Managing money for a parent - access control

[koffiejunkie]

The old lady is coming into some money, and has asked me to handle investing it. The catch is she wants me to put it somewhere she doesn't have access to the principal (although maybe to interest/dividends or some agreed percentage). Now, I could just open an account in my name and set things up accordingly, but the way I know her, this is a great way to ruin a relationship.

So what are my options? I'm not real familiar with trusts or endowments - is this what I should be looking at? Or are there brokerages that allow for this sort of thing? I would much prefer a situation where two parties (her and myself or her and my silbling) both have to agree to withdrawals, rather than me being the sole gatekeeper.

Buy a donkey!

 

[Hamster]

If you set up an account in your name and transfer her money into it the tax man will see this as a gift and tax accordingly, surely?

EDIT: Sounds like you are describing a trust which comes with its own tax problems. Can't you just set up an account in her name and use her credentials?

 

[Speedster]

No trust needed for this (obviously trust is needed, but registering a trust isn't )

All you need is for her to give you legal access to the account (or share online login details). First thing is to determine what type of investment vehicle you're looking at then one can nail down the specifics

 

[koffiejunkie]

If you set up an account in your name and transfer her money into it the tax man will see this as a gift and tax accordingly, surely?

Yeah that's another reason not to do it.

EDIT: Sounds like you are describing a trust which comes with its own tax problems.

Thanks, I'll look into that.

Can't you just set up an account in her name and use her credentials?

My first thought was getting her to give me the creds and then changing the login details, but nothing stops her from showing up with her ID book and saying "I can't log in". She's hidden financial wrongdoing from me before because she knew I wouldn't be happy with what she'd done. So it would be better not to leave that option open.

First thing is to determine what type of investment vehicle you're looking at then one can nail down the specifics

Nothing fancy - a few ETFs or mutual funds/unit trusts.

 

[Speedster]

Yeah that's another reason not to do it.



Thanks, I'll look into that.



My first thought was getting her to give me the creds and then changing the login details, but nothing stops her from showing up with her ID book and saying "I can't log in". She's hidden financial wrongdoing from me before because she knew I wouldn't be happy with what she'd done. So it would be better not to leave that option open.



Nothing fancy - a few ETFs or mutual funds/unit trusts.

EasyEquities?
From what I hear their support isn't always up to scratch so she'll struggle to have them reset the password, especially if the verification emails come to you

 

[Wide]

Wont it be easier to just complete a "power of attorney" with each investment house..

 

[Nerfherder]

Yeah that's another reason not to do it.



Thanks, I'll look into that.



My first thought was getting her to give me the creds and then changing the login details, but nothing stops her from showing up with her ID book and saying "I can't log in". She's hidden financial wrongdoing from me before because she knew I wouldn't be happy with what she'd done. So it would be better not to leave that option open.



Nothing fancy - a few ETFs or mutual funds/unit trusts.

What is the issue here ? Is she worried that she will lose her mind or does she need help and wants someone to manage her money ?

Most likely she needs to give you power of attorney....

 

[Affieplaas]

Not sure how much money this is, but if she is passed retirement age, what about something like a living annuity? Capital is deposited and she then gets a monthly annuity for the remainder of her life. It will at least ensure that she has access to money on a monthly basis and there is no risk that she spends all the capital at the casino.

 

[Hamster]

Thanks, I'll look into that.

I'm not too clued up on this so better speak to an advisor or something, but a trust is a separate tax entity so my n00b question to the advisor would be "what is the difference in tax between transferring her money to me and to a trust?"

 

[RedViking]

Britney Spears did this and now she is complaining.

Don't do this with your mom.

 

[koffiejunkie]

EasyEquities?

She has an EE account. I'm using it as an incentive - I fund her TFSA as long as she keeps on the straight an narrow.

From what I hear their support isn't always up to scratch so she'll struggle to have them reset the password, especially if the verification emails come to you

Ha ha! That last bit can be arranged.

Wont it be easier to just complete a "power of attorney" with each investment house..

Thanks, this sounds like something that might be useful.

What is the issue here ?

She likes to live beyond her means. After years of work, she now accepts that she needs help. It's a delicate situation, so anything I can do to set things up in an agreeable fashion that reduces the chance of her going on a shopping spree would help.

Not sure how much money this is, but if she is passed retirement age, what about something like a living annuity?

