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Future Inheritance Considerations in FIRE?
Old 02-28-2019, 10:57 AM   #1
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Future Inheritance Considerations in FIRE?

We're turning 55 this year and have been F.I. for a few years. Planning to RE in about 12 months.
My DW's parents are fairly wealthy and in their mid 80's. While in pretty good health, we recognize at some point they will not be with us. At that time, DW and her brother will share a fairly sizable inheritance (that I estimate to be in the millions).
We're not counting on or depending on this future inheritance, and I have not considered it at all as part of any retirement calculations, but wondering if it's something that should be taken into consideration. A windfall like that in 10 years (or hopefully later) would drastically impact our spending estimates before/after that.
It feels weird to even talk about it with DW (so we don't). But I'm sure this has come up with others, and curious if it played any part in your RE calculations or just plan as if it doesn't exist and deal with it then.
My in-laws are wonderful people and I feel so blessed to have have been part of their family for the past 30 years of marriage to DW, so hoping we have many years together.
Thanks!
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Old 02-28-2019, 11:01 AM   #2
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I'd proceed as if inheritance money did not exist. Late stage medical care can burn through lots of dollars. If there's some left at the end, consider it gravy.
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Old 02-28-2019, 11:07 AM   #3
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We're not counting on or depending on this future inheritance, and I have not considered it at all as part of any retirement calculations, but wondering if it's something that should be taken into consideration. A windfall like that in 10 years (or hopefully later) would drastically impact our spending estimates before that.
If it would drastically impact your spending estimates before that, that's counting on it. Just don't! Don't count your chickens before they hatch, as the saying goes. You never know what could happen. If the inheritance actually materializes, that would be wonderful but don't let that affect your spending estimates.

If her parents die and don't leave her a cent, she will need your support just because she will be so sad that they died. The money or lack of same shouldn't influence your support and your help for her as she tries to cope with her parents' death.

I think the main thing right now is to figure out how you will invest it, if you should inherit. You need to develop two potential financial plans for retirement, and you will need to work hard at learning how to deal with larger amounts of money than you presently have. But bear in mind that all of that learning could just be a useless exercise.
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I'd proceed as if inheritance money did not exist. Late stage medical care can burn through lots of dollars. If there's some left at the end, consider it gravy.
Very wise words. This happens a lot, and happened to my brothers and me; although we did inherit, it sure wasn't the million or millions that some assume.

Not only are there end-of-life expenses, but also my mother was getting pretty drifty in her late 90's. Well, she was always drifty, OK, it was her delightful personality all of her life, and just more accentuated in her late 90's (although she never had dementia). Anyway I would not have been one bit surprised if she had given every cent to a con artist or charity. She didn't but it was her right to do that if she wanted to. Still, I would have been fine if my inheritance had been nothing, because that was the basis on which I developed my main financial plan for retirement.

It wasn't easy but I came to terms with the various possibilities, and would not have let any of this come between me and my love for my late mother. I miss her every single day, even though it has been over a decade by now. F has been so patient with me.

Believe it or not, I haven't actually spent any of my somewhat modest inheritance although I might not have been brave enough to buy my dream home in cash before selling my prior home, without it. It might come in handy for my own end-of-life expenses, a CCRC, or whatever I need if/when I become very old. I already had that in my plans but prices could go up a lot, who knows.
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Old 02-28-2019, 11:25 AM   #4
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I have heard of many stories over the years where inheritances don't work out for any of 100 different reasons. I have also heard of many stories over the year where people die out of order (i.e. your DW dies before her mom and dad and you will likely get zero). One of them could easily live to 100+. I would count on nothing and stop thinking about it. In my experience people that talk about this topic, even just a little bit, can easily be seen as money grubbing. I am not saying that's the case with you but it's easy for some to mistake your interest. I'd forget about it if I were you.
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Old 02-28-2019, 11:45 AM   #5
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Originally Posted by Lienlord View Post
We're turning 55 this year and have been F.I. for a few years. Planning to RE in about 12 months.
My DW's parents are fairly wealthy and in their mid 80's. While in pretty good health, we recognize at some point they will not be with us. At that time, DW and her brother will share a fairly sizable inheritance (that I estimate to be in the millions).
We're not counting on or depending on this future inheritance, and I have not considered it at all as part of any retirement calculations, but wondering if it's something that should be taken into consideration. A windfall like that in 10 years (or hopefully later) would drastically impact our spending estimates before/after that.
It feels weird to even talk about it with DW (so we don't). But I'm sure this has come up with others, and curious if it played any part in your RE calculations or just plan as if it doesn't exist and deal with it then.
My in-laws are wonderful people and I feel so blessed to have have been part of their family for the past 30 years of marriage to DW, so hoping we have many years together.
Thanks!
DW's parents own real estate valued around $3 million (farmland) When DW's mother died three years ago her sister stepped in and handled everything, very secretively. DW didn't get a copy of her mother's will and the topic hasn't even come up with her sister or father. We're just assuming DW's father, age 93, inherited everything and DW will find out when (and if) she's in his will someday. I told DW to not even ask about her mom's will for fear she'll be looked at as a money grubbing, greedy heir want-to-be. We reached FIRE without any help and have no plans on using any potential inheritance in the future. I've seen too many people lose their ambition waiting for their parents to die. Please know I'm not talking about you, it sounds like you've got your priorities in order. Best wishes to you.

