Planning to receive an inheritance

[Meadbh]

Another story:

It was a dark and stormy night...no, wrong story!

A relative died and left a widow, no children, leaving most of his estate to DW. When DW died she endowed a library in both their names. Relatives were upset and contested the will; thought that money should have "come back to the family". Lawyers calmly but firmly told them that it was DW's money and she could bequeath it to whoever or whatever she pleased.

Never, ever plan to receive an inheritance.

 

[kyounge1956]

Another vote here for "don't count your chickens before they're hatched". (and I think ls99's Alaskan version is great!) Both of my parents are still living and I also have a childless aunt who may or may not have put me in her will. I don't include any potential inheritance in my retirement plans—it would make me feel like I was saying to my relatives, "why don't you die so I can retire?" I hope they all live long enough to need every penny. There are too many unknowns for me even to guess how much they might leave me, if anything.

The one inheritance-related thing I do wonder if I should ask is, "if there is any inheritance, how have you arranged to have it go to the heirs?" I expect to be sort of low income when I retire. I won't have much in the way of deductions, and I don't know if any potential inheritance is of a size that might put me into a high tax bracket and get swallowed up by the IRS. If you inherit money, does it count as income? The last time I inherited anything was decades ago, from one of my grandfather's sisters who had no children of her own. (Those childless aunts keep popping up here there and everywhere—I'm one too! ) Anyway, it was only a few hundred dollars and I think I spent it on textbooks the next quarter. I don't think I had enough income to owe any taxes, and I have no recollection at all of whether I put it on my return or not or if I was even required to file that year.

 

[chris2008]

I have inherited from an aunt (I was also the executor of her will for 3 more beneficiaries) and from my father.
As I am the only child I will probably also inherit from my mom who is 82 and in excellent health.
As we all are very open I knew and know what was/is coming.
My mom and I made some taxdriven transfers but she can trust that all will be revised as soon as she wants or I have the feeling that it is harmful to our relationship. The assets will remain untouched as long as she lives.
Our own retirement planning does not count on any of her assets.

My 2 cents:
- If you have a chance make sure that there is a clear and simple will and that you know where it is. Discourage the writer to make complicated rules like "what if A dies before B?".
- Make sure that there is a POA for all assets exceeding death and a living will.
- Make sure that you know where all the paperwork is stored.
- Never count the money till it is yours, even if you are the only child or know the will.

 

[chinaco]

The only time you can plan on it... is when the money is in your account. Otherwise, don't factor it into your plans. If it happens... whoopee, you have a windfall.

 

[BigNick]

It doesn't bother anybody else to be discussing counting up the money you're going to get when someone dies?

That was why I said in the OP that this thread might not be to everybody's taste. As I mentioned, this was never a taboo subject in my childhood home.

Thanks to everyone for all the replies. I'm going to continue my current FIRE plans, which include nothing on the inheritance, but on the other hand only finance our current levels of expenditure (which is 80K/year, not exactly skimping) until we're 80, on the basis that after that, we aren't going to be taking a lot of skiing vacations. Mum's money can pay for a better class of old folks' home after that. (Medical expenses are no problem: my employer's pension plan includes worldwide private medical cover for life, with essentially no limits, no co-pay, and no deductible. I can retire to the US and it's all covered.)

 

[Dennis]

Been there.. ready?
1. It gives you a chance to build wealth for the whole Family! Not just for you..
2.Responsibility comes with it..you owe it to them to use their $ to build a legacy for them
3. The Goal is to Invest it so it can be passed on thru your Kids and Grandkids in a Trust to be available to Bil out anyone in the family tree that may need help in their retirement yrs..
4. Example? $10,000 invested in a Balanced Fund like a VWELX since 1929? Is now worth over $5 Million!
5. Consult with an Estate Attorney and a FA on how to set up a Trust to put some of this $ away for the Goal In Mind.

Cost me $2,500 to set up a Irrevocable Trust and put $50k of an Inheritance into it with several guidelines before any of it can be issued out to any family members..In the meantime? It's invested into 5 different Mutual Funds ( at $10k each)...

Since 1998, it's now worth over $125k
Optimistically? the Next 2 generations won't need any of it and it can be worth $25 million and w/inflation, be worth about $10 million in our Dollars. Assuming [moderator edit] politicians don't find ways to get to it..

 

[easysurfer]

Many years ago when I was an intern, I looked after a single farmer who was dying of cancer. He was definitely FI and not a gregarious person. As soon as the news got out that he was not long for this world, a bevy of greedy relatives started showing up, exhausting whatever strength my patient had left. He soon asked for a "no visitors" sign. It was so obvious that the greedy relatives wanted part of the estate. I hope the farmer left his estate to charity.

Money makes people do strange things. If one was to win the lottery, no doubt, he/she will have "friends and family members" he/she never knew about .

Kinda makes the idea of spending every single cent before expiring sound appealing

 

[FIREd]

Many years ago when I was an intern, I looked after a single farmer who was dying of cancer. He was definitely FI and not a gregarious person. As soon as the news got out that he was not long for this world, a bevy of greedy relatives started showing up, exhausting whatever strength my patient had left. He soon asked for a "no visitors" sign. It was so obvious that the greedy relatives wanted part of the estate. I hope the farmer left his estate to charity.

