
401(k) and similar plans are trusts; the only corporation involved is
the "plan administrator", which is a fancy word for trustee.
I see no reason to _not_ use a trust for any such plan, even if such
plan were organized by a coop or union.
> There is no reason why you should go for complicated management of
> these pensions. There are no complicated management that has proven
> it's muster. The only rules that work are very simple ones where you
> shift instruments according to the business cycle.
Agreed, which is why the overhead of 401(k) and similar plans themselves
are essentially zero; there are costs to having a web site, keeping
track of the accounts for each beneficiary, receiving and issuing
checks, etc., but they're negligible as long as you have scale.
The trust itself invests in various mutual funds, which have their own
costs, but anyone who chooses anything other than indexes is an idiot,
and in that case fund overhead is negligible as well.
> Otherwise just stay invested in some index fund that takes around
> 1/100th of a percent margin every year, be it stocks or bonds.
Agreed.
> If the caretaker of all your pensions goes bust the worst that
> should happen is a hundred dollars in setup fee for a new one.
Trustees are replaced all the time; it's not a problem. Again, that is
part of the _point_ of using a trust.
> [*] Please remember that lots of organisations outside the US has
> incorporated as unions. You need 8 people here to make one. You get
> barganing power, to the extent that that is useful, but you also get
> lots of legal protection and tax free investments. (They are taxed
> as they are paid back out). They can supply you with extra education
> grants, unemployment and sick grants, not tax free but at sensible
> tax rates. All legally isolated from your employer and yourself.
Our unions (i.e. organized crime) aren't the same as your unions (i.e.
workers' guilds); I'd still want a trust even if funded via members'
dues. The union itself wouldn't need to be the trustee; there is an
entire trust management industry that would do a better job at lower
cost--and with much lower risk of corruption.
Given the low rate of unionization (11.1% of US workers), it seems far
more urgent to find a similar structure for non-union workers. OTOH,
such plans might help unions gain millions of new members.
S
--
Stephen Sprunk "God does not play dice." --Albert Einstein
CCIE #3723 "God is an inveterate gambler, and He throws the
K5SSS dice at every possible opportunity." --Stephen Hawking
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| Re: I Feel Old [message #308596 is a reply to message #308577] |
Fri, 15 January 2016 14:29 |
Ahem A Rivet's Shot
Messages: 4843
Registered: January 2012
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On Fri, 15 Jan 2016 17:44:48 +0000
Andrew Swallow <am.swallow@btinternet.com> wrote:
> Preventing the trust managers from spending the money on themselves is
> important.
That I believe is the 'trust' part of the whole thing, if you're
not going to manage it personally then you have to trust someone to do it.
Trusts have been around for a long time, abuses are rare enough to make
news.
--
Steve O'Hara-Smith | Directable Mirror Arrays
C:>WIN | A better way to focus the sun
The computer obeys and wins. | licences available see
You lose and Bill collects. | http://www.sohara.org/
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| Re: I Feel Old [message #308597 is a reply to message #308589] |
Fri, 15 January 2016 14:44 |
Stephen Sprunk
Messages: 2166
Registered: March 2013
Karma: 0
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On 15-Jan-16 12:15, Morten Reistad wrote:
> Andrew Swallow <am.swallow@btinternet.com> wrote:
>> Preventing the trust managers from spending the money on themselves
>> is important.
>
> Don't ever give them spending access to the trust.
>
> Billing, yes. Direct spending; no.
The trustee must have access to the trust's funds in order to do his
job; that's why they're usually required to itemize everything they do,
which for any non-trivial trust will be audited by a third party.
Fees paid to the trustee get itemized separately; for ones like this,
that's typically a flat 1-2% of net asset value per year specified in
the trust's construction. Beware any trust that allows the trustee to
increase his own compensation via "transaction fees", "expenses", etc.
S
--
Stephen Sprunk "God does not play dice." --Albert Einstein
CCIE #3723 "God is an inveterate gambler, and He throws the
K5SSS dice at every possible opportunity." --Stephen Hawking
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| Re: I Feel Old [message #308606 is a reply to message #308597] |
Fri, 15 January 2016 16:02 |
osmium
Messages: 749
Registered: April 2013
Karma: 0
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Senior Member |
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"Stephen Sprunk" wrote:
> The trustee must have access to the trust's funds in order to do his
> job; that's why they're usually required to itemize everything they do,
> which for any non-trivial trust will be audited by a third party.
>
> Fees paid to the trustee get itemized separately; for ones like this,
> that's typically a flat 1-2% of net asset value per year specified in
> the trust's construction. Beware any trust that allows the trustee to
> increase his own compensation via "transaction fees", "expenses", etc.
This seems to me like a pretty rarefied discussion. I have a vague idea of
setting up a trust for someone else, an heir for example, who is young,
incompetent or has bad judgment. Are there other reasons for having a trust?
I have a sinking feeling that if I won a certain kind of some huge legal
suit, a trust would be created for me to give everyone involved (except me)
a warm, happy glow.
I note that the 1% charge per year is 20 times the cost of the Vanguard
Amazon 500 Index fund. And I assume the trustee pays someone else to do the
actual work so he just pre-skims the base before doing anything especially
useful for most ordinary people.
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| Re: I Feel Old [message #308607 is a reply to message #308606] |
Fri, 15 January 2016 16:58 |
jack
Messages: 83
Registered: February 2012
Karma: 0
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Member |
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"Osmium" <r124c4u102@comcast.net> wrote in message
news:dft52fFj4pmU1@mid.individual.net...
> "Stephen Sprunk" wrote:
>
>> The trustee must have access to the trust's funds in order to do his
>> job; that's why they're usually required to itemize everything they do,
>> which for any non-trivial trust will be audited by a third party.
>>
>> Fees paid to the trustee get itemized separately; for ones like this,
>> that's typically a flat 1-2% of net asset value per year specified in
>> the trust's construction. Beware any trust that allows the trustee to
>> increase his own compensation via "transaction fees", "expenses", etc.
>
>
> This seems to me like a pretty rarefied discussion. I have a vague idea of
> setting up a trust for someone else, an heir for example, who is young,
> incompetent or has bad judgment. Are there other reasons for having a
> trust?
Yes, tax, here.
