I do need to make a statement about the operation of my grantor’s trust today.
The need for the statement is partially the result of the fact that the monthly informative blog post (which used to be on doaskdotellnotes blog) is no longer published, although beneficiaries still get an annual letter. This year’s letter was mailed on March 1.
The trust, though filed as one entity with the IRS, comprises a component in my deceased mother’s name (as of May 1 worth about $840830 and a component in my name only, worth about $507000.
The portion in my name comprises a trust portion, worth about $98000 now, and a portion in my name only, worth around $410000.
However there is the portion in my own name includes a Brighthouse Annuity which deposit about $1400 per month back into “mother’s” trust as a kind of “rent” for living in the condo which technically the Committee of Beneficiaries owns. This was set up in September 2011, which the first major distribution was made to me nine months after my mother’s passing. I have redistributed this to some charities, including all the beneficiaries, as well as a few my mother had used, as well as First Baptist Church of the City of Washington DC.
Once I was told that this ought not be done because literally the trust says remaining distribution to beneficiaries occurs upon my own death. This seems very unreasonable. Non-profits need a fair share of “rent” now.
The trust, also has language saying that a beneficiary can request 1% of the liquid value (not including real estate) of the sum of both trusts (including my own) for a dependent minor’s medical or educational needs. Theoretically this could consume 6% of the trusts a year but this has never been requested. In the case of an organizational (non-profit) beneficiary, I have interpreted this to mean that the dependent minor would need to have some personal connection to me, for example, by some sort of sponsorship or possibly residential hosting (in the case of asylum seekers or refugees), the latter possibility more realistic until I sold the house in 2017 and moved into a 1br condo. “Medical” would mean literally that; “affirmation” would be a legitimate use.
Therefore even within my own money, it can matter what is in the “trust” and what is in my own name only.
So there are some ground rules.
The MDB trust pays for costs associated with the condo (real estate taxes, insurance, and condo monthly dues), mostly in automated fashion. It provides backup liability insurance to me for minor and unrepeated incidents.
It does major copays on health care (after Medicare and supplemental). But it does not pay Medicare premiums, or repeated copays on ordinary medication.
It can reimburse me for its share of stiorage expenses for mother’s “stuff”, and for its incremental additions to tax income tax liability.
It owns a life policy set up to provide long term care were it to be necessary, and would back up that insurance were I to become incapacitated (like in a nursing home). That possibility is one reason it is essential to leave most of the capital there intact.
It does not pay for other ordinary living expenses like travel, car (and repairs and insurance), clothes, food, etc.
And here is an important point: It does not pay for losses due to major disruptions to political or social order that affect everyone. For example, if the current debt ceiling crisis were to result in the sudden stop of my social security income, I could not collect from the MFB portion, because this is a shared hardship that affects everyone. Likewise, I lost about $3000 from an event that I could not attend at the start of the COVID crisis in late February 2020. COVID hardships affected everyone and came about because of the behavior of an adversarial foreign power. Essentially war.
The management of the JohnWBoushka trust (separate from mother’s) deserves note. The trust amount is subject to the 1% draw above in a tax year if ever requested. (The money in my own personal account is not.) I do claim the power, at my discretion as executor, to move money to my own personal account for “strategic” investments such as promoting sales of my books or even conversion to a motion picture. Similarly I could make other investments, like cryptocurrency. I am not allowed to do this with the money in the MDB trust. Any such investment from MDB would have to provide returns from customers almost immediately. (Investment in normal securities is of course one, but must be done with care. The trusts do maintain more than $200,000 in cash-like accounts that cannot lose principal – although they could lose purchasing power with inflation, such as what would happen if the Federal Reserve mints a coin to get around a debt ceiling impasse!)
Om fact. In marketing my books (even old as they are) I’ve gone on a splurge. It looks like I’ve spent $54,000 on marketing with iUniverse since 2020. The first $3000 was lost when I couldn’t attend the first pitchfest in California as the pandemic started. I have attended them in NY and LA in 2022/4 and 2023/2. Other services have included podcast and video interviews and bookstore pitches and festivals. I did move money from my own trust (not MDB’s) for this purpose. If a 1% request were to come and be honored, I would add it back to the basis. However, as of this writing, no more money will be spent on these service efforts until they pay off.
The monthly “rent” idea means that the money in the annuity (in my own name) cannot be spent, so the balance actually available to me is $292000. Much of that is in various securities, so the debt ceiling issue could get dangerous.
I had reported to beneficiaries in early January 2018 that when I sold the house and bought a condo (with the trust) in Oct. 2017, I netted $397000 of increased liquidity for the grantor trust (union of all three trusts). According to records that I have, I placed 25% of that increase in my own trust (which I have drawn from as discussed above). I also added about $16000 to the same trust to pay “myself” some severance that I could arguably have claimed from ING in 2002 (but could not because of having signed a release of all claims to get their enhanced severance; there was controversy over their not giving their usual 60 days notice for the Dec. 13, 2001 layoff announcement.)
I should add, that the presence of inherited wealth in my assets makes it inappropriate for me to ask others for donations, for either my own content (so I don’t use Patreon), or for organizations.
(May 4, 2023 at 3 PM)