She took an annuity (didn't involve me) in the 2/3rds that have to go into a pension compliant product. The money in question is the remaining 1/3rd cash. I haven't been privy to the exact amounts (yet) but I have a suspicion the annuity isn't enough as she's decided to find other work once her big day rolls around and wants to invest the 1/3rd cash to grow some.

 

[Speedster]

I'm not too clued up on this so better speak to an advisor or something, but a trust is a separate tax entity so my n00b question to the advisor would be "what is the difference in tax between transferring her money to me and to a trust?"

If she transfers the money she'll need to pay donations tax. She can loan the funds to an individual or a trust, but that's unnecessary admin (I'm trustee of 2 trusts). Easiest in this case is to open EE account on the mom's name and just not give her the login details

 

[RandomGeek]

@koffiejunkie establishing a Trust can be pricey - probably doensnt make sense for small-to-medium sized amounts. Big pile of cash is another story.

Watching this discussion with interest, my parents arent getting any younger

 

[Speedster]

@koffiejunkie establishing a Trust can be pricey - probably doensnt make sense for small-to-medium sized amounts. Big pile of cash is another story.

Watching this discussion with interest, my parents arent getting any younger

A trust is actually pretty cheap to set up if you do it yourself (R250 last time I checked). The question you just need to settle is what would be the purpose of the trust. In OPs scenario a trust is completely unnecessary and only adds complexity to a simple question. His mom asked him to manage her funds and she shouldn't have unsupervised access to said funds.

As I mentioned earlier, easiest is an EE account and simply don't give her the password. Alternatively an account at an investment house (in her name) with OP as an authorised signatory (although restricting her access to the funds may be more tricky in this scenario).

 

[pinball wizard]

The old lady is coming into some money, and has asked me to handle investing it. The catch is she wants me to put it somewhere she doesn't have access to the principal (although maybe to interest/dividends or some agreed percentage). Now, I could just open an account in my name and set things up accordingly, but the way I know her, this is a great way to ruin a relationship.

So what are my options? I'm not real familiar with trusts or endowments - is this what I should be looking at? Or are there brokerages that allow for this sort of thing? I would much prefer a situation where two parties (her and myself or her and my silbling) both have to agree to withdrawals, rather than me being the sole gatekeeper.

Buy a donkey!

Look, you are out of your depth, and your mom has impulse control issues. I'm PM'ing you my bank details. Let me look after this for both of you.

 

[SauRoNZA]

Putting it in your name makes it a tax liability for you.

Why not a living annuity?

10X Investments

More money when it matters most

www.10x.co.za

 

[RandomGeek]

His mom asked him to manage her funds and she shouldn't have unsupervised access to said funds.

Yeah this is a tricky situation - you have the light touch approach (where you set up e.g. EE account for them with their support, and not give the parent the login details) and then the heavy handed approach (you declare them financially incompetent and fully run their affairs)

The light touch approach may fail if they decide one day "F it, it is my money" and they approach the service provider directly. The heavy handed approach may rip the family apart. As I said, tricky...

I wasn't aware the trust is that cheap to set up yourself. But yes in this case its not the right tool.

In my case, I'm quite interested in this discussion, as I said my parents are getting on in years and smooth talking scammers prey on trusting pensioners that has some money in the bank

 

[Sensorei]

Stock markets are at an all time high now after a bull run driven by devaluation of currency . Markets are overbought. It is NOT A GOOD TIME to start new investments in most ETFs now. The markets are due for a big correction in the coming months.

Central banks are artifically inflating asset prices, and stock markets can not continue to go up irrespective of the nosedive in all economies. Inexperienced investors should stick with something like very low risk income fund investments right now.

 

[Speedster]

Stock markets are at an all time high now after a bull run driven by devaluation of currency . Markets are overbought. It is NOT A GOOD TIME to start new investments in most ETFs now. The markets are due for a big correction in the coming months.

Central banks are artifically inflating asset prices, and stock markets can not continue to go up irrespective of the nosedive in all economies. Inexperienced investors should stick with something like very low risk income fund investments right now.

We're talking vehicles, not actual investments, here.

 

[mugikhan]

Stock markets are at an all time high now after a bull run driven by devaluation of currency . Markets are overbought. It is NOT A GOOD TIME to start new investments in most ETFs now. The markets are due for a big correction in the coming months.

Central banks are artifically inflating asset prices, and stock markets can not continue to go up irrespective of the nosedive in all economies. Inexperienced investors should stick with something like very low risk income fund investments right now.

People have been saying this since the '90s. Every week there is a news article about a "correction".