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

[disneysteve]

This can be a somewhat uncomfortable topic, and I'll admit to struggling with it myself, but as we get older, it's a reality for many of us that we will receive an inheritance when our older loved ones die. I have a relative who has metastatic cancer. Although he has been doing well for quite a while, his last test results weren't good. We're waiting to get more details about what to expect but we all know that his prognosis is terminal. It's just a matter of how long he's got.

Anyway, what prompted the thread is that I am the beneficiary of his estate. I'm also the beneficiary of my almost 90-year-old mother's estate. As hard as it is to think about, and I can't deny feeling at least a little guilty in the process, the truth is that unless his end of life care costs a huge amount of money, in the relatively near future, probably a couple of years tops, he will be gone and I'll be getting something north of $1 million. After expenses and taxes, I'll probably walk away with 700-800K. I'm honestly not quite sure about my mom's numbers. We really need to sit down one of these days and go over that. But I'm guessing there's about 300K or so, so maybe 200K after everything. She's in pretty good health for 89 so no particular expectation of her passing any time soon but one never knows. She might live to be 100+ for all we know. My cousin, unfortunately, is a different story.

I'd love to hear from those of you who have received an inheritance that was a significant amount for you, whatever that may be. How did you deal with it? What did you do with the money? How did it impact your life going forward?

If you haven't gotten an inheritance but reasonably expect to, have you given any thought to what you'll do with it?

[TexasHusker]

This is such a reality for me right now. I lost my father to Alzheimer’s last April, and he had $300K to distribute to his three children including me. There is a definite sense of guilt having that money, no question. My dad grew up very poor and climbed out of it to make a good life for his family. He scrimped and saved his whole life. So yes, I understand the guilt. It’s just weird and awkward.

My father in law died in December and my wife inherited $250K and an income producing farm that’s worth another $200-250K. Her dad was a total jerk, so I feel no guilt.

But is created an interesting dynamic at our home, as my wife created her own special account for these monies. There’s been nothing said, but I sense she feels it’s slightly more “hers” than “ours.” We have discussed how we might manage it but I tread lightly on the matter. I’m not really sure why.

We have accumulated a net worth of over $2 million with no inheritances, and I’ve managed all of it her entire time, yet now here we sit with her father’s inheritance and it’s uncomfortable.

She said “I do want to spend a little on a sisters trip and a new necklace”. Of course that’s fine, although I never said “I think I’ll use a little of my dad’s inheritance to go buy me a new shotgun” (or whatever).

It is just strange.

Another weird thing is all her sisters are all wanting to know what the others are doing with their money. “Why are you thinking about spending it all in real estate?” etc. So, our personal finances have somewhat been thrown out there and that makes me uncomfortable. And of course they want my advice (but not really), which I am not about to give.

I don’t like all of this and I hope it passes.

[disneysteve]

Thanks for the input, TH. I certainly realize that family dynamics can play a part in the process. I'm hoping there won't be too much of that in my case. I'm an only child (well only surviving child to be exact as we lost my brother 30 years ago) and my cousin has no siblings and never married or had kids so there's not anyone else in either case with whom I will be splitting the proceeds.

As for my wife, I don't know what, if anything, she might eventually get from her mom (who recently turned 80). Not a lot, I don't think. Plus she has 2 sisters so whatever there is would be split 3 ways. And we would both be totally okay with forgoing our share if there ends up being a bunch of drama about it. Two of the three are reasonably well off but the oldest is not and the money would be far more life-changing for her than for either of the other two.

I have heard many times from various sources that inheritances should be kept separate from other marital assets and in the name of the recipient though I think that is mainly to protect it in the event of a divorce. Once it's co-mingled, it's fair game in any settlement.

As for the guilt part, right now that's stemming from me even thinking about this when I feel like all of the focus should be on his health and making sure the remainder of his life is as good as it can be. But I'm a finance nerd and a planner so I can't help but think about it.

[TexasHusker]

Yes I felt the same guilt with my dad. I essentially had to confiscate all of his money to protect him from himself. He knew it on a certain level and told everyone that I stole his money. It was just a nightmarish situation and he was paranoid of me, I am afraid, until his thinking was so unclear that we couldn’t communicate. One common side effect of Alzheimer’s is paranoia and distrust of others.

When your dad fully believes that you stole his nest egg, why it is just a devastating thing. Of course he wasn’t in his right mind, but that is of little consolation. It still keeps me up at night and I have nightmares about it all.

[disneysteve]

What an awful situation. Dementia is a terrible disease and watching your loved one go through it is heartbreaking.