> I have a sinking feeling that if I won a certain kind of some huge legal
> suit, a trust would be created for me to give everyone involved (except
> me) a warm, happy glow.
> I note that the 1% charge per year is 20 times the cost of the Vanguard
> Amazon 500 Index fund. And I assume the trustee pays someone else to do
> the actual work so he just pre-skims the base before doing anything
> especially useful for most ordinary people.
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| Re: I Feel Old [message #308611 is a reply to message #308596] |
Fri, 15 January 2016 17:25 |
Anne & Lynn Wheel
Messages: 3156
Registered: January 2012
Karma: 0
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Senior Member |
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Ahem A Rivet's Shot <steveo@eircom.net> writes:
> That I believe is the 'trust' part of the whole thing, if you're
> not going to manage it personally then you have to trust someone to do it.
> Trusts have been around for a long time, abuses are rare enough to make
> news.
wallstreet is somewhat conflicted ... large pension funds make very
profitable targets ... like the multi-billion dollar triple-A rated
toxic CDOs .. really big scores with either ignorant managers or those
that could be bribed
http://www.garlic.com/~lynn/submisc.html#toxic.cdo
..... but the move to 401Ks was also pushed because individuals could be
taken advantage of (401Ks sold as under your own control ... but
extremely rare that individual beats professional manager) ... including
not being able to negotiate better management fees .... move from large
pension to individual 401Ks ... significantly increased fees per dollar
managed .... possibly different factions on wallstreet looting
retirement funds in different ways.
--
virtualization experience starting Jan1968, online at home since Mar1970
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| Re: I Feel Old [message #308620 is a reply to message #308606] |
Fri, 15 January 2016 17:51 |
Morten Reistad
Messages: 2108
Registered: December 2011
Karma: 0
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Senior Member |
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In article <dft52fFj4pmU1@mid.individual.net>,
Osmium <r124c4u102@comcast.net> wrote:
> "Stephen Sprunk" wrote:
>
>> The trustee must have access to the trust's funds in order to do his
>> job; that's why they're usually required to itemize everything they do,
>> which for any non-trivial trust will be audited by a third party.
>>
>> Fees paid to the trustee get itemized separately; for ones like this,
>> that's typically a flat 1-2% of net asset value per year specified in
>> the trust's construction. Beware any trust that allows the trustee to
>> increase his own compensation via "transaction fees", "expenses", etc.
>
>
> This seems to me like a pretty rarefied discussion. I have a vague idea of
> setting up a trust for someone else, an heir for example, who is young,
> incompetent or has bad judgment. Are there other reasons for having a trust?
> I have a sinking feeling that if I won a certain kind of some huge legal
> suit, a trust would be created for me to give everyone involved (except me)
> a warm, happy glow.
The trust is a separate legal person. This means it tax-wise acts as
if it were a corporation. It may be liable for some taxes, or not, depending
on jurisdiction. But the bulk of the taxes are usually paid when you withdraw
from the trust.
The trust can have you as a beneficiatly alone. This could give you
a lifetime monthly income; e.g. This would be safe even from your own
bankrupcy (but they could collect from the payments).
> I note that the 1% charge per year is 20 times the cost of the Vanguard
> Amazon 500 Index fund. And I assume the trustee pays someone else to do the
> actual work so he just pre-skims the base before doing anything especially
> useful for most ordinary people.
This is what we call "managed fortunes". "This year you have the money, we have
the experience. Next year we have the money, you have the experience.".
There is not reason whatsoever to pay more than a few ticks a year for any
~1M$ management. That is a handful of 10000ths. Which is what it would cost
to handle insurance, payments etc. No more. A percentage is exorbitant.
30 to 50 times less is more like it.
-- mrr
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| Re: I Feel Old [message #308622 is a reply to message #308606] |
Fri, 15 January 2016 18:11 |
Stephen Sprunk
Messages: 2166
Registered: March 2013
Karma: 0
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Senior Member |
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On 15-Jan-16 15:02, Osmium wrote:
> "Stephen Sprunk" wrote:
>> The trustee must have access to the trust's funds in order to do
>> his job; that's why they're usually required to itemize everything
>> they do, which for any non-trivial trust will be audited by a third
>> party.
>>
>> Fees paid to the trustee get itemized separately; for ones like
>> this, that's typically a flat 1-2% of net asset value per year
>> specified in the trust's construction. Beware any trust that
>> allows the trustee to increase his own compensation via
>> "transaction fees", "expenses", etc.
>
> This seems to me like a pretty rarefied discussion. I have a vague
> idea of setting up a trust for someone else, an heir for example, who
> is young, incompetent or has bad judgment. Are there other reasons
> for having a trust?
There are lots of different reasons, and a trust would be constructed
differently depending on what the goal was. However, they all share a
fundamental design: the trust owns assets that the trustee controls for
the benefit of a third party (aka the beneficiary).
> I have a sinking feeling that if I won a certain kind of some huge
> legal suit, a trust would be created for me to give everyone
> involved (except me) a warm, happy glow.
That's doubtful; the loser generally doesn't care what happens after
they pay out. The main exception is class action suits: the loser pays
the trust, and then the trust pays the class members--and the lawyer.
OTOH, a trust is a good way to avoid someone suing _you_; if they win,
you'd just declare bankruptcy (since _you_ have no attachable assets)
and they'd get nothing. Your trust (and anything it owns) would be
unaffected because it wasn't a party to the suit or the bankruptcy.
Living trusts also avoid probate--and inheritance taxes--since they're
not part of your estate.
> I note that the 1% charge per year is 20 times the cost of the
> Vanguard Amazon 500 Index fund.
That's not comparable; they're completely different things.
> And I assume the trustee pays someone else to do the actual work so
> he just pre-skims the base before doing anything especially useful
> for most ordinary people.
The trustee _should be_ the person doing the actual work; if not, you
picked the wrong one.
Note that in the case of living trusts (very common), the trustee and
the beneficiary often start out as the same person. When that person
dies, the trust dictates who succeeds him in both roles--and those are
often different people, e.g. when the beneficiary is a minor.
