Discussion for those who have received (or will receive) an inheritance

[Thrif-t]

I'm getting a little windfall inheritance next month, 19k. So nowhere near the amount that everyone else here is experiencing but grateful for it none the less.

My aunt and uncle died with no will because they had a trust. They had no kids but special nieces and nephews who were like kids, whom I'm sure inherited the trust assets.

Uncle dies then uncles sister in law died and left her estate to my aunt who died shortly thereafter, like a month after! without a will. So what happens it goes thru probate. The sister in law left 500k and its being split between all 32 of us cousins. Curse my big Italian family. No not really, I love them all and happy to share. But how cool is that? We're basically getting $ from a stranger!

I'm getting some new flooring in my house and saving the rest. I have a feeling I may need to help my son out more with college costs than I did with our other 2. So I'm very appreciative of the money!!

[myrdale]

I have not yet been in this situation, so my comments may not pertain specifically to your situation but rather to the topic in more general terms.

First, for taking over the finances of a relative who is still alive. You're not "taking" their money, you're managing it for them. My mother got upset over taking money out of my grandmother's accounts to purchase a club to put on my grandmother's car. That $30 prevented my grandmother from killing herself or someone else. Now if you were drawing off their accounts for your personal expenses, unrelated to their care, that is a different matter.

Second, for inheritance. It is my opinion, this type of money should never be seen as a windfall, rather as a responsibility left to you to be the stuart of. This is all that is left of their life's work after all.

A co-worker recently inherited $50k from his father's life insurance. The very next week he came in with a $30k motorcycle. 6 months later he made a comment in passing about being broke.

If you do receive some large sum, sit on the money for a while. There is no hurry. You didn't have this money last month, so live the next couple of months as if you still didn't have it.

Once you're ready to spend it, put yourself in a good position, ie pay off all your debts and what bits you can do retirement funding.

Have some fun with it. Spending over 80% in the way my co-worker did is probably not the best of ideas, but look at what the 10% mark can get you.

Heck, give some of it away. What clubs or charities or churches was your relative a member of? I am sure they would be glad for you to spend some small part, again I am figuring 10% towards that.

Lastly put yourself in their shoes. Think about the fortune you will one day leave your heirs. You've been dead and buried for over a week, and they are walking out of your attorney's office after the reading of the will. Do you want them to fill guilty for the blessing you've left them? Or do you want them to fell honored that you have put your trust in them for the future?

[disneysteve]

If you do receive some large sum, sit on the money for a while. There is no hurry. You didn't have this money last month, so live the next couple of months as if you still didn't have it.

Once you're ready to spend it, put yourself in a good position, ie pay off all your debts and what bits you can do retirement funding.

Have some fun with it. Spending over 80% in the way my co-worker did is probably not the best of ideas, but look at what the 10% mark can get you.

Heck, give some of it away. What clubs or charities or churches was your relative a member of? I am sure they would be glad for you to spend some small part, again I am figuring 10% towards that.

I think this is all spot on advice and mirrors what I intend to do.

[LivingAlmostLarge]

We got about $25k from DH being an executor of his uncle's estate. I considered it a bonus. Gave each kid $12.5k into their taxable accounts. I had to. My MIL would freak if I put it in our accounts and we got divorced because it's DH's money. So to keep the peace it went to the girls. Each girl when she gets older will have a nice little nest egg from the same uncle who gave them $1k upon birth invested in apple stock. They each have around $20k in this UGMA accounts ($21 and $19k). We wont' make them use it for college that falls on us. But I sort of savor seeing it every month and thinking wow what a start my kiddos are going to have. I mean it'll be enough for a house downpayment for sure for each girl (10 and 7) even in the expensive coastal cities.

It was life changing. Besides I think the uncle would be super happy we saved it for them. Family first and always help them. He was very charitable and gave away 75% of his million + dollar estate.

[cypher1]

We got about $25k from DH being an executor of his uncle's estate. I considered it a bonus. Gave each kid $12.5k into their taxable accounts. I had to. My MIL would freak if I put it in our accounts and we got divorced because it's DH's money. So to keep the peace it went to the girls. Each girl when she gets older will have a nice little nest egg from the same uncle who gave them $1k upon birth invested in apple stock. They each have around $20k in this UGMA accounts ($21 and $19k). We wont' make them use it for college that falls on us. But I sort of savor seeing it every month and thinking wow what a start my kiddos are going to have. I mean it'll be enough for a house downpayment for sure for each girl (10 and 7) even in the expensive coastal cities.

It was life changing. Besides I think the uncle would be super happy we saved it for them. Family first and always help them. He was very charitable and gave away 75% of his million + dollar estate.

I've been wondering about this as well for my estate planning, since I don't plan to get married or have kids of my own. I was thinking about how I would want to disperse my assets to my nieces and nephews. Debating about basically moving the funds into taxable accounts for their own retirement.

I'm sure a lot of you will say I'm looking at this wrong, but honestly I really question the judgment of young adults and how they would manage a windfall potentially given to them at a younger age of 18+ to mid 20s. Generalizing, I know. While I want to be optimistic that they would invest and spend wisely, but I really don't believe that would be the case. I also believe they should understand the value of hard work, saving, and investing. If a large sum of money was given to them, I don't think they'd really appreciate it, without being earned (I know I wouldn't , even in my early 20s).

[disneysteve]

I really question the judgment of young adults and how they would manage a windfall potentially given to them at a younger age of 18+ to mid 20s. Generalizing, I know. While I want to be optimistic that they would invest and spend wisely, but I really don't believe that would be the case. I also believe they should understand the value of hard work, saving, and investing. If a large sum of money was given to them, I don't think they'd really appreciate it, without being earned (I know I wouldn't , even in my early 20s).

