|
Post by luvmyrav on Jul 14, 2011 7:24:02 GMT -5
Long time lurker needing some advice.
We are set to receive a small inheritance from FIL. DH is meeting with attorney later this week to find out how much and details but we are thinking in the range of $15-40,000. We think we want to set the money up for DD who is currently 5, IL's were big on education and family meant everything to them, especially grandkids.
Background: DD will be an only child. We already fund a 529 and she will have a good start come college time. We don't want to add the money to the 529 for 2 reasons. 1. If we stay on the current life path and nothing unforeseen throws us off we will be in a position to help her come the time. And we both feel she should help contribute to her own education as well. 2. What if DD doesn't go to college. Whether being her own choice or a different life path. What DH has decided is that he wants to put the $ in a temporary account for 6-12months and then decide later where to park it long term.
So I guess I am asking for 2 things: what to do with the funds for the short term and then what to do for the permanent. And are there any tax implications we should be looking or expecting?
Thanks in advance for your help. While I don't post often I do read regularly and have learned a TON from you all.
|
|
alabamagal
Junior Associate
Joined: Dec 23, 2010 11:30:29 GMT -5
Posts: 8,149
|
Post by alabamagal on Jul 14, 2011 8:26:23 GMT -5
If you are in a fairly decent financial situation, I would use the money to purchase something that you will cherish for a long time. I got a very small inheritance from my grandmother, and it was just the right amount to purchase a piano (20 years ago). I don't play, DH does some and my DS loves it and it will go to him when he moves out. I always remember my grandmother when my son plays piano. I also have furniture that was inherited from my other grandparents. These bring out good memories to me, rather than saying there is $xx amount of money in your college fund from grandma.
But it you are in a position where the money would really help you get out of a bad financial situation, I would do that first.
|
|
Wisconsin Beth
Distinguished Associate
No, we don't walk away. But when we're holding on to something precious, we run.
Joined: Dec 20, 2010 11:59:36 GMT -5
Posts: 30,626
|
Post by Wisconsin Beth on Jul 14, 2011 8:31:31 GMT -5
I think your DH is taking the right course in parking it in a temp. account for 6-12 months, as long as he's using the time to determine what he'd like from the money; what his risk tolerance is and to educate himself on investing. A fee based financial planner would probably be worth a trip too.
And I'm sorry for his/your loss.
|
|
Peace77
Senior Member
Joined: Dec 29, 2010 1:42:40 GMT -5
Posts: 4,009
|
Post by Peace77 on Jul 14, 2011 8:48:04 GMT -5
Do you have any debt? If so consider paying off the debt and instead of continuing to make debt payments, make deposits into a savings or Money Market Account. Find an account paying at least 1% interest to put the remainder of funds. Check local credit unions. Also check banks on www.Bankrate.com
|
|
Deleted
Joined: Oct 31, 2024 18:43:43 GMT -5
Posts: 0
|
Post by Deleted on Jul 14, 2011 9:14:46 GMT -5
There will be no tax implications for receiving an inheritance.
As for what to do with it. My advice is to put it in a bank for a few months while you decide. Do not make a quick decision.
|
|
gawgagranny
Familiar Member
Joined: Dec 19, 2010 9:00:04 GMT -5
Posts: 501
Today's Mood: partly cloudy with a chance of showers
|
Post by gawgagranny on Jul 14, 2011 10:25:07 GMT -5
I agree with Beth and Archie....for the short term, put it into something safe and secure unless you have some really pressing financial crisis (which it doesn't sound like you have, BTW). Take at least a few months in which to consider and make a wise (not emotional or kneejerk) decision about long term arrangements for this inheritance.
|
|
Gardening Grandma
Senior Associate
Joined: Dec 20, 2010 13:39:46 GMT -5
Posts: 17,962
|
Post by Gardening Grandma on Jul 14, 2011 10:38:03 GMT -5
I agree with the idea of parking it somewhere safe while you explore the options. Also, in this case, I'd seek out a fee-only financial advisor to get long term recommendations.
The other posters are correct about the tax implications - the inheritance is not taxable. There may be tax implications later, for the gains.
