Mr. J writes:

I have an heir that can’t handle money. If I am not around, I want this person to get a monthly income after retirement instead of a lump sum at my death. I have done some research and I think a spendthrift trust is the way to go here. I don’t want to set one up before I die but I want to leave instructions in my will to have my executor do it.

I wondered if anyone knows if I can leave this kind of instruction for my executor.

Any experience with trusts or have you heard of another way of dealing with it? I was also thinking of leaving instructions that an annuity be purchased.

Mr. J,

I feel ya! I don’t leave money for anyone! Not even waitresses…

But if I did, I wouldn’t know where to start. That’s why I asked Michele Steinberg of FinanceGrrl to answer your question. Michele, I’ve left you my phone number — call me, foxy!

D. Expert

Dear J.,

I’ll ignore that comment from D and get right to your answer.

First and foremost you need to contact an attorney. Trust laws are
complicated and vary state-by-state, so it is essential that you speak
with a legal professional to accurately address your questions and to
finalize any plans. You also may not need a trust, a well written
will can accomplish your goals, particularly as you state you do not
wish to create a living trust, but a testamentary trust (one that
takes effect after your death). A testamentary trust will be subject
to probate which can be an arduous process for your survivors.

Let’s address the issue of the spendthrift trust, which is a specific
use trust that gives an independent trustee the power to allocate the
funds – as opposed to the named beneficiary. The obvious pros to
this trust is that it will keep your beneficiary from spending the money in
ways you would deem inappropriate. But the cons are you will need to
add provisions to pay this trustee for his or her services, thus
reducing the amount of inheritance the beneficiary will receive. This
can be anywhere between .75% and 1.5% of the total assets in the
trust. You will also need to name someone who you expect to outlive
both you and your heir in order to make the consistent payments.

An annuity may be the answer to provide an income stream for your
beneficiary. You will need to leave specific instructions for your
executor for the purchase of one, such as how the funds are to be
invested within the annuity before payments begin, when the payments
should start (what age will be “retirement” for your heir?), what fees
are acceptable, and so on. If you have the time to research annuities
with a financial advisor in your area this may be the better solution.
However, you won’t know what annuity products will be available at
the time of your death, so the best you can do is be specific and
create a provision if the right product is not available.

There is a bit of work to be done, but sitting down with a financial advisor and an attorney in your local area will help you achieve your stated goals. Good luck!

Thanks, Michele! You’ve come through for us again with some solid advice. If you’d like financial advice, contact Michele at FinanceGrrl.com. Or, write D. Expert. He doesn’t have a solid track record, but he sure has opinions!…

Dear D. Expert,

P.S. He is also old. Maybe he’ll drop dead before I can pay him back. (ha!) But I don’t want his wife coming after me…

—

Dear LAF,

You saucy minx! Yep, that’s what I’d call “interest rates”! That reminds me of a pervvy professor I had back at Oxford.

[Editor's note: Oxford School of Numerology]

It was the summer of ‘91. Her name was Lorraine. She taught basic accounting. That woman had legs like a Chinese abacus. Ahh…memories.

Ahem. Let’s get back to you and your perv professor. Calculators can’t save you, Lolita. In fact, let me just get someone else here to answer your question because your letter is giving me a full-blown headache. Scotch, anyone?

Here’s my friend Michele Steinberg. This fox runs her own network of financial planning services called “FinanceGrrl“. Roar!

Yours truly,
D. Expert

—

Hi LAF,

Yes, you should pay off the student loan first. It doesn’t take a genius to understand that you are paying more interest on the student loans than on the personal loan, and that’s a significant amount of money. But the reality is financial decisions (both good and bad) are emotionally charged. Exorcising bad demons in your finances will do wonders for your psyche and your savings.

So let’s get to the nitty gritty and address the situation with the creepy professor.

I would guess you’re loathe to be in contact with him or his latest wife with something as mundane and gut wrenching as monthly payments. Therefore I recommend a schedule of three lump sum payments to be done with it forever.

The total amount you owe the professor, including the 2% interest, is approximately $8400 over the period it will take to pay him off with this plan.

Here’s how it works:

First open a savings account with an online bank. Your account will earn interest but won’t come with an ATM card to tempt you when you’re walking past Bloomies. Check out http://www.money-rates.com/savings.htm for the current interest rates. Choose an online bank with no fees and NO ATMs! ING Direct is a good example of just this type of bank. In case you’re tempted, I don’t suggest opening another account at your current bank. It will be too easy to dip in as you see the savings grow. Remember, this is not your money. It belongs to the professor.

Second, link this account to your regular checking account and create an AUTOMATIC $60 transfer every week (the automatic part is critical). I recommend it comes out on Mondays – if you leave it until Friday, the latte factor will inevitably hit and you’ll have spent your cash elsewhere.

After one year you should have accumulated about $3175, including interest. Now it’s time to write the professor a check. Wash, rinse, repeat.

At the end of the second year you’ll have another $3175 accumulated to write the next check.