S
--
Stephen Sprunk "God does not play dice." --Albert Einstein
CCIE #3723 "God is an inveterate gambler, and He throws the
K5SSS dice at every possible opportunity." --Stephen Hawking
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| Re: I Feel Old [message #308623 is a reply to message #307560] |
Fri, 15 January 2016 18:43 |
Charles Richmond
Messages: 2754
Registered: December 2011
Karma: 0
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Senior Member |
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"J. Clarke" <j.clarke.873638@gmail.com> wrote in message
news:MPG.30f63d6669c43f49989da1@news.eternal-september.org...
> In article <397341809.473730964.998635.peter_flass-
> yahoo.com@news.eternal-september.org>, peter_flass@yahoo.com says...
>>
>> [snip...] [snip...]
>> [snip...]
>>
>>> Your average user has more computer power on his desk (heck, even
>>> in his phone these days) than the combined power of all the computers
>>> used to put a man on the moon. But nobody's going to the moon anymore.
>>> What happened?
>>>
>>
>> Obama ;-)
>
> The last time anybody went to the Moon was 1972, when Obama was a small
> boy who had just come back from Indonesia. It is rather difficult to
> find a way to plausibly blame him for the lack of a manned lunar
> program.
>
<funny story>
Question: How many Republicans does it take to change a light bulb???
Answer: Republicans do *not* change light bulbs. They would rather sit in
the dark and blame Obama.
</funny story>
--
numerist at aquaporin4 dot com
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| Re: I Feel Old [message #308624 is a reply to message #307628] |
Fri, 15 January 2016 18:45 |
Charles Richmond
Messages: 2754
Registered: December 2011
Karma: 0
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Senior Member |
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"Ahem A Rivet's Shot" <steveo@eircom.net> wrote in message
news:20160106143233.dc9238ee03168ed3a438eb50@eircom.net...
> On Wed, 6 Jan 2016 05:49:28 -0800 (PST)
> Quadibloc <jsavard@ecn.ab.ca> wrote:
>
>> On Wednesday, January 6, 2016 at 6:30:02 AM UTC-7, Ahem A Rivet's Shot
>> wrote:
>>
>>> Oh ye gods, I thought letting Skylab drop was criminally
>>> insane. Now they plan to repeat themselves. I do hope they at least
>>> take a little more care about arranging where it lands this time.
>>
>> Well, it seems preferable to making a gift of it to Russia. Which, at the
>> moment, seems like the only other alternative.
>
> Not to me! Didn't the I stand for International ? Why not formally
> give it to the UN ?
>
Yeah! Give the Inernational Space Station to the U.N. Then when the ISS
falls, we can blame the U.N.
--
numerist at aquaporin4 dot com
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| Re: I Feel Old [message #308658 is a reply to message #308606] |
Sat, 16 January 2016 08:03 |
Peter Flass
Messages: 8375
Registered: December 2011
Karma: 0
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Senior Member |
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Osmium <r124c4u102@comcast.net> wrote:
> "Stephen Sprunk" wrote:
>
>> The trustee must have access to the trust's funds in order to do his
>> job; that's why they're usually required to itemize everything they do,
>> which for any non-trivial trust will be audited by a third party.
>>
>> Fees paid to the trustee get itemized separately; for ones like this,
>> that's typically a flat 1-2% of net asset value per year specified in
>> the trust's construction. Beware any trust that allows the trustee to
>> increase his own compensation via "transaction fees", "expenses", etc.
>
>
> This seems to me like a pretty rarefied discussion. I have a vague idea of
> setting up a trust for someone else, an heir for example, who is young,
> incompetent or has bad judgment. Are there other reasons for having a trust?
> I have a sinking feeling that if I won a certain kind of some huge legal
> suit, a trust would be created for me to give everyone involved (except me)
> a warm, happy glow.
>
> I note that the 1% charge per year is 20 times the cost of the Vanguard
> Amazon 500 Index fund. And I assume the trustee pays someone else to do the
> actual work so he just pre-skims the base before doing anything especially
> useful for most ordinary people.
>
>
We set up a trust and put our house and condo in it. If either of us needs
long-term care this will keep the government's hands off of it.
Unfortunately we just did it recently, so we have to stay healthy for a few
years. We're the trustees so no fee. The kind of legal settlement you're
talking about is, I think, a "structured settlement". I'm always seeing
ads by companies who will buy you out of these, guving you a lump sum but
taking a big hunk themselves.
--
Pete
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| Re: I Feel Old [message #308661 is a reply to message #308589] |
Sat, 16 January 2016 09:09 |
jmfbahciv
Messages: 6173
Registered: March 2012
Karma: 0
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Senior Member |
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Morten Reistad wrote:
> In article <6tWdnbjxzYFrsgTLnZ2dnUU78UudnZ2d@giganews.com>,
> Andrew Swallow <am.swallow@btinternet.com> wrote:
>> On 15/01/2016 14:51, jmfbahciv wrote:
>>> Stephen Sprunk wrote:
>>>> On 13-Jan-16 20:22, Stephen Sprunk wrote:
>>>> > One exception would be during a transition from employer pensions to
>>>> > trust pensions, since the most logical way to do that would be for the
>>>> > employer to fund the trust with newly-issued equities representing its
>>>> > existing obligations. However, I would expect the trusts to then swap
>>>> > equities around so that they were all properly diversified.
>>>>
>>>> Oops; that should have been "securities", not "equities".
>>>>
>>>> I'd think bonds would generally be more appropriate, but there may be
>>>> cases where stocks could be acceptable, e.g. when issuing enough bonds
>>>> would itself put the employer at risk of bankruptcy.
>>>>
>>>> Note that moving to trust pensions also puts those assets out of the
>>>> reach of corporate raiders (or corrupt execs), which radically reduces
>>>> the odds of the employer going bankrupt in the first place!
>>>
>>> And then the companies in charge of those trusts go bankrupt.
>>>
>>> /BAH
>>>
>>
>> Preventing the trust managers from spending the money on themselves is
>> important.
>
> Don't ever give them spending access to the trust.
>
> Billing, yes. Direct spending; no.
they "spend" it with the investments they buy. Churning is one
way to acquire money.
Pensions are also handled by insurance companies. The pension cash
of a company is transformed into insurance policies.