[cypher1]

This is definitely a topic I've been thinking about recently, as a few weeks ago my uncle passed away, leaving my aunt, no children. Which got me thinking about my parents health (retired and in early 70s), and rough plan for when something happens to one of them, and also leaving behind my youngest sister with downs (she's 30 but can't take care of herself). While I don't expect any inheritance nor want anything from my parents, I'm also concerned with their finances being a mess (no debts, and house paid off at least), with very little organization or communication between parents about the direction or action plan.

I realize no one can fully prepare emotionally for the loss of any loved one, and I've struggled with talking to them about this for the last few years, since it's such a sensitive topic. My siblings are concerned too, but they have their own families to tend to, so its not really a priority nor does anyone else want to take the initiative. A part of me may just not get involved for speaking out, when it happens. However, I will definitely say something when it comes to the decision of my youngest sister and if I feel she is getting taken advantage upon.

My father in law died in December and my wife inherited $250K and an income producing farm that’s worth another $200-250K. Her dad was a total jerk, so I feel no guilt.

But is created an interesting dynamic at our home, as my wife created her own special account for these monies. There’s been nothing said, but I sense she feels it’s slightly more “hers” than “ours.” We have discussed how we might manage it but I tread lightly on the matter. I’m not really sure why.

TH, that situation reminds me very much of my folks years ago, when my mom received an inheritance from her mom, as well. From what I gathered, my dad felt he had very little, if any, say in the direction of the money to be used since it was from HER mom. Which my mom decided to keep completely separate from their finances. I know he's not bitter, but definitely felt it was a big disconnect for communication, or lack of.

[Jluke]

Inheritance from my side: put towards mortgage/college debt (if any) or retirement. Or set aside for my kids.

inheritance from my wife’s side: ideally boost retirement funding for her. Her decision though.

All 4 parents are currently mid to late 60’s.

[MonkeyMama]

If you haven't gotten an inheritance but reasonably expect to, have you given any thought to what you'll do with it?

As a planner, of course I have given thought to it.
The reason I have thought about it at my age is because our parents have been very open about their finances. Also, sister is extremely ill so it is very likely I will be the sole heir. I only really thought about that in recent years, but it does mean that my potential inheritance is quite massive, and because of that is worth putting some thought and planning into. The background on that is that my "impoverished" side of the family left behind some pretty massive inheritances (in terms of their income/means). First it was my grandparents, who shocked everyone with how much money they left behind. My Dad grew up in poverty but his family was very large so he probably ended up with more inheritance money in dollars. It just keeps trickling in from random extreme-saver relatives (some who did not have kids). My mom's family was middle class and did very well, but it was also split may ways. What is striking to me and why I have been giving it more thought is that my parents shared this money with 7 siblings. That it will all trickle down to me is kind of absurd in comparison. (My parents didn't expect or rely on this money whatsoever, so it is just being invested).

My husbands' family, they are frugal and savers, but I don't read the more "Extreme" kind of personalities that are so abundant in my family. He still has living grandparents so time will tell. His mom has told us they want to give us $50k of her mom's money. But I think that's pretty optimistic given how little in assets she has. 2-3 years in a nursing home will wipe out her assets. My in-laws have also told us in the past they plan to leave us $500k, but I feel more of the same. I am not as optimistic they have planned as well for end-of-life expenses. Their assets are considerably smaller than my parents' assets. It's nice they want to plan for their kids, but is nothing I plan on whatsoever. Or have even given any thought to.

This reminds me though, the one thing that is obvious is that my parents will never need any financial help. This does stand out to me because so many of my peers are financially caring for their parents (in their 30s and 40s). Which is a whole other discussion and something else to plan for. <---- Might be an interesting discussion but I am to lazy to start a new one.

My spouse and I have been together since we were 18 so there is no question that we will share all of our inherited assets. We have built up everything we have together and our parents view us as their children. I have some extra peace about this because my mom told me a while ago that I "should" keep inherited money separate. Something like that. Then she said, "Pffft, yeah we never did that. I just said that to your sister. I don't care what you do." In contrast, my sister had married twice before she was 23. So of course my parents want her to be more careful. My husband is like a son to my parents, in contrast.

{Insert another discussion topic: I have a friend going through a divorce. The divorce was largely due to a (very unexpected) inheritance. The money brought a lot of ugliness to light. Clearly the problems were deeper. But I imagine this a common marriage minefield. As they say, money magnifies both the good and the bad}.

