Help with inheritance...

[cschin4]

I think it would be wise not to DO anything. Just put the money in a savings account (but pay off the cc's) and then let the rest sit there for a couple of months until the reality of it sinks in.
I would NOT got a financial advisor as they may push her to put her money into funds, etc that she isn't ready too. I would NOT got buy anything that is expensive like a house, etc.
After my dad passed away, someone told my mom not to make any changes for a year, that was great advice. Allowed her time to adjust to a new reality and then she was able to make good decisions.
Same for your friend, she should not rush to invest or place money anywhere until she has clearly thought this through over a period of time.

[cschin4]

Plus, lots of real estate investors lost their shirts in the market downturn so buying real estate is no guarantee that you'll make money

It is nice to hear someone say that! I rarely see any stories about people losing money on real estate, landlording, etc but it happens and no one wants to talk about their failures.

[ScrimpAndSave]

Not saying that it is time for her to do anything - but just for reference, her father passed away 7 months ago and now she has the inherited the IRA. She needs to take out a certain portion by the end of this year (she did withdrawl some - she needs to take out about $15,000 more). Her plan right now is to put $10,000 into a new mutual fund and then put the other $5,000 into a Roth to max it out.

She did get about $25,000 already from other small retirement accounts and she is using that to pay off her car and her credit cards. I helped her devise a new budget so she is not accruing any credit card debt (she wasn't a spender to begin with - had about $2,000 on a credit card but always had enough in the back to pay it off).

She is the friend who is renting from me, so we are very close and she has disclosed a lot of information for me. I'm just trying to help her navigate through things. I will post the way the current IRA is diversified. She uses "The Mutual Fund Store" - not sure if anyone is familiar with it.

[Like2Plan]

Not saying that it is time for her to do anything - but just for reference, her father passed away 7 months ago and now she has the inherited the IRA. She needs to take out a certain portion by the end of this year (she did withdrawl some - she needs to take out about $15,000 more). Her plan right now is to put $10,000 into a new mutual fund and then put the other $5,000 into a Roth to max it out.

She did get about $25,000 already from other small retirement accounts and she is using that to pay off her car and her credit cards. I helped her devise a new budget so she is not accruing any credit card debt (she wasn't a spender to begin with - had about $2,000 on a credit card but always had enough in the back to pay it off).

She is the friend who is renting from me, so we are very close and she has disclosed a lot of information for me. I'm just trying to help her navigate through things. I will post the way the current IRA is diversified. She uses "The Mutual Fund Store" - not sure if anyone is familiar with it.

SNS,
Your advice to your friend to get a professional involved is very good advice! If all the inheritance is from IRAs (other than Roth) and 401Ks she is going to have tax consequences if she takes the money out.

If she received 25K already from other retirement accounts (were they traditional IRAs?), that may have already impacted her tax situation depending on what type of account it was...

Maybe she already has an inherited IRA set up? (DisneySteve had a good link on inherited IRAs on a recent thread, but I can't find it right now).
These considerations will definately impact what she can do with the money.

[ScrimpAndSave]

The 25k was from Scott trade and vanguard...I think these were just mutual funds. The taxes were already withheld and she was given the money in the form of a check. She mentioned that she HAD to close those accounts...but I am not sure if someone influenced her to do that or not.

I will post more later.

[disneysteve]

(DisneySteve had a good link on inherited IRAs on a recent thread, but I can't find it right now).

http://www.savingadvice.com/forums/investing-banking/49644-where-put-small-inherited-ira.html?highlight=inherited+ira

Here's the thread on inherited IRAs. The link I posted is in there.

[ea1776]

The initial advice to pay down debt was good and create a 6 month emergency fund was good.

I would question doing anything else with the money for at least 6-12 months. Have your friend put the money in a CD where she cannot access it for 6 months, and research making decisions.

In general the best way to handle large sums of money is to not spend them too fast or commit to anything in short term.

No new house
No new car
Not even creating a car fund IMO
keep all the money in one account, do not touch the money, then in 6-12 months make a well informed decision.

For example, if the spending habits did not change, she might find herself in 20k of cc debt
For example she might decide earlier retirement is a better avenue.

Good advice. I agree.

[segmond]

if she wants to figure it out on her own, she should go to the bookstore and pick up a dozen books and start reading.