/BAH
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| Re: I Feel Old [message #308662 is a reply to message #308661] |
Sat, 16 January 2016 09:19 |
Morten Reistad
Messages: 2108
Registered: December 2011
Karma: 0
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Senior Member |
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In article <PM00052973D9FC698C@aca404fd.ipt.aol.com>,
jmfbahciv <See.above@aol.com> wrote:
> Morten Reistad wrote:
>> In article <6tWdnbjxzYFrsgTLnZ2dnUU78UudnZ2d@giganews.com>,
>> Andrew Swallow <am.swallow@btinternet.com> wrote:
>>> On 15/01/2016 14:51, jmfbahciv wrote:
>>>> Stephen Sprunk wrote:
>>>> > On 13-Jan-16 20:22, Stephen Sprunk wrote:
>>>> >> One exception would be during a transition from employer pensions to
>>>> >> trust pensions, since the most logical way to do that would be for the
>>>> >> employer to fund the trust with newly-issued equities representing its
>>>> >> existing obligations. However, I would expect the trusts to then swap
>>>> >> equities around so that they were all properly diversified.
>>>> >
>>>> > Oops; that should have been "securities", not "equities".
>>>> >
>>>> > I'd think bonds would generally be more appropriate, but there may be
>>>> > cases where stocks could be acceptable, e.g. when issuing enough bonds
>>>> > would itself put the employer at risk of bankruptcy.
>>>> >
>>>> > Note that moving to trust pensions also puts those assets out of the
>>>> > reach of corporate raiders (or corrupt execs), which radically reduces
>>>> > the odds of the employer going bankrupt in the first place!
>>>>
>>>> And then the companies in charge of those trusts go bankrupt.
>>>>
>>>> /BAH
>>>>
>>>
>>> Preventing the trust managers from spending the money on themselves is
>>> important.
>>
>> Don't ever give them spending access to the trust.
>>
>> Billing, yes. Direct spending; no.
>
> they "spend" it with the investments they buy. Churning is one
> way to acquire money.
No. The investments may carry commision; usually 0.7%; or they may
be done by some index fund that charge .. 0%. The commision is what
makes the brokers live. You don't have to provide that livelyhood
to them. You cannot, long term, influence what the individual shares
and bonds do; but you can influence the mix, and what this divide
between stocks and bonds is. And use the business cycles to generate
some extra profit. You dont have to pay commisions to brokers for this.
> Pensions are also handled by insurance companies. The pension cash
> of a company is transformed into insurance policies.
Same story. They feed the brokers. They do stockpicking. But they
stay put in the share-bond divide.
-- mrr
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| Re: I Feel Old [message #308663 is a reply to message #308658] |
Sat, 16 January 2016 09:29 |
osmium
Messages: 749
Registered: April 2013
Karma: 0
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Senior Member |
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"Peter Flass" wrote:
> Osmium <r124c4u102@comcast.net> wrote:
>> "Stephen Sprunk" wrote:
>>
>>> The trustee must have access to the trust's funds in order to do his
>>> job; that's why they're usually required to itemize everything they do,
>>> which for any non-trivial trust will be audited by a third party.
>>>
>>> Fees paid to the trustee get itemized separately; for ones like this,
>>> that's typically a flat 1-2% of net asset value per year specified in
>>> the trust's construction. Beware any trust that allows the trustee to
>>> increase his own compensation via "transaction fees", "expenses", etc.
>>
>>
>> This seems to me like a pretty rarefied discussion. I have a vague idea
>> of
>> setting up a trust for someone else, an heir for example, who is young,
>> incompetent or has bad judgment. Are there other reasons for having a
>> trust?
>> I have a sinking feeling that if I won a certain kind of some huge legal
>> suit, a trust would be created for me to give everyone involved (except
>> me)
>> a warm, happy glow.
>>
>> I note that the 1% charge per year is 20 times the cost of the Vanguard
>> Amazon 500 Index fund. And I assume the trustee pays someone else to do
>> the
>> actual work so he just pre-skims the base before doing anything
>> especially
>> useful for most ordinary people.
>>
>>
>
> We set up a trust and put our house and condo in it. If either of us
> needs
> long-term care this will keep the government's hands off of it.
> Unfortunately we just did it recently, so we have to stay healthy for a
> few
> years. We're the trustees so no fee. The kind of legal settlement you're
> talking about is, I think, a "structured settlement". I'm always seeing
> ads by companies who will buy you out of these, guving you a lump sum but
> taking a big hunk themselves.
Now, *that*, I can understand. *You* can be destitute, a pauper, and go on
Medicaid, meanwhile, your wife can buy you a new Rolls Royce. Not
literally, but do whatever it takes to allow you full use of the car. Like
telling you where it is and giving you the keys. Is this simply a side
effect of laws with some reasonable intent?
Digging into my memory the credit lines on some PBS shows sometimes include
a mention of trusts, as in the John and Mary Doe Trust. That sounds like
there might be some justification hidden in there somewhere. But I think
that it is more common to refer to "Foundations". Are there some big trusts
I might know of? For example, the Joe Kennedy Trust?
From the description of your example, it seems like every married couple who
has two nickels to rub together should have a trust. But they don't, what
is the dark side of setting up a trust?
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| Re: I Feel Old [message #308667 is a reply to message #308658] |
Sat, 16 January 2016 11:33 |
mausg
Messages: 2483
Registered: May 2013
Karma: 0
|
Senior Member |
|
|
On 2016-01-16, Peter Flass <peter_flass@yahoo.com> wrote:
> Osmium <r124c4u102@comcast.net> wrote:
>> "Stephen Sprunk" wrote:
>>
>>> The trustee must have access to the trust's funds in order to do his
>>> job; that's why they're usually required to itemize everything they do,
>>> which for any non-trivial trust will be audited by a third party.
>>>
>>> Fees paid to the trustee get itemized separately; for ones like this,
>>> that's typically a flat 1-2% of net asset value per year specified in
>>> the trust's construction. Beware any trust that allows the trustee to
>>> increase his own compensation via "transaction fees", "expenses", etc.
>>
>>
>> This seems to me like a pretty rarefied discussion. I have a vague idea of
>> setting up a trust for someone else, an heir for example, who is young,
>> incompetent or has bad judgment. Are there other reasons for having a trust?
>> I have a sinking feeling that if I won a certain kind of some huge legal
>> suit, a trust would be created for me to give everyone involved (except me)
>> a warm, happy glow.