There are other ways to handle that through trusts or annuity-type arrangements.

We had to make that decision years ago when our daughter was granted a settlement from an accident case. We could have chosen for her to get a lump sum payment when she turned 18 or a monthly check for the rest of her life. We opted for the annuity even though she could have come out ahead financially getting the lump sum and investing it wisely. The annuity eliminated the risk of her blowing it. Of course, today, she's a bright young woman and I have no doubt that she would manage that money responsibly, but back when she was 8, I couldn't be sure that would be the case. So instead, she gets a nice little check every month that increases 2%/year forever.

[cypher1]

Yeah, i'll have to look into that annuity-type arrangement for them. Personally I'd rather have them get the money in the form of retirement income way later in their lives. Since its not like they would be depending on an inheritance from a relative for their daily living expenses in their 20s+.

[disneysteve]

Yeah, i'll have to look into that annuity-type arrangement for them. Personally I'd rather have them get the money in the form of retirement income way later in their lives. Since its not like they would be depending on an inheritance from a relative for their daily living expenses in their 20s+.

Even if they do receive it in the form of a monthly check, they could then use that money to fund their Roth or up their 401k contributions to compensate for having that money coming in. I suppose there are bunch of ways to approach it.

[amarowsky]

This is fairly close to me. As the dust has settled since my mother passed away in 2014.

It was an intensely emotional experience, my mom was tremendously close to many, and only 51 when she passed away from pancreatic cancer. Our family is fairly humble and overall Low/center -Middle class typically. Thankfully, our’s was divided between my brothers family, grand parents, and my family - and were all very very close and have absolute trust in one another. So it went off smoothly. I believe my inheritance was about 80k + 1/2 ownership of my mom’s house. Which was has proved to a blessing, as it was the engine that started my R.E. Investing business.

I’d give it all back for a day with mom, especially if I could make her proud with all of we have built, created, and seen. But I’m grateful she responsibly planned to take care of us, and we have not taken her money for granted. It all went to school + wedding + retirement. And was effectively deployed in all of those.

Momma didn’t raise no fool!

[disneysteve]

I’d give it all back for a day with mom, especially if I could make her proud with all of we have built, created, and seen. But I’m grateful she responsibly planned to take care of us, and we have not taken her money for granted.

Well said. I intend to be the same way.

My cousin is a big proponent of early retirement. He saw his mother die young of cancer, and his father and uncle die early due to Alzheimer's. He worked hard to position himself to be able to retire at 55 and enjoy life for however long he could. He fulfilled his dream of moving to Florida and has been loving life ever since. He just turned 65 so he's had 10 great years, even with cancer treatment these last few. Sadly, the end is probably approaching but I know that he would be thrilled to know that his gift to me enables me to retire and enjoy my later years to the best of my ability.

I won't know exactly what will happen until I know how much I end up with, but if it's close to $1 million, retiring sooner than planned will be a very real possibility and that would definitely honor what he stood for.

[rob62521]

It is a tough subject. My husband's mother died a number of years ago and we inherited some farm land. Sadly, because he shared it with his brother, brother came in on top of the deal and dh lost a lot of things he could have. Although they were supposed to share 50-50, because my husband didn't want to anger his brother and hire a lawyer, he lost out on some things.

[LivingAlmostLarge]

Maybe it's not a good idea to give an 18 year old a sizable sum. But at the same time, I don't like annuities and I'm hoping that they listen enough. Maybe i can say if you are going to spend it has to be for college? I'm not sure.

[disneysteve]

Maybe it's not a good idea to give an 18 year old a sizable sum. But at the same time, I don't like annuities and I'm hoping that they listen enough. Maybe i can say if you are going to spend it has to be for college? I'm not sure.

You can say that, but once they're 18, you won't have any actual control. We all hope our kids will turn out to be responsible, but if they see a huge balance in their account, there's always a risk of them doing something frivolous.

I'm not sorry that we went with the annuity for our daughter despite her being very responsible. And not just because she could have blown the money but because she doesn't have the strongest work ethic in the world and if she was sitting on $1 million in the bank right now, her drive to work would probably be even lower than it is. This way she still needs to work to pay for life but gets that nice check each month to help.

[corn18]

Our estate as of today with life insurance would be over $5M. We set up a revocable trust with a pour over will into the trust. We did this when the kids were younger (13-16). If we both die, we put in the trust that they get nothing until they are 26 (they are 24 and 21 now). We did allow the executor to pay for college or any other expenses they felt appropriate. We didn't put any restrictions on this since the executor is a like minded friend.

As of today, the kids are responsible enough that we are comfortable removing the age restriction and just doing a simple will. 50% to each kid, no restrictions. I see a lot of folks try to control their kids from the grave, but I don't think we need to do that.

[cypher1]

You can say that, but once they're 18, you won't have any actual control. We all hope our kids will turn out to be responsible, but if they see a huge balance in their account, there's always a risk of them doing something frivolous.

I'm not sorry that we went with the annuity for our daughter despite her being very responsible. And not just because she could have blown the money but because she doesn't have the strongest work ethic in the world and if she was sitting on $1 million in the bank right now, her drive to work would probably be even lower than it is. This way she still needs to work to pay for life but gets that nice check each month to help.

While I don't have kids, I have this concern as well to others I plan to pass on assets. I believe they need to learn to budget and be disciplined with money. We all know someone that just works hard enough to get by. That if they got a windfall, are probably not going to change their work ethic or spending habits.