How to approach Expected Inheritance?

[sengsational]

I'd have your mom keep enough portfolio to be cash-flow neutral, and gift to the three of you now. There's an entire book on why that makes sense: Die With Zero. The death of a person is an arbitrary point to gift, and sub-optimal. I'm nowhere near the asset level of your mom, and nowhere near her age, but gifting to my kids (up against tax rate implications, or I'd be giving more).

 

[Exchme]

You could retire now if:
*your current expenses are truly 2500/mo=$30,000/yr
*3% of 700,000=$22,500 (you are young at 56, you most likely will need money to last longer than 30 years)
*Mom is currently gifting, and plans to continue annual gift of $17,000 or more per tax code
22,500+17000=39,500

So, you could find a part time job to make up what you need beyond your own investment income, if you don't want to rely on Moms money.

I know with 8 million, it seems reasonable to believe that the yearly gifting will continue and there will be significant monies left when your Mom passes.
But, you never know.
She is 83 and could live to 100 or beyond. Hopefully, healthy, and not needing significant cost for assisted or live in help.

+1
Also, in a decade or so, OP will presumably claim SS, which would help. On the other hand, OP is splitting expenses with a partner but is not married, so not sure OP would get anything if partner passed and it sounds like OP would be in a jam if partner left.

If OP really hates this job, there's nothing wrong with looking for new one. Finding something more enjoyable would make working a while longer easier.

In any case, playing with FireCalc would be a good idea and OP could assess risks that way.

 

[jollystomper]

Thank you all for the feedback and suggestions. After reading all of these I'm agreeing with the idea of moving forward, working and living on what I have already saved up (which includes the "checking account" inheritance) and not counting on the larger inheritance. I am going to looking that FireCalc someone mentioned. I'm still pondering the idea of some level of withdrawals in order to pursue some other work situation (less hours worked - more time on things I enjoy)

My parents have been giving the kids distributions the past few years, which I've regularly maxed out my Roth IRA and HSA. I have a pretty good handle on investing and saving money, and am always running calculations on how much money will last how long.

Two more things. We will not be charging my mom rent for living in our condo.
And I have a new worry, now that someone mentioned my mom remarrying some guy, that could inherit the money? This opens up a whole new question about powers of attorney, etc, when a parent reaches later stages of life and may make some questionable decisions, etc. But that's for another thread.

Also, I don't think we will be liquidating any stock as the tax liability would be massive. It's my understanding that when stocks are inherited, teh cost basis is adjusted to the current market value. I could be wrong.

One thing I did not see mentioned - what is your relationship with your siblings? With your mother? That could be a guide to how much you might count on (but not depend on) your inheritance.

I had a good relationship with my parents, and all of my siblings(6) and I are close. Dad died when mom was 66. When mom died at 86, though the house was in the name of one sibling (who had lived with her), there was zero issues to dividing up the inheritance according to our parents wishes. In fact, the biggest "argument" we had was getting that sibling to agree to take a larger share, since she had been the primary person looking after mom in the last few years of her life.

On the other hand, DW's parents just assumed that their kids would carry out their wishes, and were reluctant to put anything in writing as that would cause issues between them. When money is a factor they do not get along. When DW's dad died DW had to fight to get even <10% of what her dad wanted her to get, and there was a battle royale over his house and financial accounts. DW's mom is now 92 and mentally solid but in fading physical health, but still (in my view) somewhat of a bully to her surviving children, and thinks she knows better than them. DW and her siblings have an "interesting" relationship. Long story short there will be another battle royale over MIL's estate. I told DW best to not count on getting anything, but take comfort in the fact that we do not need anything. Her siblings are generally LATM (Living Above Their Means) and are already counting on getting an inheritance, for which they have reasons why their portion should be larger than the other siblings.

So... hopefully your situation is more like mine, and not like my DW's .

 

[Fielding]

I've inherited a great deal from my father, and this eventually allowed me to retire. He's also been completely transparent about the remainder that will most likely come after his death.

Despite the fact that absolutely everything he has promised and outlined so far has occurred, or better, I do not count on this additional income. When I set up my retirement planning scenarios, I had one that included these sums as the most likely case, but did not retire until my "no further help whatsoever" scenario went green. I would have retired a decade earlier if I could have been absolutely sure of the future - oh well.

You can't help thinking about these things, I get it. But as virtually everyone has said, you can't count on them.

 

[skyking1]

I see many great suggestions, and they all hinge on mom's desire to give some now, or pay rent on the condo, or any other angle involving her money. Only the OP knows how that is.
That may be a non-starter or a fruitful conversation.
jollystomper covered it above.

"One thing I did not see mentioned - what is your relationship with your siblings? With your mother? That could be a guide to how much you might count on (but not depend on) your inheritance."