>>
>> I note that the 1% charge per year is 20 times the cost of the Vanguard
>> Amazon 500 Index fund. And I assume the trustee pays someone else to do the
>> actual work so he just pre-skims the base before doing anything especially
>> useful for most ordinary people.
>>
>>
>
> We set up a trust and put our house and condo in it. If either of us needs
> long-term care this will keep the government's hands off of it.
> Unfortunately we just did it recently, so we have to stay healthy for a few
> years. We're the trustees so no fee. The kind of legal settlement you're
> talking about is, I think, a "structured settlement". I'm always seeing
> ads by companies who will buy you out of these, guving you a lump sum but
> taking a big hunk themselves.
>
I've thought of that myself, BUT:
A person on local radio last week described how her mother, at the end
of the housing boom here, availed of an offer that was common at that time,
and got 180,000 roughly from the bank/whatever to live on, the bank to take
over the house on her death. Now that lady has to move in with her married
daughter, being over 90. The bank wants to take over her house, but house
prices haven fallen, now want 300,000 from someone (Whatever the house makes
, less (interest on 180,000)). Logic is a little fuzzy here, but my meaning
should be clear. The original salesman can not be found, even besides that,
financial wheezes like that are statute barred after 7 years here.
The same deal was proposed to me, but I understood that it was sort of a bet,
the bank betting that I wwould be dead before (x) years.
It seems that it is really (heads I lose, tails you win). T'was ever so.
--
greymaus
.
.
....
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| Re: I Feel Old [message #308668 is a reply to message #308663] |
Sat, 16 January 2016 11:38 |
jack
Messages: 83
Registered: February 2012
Karma: 0
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Member |
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"Osmium" <r124c4u102@comcast.net> wrote in message
news:dfv2ejF2rl2U1@mid.individual.net...
> "Peter Flass" wrote:
>
>> Osmium <r124c4u102@comcast.net> wrote:
>>> "Stephen Sprunk" wrote:
>>>
>>>> The trustee must have access to the trust's funds in order to do his
>>>> job; that's why they're usually required to itemize everything they do,
>>>> which for any non-trivial trust will be audited by a third party.
>>>>
>>>> Fees paid to the trustee get itemized separately; for ones like this,
>>>> that's typically a flat 1-2% of net asset value per year specified in
>>>> the trust's construction. Beware any trust that allows the trustee to
>>>> increase his own compensation via "transaction fees", "expenses", etc.
>>>
>>>
>>> This seems to me like a pretty rarefied discussion. I have a vague idea
>>> of
>>> setting up a trust for someone else, an heir for example, who is young,
>>> incompetent or has bad judgment. Are there other reasons for having a
>>> trust?
>>> I have a sinking feeling that if I won a certain kind of some huge legal
>>> suit, a trust would be created for me to give everyone involved (except
>>> me)
>>> a warm, happy glow.
>>>
>>> I note that the 1% charge per year is 20 times the cost of the Vanguard
>>> Amazon 500 Index fund. And I assume the trustee pays someone else to do
>>> the
>>> actual work so he just pre-skims the base before doing anything
>>> especially
>>> useful for most ordinary people.
>>>
>>>
>>
>> We set up a trust and put our house and condo in it. If either of us
>> needs
>> long-term care this will keep the government's hands off of it.
>> Unfortunately we just did it recently, so we have to stay healthy for a
>> few
>> years. We're the trustees so no fee. The kind of legal settlement
>> you're
>> talking about is, I think, a "structured settlement". I'm always seeing
>> ads by companies who will buy you out of these, guving you a lump sum but
>> taking a big hunk themselves.
>
> Now, *that*, I can understand. *You* can be destitute, a pauper, and go
> on Medicaid, meanwhile, your wife can buy you a new Rolls Royce. Not
> literally, but do whatever it takes to allow you full use of the car.
> Like telling you where it is and giving you the keys. Is this simply a
> side effect of laws with some reasonable intent?
>
> Digging into my memory the credit lines on some PBS shows sometimes
> include a mention of trusts, as in the John and Mary Doe Trust. That
> sounds like there might be some justification hidden in there somewhere.
> But I think that it is more common to refer to "Foundations". Are there
> some big trusts I might know of? For example, the Joe Kennedy Trust?
>
> From the description of your example, it seems like every married couple
> who has two nickels to rub together should have a trust. But they don't,
> what is the dark side of setting up a trust?
Not dark side so much as downside. They do require rather more organisation
than not bothering with one and more fees paid to legal parasites etc.
Can be quite a bit simpler too, particularly not
needing changes to wills as the detail changes.
Some jurisdictions don’t have any real need to keep the govt
hands off anything. Ours doesn’t even have any inheritance
tax or death duties at all. We do see quite a few trusts for
other reasons tho, primarily tax avoidance by the more wealthy.
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| Re: I Feel Old [message #308673 is a reply to message #308667] |
Sat, 16 January 2016 12:19 |
osmium
Messages: 749
Registered: April 2013
Karma: 0
|
Senior Member |
|
|
<mausg@mail.com> wrote:
> A person on local radio last week described how her mother, at the end
> of the housing boom here, availed of an offer that was common at that
> time,
> and got 180,000 roughly from the bank/whatever to live on, the bank to
> take
> over the house on her death. Now that lady has to move in with her married
> daughter, being over 90. The bank wants to take over her house, but house
> prices haven fallen, now want 300,000 from someone (Whatever the house
> makes
> , less (interest on 180,000)). Logic is a little fuzzy here, but my
> meaning
> should be clear. The original salesman can not be found, even besides
> that,
> financial wheezes like that are statute barred after 7 years here.
The lady changed her mind, right? I assume she planned on living in the
house till death, then changed her mind about that. That seems like a not
unlikely outcome.
I wonder if a lawyer would have helped her see this possibility. My guess
is that a typical lawyer would immerse himself in the legal mumbo-jumbo and
not have been any help at all. She should have talked this over with friends
and relatives - but relatives could well be biased.
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| Re: I Feel Old [message #308674 is a reply to message #308667] |
Sat, 16 January 2016 12:59 |
|
|
Originally posted by: J. Clarke
In article <slrnn9ks6f.18g.mausg@smaus.org>, mausg@mail.com says...
