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« Want to Make Wishes Come True for Some Sick Kids? | Main | Still Shocked by How Little People Have Saved for Retirement »

June 21, 2007


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I tend to think about this question, not because I expect to ever inherit anything, but because if my wife and I both met an untimely demise (such as a plane crash), a number of our heirs could inherit very significant sums (though half the $$$ will go to charity).

While it sounds good in theory to leave people significant sums of money, the problem is that some of those people might not be able to handle it for several reasons.

They could be too young (in which case trusts and trustees are needed), plus you don't want to de-motivate young people by making things too easy too early in life. Or some people could be irresponsible with money (which suggests they'll blow whatever you leave them), or they could have an addiction problem (which the money could actually make far worse), or they could be elderly (and vulnerable to con artists). And what about someone who's marriage is on the ropes - getting a windfall could create an ugly divorce situation. The list goes on.

How to leave money in a way that makes people better-off, not worse off is a lot more challenging than you'd think. In fact, in the next version of our estate plan, my wife and I are probably cutting everybody way back to more modest sums (also because our assets have grown to where people would be getting more than we expected under the existing plan).

Money, especially a windfall can be a very destructive thing. I'll bet overall, windfalls have caused more pain than pleasure to the recipients.

Back in March I wrote a post about how to handle a financial windfall (link provided below if interested) and commented that one needs to take a step back and take a deep breath before making any decisions. During that process, one should deposit the funds somewhere safe while they evaluate everything.

It is important to realize that you might not have the answers and can consult with a professional for advice, whether it be with the tax implications or investment options. Just be careful with any selection of a professional.

My husband and I are seeing a potential windfall of a few thousand dollars in the near future. We've talked about it and will probably beef up our emergency fund/savings, put some in an IRA, and use whatever is left to pay down our mortgage.

I doubt we would ever change our lifestyle based on a windfall (even a much larger one) - we'd pay down our loans (house and student) and invest for the future. Just think what kind of retirement that money could bring after compounding for 40 years!

My wife and I ran into a sort of interesting situation along these lines. Two weeks before our wedding and a week after we graduated college, her grandfather died and we received a large wedding present/inheritance/leftovers from her college fund that increased our assets by about a factor of 20 and most of it was in a single stock. Figuring out what to do with that money, the tax issues associated with it and everything else would have been very stressful if I hadn't had help from a financial advisor who'd been managing my Roth for a few years. I feel like I know enough NOW that I could have distributed that money well but at the time I'd have handled it poorly. Looking back, I can't complain at all about how my financial advisor distributed it. So my advice is definitely to finds someone you can trust who can give you advice at a time like this.

I also would suggest finding someone you can trust when you have little money. Its much harder to find someone good when there's more at stake.

In the UK, the first thing a lot of people do after they receive an inheritance is pay tax on it! (Current threshold is £300,000 but the average house value is over £200,000 so if parents have a slightly above average property and a few savings, the children will be liable to pay 40% tax on any amount over the threshold.

I was lucky enough to inherit money, though not enough to change my life. One of the exciting things it enabled me to do was to immediately put 10% of it in a Fidelity Charitable Trust, so that I could get the tax benefits in a year it was financially helpful, but do not need to disburse the contributions until I am ready to make those decisions.
I've written more generally about our tithing

I am a recent college graduate. I have aspirations to go to PA school. I have the grades, I just need some medical experience. My mother passed away two years ago and left my sibling and I each roughly 60 thousand dollars. I have no college debt and am going to be moving to Syracuse, NY soon. I have never had a lot of money and I don't know how to save it. My sister thinks I should buy property in Syracuse, instead of renting. However, I don't know anything about owning a home. I don't intend to do anything wild with the money. I simply want to stretch it as far as I can in the future. Can anyone with any financial experience give me some advice?

Davy --

Check back on the main page in a couple weeks. I'll post your question for readers to answer.

Iwould like to know after n.j. tax is payed . How long does it take

get our inherit money. joan

Several years ago I inherited around $50,000 and I have lived on this amount ever since. It's been 7 years now I currently have $130,000 thanks to my money making technique that involves buying cars and cleaning them up and selling them tax free on eBay.

My advice to anyone who inherits money is to realize the POWER you have when you have a large some of CASH because you have a tremendous advantage in the business world if you have access to CASH. For example, You can see a car for sale for $10,000 and buy it for $7000 cash because you show up with a stack of $100 dollar bills in an envelope rather than the guy who has to go get financing... Most people have never seen a stack of $100 bills 3 inches thick and this fact makes them FOLD and give in when your trying to work a deal.

Once you buy a car for $3000 less than it's value, you simply clean it up, take pretty pictures and sell it for a $5000 profit... I've done it 100+ times over...

The key is it TAKES MONEY to make MONEY. So once you have MONEY don't just BLOW it as a foolish DOWN PAYMENT ON DEBT!!!!! MAKE YOURSELF WEALTHY!!!!!

I've told you the secret.. Now go do it. If you blow it all on silly stuff then you only have yourself to blame. Your life is yours... Do with it what you will.

Rich people ALWAYS PAY CASH. They have ZERO DEBT.

THINK about that.

I will be inheriting roughly 500,000 to 750,000 thousand dollars and I am 22, I have a career job(commercial A/C tech) that I am moving up in and my soon to be wife is a software engineer and makes good money, we already have a house and i am only in 4000 dollars of dept and she just owns money for a car and house, about 320,000 of that is stocks and investments. Any advise on what to do with roughly 300,000 CASH, we are both pretty good with money but never saw this one coming in out early life. It is overwhelming but I want to be smart and try to make millions someday with it.

Charlie --

I'll post your question in a couple weeks and let my readers have at it. Good luck!

Ok great thanks!

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