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Message
re: Inheritance investment question(s)
Posted on 6/19/24 at 7:33 am to Dawgfanman
Posted on 6/19/24 at 7:33 am to Dawgfanman
No primary residence as she lived with us until the last few weeks (hospital then senior care/hospice).
Mom was 86, lived a great life. Now she's with my dad and her first 2 grandsons.
There was a question/comment earlier about the IRA and the RMD. I know she was taking the minimum and it came out each December. Have to find out the current value but I seem to remember that it has a death benefit of around $100k. She kept getting calls and letters wanting her to.change something with it but she wouldn't because that would erase the death benefit.
Mom was 86, lived a great life. Now she's with my dad and her first 2 grandsons.
There was a question/comment earlier about the IRA and the RMD. I know she was taking the minimum and it came out each December. Have to find out the current value but I seem to remember that it has a death benefit of around $100k. She kept getting calls and letters wanting her to.change something with it but she wouldn't because that would erase the death benefit.
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Posted on 6/19/24 at 7:49 am to TorchtheFlyingTiger
quote:This for sure.
Not sure how it works but I think you'll want to get a good appraisal of house value so you get stepped up tax basis since you arent selling immediately and may be more difficult to determine later.
Like have an appraisal of the Lake house done this month.
Everything else in front of you can be pretty easily forensically unwound*, the physical property needs to have a value established at the time you acquired it.
Fringe benefit- the appraisal of the property may discover unknown defects that you need to immediately address.
*doesn’t imply that it won’t cost you. Therefore, I’d consult appropriate counsel that works with estate planning.
Posted on 6/19/24 at 9:48 am to PJinAtl
Sorry for your loss.
You have some good answers for consideration.
I would pay off Heloc, but keep the low interest mortgage.
You did not provide income info, but will make an assumption that you fall in the middle of the tax brackets. If so, then I would max out a Roth contribution yearly with some of the funds. Allow your Roth money to grow as long as possible. Spend tax deferred money first once you starting using retirement funds. The Roth money grows tax free and should be given as much time as possible to grow.
Keep the majority of the remainder invested. The s&p500 is a reliable and fairly low risk way to grow wealth. The 500 is a solid option for your 401k money as well.
Given the info provided, I would not go too heavy on additional 529 money. Your retirement is important and could use more focus. Being financially strong in your latter years is good parenting and should not be a lower priority than your kid's college funds. You may find higher priorities for helping your kids down the road.
Consider your options on lakehouse. Sell it, or improve it and enjoy it if within reasonable distance. You could look into Airbnb options as a way to occasionally use it while generating revenue. We own one and use it in that way.
I inherited a smaller amount from my mom. We bought a pontoon boat and kept the remainder invested in the same funds that mom had the money in. I already had the majority of my money in the s&p500 and her funds were doing well. I thought of my mom often when we used the pontoon and never regretted the purchase.
You have some good answers for consideration.
I would pay off Heloc, but keep the low interest mortgage.
You did not provide income info, but will make an assumption that you fall in the middle of the tax brackets. If so, then I would max out a Roth contribution yearly with some of the funds. Allow your Roth money to grow as long as possible. Spend tax deferred money first once you starting using retirement funds. The Roth money grows tax free and should be given as much time as possible to grow.
Keep the majority of the remainder invested. The s&p500 is a reliable and fairly low risk way to grow wealth. The 500 is a solid option for your 401k money as well.
Given the info provided, I would not go too heavy on additional 529 money. Your retirement is important and could use more focus. Being financially strong in your latter years is good parenting and should not be a lower priority than your kid's college funds. You may find higher priorities for helping your kids down the road.
Consider your options on lakehouse. Sell it, or improve it and enjoy it if within reasonable distance. You could look into Airbnb options as a way to occasionally use it while generating revenue. We own one and use it in that way.
I inherited a smaller amount from my mom. We bought a pontoon boat and kept the remainder invested in the same funds that mom had the money in. I already had the majority of my money in the s&p500 and her funds were doing well. I thought of my mom often when we used the pontoon and never regretted the purchase.
Posted on 6/19/24 at 12:56 pm to PJinAtl
I am very sorry for your loss.
With this inheritance you have lots of good possibilities to improve your long term wealth and well being.