>
> On 2016-01-16, Peter Flass <peter_flass@yahoo.com> wrote:
>> Osmium <r124c4u102@comcast.net> wrote:
>>> "Stephen Sprunk" wrote:
>>>
>>>> The trustee must have access to the trust's funds in order to do his
>>>> job; that's why they're usually required to itemize everything they do,
>>>> which for any non-trivial trust will be audited by a third party.
>>>>
>>>> Fees paid to the trustee get itemized separately; for ones like this,
>>>> that's typically a flat 1-2% of net asset value per year specified in
>>>> the trust's construction. Beware any trust that allows the trustee to
>>>> increase his own compensation via "transaction fees", "expenses", etc.
>>>
>>>
>>> This seems to me like a pretty rarefied discussion. I have a vague idea of
>>> setting up a trust for someone else, an heir for example, who is young,
>>> incompetent or has bad judgment. Are there other reasons for having a trust?
>>> I have a sinking feeling that if I won a certain kind of some huge legal
>>> suit, a trust would be created for me to give everyone involved (except me)
>>> a warm, happy glow.
>>>
>>> I note that the 1% charge per year is 20 times the cost of the Vanguard
>>> Amazon 500 Index fund. And I assume the trustee pays someone else to do the
>>> actual work so he just pre-skims the base before doing anything especially
>>> useful for most ordinary people.
>>>
>>>
>>
>> We set up a trust and put our house and condo in it. If either of us needs
>> long-term care this will keep the government's hands off of it.
>> Unfortunately we just did it recently, so we have to stay healthy for a few
>> years. We're the trustees so no fee. The kind of legal settlement you're
>> talking about is, I think, a "structured settlement". I'm always seeing
>> ads by companies who will buy you out of these, guving you a lump sum but
>> taking a big hunk themselves.
>>
>
> I've thought of that myself, BUT:
>
> A person on local radio last week described how her mother, at the end
> of the housing boom here, availed of an offer that was common at that time,
> and got 180,000 roughly from the bank/whatever to live on, the bank to take
> over the house on her death. Now that lady has to move in with her married
> daughter, being over 90. The bank wants to take over her house, but house
> prices haven fallen, now want 300,000 from someone (Whatever the house makes
> , less (interest on 180,000)). Logic is a little fuzzy here, but my meaning
> should be clear. The original salesman can not be found, even besides that,
> financial wheezes like that are statute barred after 7 years here.
>
> The same deal was proposed to me, but I understood that it was sort of a bet,
> the bank betting that I wwould be dead before (x) years.
>
> It seems that it is really (heads I lose, tails you win). T'was ever so.
The original salesman doesn't have any real relevance unless he he had a
financial interest other than his commission. There should be a
contract somewhere, with what is owed to who under what circumstance
spelled out in the contract.
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| Re: I Feel Old [message #308679 is a reply to message #308673] |
Sat, 16 January 2016 13:36 |
mausg
Messages: 2483
Registered: May 2013
Karma: 0
|
Senior Member |
|
|
On 2016-01-16, Osmium <r124c4u102@comcast.net> wrote:
> <mausg@mail.com> wrote:
>
>> A person on local radio last week described how her mother, at the end
>> of the housing boom here, availed of an offer that was common at that
>> time,
>> and got 180,000 roughly from the bank/whatever to live on, the bank to
>> take
>> over the house on her death. Now that lady has to move in with her married
>> daughter, being over 90. The bank wants to take over her house, but house
>> prices haven fallen, now want 300,000 from someone (Whatever the house
>> makes
>> , less (interest on 180,000)). Logic is a little fuzzy here, but my
>> meaning
>> should be clear. The original salesman can not be found, even besides
>> that,
>> financial wheezes like that are statute barred after 7 years here.
>
> The lady changed her mind, right?
That was not stated. I think the problem is the amount the bank wants.
People moving in with relatives generally never go home.
> I assume she planned on living in the
> house till death, then changed her mind about that. That seems like a not
> unlikely outcome.
Yes.
>
> I wonder if a lawyer would have helped her see this possibility.
Probbaly, she never did that. Old people can be very silly.
> My guess
> is that a typical lawyer would immerse himself in the legal mumbo-jumbo and
> not have been any help at all. She should have talked this over with friends
> and relatives - but relatives could well be biased.
>
Yes. A similiar case was people who earned their living through
contracts, and were persuaded take out `employ' insurance. It didn't
apply, of course, but they were not even able to recover their payments.
--
greymaus
.
.
....
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| Re: I Feel Old [message #308686 is a reply to message #308663] |
Sat, 16 January 2016 15:32 |
Peter Flass
Messages: 8375
Registered: December 2011
Karma: 0
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Senior Member |
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Osmium <r124c4u102@comcast.net> wrote:
> "Peter Flass" wrote:
>
>> Osmium <r124c4u102@comcast.net> wrote:
>>> "Stephen Sprunk" wrote:
>>>
>>>> The trustee must have access to the trust's funds in order to do his
>>>> job; that's why they're usually required to itemize everything they do,
>>>> which for any non-trivial trust will be audited by a third party.
>>>>
>>>> Fees paid to the trustee get itemized separately; for ones like this,
>>>> that's typically a flat 1-2% of net asset value per year specified in
>>>> the trust's construction. Beware any trust that allows the trustee to
>>>> increase his own compensation via "transaction fees", "expenses", etc.
>>>
>>>
>>> This seems to me like a pretty rarefied discussion. I have a vague idea
>>> of
>>> setting up a trust for someone else, an heir for example, who is young,
>>> incompetent or has bad judgment. Are there other reasons for having a
>>> trust?
>>> I have a sinking feeling that if I won a certain kind of some huge legal
>>> suit, a trust would be created for me to give everyone involved (except
>>> me)
>>> a warm, happy glow.
>>>
>>> I note that the 1% charge per year is 20 times the cost of the Vanguard
>>> Amazon 500 Index fund. And I assume the trustee pays someone else to do
>>> the
>>> actual work so he just pre-skims the base before doing anything
>>> especially
>>> useful for most ordinary people.
>>>
>>>
>>
>> We set up a trust and put our house and condo in it. If either of us
>> needs
>> long-term care this will keep the government's hands off of it.
>> Unfortunately we just did it recently, so we have to stay healthy for a
>> few
>> years. We're the trustees so no fee. The kind of legal settlement you're
>> talking about is, I think, a "structured settlement". I'm always seeing
>> ads by companies who will buy you out of these, guving you a lump sum but
>> taking a big hunk themselves.