I worked in a bank once. Several of our older clients died during my tenure. More than once, granny wasn't cold yet before at least one of the kids would attempt to siphon her accounts. Of course, the accounts were frozen while awaiting probate, but they still tried.

 

[Texas Proud]

4. Example? $10,000 invested in a Balanced Fund like a VWELX since 1929? Is now worth over $5 Million!

Not to start a fight... but giving an example like this does not mean much... because there were very few people in 1929 who had $10K... heck, few people had $100...

To me... that is like saying.. "If you invested $1mill today, you will have X in...."... not many people have $1 mill today...

 

[BigNick]

Not to start a fight... but giving an example like this does not mean much... because there were very few people in 1929 who had $10K... heck, few people had $100...

To me... that is like saying.. "If you invested $1mill today, you will have X in...."... not many people have $1 mill today...

That's just the kind of negative thinking [moderator edit] politicians want you to fall for. (Of course, politicians of all persuasions are adept at using big-sounding numbers to scare people when it suits them.)

I also picked up on this:

The Goal is to Invest it so it can be passed on thru your Kids and Grandkids in a Trust to be available to Bil out anyone in the family tree that may need help in their retirement yrs..

Great! No pension planning for me. I'll just spend, spend, spend now, and the family trust will be there in my retirement. After all, the family tree is pretty wide, and I don't feel too bad about stiffing a couple of the cousins.

 

[Gardener]

I think it is good to have something of a plan. I inherited $90,000 in my early 20's. I would much rather have that person back, than the money, but God didn't offer me that deal. In addition I almost lost my father a few months later in a mugging. Money is nothing compared to family (at least non -toxic family.) I had been reading Your Money or Your Life, and other financial planning books for years. So, while I hadn't expected an inheritance, I had plans for how to manage money. I put 1/3 into a downpayment for a house, 1/3 to go back to school for a better paying career, and 1/3 in an index plan. My brother went through the money within 1 or 2 years, and declared bankruptcy. He owes more on his house than it is worth, mine is worth more and I don't have a mortgage. The point is not to make fun of my brother (who is a great person) it is just to comment that inheritances have to be managed, and some forethought is required for that. Especially if the money is a big amount (relative to what you are living on.) I expect a couple more inheritances in my life, most of them enough to fund a vacation, maybe. One I anticipate being 3 or 4x our yearly income. Of course, the longer that relative lives the better, as he is one of my favorite people in the world.
Gardener

 

[kumquat]

The only time you can plan on it... is when the money is in your account. Otherwise, don't factor it into your plans. If it happens... whoopee, you have a windfall.

Planning to retire on an inheritance is similar to planning to retire on a lottery win. OK, maybe inheritance has a slightly better chance of working.

 

[TomG]

My parents have been completely candid that they expect to leave a sufficient inheritance for me and my sister. It is mindboggling that so many who have built any estate fail to do this

Though hopefully decades away from seeing the bulk of the wealth, I look to it as an asset similar to my health. Great to have, but can slip away at anytime

 

[homestead]

My grandmother lived to be 102 years , after she died my dad said
she only had 2k dollars left.

 

[kaudrey]

We have longevity, as well as frugality, in our family (on both my parents' sides). My mother's mother didn't have any money after it all went to years in a nursing home due to Alzheimer's. My dad's parents died well into their 80s, and had a nice house and some money. My sister and I are the heirs to my parents and my aunt (no kids). My parents are 74 and my aunt is 69. I hope they live as long as my grandparents did (at least), and I always encourage them to spend their money as they see fit. After a lifetime of saving, it is hard for all of them to spend! My aunt is getting better at it, though - being more adventurous in traveling around the world. I think they both have portfolios in the low 7-figures, but we dont' talk about specific numbers, and I don't care. I am the executor to all of their wills, and my sister's....I must be the finance person in the family...ugh.

We, as a family, are prepared to deal with the possibility of long-term care and helping each other out. Late-life medical costs may deplete everything, and if it does, I just hope it helps make them all comfortable in the last years. I hope to retire while they are still alive (as my parents and aunt did with their parents).

This is my long-winded way of saying that although I am certain to be remembered in the wills' my close family, I know there are no guarantees in life, and it is not something I think about or plan for. What is important to me is how they live with whatever life throws at them, and that I am there for them when they need me.

 

[kcowan]

I built a financial plan which had 5 scenarios in it, one of which was to receive two large inheritances. By manipulating the plan, I was able to decide when it was appropriate to buy our place in the sun within our own means.

Before we spent our first year there, MIL passed away from lung cancer. Then last year, my only bro died suddenly. Both inheritance came in "on plan" but our lives have not changed. Bro did give each of my kids $50K and that was very well received.

Would rather have MIL and bro in our lives. But the plan did come together. Of course the plan was constructed in an age of different returns than today so the inheritances provide a welcome buffer.

