Seeking advice for closing estate.

[josie]

quick background
My father passed away this past weekend (very unexpected, died of a heart attack, was in good health and only 50 )and I am in the middle of closing his estate. There was no property to be concerned about. He had life insurance and some credit card debt( 18,000) but the policly should cover both that and the funeral.(50,000 policy) He has 45,000 in various individual stocks, mutual funds (Vanguard), retirements, savings, and bonds. I also have his last check from work and a couple other checks of his to cash. I am his sole heir ( my mother had also passed away and I'm an only child). I am 21 years old, married, with a one year old daughter. I'm currently a stay at home mom and going back to school, hopefully in the spring semester.I don't know a lot about stocks and investing but willing to learn. My husband and I don't have a lot of money. Enough to pay the bills with just a little extra which we're hoping to put into savings/pay off debts every month. We just recovered from a huge financial hardship and have no savings at this point. I have about $500 in debt and my husband has $2000. We don't own a home, we rent a townhome.

question

Please give me advice on the best way to invest this money. I thought paying off any debts we have would be the first step. I got told to not keep the indiviual stocks as it would be a huge risk if you are not familiar in that area. I looked at rates of CD's and they are similar to some rates of online savings accounts right now. Should I diversify and put money in both? Should I put in money in bonds right now or would it be better to but that money in CD's. I would like to keep Vanguard. (excuse me if I misspelled that) if that would be of good benefit to me. Also a retirement savings account. SHould I get interest on this money before I move any into retirement savings? I would like to have a solid financial savings portfolio but also am willing to be at a higher risk for some of the money. Anyone have any good ratio ideas of what I should put where? Thanks!! josie

[sweeps]

First, very sorry for your loss.

1. Pay the debts -- they're pretty small and inconsequential.
2. Build up your emergency fund to 3-6 months of expenses. A 5%+ online savings account is a good choice here.
3. Fund a Roth IRA for you and your husband at Vanguard (or Fidelity or T.Rowe Price or equivalent). This will be $8,000 for this year. $8,000 for next year. Target Retirement funds are a good choice for an investment.
4. Save some money for your schooling and/or open a 529 for your daughter.

[threebeansalad]

Josie-- Sorry to hear of your loss.

I would suggest seeing a financial advisor recommended to you from a reliable friend or mentor. Given your age, you can do a lot with this money if it's invested wisely, but it will be gone before you know it if you either don't plan correctly or make too many rookie mistakes. Also, this is probably a very stressful time for you emotionally and making rational money decisions may be especially difficult. Personally, I would want guidance. Sweepsplayer does give sound advice above, though.

Last week Oprah actually had a show on what to do if you come into a windfall.

Here's some advice from the show I copied from the Oprah web page:

If you should get a windfall of $50,000 or more, Lynnette says there are five things you should do to make sure you keep it.

* Get financial help. A trusted advisor can talk to you about long-term plans and help you set a budget.
* Make sure you have a system in place for dealing with requests for money. This can be someone like an accountant, who can handle the requests so you don't have to feel emotionally responsible saying no.
* Make sure you have a structured way of giving—like to charities or to your church—so no one can make you feel guilty for not giving to them individually.
* Plan before you invest. Don't make any big moves without a long-term strategy.
* Give yourself time. Though you may want to, don't make rash moves right after getting your money."

from: http://www.oprah.com/tows/slide/2006..._284_110.jhtml

[Broken Arrow]

I'm just glad you're here, asking for some sensible advice, rather than going out and blowing it.

[Ima saver]

Really, if you do some research, you should be able to handle the money yourself. Listen to Sweeps, good ideas there. I would keep the vanguard mutual fund that your father had already, just have your name put on it. Then you will not have to pay taxes if you sell it.

[34saving]

I would suggest not doing anything right away. After the estate is closed, put the money in a super safe place like an online savings account and spend a couple of months learning/thinking/mourning. At your age you can spare a few months in your long term plans. (Just try to get those Roths funded before April 15 because then you can contribute for 2006.)

[josie]

Thanks for all the great advice. I agree that putting it into a savings account with a 5.0 + interest rate would probably be a good idea and to also take some time to wait before I start any drastic investments. However, I also know that it is close to the end of the tax year and I think doing the 8,000 for retirement would be good.

Vanguard Target Retirement 2050 Fund Summary- I came across this and found it pretty interesting, anyone else doing this?

Another question I thought of is should I contribute a certain amount to charity for a tax break?( I don't mean this to sound insensitive, I just thought of it with the tax year)I'm not sure what the limit is.

[vsjhoc]

So sorry for your loss. That must have been a terrible shock.

You didn't mention if your dad had a will or not. Even if he did, the probate process takes a while, so I don't think it's likely you will have access to all these assets for a while. Therefore I wouldn't worry about investing before the end of 2006. You may get the insurance proceeds sooner (because they don't have to be probated), but you're planning to use those for your dad's debts and funeral. I agree with everyone who says to take your time and not make decisions too soon. Best wishes, and let us know how you're doing.