>
> Now, *that*, I can understand. *You* can be destitute, a pauper, and go on
> Medicaid, meanwhile, your wife can buy you a new Rolls Royce. Not
> literally, but do whatever it takes to allow you full use of the car. Like
> telling you where it is and giving you the keys. Is this simply a side
> effect of laws with some reasonable intent?
>
> Digging into my memory the credit lines on some PBS shows sometimes include
> a mention of trusts, as in the John and Mary Doe Trust. That sounds like
> there might be some justification hidden in there somewhere. But I think
> that it is more common to refer to "Foundations". Are there some big trusts
> I might know of? For example, the Joe Kennedy Trust?
>
> From the description of your example, it seems like every married couple who
> has two nickels to rub together should have a trust. But they don't, what
> is the dark side of setting up a trust?
>
It's a bit harder go access the money. For example, I can sell my house
and buy another to go into the trust, or use the money to buy stock for the
trust, etc. I couldn't use the money to take a trip around the world
without dissolving ("collapsing") the trust.
--
Pete
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| Re: I Feel Old [message #308687 is a reply to message #308667] |
Sat, 16 January 2016 15:32 |
Peter Flass
Messages: 8375
Registered: December 2011
Karma: 0
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Senior Member |
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<mausg@mail.com> wrote:
> On 2016-01-16, Peter Flass <peter_flass@yahoo.com> wrote:
>> Osmium <r124c4u102@comcast.net> wrote:
>>> "Stephen Sprunk" wrote:
>>>
>>>> The trustee must have access to the trust's funds in order to do his
>>>> job; that's why they're usually required to itemize everything they do,
>>>> which for any non-trivial trust will be audited by a third party.
>>>>
>>>> Fees paid to the trustee get itemized separately; for ones like this,
>>>> that's typically a flat 1-2% of net asset value per year specified in
>>>> the trust's construction. Beware any trust that allows the trustee to
>>>> increase his own compensation via "transaction fees", "expenses", etc.
>>>
>>>
>>> This seems to me like a pretty rarefied discussion. I have a vague idea of
>>> setting up a trust for someone else, an heir for example, who is young,
>>> incompetent or has bad judgment. Are there other reasons for having a trust?
>>> I have a sinking feeling that if I won a certain kind of some huge legal
>>> suit, a trust would be created for me to give everyone involved (except me)
>>> a warm, happy glow.
>>>
>>> I note that the 1% charge per year is 20 times the cost of the Vanguard
>>> Amazon 500 Index fund. And I assume the trustee pays someone else to do the
>>> actual work so he just pre-skims the base before doing anything especially
>>> useful for most ordinary people.
>>>
>>>
>>
>> We set up a trust and put our house and condo in it. If either of us needs
>> long-term care this will keep the government's hands off of it.
>> Unfortunately we just did it recently, so we have to stay healthy for a few
>> years. We're the trustees so no fee. The kind of legal settlement you're
>> talking about is, I think, a "structured settlement". I'm always seeing
>> ads by companies who will buy you out of these, guving you a lump sum but
>> taking a big hunk themselves.
>>
>
> I've thought of that myself, BUT:
>
> A person on local radio last week described how her mother, at the end
> of the housing boom here, availed of an offer that was common at that time,
> and got 180,000 roughly from the bank/whatever to live on, the bank to take
> over the house on her death. Now that lady has to move in with her married
> daughter, being over 90. The bank wants to take over her house, but house
> prices haven fallen, now want 300,000 from someone (Whatever the house makes
> , less (interest on 180,000)). Logic is a little fuzzy here, but my meaning
> should be clear. The original salesman can not be found, even besides that,
> financial wheezes like that are statute barred after 7 years here.
>
> The same deal was proposed to me, but I understood that it was sort of a bet,
> the bank betting that I wwould be dead before (x) years.
>
> It seems that it is really (heads I lose, tails you win). T'was ever so.
>
>
That's a "reverse mortgage". Fonzie (Henry Winkler) is shilling for these
on TV. I thought:
1. You can live in the house until you die
2. The bank has to absorb the loss of value.
Always seemed like a bad deal to me too, but I suppose if you're poor and
need money to live on it's better than the alternative of selling your
house outright.
--
Pete
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| Re: I Feel Old [message #308690 is a reply to message #308674] |
Sat, 16 January 2016 15:55 |
Ahem A Rivet's Shot
Messages: 4843
Registered: January 2012
Karma: 0
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Senior Member |
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On Sat, 16 Jan 2016 13:01:52 -0500
"J. Clarke" <j.clarke.873638@gmail.com> wrote:
> The original salesman doesn't have any real relevance unless he he had a
> financial interest other than his commission. There should be a
> contract somewhere, with what is owed to who under what circumstance
> spelled out in the contract.
Ome of the classes of problems resulting from the Celtic Tiger boom
and subsequent bust is that during the boom there was a lot of "we'll sort
out the paperwork later, just pass over the money and your good to go"
going on. With the bust many of the parties involved in chains of deals of
one kind or another went bust and paperwork that may or may not have
existed can no longer be found.
We were looking at one place going for an excellent price (one we
could afford!) when the market was pretty much rock bottom. We went to make
an offer for it only to be told that it was off the market temporarily while
some paperwork was sorted out, it should be OK in a week or two. Another
agent told us that the place was never going to be sold as it had been
through a number of hands during the boom without all the proper traces and
validations being done and now all the relevant paperwork was lost among
several agents and solicitors none of whom were still in business, and in
some cases had left the country without clearing up their bankrupt affairs.
Apparently this was not an uncommon situation.
--
Steve O'Hara-Smith | Directable Mirror Arrays
C:>WIN | A better way to focus the sun
The computer obeys and wins. | licences available see
You lose and Bill collects. | http://www.sohara.org/
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| Re: I Feel Old [message #308698 is a reply to message #308673] |
Sat, 16 January 2016 17:23 |
Michael Black
Messages: 2799
Registered: February 2012
Karma: 0
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Senior Member |
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On Sat, 16 Jan 2016, Osmium wrote:
> <mausg@mail.com> wrote:
>
>> A person on local radio last week described how her mother, at the end
>> of the housing boom here, availed of an offer that was common at that time,
>> and got 180,000 roughly from the bank/whatever to live on, the bank to take
>> over the house on her death. Now that lady has to move in with her married
>> daughter, being over 90. The bank wants to take over her house, but house
>> prices haven fallen, now want 300,000 from someone (Whatever the house
>> makes
>> , less (interest on 180,000)). Logic is a little fuzzy here, but my meaning
>> should be clear. The original salesman can not be found, even besides that,
>> financial wheezes like that are statute barred after 7 years here.
