Leamnson Capital Advisory, LLC
Founder and President
I am the founder and president of Leamnson Capital, a fee-only, a Registered Investment Advisor firm in Reston, VA. I work with people serious about preparing for and getting through retirement. Typically, they are in their fifties or already retired. I have over 30 years of experience in the financial services industry.
I live in Reston, VA with Cathy, my wife of 34 years and our two Akita's, Titus and Kaylee. On weekends, we enjoy spending time with their pups, taking them for walks on the Reston trails. We both enjoy bicycling, yoga, and regular workouts at the gym. We spend time visiting the many beautiful Virginia wineries — doing our small part to support the growing Virginia wine industry.
Assets Under Management:
It's hard to answer this question definitively with your description. You don't say what the death benefit of the original $100,000 purchase was. It's also unclear to me what value you're referring to when you say the present value of the policy is $425,000.
Another confusing piece of this is the reference to the estate taking out a loan on the policy intended for long-term care expenses. The owner of the policy is the only person who can make changes, take out loans, name beneficiaries, etc. An estate is established after someone dies. How can an estate own a policy on someone? Unless by estate you mean a trustee of a trust owned life insurance policy. That would be possible, but not an estate.
In general, here's how life insurance loans work. Whatever unpaid loan amounts outstanding when an insured dies get deducted from the life insurance proceeds. If you're saying the death benefit of the policy was $425,000 and the loan was $400,000, then the beneficiaries would get $25,000 in death benefits. In general, life insurance death benefits are tax-free. However, that depends on several factors like who owns the policy, who paid the premiums, etc.
The beneficiaries should consult a tax attorney or CPA to discuss the tax implications. Not sure if you're asking on their behalf, or if you are the/one of the beneficiaries. Either way, seek professional advice.,
I'm very sorry for your loss. It's never easy making these kinds of decisions while grieving.
Here's what I can offer based on what you've said.
If the house was in your fiance's name and you're not planning on living in it, selling it is a good option. Depending on the real estate market, selling the house could take some time. If you need the cash to pay the taxes sooner than the house sells, the investment account gets the money to you quickly. If you additional cash after paying the taxes, you can always put that back into the investment account.
If you're living in the house and want to keep it, then selling some of the investments would make sense. Gains from assets held over one year get taxed at favorable capital gains tax (either 15% or 20%). Depending on your income, that may be the lower rate. It appears that both the house and investment account would qualify for capital gains tax rates.
So, either option is fine.
That depends on several things. Nort having either of your dates of births makes it difficult to answer definitively.
If one of you was born prior to January 1, 1954, you would qualify for a spousal benefit. When the other spouse reaches full retirement age (FRA) and begins taking his/her benefit, the other spouse can file a restricted application for a spousal benefit and receive 50% of the other spouse's benefit. That allows the one receiving the spousal benefit to grow (8%/yr) their own benefit until he/she reaches age 70.
Even if you both wait until your own FRAs to start taking your benefits, this is still better than drawing early. Claiming prior to FRA reduces your benefit.
What many forget to consider are the survivor benefits. Delaying your own benefit increase the amount you receive, which also increase the amount your survivor will receive. If you take a reduced benefit from starting early, your survivor's benefit is also reduced. If you can both wait until age 70, you will maximize both your retirement and survivor benefits.
Social Security is complicated. Consider having someone do a detailed analysis of your options to get a closer look. There are online calculators that can help. Getting this done will give you the information you need to make the best decision. Good luck!
I would definitely not recommend doing that. Timing never works. You have to be right twice - once when you sell and the other when you get back in. A better option is to determine how much downside risk you can take.
Have you done a stress test on your portfolio to see how it might drop in a "worse case" scenario? If not, I would highly recommend that. That will tell you whether your investments pass the stomach test? What's the stomach test, you ask? If you stress test your portfolio and find that the drop in a worse case scenario makes you queasy, you've failed the stomach test and need to reduce your risk. That's a much better strategy than panicking and selling everything.
It's reasonable to review the risk you're taking and, if necessary, lower the amount of money you have in riskier investments (presumably stocks or stock funds). Once you've done the risk assessment, having a rebalancing strategy will help you keep your risk in the range that keeps you from failing the stomach test.
We're living longer and longer lives. That means your investments need to continue to grow to provide the income you need. When I plan for clients, I use age 90 or 95. Better to do that than plan for shorter life expectancies and run out of money.
If you're not working with an independent financial advisor, consider finding one to help you with this. Your mutual fund companies should also provide these kinds of services.
I am always cautious in answering these types of questions with any specific advice. However, an easy piece of advice I can safely give is to pay off the $10,000 in debt. Beyond that, take your time.
You're going to have lots of people knocking on your door to help you invest and manage that money. Be careful! Find a financial advisor committed (legally, not with words) to acting in your best interest. Lots of people will tell you to work only with a CFP or a member of NAPFA, which is a group representing "fee-only" financial advisors. Those are both fine organizations and a good place to start. There are also plenty of good advisors who aren't part of either of those groups.
When you get a short list of names, research them and their records at the SEC's advisor search site here - https://www.adviserinfo.sec.gov/. You should also run them through FINRA's broker check to see if there are any complaints against them. Here's a link to that site - https://brokercheck.finra.org/. At each of these sites, you can enter the individual's name and find out about their records. Once you've chosen your short list, interview each advisor. You want to make sure he/she is a good fit with your personality. Make sure they listen and don't just talk about all the reasons why you should work with them.
A good advisor will help you put together a plan to both protect and help this money grow. You will easily be able to enjoy travel and spend some money to do the things you've dreamed of doing. I believe you will enjoy it much more if you take the time to develop a long-term plan for the funds., Then, when you travel, you can do it with ease knowing there is a foundation in place that allows you to do this comfortably. I hope this helps.