[lvpiggy]

Somewhat unusual situation that I'd like to get some advice on - I have several trusts that are about to revert to my control; the funds are all currently in managed accounts. From some of the other posts on this forum, I know that the investment manager is probably charging some huge yearly fee or something on the accounts . . .

however, given that the $ is already in the accounts, and given the state of the markets, does it make sense to take all the money out and start managing it myself?

My main concern is that a *lot* of the securities in the portfolio have accumulated through the years since I was a baby and thus have very low tax bases . . . I don't want to set myself up to get hit with huge capital gains taxes!

The other issue is the current state of the markets; does it make sense, since I won't actually be spending any of the money in the near future, to just leave it in the managed accounts until the market improves so I can sell at higher prices? sort of pulls in the opposite direction to the capital gains question i know . . .

[Vegas Long Legs]

You might want to talk with a CPA.
Our CPA recommends at this time paying all capital gains taxes now.

We have talked with several trust companies. We are managing our own money. I do see the need for having a trust company, but at the current time our returns are much better than what they have historically done. DH & I spend a few hours a week discussing & doing research. We are older & have made mistakes in the past which we use as a guidance tool.

Just a suggestion - maybe leave the money in the accounts & spend alot of time before you pull it out to do some research. Its much easier to keep the money you have then to try to get it back after losing it, especially in these markets. If that makes sense.

If you are inheriting enough money to live on the rest of your life, maybe look into quitting your job & investing your money your career.

Sending good luck wishes your way!

[barcreperie]

Some of these investments may be transferrable without actually selling them out of the funds/stocks. Others may not be, as they may be tied to the financial institutions the trusts are presently invested with. It would probably be worth your time/money to sit down with a financial planner and go over everything that's involved - take your last statements to the meeting. A financial planner will be able to tell you what can be transferred without selling (avoiding capital gains), what the tax impact will be if you do sell, and what funds/stocks are not performing and may be better to sell off right now. For instance, if some tech stocks were purchased years ago they may have made a lot of money in the past, but may have been duds for the past few years. Just because you take the investments out of the trust doesn't mean that you have to move the money or sell anything. Also, if you have children, there may be tax advantages to setting up trusts for them. Or even of keeping the trusts in your name as trusts, with your children as beneficiaries. If your estate is large enough, this could save $$ in inheritance tax.

It sounds like this is the time to seek professional help in managing these investments.

[lvpiggy]

oh my! thanks for the advice ladies! sounds complex . . .

barcreperie - where would i locate a financial planner, and how are they different from the investment manager that currently manages the accounts?

[Vegas Long Legs]

JMHO - I would never trust a financial planner (fp) to give me tax advice. A CPA is edcated in taxes. A CPA can give you the same advice & analysis on your investments barcreperie states a fin planner gives. A CPA might cost you more. But he will not try to get you to invest in things that are for his benefit.
There are too many questions you need to ask a FP to make sure he is neutral. There is a great article that was in the few of issues of Money or Smart Money magazine on what you should ask a FP before giving him your money. How they are not required to disclose to you that they are working in their best interest not yours! Please do a search for these articles before hiring a FP. They will give you some good insight into that industry.
I have seen the IRS ruin peoples lives cause they were given bad advice.

[socalgem]

I agree with VegasLongLegs, a CPA is much better to handle this than a FP.

And you really need to do your research before you think about pulling the money out.

Good Luck!!

[BigPurseSue]

In addition to talking to a CPA you should find out as much as you can about the firm/person(s) who is managing the accounts. What kind of return they're getting. And what are the fees that you're paying them. There can be all sorts of fees on managed accounts from an annual percentage-based fee to fees on individual accounts.

With some of the big investment firms switching your accounts from managed to un-managed status is as simple as calling up the firm, filling out a little paperwork, and zap, the accounts are no longer managed.

With smaller investment firms it's simply a matter of transferring the individual account holdings from their name to yours.

This year capital gains taxes are as low as they're ever going to be. They'll probably rocket up next year. That means that if you're going to sell stocks or mutual funds now's the time to do it. But you don't need to actually sell your stocks or funds in order to switch them from a managed to an unmanaged account status.

I agree with the others. For tax advice you want to go to a CPA. You don't want to rely on the judgement of a financial planner or investment manager.

[TropicalGal]

When you say these trusts are in "managed accounts" do you mean like Merrill Lynch type investment account, where you either pay a yearly fee or percentage?

[lvpiggy]

Originally Posted by TropicalGal

When you say these trusts are in "managed accounts" do you mean like Merrill Lynch type investment account, where you either pay a yearly fee or percentage?

indeed - I don't know all the details, but I believe it's with an investment advisory firm which holds & allocates the assets, based on discussions about the client's investing time horizon, goals, budget in upcoming years, income, etc.

[TropicalGal]

^^^Well, then, do all your homework, as everyone suggests. Find out how much your portfolio has grown, and how much you're paying for investment management. I keep my portfolio at Merrill Lynch and my broker is worth it! Look at your risk, return ratio and your expense ratio. I read the papers every day, but I still appreciate the advice I get from my advisor who is really involved in the financial world in a way I couldn't be. It all depends on your investing style. Some people want to micro manage, they have the time and the knowledge. Others want to pay a professional. Let us know what you learn after your investigations.

[lvpiggy]

thanks to everyone for all the advice! guess i've got my work cut out for me . . . . i'll definitely report back if I learn anything interesting, or if anything weird comes up!