DEAR HARRY: I'm faced with a problem regarding my uncle's estate. I'm the executor of the estate, which is now 95 percent in stocks and bonds. The total estate is a little less than $600,000, not including cash of $28,000. The widow is the principal heir, with her two sons as contingent beneficiaries. We are in the process of moving all the assets to a trust, as provided in the will. As the sole trustee, I have full and unlimited power to make distributions to the wife. But how much? The widow is getting Social Security of $1,900 monthly and nothing else. She is 72 and in exceptionally good health. What do I do about distributions without her outliving her resources? She has monthly expenses (without luxury expenses) of about $5,500. Help!
WHAT HARRY SAYS: At her age, her life expectancy is about 15 years, maybe longer because of her health. Let's get some figures to consider. With no income or losses, she would have $3,333 per month during the 15-year period. If the trust earns 2 percent, that figure goes to $3,861. For 4 percent, 6 percent and 8 percent, it goes respectively to: $4,438, $5,069 and $5,734. Losses would pull down that $3,333. My vote is for $4,000. The trust should earn that easily, and it will cover her expenses. Let us hope that you don't run out of money before she runs out of time.
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