I suppose I should answer the question. I would like to break the cycle of extreme money hoarding in my family. So our primary focus would be charity and maybe starting a charitable foundation. I also think our kids will make out pretty well. For us personally, we plan to retire on the young side and expect this to shake out after we are retired. Which is why it will all be passed on to charity and our kids. I do not want to hoard vast amounts of money for no purpose. That is the part I have issue with. & I could not even imagine enjoying the money after seeing the way my impoverished grandparents lived, etc. My kids never saw that and I think would feel less guilt about it. My kids only saw their grandparents prosper, so I think they would have more peace with it. Ignorance is bliss.

[TexasHusker]

If your loved ones have any significant assets with Edward Jones, get ready for a cat fight. My father in law had $600K there, and they have thrown up every barrier known to man to keep the daughters from getting their checks. I would never recommend EJ to anyone after all of this. They are slime.

In fact, if my wife doesn’t have her proceeds by Monday, I will be filing a complaint with Securities Exchange Commission against EJ.

[MonkeyMama]

If your loved ones have any significant assets with Edward Jones, get ready for a cat fight. My father in law had $600K there, and they have thrown up every barrier known to man to keep those girls from getting their checks. I would never recommend EJ to anyone after all of this. They are slime.

In fact, if my wife doesn’t have her proceeds by Monday, I will be filing a complaint with Securities Exchange Commission against EJ.

I'd expect this with any big brokerage. My in laws all have Merrill Lynch. Ugh! It was a big enough deal when we moved our own $10k - $20k (in our 20s). The guy who managed the family money was not happy we decided to invest elsewhere with lower expense ratios. My parents actually ditched Smith Barney (10 years ago) because of issues they had with inherited money. I presume my dad got his dad into SB. Some stuff went down and they have managed their own money since. But my in laws are still in that mess and plan to stay there.

[corn18]

My MIL has a $2.4M estate that will split between my wife and her nephew. I help my MIL with her investments. I talk to my wife about the inheritance. I told my wife it is her money and not needed for retirement. She told me it will go into the kitty all commingled. I countered with I think we ought to set up a foundation in her mom and dad's name and fund things they were passionate about. Maybe a few scholarship funds. A DAF for charitable giving. Grandkid's college. And who knows what else. I think that would honor their legacy and bring a lot of joy to us to manage. If we do it well, we could pass the trust onto the kids to manage and carry on their legacy.

[disneysteve]

I countered with I think we ought to set up a foundation in her mom and dad's name and fund things they were passionate about. Maybe a few scholarship funds. A DAF for charitable giving. Grandkid's college. And who knows what else. I think that would honor their legacy and bring a lot of joy to us to manage. If we do it well, we could pass the trust onto the kids to manage and carry on their legacy.

What a wonderful idea. I hope we might someday have the funds to do something like that.

And that really ties in to my original questions. As I've said previously, we are on track to have what I think we'll need for me to retire in 5-6 years as is. If I also inherit 800K when my cousin dies (which will likely occur within the next couple of years) and another 200K when my mom dies (at some point), we may find ourselves at 62 with $1 million more than we were aiming for. Certainly not a bad problem to have but we will then need to decide what to do with the money. Charity would be high on the list for sure. And I'd definitely want to keep a chunk of it to pad our nest egg to help protect us from any downturns and be able to spend a bit more freely.

The other possibility, depending on when the money comes in, is that it could advance my retirement date. Or at the very least, it could allow me to cut back from full time to part time for my last 2 or 3 years of work. I think I'd be quite happy working 20 hours/week instead of 36. That would let me keep my benefits so insurance would be taken care of (though at a higher premium than I pay now). If I could set up to do a 12 hr day and an 8 hr day and be off 5 days per week, that would be pretty sweet.

[Joan.of.the.Arch]

I'd love to hear from those of you who have received an inheritance that was a significant amount for you, whatever that may be. How did you deal with it? What did you do with the money? How did it impact your life going forward?

May I talk about an inheritance, but veer off a little bit? My husband recently received an inheritance from a former student. The amount was, taking into account inflation, more than two times his earliest yearly teaching salary. So not whopping huge, but multiple times a day my husband is kind of blinking, shaking his head, and saying, "What? What?" It is just so unexpected. The inheritance is not so much a significant amount as it is a significant meaning, if you see what I mean. The person who delivered the news also delivered a message of appreciation from the former student. Now that made a tear come to my eye.

As has often been advised at savingadvice, my husband is going to wait a while and mull it over before deciding what to do with it.

[bjl584]

I too need to have a sit down with my Mom and get all this figured out.
I am an only child and the sole beneficiary of her estate.
I don't know actual numbers, but it is in the millions.

Following this thread to see how others are handling.

[disneysteve]

I really want to thank everyone who has posted so far. Clearly this is a topic that others have on their minds too whether they've already dealt with it or have it on the horizon as I do. Thanks for all of the comments and for sharing your experiences.