[josie]

My father didn't have a will. I guess he figured he didn't need one as I was the only person who would be able to be his heir. I have papers to sign this week and get notarized, and then I am able to sign checks, close accounts, ect ect. Or at leat that's what I got after I spoke to a lawyer. I'm trying not to rush as this really isn't a fun process. I would much rather have my father than any of this but I know it's important to protect his investments and use them the best way I can.

[vsjhoc]

Sounds like you are wise beyond your 21 years. Good luck.

Everyone: This is exactly why you want to grant durable powers of attorney now. The person you give power to is able to do the things you specify (sign checks, close accounts) even before you die. It saves a lot of hassle. It goes without saying that you have to pick a person (or two) whom you trust ...

[cptacek]

One question...why does the father's credit card debt have to be paid? I always thought that if the person died and was not married, the debt would not have to be paid.

[sweeps]

Originally Posted by cptacek

One question...why does the father's credit card debt have to be paid? I always thought that if the person died and was not married, the debt would not have to be paid.

It's more complicated in this case since the father had assets. Interesting article

[josie]

From what I understand, creditors have 3-6 months to collect any debt. Some credit card companies will want to collect and others might be nice enough to write it off. But they can legally liquidate any assets in order to cover what was owed to them. If you have a parent that has more debt than assets you will not be responsible for any debt left over.That's a myth that sometimes scares people. It is written off. However, all the assets are also gone. This is something to really think about if you have any property that you never wish to get sold. If for some reason you have more debt that assets currently, I would suggest to get a life insurance policy that would cover a good portion of debt and funeral costs so you can leave assets for your loved ones.

If fact no matter what your health or financial standing I would strongly suggest a life insurance policy. Funerals are SO expensive and rack up thousands and thousands of dollars for even a "frugal" one. Creamation is more expensive (at least in my city, and state) and it costs money for even the tax experts and laywers it may or may not take to close an estate depending on your experience.

If you haven't done so, no matter what your age, visit a funeral home and look at the different expenses involved, tell your loved ones what kind of funeral you would like and try to take care of as many details as you could. Even just buying a burial plot can help. Write a brief autobiography about yourself. Make sure to have a record of all your assets and where they are located.I know it's something noone wants to think about but it's even harder for someone in grief to have to make every single decision and they are all treated as a business transaction which is very difficult to deal with.

I am really worried about my mother in law. She has so assets, no retirement, no savings, and no life insurance policy. I think we are going to sit down with her and possibly even purchase one ourselves for her. Same with my father in law. He has numerous assets and a business but no life insurance policy. My husband also has a sister. If she doesn't want to pay half the premium of the life insurance would she still recieve half when the time came? I don't mean to sound insensitive but if we are paying 30 years worth of life insurance which is a huge sum in itself I don't know how fair it is to just split it. Or do you think it would be better to just invest a certain amount of money every month instead of paying a life insurance premium and then use that for funeral expenses?

Sorry I'm sounding so morbid but I guess when your father dies really young and you are orphaned before age 22 you really think about these things and realize they are going to happen. I'm not trying to be greedy at all but I also know how horrible it would be to go through the entire funeral process and this time without any type of insurance to even cover expenses.

[josie]

The above article explains it very well. I didn't see it right away.

[sweeps]

Originally Posted by vsjhoc

Sounds like you are wise beyond your 21 years.

Agreed!

[josie]

Thanks <blushes>

[rob62521]

Dear Josie,

First, I am very sorry for your loss. It's never easy to lose a parent. I lost my mom August 2006 and I'm still dealing with things and my name was on everything. I don't know where you live, but I imagine your state has a probate law. That's when the bill collectors have to get their bills in so you can pay them. If your dad had health insurance be sure to watch the bills and question stuff they didn't pay otherwise the estate will have to pay for these items. I spent four weeks arguing with my mom's supplemental insurance as well as the hospital all because someone in the billing office didn't put one little item in the computer. It would have cost me $957 if I hadn't argued over it.

Your lawyer can probably tell you what you need to do legally. Most places will help you if you ask how to do stuff, but may not give you information until you can prove you are the executor or have poa. If you dad had a vehicle and you want to sell it, contact the division of motor vehicles in your town and they will give you information on how to sign the title over.

I agree with most of the people on this board -- take it slow before you do too much on the investments. You've just been through a huge loss and your emotions will be up and down. Putting the money in a decent interest bearing account is a wise move. You don't want to tie the money up because you will have bills to pay plus you will probably have to file your dad's tax returns and you may have to pay, depending on what the estate looks like. When my mil died a few years ago, we paid to have the tax returns done since they tax folks knew a whole lot more on how to do it than we did.

Hang in there. Let yourself grieve and mourn. Remember the good things about your dad. My prayers are with you.

[Bookie]

Originally Posted by michaelspringhill

Hello Friend ,
Well am Michael Dallas from usa, i will like get to have one on one instant messenger or email chat wiith, here is my yahoo.com handle:- michaelgdallas i think i have the best advise for you.ok take care of yourself.I want to wish you a Very Merry Christmas and a Happy New Year.

This is most inappropriate.

[rob62521]

Hey, Bookie!

Glad you caught that spam...I thought it was a little weird too, but wasn't sure. I thought it was against the posting rules. She's got enough troubles without that.