I wouldn't bring the topic up if I were you, and I wouldn't let it influence your FIRE plan.


Also, some people really change when a loved one dies, especially when there is money involved. Try hard to keep peace in the family.
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Old 02-28-2019, 11:58 AM   #6
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Down the road, when both parents are gone, if some of the money is in tax-deferred accounts, your wife will be required to take RMD's relatively soon afterwards. IIRC, in the year following the year of death. That may impact your income tax bracket for awhile.
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Old 02-28-2019, 12:10 PM   #7
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I'd forget about it if I were you.
This is exactly how it factors into your plans. So many things could happen.
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Old 02-28-2019, 12:30 PM   #8
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I agree with not counting on it, as multiple posters have already said.

I do have a different take on talking about plans, though. I think it is helpful in several respects to talk about plans in advance for multiple reasons:

1. Resolving any potential misunderstandings. If a person's plans involve, say, an unequal distribution to their children (not generally recommended but appropriate in some cases), then explaining that and talking about that and the reasons behind the way things have been set up creates an opportunity for the children to understand better. Once the person is gone that discussion can't happen.

2. Make the estate process more smooth. In talking about things, maybe the parent identifies an asset or a strategy the kids didn't know about. Or maybe the kids come across a better way to accomplish the parent's goal, or identify that a particular piece of paperwork needs to be completed. For example, my Dad has a checking account that I'm setting up with PODs. It's not a very big part of his estate, and it would eventually go through probate, but having the PODs will make it easier/faster/cheaper.

3. Helps prepare the kids. Even though I don't count on an inheritance, I know what my Dad wants and doesn't want, and I've been able, over the years, to make a very short list of contingency items so that if I do inherit something, I'll be prepared to handle it as well as I can, which is a way of honoring my Dad and all the work and effort he put in to earn and invest that money for his kids and grandkids.

4. Helps in case you need to take over before they pass away. There's a chance my Dad will need memory care at some point. Having had conversations with him about his estate plans and medical POA-type stuff, I'm better prepared to make those decisions if needed (I am his financial and medical POA. My oldest sister is his executor.)
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Old 02-28-2019, 12:34 PM   #9
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My inheritance(s) were pretty much locked in 15-20 years ahead of the fact.

Unless yours are, I'd wait, not count on it and see. Grandpa can often go out and get a new girlfriend.....
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Old 02-28-2019, 12:47 PM   #10
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This is exactly how it factors into your plans. So many things could happen.

I'll second that. There's just too many variables. In my case, I'm an only child, and on my Mom's side of the family, only grandchild. Grandmom passed away back in 2015 and the estate was split 40% to my Mom, 40% to my uncle, and 20% to me. That actually went as planned, no surprises.


My uncle put me down as his sole heir. However, he's had kidney issues all his life, and cancer has reared its ugly head now and again. So, he could definitely run into some big, expensive medical issues later in life. As a result, I'm not planning on anything.


Back in 2012, my Mom told me of her plans. At the time, I had just assumed that, if my stepdad passed away first, I'd get everything, and if she passed away, I'd probably get nothing. But then she told me their plan was, regardless of who passed first, that I'd get half, my stepdad's sister would get 25%, and his half-brother would get 25%. But, I also found out that they had amassed about twice what I thought they had, so in my mind it came out about the same.


Well, last year, my Mom and I were talking, and she said that, if my stepdad passed away first she was reconsidering that, because apparently the half-brother did something to make her mad. I told her Mom, don't do that...don't try to use money to influence, or punish people. But, who knows what would ultimately happen? And, if my stepdad outlives Mom, there's no guarantee he'd honor those intentions, either. He and I tend to butt heads on occasion, so who knows how that will end up, as time goes by? Plus, either or both of them could always run up some major medical bills, themselves.
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Old 02-28-2019, 01:39 PM   #11
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I expect a sizable inheritance. I haven't modified our spending to include any of it. More of a safety net for now.

