Planning for death or incapacitation and your trading account

Discussion in 'Risk Management' started by FP22, Feb 11, 2019.

  1. FP22


    Such a nice morbid thought that most young traders don't consider but maybe some older ones with families may have thought of.

    I have spent considerable time setting up a good estate plan to include wills, poa, trusts, life insurance, etc., so that is all good. My next plan is to spell out instructions for my broker to close out all trades in my trading account and move that money into a specific ETF so my wife is overwhelmed looking at the account while she hopefully mourns my dead ass. I am currently spending this year making my accounts simple and more easily understandable for her in case I get hit by a bus tomorrow.

    I wonder if others have given thought to this??
  2. Robert Morse

    Robert Morse Sponsor

    What broker would take these instructions?
  3. My guess is that the first thing a broker will do when they hear that the account owner has passed away is to block the account for any action. Until it has been clarified to them who has become the rightful heir of the account.

    I'm not too sure about what to do in my case. When I would suddenly be hit by a bus my wife would be my heir but she does not have an understanding of trading and of the instruments in my account. She would need help in closing all positions and transferring the resulting cash to her bank account of choice. I wouldn't know who would be able to help her with that and don't think that IB (my current broker) has people available to assist in such situations.
    Robert Morse likes this.
  4. jharmon


    It really depends how complex your trading has become.

    Leave detailed login instructions with your wife. Find a trusted trading colleague. Develop detailed instructions for what you want to happen. On a quiet day, enter several positions and then have you wife do a practise run of the procedures with the colleague. The final step should be a change of password that your wife understands, so that your colleague (no matter how trustworthy) is unable to trade on the account again.

    How legal is this? I have no idea. But it's prudent. Also, mention it in your Will, so nobody can be accused of not following your wishes.

    If you don't know anybody else trading, perhaps it's start to start networking and expanding your contacts.
    PennySnatch likes this.
  5. JSOP


    You are instructing your broker to close out all your accounts and move all that money into a specific ETF so your wife would be overwhelmed looking at the account? LOL Wow, good thinking. Nice way to make her life easier while she mourns you. :)

    I think the easiest way is just to leave your next-of-kin the password to all of your accounts and with instructions on what to do and the broker's contact information in your will. And from time to time, show your loved ones the broker and also the trading software/platform that you work with so they would at least be familiar with everything on an overall level should anything to you.
    Last edited: Feb 11, 2019
    FP22 likes this.
  6. JSOP


    You mean like in that movie "Ghost"? ;)
    beginner66 likes this.
  7. tiddlywinks



    The EASIEST AND CLEANEST is a JTWROS account. The one assumption that needs to be made for such titling is that the titled parties will not all simultaneously be hit by the bus. All titled parties have unfettered account access (and hopefully passwords, etc), so all that is left, is to provide any particular instructions directly to the remaining titled account holder(s), obviously, before the bus arrives.

    If JTWROS is undesirable, then passwords and necessities to access an individual account, can be provided to trusted family/friend along with particular instructions, will work for an online account, with a caveat... if there are legal disputes, recorded dates, times, IPs, etc, may be problematic.

    This type of thing can become very complicated for all involved. I've offered two options on the simplistic side of of scale. Account size (among many other related and unrelated facets) should play a role as to which side of the scale is most appropriate and/or beneficial.
  8. fan27


    Perhaps a little inspiration from a Twilight Zone episode.

    digitalnomad and beginner66 like this.
  9. wrbtrader


    Have a backup plan beyond your wife just in case she's not in the right mind to make good decisions if something bad happens to you.

    I did everything you have done and it was still a messy situation for me when I was in a coma for about 2 months in the fall of 2016...messy setting up everything during my recovery in 2017. Yet, even when you think you got everything setup...something new occurs in your life and you need to make plans for that too.

    Also, make sure you have a good lawyer and safe deposit box at your bank that contains your every wish. Thus, don't leave your spouse with all the info...too much pressure to leave all your instructions to one person during a traumatic event involving you even if she's a very level headed person.

    She will forget things, forget location of important papers and many other things during her mourning. Thus, have a backup plan so that its not all on her.

    It really takes about a year to setup everything...trying to make it easier on your love ones just in case the worst happens along with the never ending updates when new things/changes develop in your life.

    Talk to everybody you love & care about about what may be important to them. They may think about something you have not thought about.

    billv and Onra like this.
  10. JSOP


    You were in a coma? You are ok now?
    #10     Feb 12, 2019