As you describe your financial picture I am making an assumption that you do not have retirement outside of the 401k, 403b, etc. Assuming you are relying on this plus SS to retire, it seems like you are a little behind to be able to stop working and retire comfortably at an early age.
I would want to be positioned when all of the dust settles so I could reliably budget for healthy retirement contributions 5, 10, 15 years from now through my paycheck and still meet all of my other needs and goals including savings for college, everyday living, enjoying the lake house etc.
Putting aside savings for an emergency -- Yes if not already in place
Paying off high interest debt (assuming HELOC is high) - yes.
What moves can you or should you move so that you can control your cashflow in the years ahead to always be able to make substantial retirement contributions? 15% of income? Max allowed? whatever you define that will let you meet your goalsWhatever you determine you need to do now and until retirement should not be left to chance. I would make this a center piece of these decisions.
When you are 65 and your youngest is starting college are you able to retire when you want or need? 2 years later? 5 years later?
Getting control of your cashflow so retirement is not derailed when you need a new car, etc. would be important. What was the HELOC for? Are you likely to need another cash infusion like that in the future? Can you avoid this becuase this may interfere with bedrock financial needs like saving for retirement?
If the inheritance only gets you squared away or caught up for a few years of contributions or a lump sum in a new Roth. etc/ and a few years later you are short of your retirement savings goal and unable to cashflow it out of yuour income, you will have to figure out plan B to get back up to the level you want.
Good luck with your decisions and I hope your Mom is well remembered for the blessings she left to you and your family with whatever choices you make.
With this inheritance you have lots of good possibilities to improve your long term wealth and well being.
As you describe your financial picture I am making an assumption that you do not have retirement outside of the 401k, 403b, etc. Assuming you are relying on this plus SS to retire, it seems like you are a little behind to be able to stop working and retire comfortably at an early age.
I would want to be positioned when all of the dust settles so I could reliably budget for healthy retirement contributions 5, 10, 15 years from now through my paycheck and still meet all of my other needs and goals including savings for college, everyday living, enjoying the lake house etc.
Putting aside savings for an emergency -- Yes if not already in place
Paying off high interest debt (assuming HELOC is high) - yes.
What moves can you or should you move so that you can control your cashflow in the years ahead to always be able to make substantial retirement contributions? 15% of income? Max allowed? whatever you define that will let you meet your goalsWhatever you determine you need to do now and until retirement should not be left to chance. I would make this a center piece of these decisions.
When you are 65 and your youngest is starting college are you able to retire when you want or need? 2 years later? 5 years later?
Getting control of your cashflow so retirement is not derailed when you need a new car, etc. would be important. What was the HELOC for? Are you likely to need another cash infusion like that in the future? Can you avoid this becuase this may interfere with bedrock financial needs like saving for retirement?
If the inheritance only gets you squared away or caught up for a few years of contributions or a lump sum in a new Roth. etc/ and a few years later you are short of your retirement savings goal and unable to cashflow it out of yuour income, you will have to figure out plan B to get back up to the level you want.
Good luck with your decisions and I hope your Mom is well remembered for the blessings she left to you and your family with whatever choices you make.
This post was edited on 6/19/24 at 1:33 pm
Posted on 6/19/24 at 4:25 pm to WM88
quote:This assumes the lakehouse won't escallate from its cost basis at a similar rate.
Sell the lakehouse
Take the 650k to 750k and put it to work, even if it's CDs.
E.g., We bought our Beach House in 2012 as a portfolio component. Selling now at a mind-boggling profit. As a bonus for the OP, the first $500K in profits after step-up in the lake home sale could be reaped tax-free.
This post was edited on 6/20/24 at 6:57 am
Posted on 6/19/24 at 4:27 pm to soccerfüt
quote:Best advice in the thread IMO
Not sure how it works but I think you'll want to get a good appraisal of house value so you get stepped up tax basis since you arent selling immediately and may be more difficult to determine later.
This for sure.
Like have an appraisal of the Lake house done this month.
Posted on 6/19/24 at 4:46 pm to PJinAtl
quote:
My wife and I both work full time. I'm 48, she is 41. We have two children - 2.5 and 4 months.