However, I have tried to model our tax situation with and without it. I know a good portion of it would be an IRA, which would require immediate and significant yearly taxable withdrawals. The rest would be taxable accounts and sale of the house. I'm trying to hit a sweet spot of more Roth conversions than entirely optimal for us alone so that additional IRA withdrawals don't exceed our current tax bracket, without being too suboptimal if it never happens.
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Old 02-28-2019, 03:41 PM   #12
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Thanks for the feedback to this point, and hope to hear more.
I fear I wasn't clear in my question as to my intentions or motivations.
DW & I are very blessed and comfortable leading into our FIRE next year. So hearing my question called 'moneygrubbing' couldn't be further from the truth. I have zero intention of discussing anything with the in-laws.
Since I'm asking strangers about their own experiences, I didn't think anyone would be offended by a situation we'll eventually have to face.
My reason for posting was primarily wanting feedback from folks who've dealt with this issue, not just opinions on how I should handle it, or whether to just forget about it. It seems prudent to keep future windfalls in mind when RE, whether you're counting on them or not.
I liked the idea of planning the correct way to handle any future proceeds, and will definitely do that. We have two grown sons (and hopefully grandchildren some day) so I can see a potential Trust for college tuition or first homes.
I also like looking at it as a potential safety net for unforeseen issues and live the life we have planned.
Thanks to all who've taken time to respond!
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Old 02-28-2019, 03:47 PM   #13
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It seems prudent to keep future windfalls in mind when RE, whether you're counting on them or not.
Absolutely. Perfectly reasonable. But I think most folks were just trying to point out that it's all hypothetical at this point, in the category of "What would I do if I won the lottery?"

Very important if it happens, so it's wise to be prepared. But far from a guarantee, so unwise to waste time on detailed planning.
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Old 02-28-2019, 04:41 PM   #14
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Thanks for the feedback to this point, and hope to hear more.
I fear I wasn't clear in my question as to my intentions or motivations.
DW & I are very blessed and comfortable leading into our FIRE next year. So hearing my question called 'moneygrubbing' couldn't be further from the truth. I have zero intention of discussing anything with the in-laws.
Since I'm asking strangers about their own experiences, I didn't think anyone would be offended by a situation we'll eventually have to face.
My reason for posting was primarily wanting feedback from folks who've dealt with this issue, not just opinions on how I should handle it, or whether to just forget about it. It seems prudent to keep future windfalls in mind when RE, whether you're counting on them or not.
I liked the idea of planning the correct way to handle any future proceeds, and will definitely do that. We have two grown sons (and hopefully grandchildren some day) so I can see a potential Trust for college tuition or first homes.
I also like looking at it as a potential safety net for unforeseen issues and live the life we have planned.
Thanks to all who've taken time to respond!
So it is clear I definitely did NOT intend to call you moneygrubbing. I said, "In my experience people that talk about this topic, even just a little bit, can easily be seen as money grubbing. I am not saying that's the case with you but it's easy for some to mistake your interest." I was specifically thinking of someone I know who talks about it a lot. He might not realize it's a lot but it's a lot. My point is to be careful about talking about it with people you know, and especially not your DW and her family, as people that dwell on such a topic could be seen as moneygrubbing. So again I would say forget about it. Just my two cents.
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Old 02-28-2019, 05:34 PM   #15
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That much money and it's not in a trust? I'm no where near worth that much and I'm only 62. Yet I've already discussed with both my sons my wishes and have them assigned in position with the trust when DW and I pass. Also with durable powers of atty if/when I we are unable to make decisions based on medical and financial. They know most of our spending is with my pension, that I have IRA accounts and that we have a rather large home that is free and clear.

They realize they may inherit some day, but don't count on it as we do know it can be spent on end-of-life stuff. I also have a living will they are aware of my wishes in abstract as well.

I think it would be a harmful thing to dump a pot of money onto an unsuspecting loved one as it could easily be mishandled if they are not prepared. Just as there are scammers for old men, so there are for young men who inherit money.
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Old 02-28-2019, 07:01 PM   #16
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I've increased my roth conversions a bit. Other than that, do nothing until they hatch.
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Old 02-28-2019, 07:57 PM   #17
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Acted as if it didn't exist and dealt with it later. Much, much, later. My concern was for their needs while they were still with me.

There are so many stories of one parent dying, the other remarrying, and new spouse taking all.
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Old 02-28-2019, 08:11 PM   #18
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. . . curious if it played any part in your RE calculations or just plan as if it doesn't exist and deal with it then.
!


In response to the OP’s question, my parents worked and saved and amassed a significant investment portfolio that would have been lifestyle-altering if inherited. But as many here pointed out, anything could happen, and it was better to plan one’s financial future as though that money didn’t exist. I retired last year based upon my and DH’s savings. And then, unexpectedly, DM passed away 8 months later, leaving an estate to 4 heirs. But it could have been zero, if she had decided to leave everything to a sweet-talking charity fundraiser. You just don’t know how these things pan out.
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Old 02-28-2019, 08:28 PM   #19
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This is a possible inheritance from your wife’s parents. You should keep out of it unless you are asked for input or to be involved in any decision making. An inheritance is a very personal thing. Your wife may have different ideas than you and you should respect that.
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Old 02-28-2019, 08:55 PM   #20
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This would be your wife’s money and does not fall under marital property - you have no claim on it. Unless you are also named in the will of course.

If it feels weird talking with your DW about it - well, yes, probably best to put it out of you planning.
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