>
> The lady changed her mind, right? I assume she planned on living in the
> house till death, then changed her mind about that. That seems like a not
> unlikely outcome.
>
I suspect it's less about changing one's mind, but living longer than
expected and circumstances thus changing.
When my grandmother died in 1972, her house was put in trust for us three
kids. I think everyone assumed my mother would die some day quietly,
something you don't really think about. But she kept ticking, and after
some years of odd events, it just seemed best to put her in a home. So we
took the house out of trust. I hadn't really thought about that, the
condition was it wsa in trust until we were all 21 or maybe 30 (I don't
know) but only after my mother died. Nobody ever thought of a time
when she'd be unable to live in the house, yet still have life to her.
But there is reason to take it out of trust, instead of spending money on
upkeep as they see fit, we have control of it.
> I wonder if a lawyer would have helped her see this possibility. My
> guess is that a typical lawyer would immerse himself in the legal
> mumbo-jumbo and not have been any help at all. She should have talked
> this over with friends and relatives - but relatives could well be
> biased.
>
Maybe it was a bad move, but maybe it seemed a good move at the time. Get
some income, but the use of the house. When people used to die earlier (a
lot less medecine to keep them going) it would have been very reasonable.
Unless you want the kids to have the house, you might as well get some
return on it when you can make use of that money (or need to use that
money). But people's lives keep getting extended, and the longer you
live, the more likely you won't be able to live by yourself.
Michael
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| Re: I Feel Old [message #308699 is a reply to message #308663] |
Sat, 16 January 2016 17:45 |
Stephen Sprunk
Messages: 2166
Registered: March 2013
Karma: 0
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Senior Member |
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On 16-Jan-16 08:29, Osmium wrote:
> "Peter Flass" wrote:
>> We set up a trust and put our house and condo in it. If either of
>> us needs long-term care this will keep the government's hands off
>> of it. ...
>
> Now, *that*, I can understand. *You* can be destitute, a pauper, and
> go on Medicaid, meanwhile, your wife can buy you a new Rolls Royce.
Probably not your wife, but your _trust_ could buy _itself_ a new car
(or house, etc.) and let you, as the beneficiary, use it.
> Not literally, but do whatever it takes to allow you full use of the
> car. Like telling you where it is and giving you the keys. Is this
> simply a side effect of laws with some reasonable intent?
The grantor, trustee and beneficiary being the same person wasn't what
trusts were invented for*, but the results are perfectly logical.
* Nobles heading off to the Crusades needed to give someone power to
manage their estates--and be assured of getting it back if/when they
returned. Their wives, being property themselves, weren't considered.
> Digging into my memory the credit lines on some PBS shows sometimes
> include a mention of trusts, as in the John and Mary Doe Trust. That
> sounds like there might be some justification hidden in there
> somewhere. But I think that it is more common to refer to
> "Foundations". Are there some big trusts I might know of? For
> example, the Joe Kennedy Trust?
One of the top reasons for setting up a trust is privacy; they aren't
generally known except to people directly interacting with them.
> From the description of your example, it seems like every married
> couple who has two nickels to rub together should have a trust. But
> they don't, what is the dark side of setting up a trust?
It costs time and money to set up a trust, and transactions as a trustee
are a bit more complicated than doing them as yourself, so few bother
unless they have a substantial amount to protect/hide.
S
--
Stephen Sprunk "God does not play dice." --Albert Einstein
CCIE #3723 "God is an inveterate gambler, and He throws the
K5SSS dice at every possible opportunity." --Stephen Hawking
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| Re: I Feel Old [message #308700 is a reply to message #308690] |
Sat, 16 January 2016 17:53 |
Gene Wirchenko
Messages: 1166
Registered: January 2012
Karma: 0
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Senior Member |
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On Sat, 16 Jan 2016 20:55:40 +0000, Ahem A Rivet's Shot
<steveo@eircom.net> wrote:
[snip]
> We were looking at one place going for an excellent price (one we
> could afford!) when the market was pretty much rock bottom. We went to make
> an offer for it only to be told that it was off the market temporarily while
> some paperwork was sorted out, it should be OK in a week or two. Another
> agent told us that the place was never going to be sold as it had been
> through a number of hands during the boom without all the proper traces and
> validations being done and now all the relevant paperwork was lost among
> several agents and solicitors none of whom were still in business, and in
> some cases had left the country without clearing up their bankrupt affairs.
> Apparently this was not an uncommon situation.
How does such a situation get cleared up? Anyone answering,
please state which country you are answering for.
Sincerely,
Gene Wirchenko
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| Re: I Feel Old [message #308704 is a reply to message #308686] |
Sat, 16 January 2016 17:59 |
Stephen Sprunk
Messages: 2166
Registered: March 2013
Karma: 0
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Senior Member |
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On 16-Jan-16 14:32, Peter Flass wrote:
> Osmium <r124c4u102@comcast.net> wrote:
>> From the description of your example, it seems like every married
>> couple who has two nickels to rub together should have a trust.
>> But they don't, what is the dark side of setting up a trust?
>
> It's a bit harder go access the money. For example, I can sell my
> house and buy another to go into the trust, or use the money to buy
> stock for the trust, etc. I couldn't use the money to take a trip
> around the world without dissolving ("collapsing") the trust.
That depends entirely on how the trust was constructed; typical living
trusts will allow the trustee/beneficiary to do nearly anything, and
since generally only the beneficiary can sue the trustee for breach of
trust anyway, it is effectively "anything goes" in practice. Other
types of trusts are an entirely different matter, though.
S
--
Stephen Sprunk "God does not play dice." --Albert Einstein
CCIE #3723 "God is an inveterate gambler, and He throws the
K5SSS dice at every possible opportunity." --Stephen Hawking
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