Thanks for giving me hope brah
I hope it doesn’t take me this long tho
Posted on 6/19/24 at 8:48 pm to NC_Tigah
Value of Lakehouse $250K. Poster said $750K adding the $250 with the $500K liquid.
Posted on 6/19/24 at 10:40 pm to PJinAtl
I’d keep the lake house. Don’t go in alone the first few times. Bring the whole family. Feels less empty.
We are currently going through a similar process from FIL passing away last May. Hardest part has been dealing with SIL. Luckily you don’t have to worry about that.
I would pay of HELOC, car, make repairs, pay off house. Remember you can stretch inherited IRAs 10 years. Don’t rush it, take your time. Don’t forget about estate taxes next April.
Don’t know what state you’re in but you can throw some money in state 529s to avoid taxes.
I see some fun summers in your future. Enjoy the lake house and the family.
We are currently going through a similar process from FIL passing away last May. Hardest part has been dealing with SIL. Luckily you don’t have to worry about that.
I would pay of HELOC, car, make repairs, pay off house. Remember you can stretch inherited IRAs 10 years. Don’t rush it, take your time. Don’t forget about estate taxes next April.
Don’t know what state you’re in but you can throw some money in state 529s to avoid taxes.
I see some fun summers in your future. Enjoy the lake house and the family.
Posted on 6/20/24 at 7:13 am to PJinAtl
Lot of good advice here but something I have not seen mentioned is that you need to sell the lake house or the house you live in now.
You can not afford to keep up two homes.
At a minimum you need to airbnb the lake house.
You can not afford to keep up two homes.
At a minimum you need to airbnb the lake house.
Posted on 6/20/24 at 7:57 am to NC_Tigah
Why? An appraisal is not required to give the lake house A value for cost basis.
Posted on 6/20/24 at 8:19 am to KWL85
Ok, what's the best method to establish value for cost basis?
Posted on 6/20/24 at 10:12 am to I Love Bama
Don’t sell the lake house
In 16 years his kids friends will barely be able to scrape together enough cdbc to keep the lights on in their pods while his kids will have a nice lake house
Plus like 250k is nothing. You could air bnb it with a manager and clear a couple grand a month
ETA: or sell primary house and live in lake house now. If it’s a 250k lake house that must be a super low cost of living area
In 16 years his kids friends will barely be able to scrape together enough cdbc to keep the lights on in their pods while his kids will have a nice lake house
Plus like 250k is nothing. You could air bnb it with a manager and clear a couple grand a month
ETA: or sell primary house and live in lake house now. If it’s a 250k lake house that must be a super low cost of living area
This post was edited on 6/20/24 at 10:14 am
Posted on 6/22/24 at 6:45 am to TorchtheFlyingTiger
Just saying it is not required. We didn't get one when my mom passed. We assigned a value based on comp sales.
Posted on 6/24/24 at 10:05 am to PJinAtl
Can you rent the lake house out as a short term rental and spin off some cash?
What'd I'd do:
1.) put a solid chunk into the kids 529 $10,000 each or so maybe $20k each.
2.) Do something small like a trip or purchase your mom would appreciate
3.) You are behind on retirement, put the rest there
I know its hard, but if you don't REALLY want the lake house I'd consider selling it. IMO with your retirement accounts you aren't in a position to own a second home. BUT, if you could rent it maybe it makes some more sense.
Your retirement needs to be the primary concern over college here. Your debts are at low enough interest I'd invest it and pay those off slowly.
What'd I'd do:
1.) put a solid chunk into the kids 529 $10,000 each or so maybe $20k each.
2.) Do something small like a trip or purchase your mom would appreciate
3.) You are behind on retirement, put the rest there
I know its hard, but if you don't REALLY want the lake house I'd consider selling it. IMO with your retirement accounts you aren't in a position to own a second home. BUT, if you could rent it maybe it makes some more sense.
Your retirement needs to be the primary concern over college here. Your debts are at low enough interest I'd invest it and pay those off slowly.
Posted on 6/25/24 at 1:57 pm to baldona
We really want to keep the lake house. If we have to sell it in the future we will, but right now we want to have it to make memories with our kids like I made memories with my parents. I underestimated the value. Not sure what it would bring on the market, (3 bedroom, bath and a half, unfinished basement) but the most recent tax assessment has it at $380,000.