Best of luck to you on that regard, OP. Barring that being fruitful, I agree on living your life as it is, as you can control it.

 

[Stormy Kromer]

I can't remember who wrote this quote, I think it was Ann Landers when she was asked a similar question. She said "The longest period of time known to man is the time waiting for someone to die"

I would recommend living your life with no expectations of any inheritance.

On a related note. There may be an emotional impact upon receiving an inheritance. DM recently passed and I received $6,000 from her estate. I watched her work hard her whole life and that is what was left. I don't feel good having it, have no desire to spend it. I am going to wait a couple months and will likely give it to our two children.

 

[CaliGirl]

I agree with folks here, live as if the money is not there yet (bc it isn't). But also, I would start researching and looking at other types of jobs you might want to segue into once your money does come in. I fell into a couple of jobs I really like after I semi-retired and I hope you will too!

 

[WhenIsItTime]

I think the consensus is clear on the inheritance so I'll ask a different question.


Have the 3 of you discussed this with your mom at all? Any thought to her beginning to distribute at least some of the money during her lifetime? I'm guessing she doesn't need $8 million to maintain her lifestyle. The annual gift exclusion is $17,000/person and goes to $18,000 for 2024. It's not much relative to the total but she could give each of you 17K now and 18K next year and whatever the amount is in future years. If she wishes, she could also give the same amount to each of your spouses/partners and/or your kids. She could fund college savings plans if needed or help with buying cars or homes.


I don't know about your siblings' incomes but you said you earn 60K/yr currently so her giving you 18K/year would be pretty significant for you.


Just something to think about.

Assuming Mom is not gonna spend the nest egg and you are not taking advantage of her...

get her the book "die with zero" for Christmas. No books perfect, but this one includes talk about giving to family and charity while you are alive to SEE it do good and change course as necessary based on results.

I agree, even if she tells/shows you what the will says you shouldn't count on it until it is in your name.

 

[GrayHare]

I'm sure that book is well meaning, but if my kid gave me a book titled "Die With Zero" I'd probably be looking at rewriting my Will.

 

[MC Rider]

My Mom used to say don't count your chickens before they are hatched.
Good advice even if sort of obsolete.

 

[WhenIsItTime]

I'm sure that book is well meaning, but if my kid gave me a book titled "Die With Zero" I'd probably be looking at rewriting my Will.

Fish or cut bait. At least he could plan.

I didn't say I would do this.

 

[imnontrad]

Make it a game and arrange your finances so you are financially independent enough that anything you get in inheritance is "icing". Who knows, that person could change their will or have a devastating illness that uses up all their assets. if you had been counting on that money to find things later, you would not do well.

 

[Retired Expat]

Hello. I'm curious how I should approach retirement planning when it comes to an expected future inheritance. Here's a little bit about me and my situation:

56 years old, Employed last 12 years at a job I'm no longer happy with. 60K salary.

Partnered (not married)

Current savings: $700,000 ($350K retirement accounts / $350 Brokerage, CDs)

Homeowner: $600K home w/ $190K left - My monthly expenses are fairly low. I've estimated my monthly bills at $2500/month - I split the household stuff with my partner, so my actual monthly out of pocket is much lower. (but we love to travel)

Now to the inheritance part. My father passed in 2021 and left a sizable estate (8M in stocks - he was a stockbroker and quite frugal) to my 83 year old mother, who is in excellent health and active. The 3 children split a checking account that he had valued around 1.2M

I'm really not happy with my current job and would much rather get something else part-time (with Health Insurance) where I have more interaction with people, lower stress and less WFH (suggestions welcome)

I guess I'd like to "Semi-Retire" and spend more free time on hobbies, golf, travel, volunteering, camping, etc., while still getting a paycheck and health insurance. If taking part-time employment of course my take home pay would be reduced. I have the idea of taking sensible monthly withdrawls (from my non retirement accounts) to make up the shortfall.

Curious what people in my situation would do.

Thank you.

I was in almost the exact same situation although with somewhat higher assets of my own. Father was 83, mother had passed but he needed more help so I stepped in to get him the care he needed. Met with an estate attorney to make sure we were best prepared and that helped save a couple millions in taxes so I suggest you do that with your siblings and mom. Actually didn’t hire the first attorney and went with another so you might need to shop around.

I retired at 52 but I knew to a life that was going to be much less expensive and I would be fine. Inheritance when it finally came through changed my financial planning and life is more luxurious now hit not substantially different than retirement planning had it before. You can’t rely on an inheritance for anything! If it happens well that is gravy!

 

[Keim]

The best way to approach an inheritance is as if it was a wild animal.



Stand still and ignore it. Don't approach it, that may cause it to suddenly bolt.

Let it approach you.