 

[BigNick]

I'm bumping this thread, first to say hi, since I haven't been here in a while (mostly busy with school... I have a paper coming out in a couple of months that may become moderately notorious, but it's embargoed for now) and second, to complete the story started by the first post in this thread.

Since July 2010 when I posted this:
- I went back to school (see above)
- I took ER from my job, with a nice payoff; I'm now looking to do a PhD in something esoteric like "philosophy of science"
- My FiL died (heart attack after 8 years of caring daily for MiL)
- My MiL died (the bugs got her, after 8 years of being bedridden)
- My Mom died (massive stroke; it was the way she would have wanted to go, and she knew the risks, having stopped her blood pressure medicine several years earlier because it was seriously messing with her quality of life)

DW and BiL did an awful lot of grieving; I coped with it the way our family has always coped with this kind of thing, i.e., with gritted teeth. Anyway, that process is now at the "no longer getting in the way of daily life" stage and we're ready to move on.

It's taken the best part of a year to sort out the inheritance, despite both wills being ultra-simple (FIL left it all to MIL; MIL left it 50-50 to DW and BiL; my Mom left it 50-50 to me and DS). BiL and DW appointed a specialist company to do the work, about which I was skeptical, but they came recommended (from a newspaper article that highlighted the ripoffs to avoid) and indeed it cost less for them to do MiL's total will than we paid the realtor to sell her house. DS, who lives in the same country as my Mom, did all the procedure herself, with a little help from her DH, and didn't charge a fee to the estate.

Mom left about what I thought she would. In-laws were a revelation; they had a quarter of a million dollars in cash, squirreled away in various accounts. DW is torn between being delighted at what we will receive (most of it is earmarked to help our kids buy houses when the time comes, but there may be a little "fun money") and upset that her parents didn't do more travelling when they could. I ought to point out to her that, unlike us, they weren't big fans of travelling, but I'll keep quiet on that point.

Most people who posted here said "don't count your chickens", and I can honestly say that I didn't. I'm just updating "The Spreadsheet" as the various disbursements come in, and looking at what we'll have in the bank at age 75. The grandkids will probably be able to go to college after all.

 

[MichaelB]

Hey Bignick, thanks for the update. Condolences for your losses, I can't imagine all that happening in such a short time.

Your kids are fortunate, the grandkids even more so. Don't neglect yourselves, "ungritting" your own teeth is also important.

 

[Fishingmn]

My grandmother lived to be 102 years , after she died my dad said
she only had 2k dollars left.

That's the exact deal my mom and I have. I shouldn't expect any money and she shouldn't run out

 

[Shanky]

I absolutely do not believe in the concept of inter-generational wealth. The best path would be to settle the estate and give the rest to charity. (of your choice) That way, you know you made your way in this world by merit and without the windfall which you had nothing to do with. You can probably guess, I do not have to worry about receiving an inheritance.

 

[SumDay]

Wow BigNick, your family has been through it! We went through almost the same scenario beginning in 2008, only we had a little cancer sprinkled in there. That which doesn't kill us makes us stronger....

Personally, I am fond of the idea of leaving a legacy to my kids, but it isn't my primary goal. I want to not eat dog food, and if there's any left over, it will go to the charities specified in our will, with the rest going to the kids. My parents did this for us, and it make a fundamental difference in all our lives. It makes me grateful every single day for their hard work, and the work ethic they instilled in me. I'm sure our parents are looking down on us, happy to know they made such an impact. I hope to do the same one day.

 

[FANOFJESUS]

Had a relative that was well off about 250k in today's money and all the relatives knew it. We were related to the female she died first. The male after this "thought" he found his relatives in a foreign country. They got all the money off him while he was alive then when the money ran out this woman who said she was his sister talked him into marrying her so she could get social security. These crazy people got the money but we told the social security department and got her deported. This couple is still talked about in our family over 35 years later. All the relatives(8) had planed on an inheritance. It just goes to show anything can happen.

 

[Free To Canoe]

It doesn't bother anybody else to be discussing counting up the money you're going to get when someone dies?

Reminds me of that movie in which the old Italian women are gathered around someone's deathbed waiting to pounce on her possessions as soon as she takes her last breath. Anybody know what movie that was?

Zorba the Greek
I'll never forget that scene.

Zorba the Greek - Wikipedia, the free encyclopedia

 

[Dawg52]

Thanks for the update BigNick. My mother died recently and although I keep busy, it's not easy getting over the loss of a your Mom. But.....you have to move on and try to live each day to the fullest.

As far as your inheritance goes, enjoy it anyway you so choose. Your Mom and in-laws wanted you to have it.

 

[W2R]

BigNick, I am so sorry to hear of the passing of so many of your relatives. You have had so much grief to deal with in such a brief time. Glad to hear that your teeth gritting time is passing, and that the time has come to move on.

I'm just updating "The Spreadsheet" as the various disbursements come in, and looking at what we'll have in the bank at age 75. The grandkids will probably be able to go to college after all.

I was so glad to read that you hadn't counted your chickens. When your disbursements do come in, you will know what you are dealing with.