We possibly could do short term rentals, but I think we would need to put some money into it to make it enticing - it was built in the early '90s and really the only things that have been done to it are roof, paint, new dock, and work on the screened porch/deck. It does have DirecTV but cell service is spotty, and would need to add Starlink for Internet.
The HELOC was a one time expense that will not be recurring in the future.
We possibly could do short term rentals, but I think we would need to put some money into it to make it enticing - it was built in the early '90s and really the only things that have been done to it are roof, paint, new dock, and work on the screened porch/deck. It does have DirecTV but cell service is spotty, and would need to add Starlink for Internet.
The HELOC was a one time expense that will not be recurring in the future.
Posted on 6/26/24 at 9:02 am to PJinAtl
I get it and don't necessarily blame you. But you need to sit down with your wife and have a real serious conversation. That home is going to cost you at least $10,000/ year if not closer to $25,000 most likely between insurance, taxes, and repairs. You may not need to spend that every year but you'll need a new roof, AC work, etc. that will hit you in the nuts if you aren't ready.
Your retirement is very underfunded. You need to admit that. Hard.
Sure you can catch up, but you also now have a vacation home to pay to maintain.
Maybe put $100,000 into an account to upkeep the home and place the rest all into retirement. Something like that.
If you put it all into retirement, you'll be in the range of being properly funded.
You also as said, need to get it appraised or at least just have a realtor give you some comps to "consider selling".
Your retirement is very underfunded. You need to admit that. Hard.
Sure you can catch up, but you also now have a vacation home to pay to maintain.
Maybe put $100,000 into an account to upkeep the home and place the rest all into retirement. Something like that.
If you put it all into retirement, you'll be in the range of being properly funded.
You also as said, need to get it appraised or at least just have a realtor give you some comps to "consider selling".
This post was edited on 6/26/24 at 9:04 am
Posted on 6/28/24 at 6:29 am to baldona
Again I appreciate all of the advice from everyone. A lot to think about. We are just getting started with the process of unwinding her estate, and it has made me look harder at some of our own finances, and my numbers in the OP may have been off some.
I hope it is ok if in a month or two, once we have the state settled, that I bump this thread with updated numbers and ask for more input.
I hope it is ok if in a month or two, once we have the state settled, that I bump this thread with updated numbers and ask for more input.
Posted on 6/28/24 at 8:03 am to PJinAtl
Having been the executor for my uncle’s estate and the administrator for my mom’s now, I feel for you. At least in your case you won’t have to deal with any (greedy) heirs.
While it’s important to look ahead as you devise a plan for the assets, it’s even more important to deal with the grief and not let emotions overly influence your future plans.
I hope that you will come back with an update and additional questions when you’re ready.
God be with you and yours through this process.
While it’s important to look ahead as you devise a plan for the assets, it’s even more important to deal with the grief and not let emotions overly influence your future plans.
I hope that you will come back with an update and additional questions when you’re ready.
God be with you and yours through this process.
Posted on 7/7/24 at 10:56 pm to Jag_Warrior
Late to this thread, but in a similar situation. Don't feel bad about the $200K. You are better off than the majority of Americans. My wife and I are behind as well - I wish I had gone to forums like this when I was younger. That being said, you are in a forum with a group of people that like money and have been much more prudent that I ever have, so their expectations of retirement might be totally different than yours. My retirement will probably consist of going to eat breakfast at Hardees in the morning and sleeping through episodes of Seinfeld during the day.
Everything besides the house I would throw in retirement. My hunch is that in a few years you are going to determine whether you are going actually fix up the lake house, or it will become a bit of a burden (my dad inherited a lakehouse in the 80s, and eventually it just became too much upkeep, and they were not close enough to retiring to move to it as their primary residence). At that point, you could sell it and invest that money as well.
Everything besides the house I would throw in retirement. My hunch is that in a few years you are going to determine whether you are going actually fix up the lake house, or it will become a bit of a burden (my dad inherited a lakehouse in the 80s, and eventually it just became too much upkeep, and they were not close enough to retiring to move to it as their primary residence). At that point, you could sell it and invest that money as well.
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