During the third (and final!) year you now only owe $2050, and this will be saved up by mid-August.

Be aware that if you are able to increase the weekly amount to $75 (only $15) you’ll be done in just over TWO payments with almost $4000 saved each year.

The good news is that once you’ve made your last payment to the old perv you will have become accustomed to putting aside a little bit of cash every week. The best thing you can do is continue to save every week and put this money towards your student loans. Although student loan interest is tax deductible, interest payments are still extra expenses you should strive to avoid.

Good luck!
Michele Steinberg
FinanceGrrl.com

Got an embarrassing money problem for the D. Expert? Write him at: d.expert[@]geezeo.com. Kudos to Michele Steinberg of FinanceGrrl.com for actually answering our dear reader’s embarrassing money question. Thanks, Michele!

And thank you, dear reader, LAF. Your money question was the most hideous we received. At least until next week…

Just need to get that money “thing” off your chest? Try our Money Confessions. It’s easy, fast, and you’ll entertain us all.

Need sex advice? We love Dan Savage of Savage Love. Too bad Dan doesn’t give money advice.

Money advice could use a sexed up image. Unfortunately, there’s nothing particularly sexy about our newest hire. (Truly!) But he’s nominated himself the resident advice-giver with the not-too-subtle title of “D. Expert”

So, empty your wallet, confess your money sins, and write to d.expert[at]geezeo.com. He’s here to give free advice.

My advice to you is beware: he’s no Dan Savage.

Is there any alternative to Quicken? Quicken Online does just about everything Geezeo does with one key exception. Quicken charges you money to manage your money!

Why choose Geezeo, the Quicken Online alternative?

Well, for starters we share most of the features Quicken Online offers, but without fees:

A dashboard where you can see all your financial data from a number of different banking institutions.
Budgeting tools to effortlessly see where your money goes
Mobile phone TXT/SMS messaging to track your accounts using your cell phone
Like Quicken we’ve got robust and formidable security and privacy guards. In fact, we use CashEdge, the same security used by top financial institutions worldwide.

But wait — there are more reasons we’re the Quicken alternative.

Here at Geezeo we also have a bunch of cool stuff that Quicken doesn’t:

Money Confessions… where you can take a peek at how others handle their money
Groups… so you can find and connect with other people who share your interests or background. Your money is always private and secure but you can personalize a Geezeo profile to interact with others (here’s an example of my Geezeo profile).
Goals… so you can track your financial goals and be held “accountable” in a supportive environment
Peer Reviews…so you can voice your opinion on every financial product you use
Facebook integration… so you can share your financial and philanthropic goals with others
Or write our resident cranky expert, D.Expert, for personalized Dear Abby-like advice on your specific financial situation (if you’re brave enough!)
Don’t forget to check out the Geezeo buzz, too!

Finally, you’ve also got instant access to our entire team, including the co-founders! You have questions or suggestions? Hit us! (We’re guessing Quicken isn’t too quick to talk directly to you).

Is there a Quicken alternative? Yes — you’ve found it with Geezeo!

Greetings Geezeo Interweb Cyber-Nationalists! Let me introduce myself. I am the newest Geezeo team member.

No, let me first start by complaining about Katie. Yes, Katie. Here is what she wrote in my AOL account:

Pete and Shawn, this guy you hired is a complete MORON! Why are you hiring someone who can’t even post to the blog by themselves? We’re an internet company! He seems like an arrogant, sexist jerk. Strategy-wise I don’t think this is a good decision at all. People don’t need more jerks telling them how to handle their money!

Also, he smells.

Well! Let me tell you a thing or two, missy! First of all, I have my secretary, Edna, transcribe everything. All you have to do is publish my words onto the information superhighway, alright? Stop your complaining, sister.

Second, Katie, perhaps you need to be reminded of my credentials? I hold a B.S. degree from Oxford. Yes, Oxford! That’s why you’ll post my words whether you want to or not. Oxford Numerology Institute happens to be very elite. Do I need to add that I am also a lot older than you and also know more about living? So there! I’m here to give advice. You’re here to put it on The Web. Got it? Good.

Oh, and one last thing. That “smell” happens to be “Polo” by Ralph Lauren. Maybe if you had some class you’d appreciate that. I know my lady friends do.

Okay. Now that I’ve got that broad back in line let’s get down to brass balls, shall we?

Do you have a money problem? Problems are my specialty. I’ve been having them as long as I can recall. Not just money ones, either. Recently I’ve been having a lot of problems with these kids showing up claiming to be mine. All I can say is I got paid for those samples, and no, I’m not Donor X83-7734. So let’s just get that out in the open now. Stop coming to my house!

Write me with your money problems at d.expert@geezeo.com. Edna will transcribe them and Katie — if she knows what’s good for her — will put them here.

Editor’s note: This guy confirms he is a jerk! Send your money problems anyway. Or, go into your Geezeo account and check out our brand new feature: MONEY CONFESSIONS! What are the silly, stupid, or just plain wrong ways people are handling their money?