I am sorry for your loss, but what a wonderful gift to your daughter.
|
|
phil5185
Junior Associate
Joined: Dec 26, 2010 15:45:49 GMT -5
Posts: 6,412
|
Post by phil5185 on Jul 14, 2011 10:45:08 GMT -5
People tend to lose lump sums in about 7 yrs - lottery winners, inheritances, judgments - people that have never managed money often split the money several ways - payoff CCs, payoff cars, buy a new car, buy a new car for their mom, payoff mom's house, etc - and then they save the last $5000 "for their future" by buying an annuity or worse. But it doesn't sound like you are susceptible to those traps. I would put it in a market index fund (or 50% index fund, 50% short bond fund) at a no-load company such as Vanguard or Fidelity. Keep the 'lump' intact, put it in your own name as a family wealth fund, and ignore it for a couple decades. The goal would be for each $10k to appreciate to $80,000. Your family will have many events/goals by 2031 - wedding, grandkids, SonIL's new business venture, your business venture, and so on. Or maybe just an extra million for the grandkids colleges.
|
|
|
Post by luvmyrav on Jul 14, 2011 11:14:13 GMT -5
We are ok financially. Only debt is a small mortgage at 5% that we aren't rushing to pay off. If we stay in this house we will have it clear by the time DD is in college. And we do have a financial guy. I am just reaching for the wisdom of the boards to get a few different ideas.
Phil.....I was hoping you would post. I often read your comments and am amazed at your insight and wisdom. The money will not be blown. Dh's parents worked too long and too hard for what little they could save. It means way too much to us to just blow. I do like the idea of future goals such as a wedding and such. Having a little extra money at such a special time would be a nice gift. And knowing DH's parents it would make them smile.
Thank you again.
|
|
|
Post by robbase on Jul 14, 2011 21:25:54 GMT -5
usually I think it is best to wait a year with the money if it is from an inheritance (depending how close you and your husband were to the deceased you may feel "guilty" abiout this money or something). I would park it into a CD or somehting safe and let it fester for a year while I dealt with my grief and than worry about options later. 1 year won't hurt the money and you may be mentally in a better place at that time to deal with this money.
|
|
Mardi Gras Audrey
Senior Member
So well rounded, I'm pointless...
Joined: Dec 25, 2010 18:49:31 GMT -5
Posts: 2,087
|
Post by Mardi Gras Audrey on Jul 15, 2011 1:06:08 GMT -5
Rav, what does the rest of you financial picture look like? What do you have for retirement/future savings? Are you and your DH contributing to any 401ks available and fully funding Roth or traditional IRAs, as appropriate?
I would keep it somewhat liquid for the next few months while considering what to do with it long term. If you and your DH haven't funded your IRAs for the year, I would put the money into those (preferably Roths) if you don't have any debt to pay off. The advantage of those is that they are in your name, are for retirement, grow tax free, and the money can be used later to help DD with schooling, if necessary. If she decides not to go or doesn't need the $$, you will still have it tucked for retirement. 529s are good but they concern me a little. I know that they are not currently counted in financial aid projections but I can see them being counted against you for aid in the future, especially as more people have them. If that happens, it would be better to have all the $$ in your IRA because it is assumed that money will be used for retirement, not for education purposes.
|
|
happyscooter
Senior Member
Joined: Jan 5, 2011 9:04:06 GMT -5
Posts: 2,416
|
Post by happyscooter on Jul 15, 2011 7:04:15 GMT -5
When I inherited money from my paternal grandmother (I got my deceased dad's share), I parked it in a money market account. Rates were higher, this was 7 years ago. Both of my sons were still in college and it would have been enough to pay the last year for my older son and the other 2 years for my younger son. DH and I were paying tuition but had anything happened and we couldn't have paid, this money would have been enough to get them through graduation. My grandparents were hard workers but my Grandma was illiterate. They scrimped and saved, invested, and grew their money over the years. I knew that they would have wanted the money to go for educational purposes since they weren't educated. We have since taken the money and put it into CDs (rates still not good but better than MM). Think about what the deceased person liked to do and use the money for something like that. If they liked to travel but was never able, use that money to take a trip. If the deceased person liked animals, consider giving some to the humane society. Win, win for all concerned.
|
|