How to use an inheritance?

[Tybee]

I've been reading a lot about how to use an inheritance, and wondered what all of you would do if you got an inheritance. I know this depends widely on one's circumstances and age. I have read Dave Ramsey's advice about honoring the person who gave it to you, and I resonate with that. I have also read about going slow, and think that is good advice, especially if you were close to the person and are grieving. I am trying to prepare for when I get the inheritance from my mom, and I am a little nervous about how to physically deal with it, and how to apportion it in various categories, since I am in my late 60's, and my earning years have dwindled, so I have to make this last.

Anyway, thoughts, ideas, tips from those who have been there, all appreciated!

[frugal-one]

I've been reading a lot about how to use an inheritance, and wondered what all of you would do if you got an inheritance. I know this depends widely on one's circumstances and age. I have read Dave Ramsey's advice about honoring the person who gave it to you, and I resonate with that. I have also read about going slow, and think that is good advice, especially if you were close to the person and are grieving. I am trying to prepare for when I get the inheritance from my mom, and I am a little nervous about how to physically deal with it, and how to apportion it in various categories, since I am in my late 60's, and my earning years have dwindled, so I have to make this last.

Anyway, thoughts, ideas, tips from those who have been there, all appreciated!

If it is a large sum of money it might be wise to seek advice from a fee based financial planner on the best way to invest. DH inherited a small amount from his mother that were IRAs. We transferred the money to Vanguard and they set it up as an inherited IRA and calculated RMD each year. We actually used that money every year to finance our escape from winter and vacationed in Texas.

Interested to know what advice was given on how to honor the person who left you the inheritance….. ??

Again, so sorry for your loss.

[hana]

Husband and SiL sold a property they inherited and husband's share is around $30,000 a couple of months ago. After thinking about what to do with the funds we decided that $10,000 goes to paying the principal of the mortgage, $10,000 to the travel fund, and $10,000 to the emergency fund.

We're in our late 40s (me) and early 50s (him) and our only debt is the condo and there are no prepayment penalties in our state since this is our primary residence. We are at least 10 years away from retirement.

Ils were very debt adverse so we decided to throw part of the inheritance at the mortgage in their honor. Thought about the whole thing, but with this was before the continuing resolution passed congress and husband is a government employee so shutdowns mean he can't work. Threw $10,000 at the emergency fund, just in case. We decided to travel as much as we can while we can physically do so, my parents decided to wait until retirement to travel and mom had to retire early due to Cancer and they now need medical clearance to travel and have to time everything around chemo.

Hope this helps

[Tybee]

Thank you! We might do well to talk to a fee based financial planner. I do plan to talk to Schwab where I have my brokerage account, but that's not the same kind of holistic advice that a fee-based planner can give.

As to honoring, it's like hana was saying--her IL's were debt averse so they used it to lower mortgage debt. My mom loved investing in stocks, so honoring her might be to buy some stocks. She also loved real estate as an investment, so that's another thing. She was extremely frugal and would disapprove of anything "showy" unless you count owning land as showy, she would approve of that. That kind of thing. Not be wasteful because all of that money was worked for. Be prudent and thoughtful.

[catherine]

Not having good family models for getting an inheritance, I couldn't tell you from personal experience! But I think if it were me at this point in my life, I think "honoring the person" would mean doing whatever would give them the most peace of mind. If were dead in the Bardo and could see what my chlidren had done with my money, I would want to see their hearts lightened with it, and I would want to see it was being used mindfully and not stupidly.

So that means no frivolous spending, no new cars (unless one was greatly needed), no "hey let's go to Africa!" unless they could have afforded it on their own. I would want to have gifted a burden lifted off their shoulders. Maybe after that a small memento of our relationship, like a shrub or tree or small piece of jewelry

[Tybee]

"If were dead in the Bardo and could see what my chlidren had done with my money, I would want to see their hearts lightened with it, and I would want to see it was being used mindfully and not stupidly."
"I would want to have gifted a burden lifted off their shoulders."

Yes, exactly! Thanks for expressing this so succinctly.

[Tybee]

"We transferred the money to Vanguard and they set it up as an inherited IRA and calculated RMD each year. We actually used that money every year to finance our escape from winter and vacationed in Texas."

My mom would have loved that idea--it's great planning.

[iris lilies]

I inherited $60,000 from my mother in 2010. I gave 10% of it to the Park Conservancy for their latest project, not one I was especially in love with but it was their fundraising project at the time, so that was fine. The rest of that I kept for myself to spend however I like, because we already had decent savings.

A big part of that was “paying “DH to finish our basement* and living room, buying materials for that completion, and furnishing it.

I had been living with unfinished staircase and unpainted walls, etc. for more than a decade. So this allowed him to interrupt his work for other people and work for me, ha ha!

While I didn’t do this to make my mother happy, I know she would’ve been very happy with every way I spent this money. In that group of furnishings I also spent $3000 on a big piece of Victorian furniture which I still have, something I’d always wanted. So that’s the piece I always look at to remember my mom’s inheritance money.

* finished basement here means pouring cement onto a dirt floor and putting up a wall of shelving. It does not mean making a livable space, it means making a usable basement in an old house.

[iris lilies]

There is no way I would invest significant funds purely according to what the deceased person did with their money. Tybee, I’m not saying that’s what you’re doing but man, be smart about where you put that money. Do you normally buy individual stocks? Do you normally buy real estate for investment?

I have to be blunt here, because there’s many times over years you’ve talked about saving pennies (there’s nothing wrong with watching the pennies because that’s how the dollars grow) it seems to me that all of it should be focused on easing your old age.

I don’t know how much this inheritance is and if it’s a huge amount of money, then, siphon off some of it to give to your children. I think leaving your children something is a goal you have stated at often(?) give them a nice surprise while they are young enough to enjoy it.

circling back to how your mother invested her money, perhaps not be so literal in how you honor her investing spirit. You yourself are good at managing your investments, so think of it in a more abstract way perhaps: Tybee will put the money in investments that Tybee is good at managing, Tybee is her mom’s daughter!

[iris lilies]

Our other inheritance, the one more recently from DH’s dad, was made up of financial instruments and farmland.

The $120,000 in financial instruments we just kept as is. Our part of the family farm is valued at $250,000, but there’s nothing I can “do “with that, it just goes on our balance sheet.

so, in summary with the DH’s dad‘s money there was no decision making, although certainly there was drama about the farmland as you can remember