inheriting money instead of gifting

[PointBreeze]

My uncle died 4 years ago and left each of his 5 nieces and nephews $50k. It was a complete surprise. I was very grateful for it. I’m using it to pay the taxes on my Roth conversions. Don’t know what my sibs are doing with it.

My grandpa died in 1980 and left me $3k. I was in college and it was a fortune to me. I used it to buy my first car when I graduated, which enabled me to go back to school a few years later and get a degree that would actually prepare me to make money, as opposed to my first degree . Grandpa had wanted me to invest it for retirement, but I ended up making a lot more money with that 2nd degree and the investments that degree allowed me to make.

My parents paid for my room and board for my first degree (I had earned a full tuition scholarship). As the oldest of 5, that was all they could afford to give me. I learned early on that I had to work for what I wanted, and that is lesson I’m deeply grateful for. I earned the money for my books, for the bus home for breaks, for pocket money.

 

[thod]

My parents paid for my college education and my first car. Beyond that, I never really received anything else till just recently. I retired in 2020 and in 2023, received $34000 as my part when my dad finally sold the house I grew up in.

Oh yeah, I did receive a piece of furniture from my granddad. It is a hat rack type of thing. I restored it and cleaned it up and I still have it by our front door where it gets used. Apparently, I must have shown some interest in it when I was little and my grandfather remembered that and gave it to me.

But the education I did get (BS Computer Science) set me up for a very rewarding career. So, I have no complaints.

 

[brett]

Inheriting money did not play any part in our early retirement decision.

Too early for our children though they will inherit more than they imagine.

We have gifted one child from time to time as required.

We have estabished an edu fund for our four grandchildren (currrently). Our intention is to pay their respective post secondary edu costs.

They will each get a first round slice of our respective estates to pay for any post secondary expenses should we pass earlier.

We do not want to leave it to their parents, or indeed to chance. We feel that it is the most important gift that we can leave.

I expect that our estate will assist each of our two children to retire early.

 

[street]

Wow!! I never got any inheritance there was nothing left. What a great thing some of you got in an inheritance.
This is one of my missions and quest to leave a legacy to my only son and his family. I have made it my goal since I never got one red penny. I hope my plan does come to a reality and there is something left for them.

 

[Gumby]

.... The one lesson I did learn from my mother is to keep money aside in a bank account that my husband didn't know about. My get out money, should I need it.
....

Your mother was a wise woman.

 

[ecowtent]

DH received mid 6 figure inheritance from his uncle who was an admiral. It allowed us to retire a few years early with more confidence. We are gifting DD’s annually at an increasing amount. Both had college paid and some masters costs. DH had college paid because he lost both parents at an early age. I did not and struggled under burden of student loans.We did not want the girls to feel that burden. As we age, we hope to max out annual amounts.

 

[street]

I have a very wealthy aunt, and she was my God Mother and still living and is around 100 years ago. I was always very close to till about 6 years age when she made a statement about some are trying to butter up to me to get my money. In so many words and how I read her statement. Since about that time I have stopped calling and haven't made the effort to contact her anymore.
I don't want to be someone after her money, so I stopped all connections. I have wondered who will be get her estate, but it really doesn't matter at this point.

 

[Lewis Clark]

The one lesson I did learn from my mother is to keep money aside in a bank account that my husband didn't know about. My get out money, should I need it.

Just curious: If there is enough money to enable you to get out, it probably throws off enough interest to be reportable on your tax return. How were you able to hide the tax reporting?

 

[indiajust]

I inherited grandmother and great grandmother funds which combined with my savings completely paid for my 2 year grad school vacation, almost 15k. I did not know how to file the inheritance forms, so I threw them away and focused on engineering.

My father grew into the habit of sending checks below the documentation rate for inheritance. Early on I used it to fund IRA contributions. Now I use it for annual rebalancing. My stepmother will never spend down the house sale proceeds, much less the taxable accounts. The IRA's silently compound unspent.
I expect Alzheimers will eventually beat my stepmother. I plan to use a 5 year plan to empty the inherited IRA's into taxable.

I will likely face the same end. I can't spend down the taxable side fast enough to get to the Roth. A good problem to have.

 

[Morricol61]

Just curious: If there is enough money to enable you to get out, it probably throws off enough interest to be reportable on your tax return. How were you able to hide the tax reporting?

Back in the 1980's when children were very young, I had $2,000 saved which was sufficient to leave with my two babies when it became necessary, but the tax office had no interest in that small an amount.

My husband and I did separate for 3 years and the children and I were fine. A friend helped us to actually leave because my husband used the car daily. I took a caretaking job that provided a small wage and free accommodation. It took me about 2 years to save up another $2,000 for a deposit to buy a small house after I obtained work as a teacher's aid. The pay was enough to live on and make house payments so we were secure.

Around 3 years after our separation my husband and I had another go at the marriage and as I was no longer prepared to put up with his bad behaviour he had to shape up or ship out. We are still happily together now and I still have my emergency stash.

 

[imnontrad]

Does the recipient need the money now? Would it help them become debt free or move to an area with better schools, job opportunities, etc? If so, your giving it to them now may reap better rewards than waiting.
In my case, there was one time where we were struggling. I imagine that if my parents had given us money then, my (now ex) would have squandered it. But later, they inherited money from my aunt and chose to just pass it along to the kids. My share enabled me to go back to college and eventually leave an emotionally abusive marriage. I don't know where I would have ended up without that money. (yes, I had a successful career after the divorce and that degree and retired at 62. To my knowledge, he's still working at 74).

 

[Teacher Terry]

My parents were blue collar workers and it was important to them that we all go to college. They offered us to live at home and they would feed us, they would give us a no interest loan for tuition and we needed a part time job to cover other expenses. There was no timetable to repay the money. Both my siblings did that.

I got married young and paid for my own education when my youngest started school. My parents helped all of us in many non financial ways. My dad was very sick from his job as a tool grinder and had to retire at 53. This obviously hurt them financially.

They had to help my grandma after my grandfather died because there were no pension survivors options back then and all she had was SS. They were good savers but my mom lived to 89 so she spent all her money. We encouraged her to travel and she did. My parents were wonderful and us kids were richer in so many ways by having them as our parents.

 

[livingalmostlarge]

mine also said to have cash stashed on the side to leave a marriage. In fact more recently she's been giving me cash for it. I just decided to leave it be. More questions if i deposited couple grand every so often.

 

[Pellice]

Mom raised us well (albeit simple and frugally). She & husband only saved ~$200k and is still going. Hopefully she finds good use of this vs giving to any of us. She surprisingly did better than pops even though earnings were extremely meager.

We (kids) are OK financially and don't need it, but mom wants to leave us something, but I don't expect it.

I grew up working class, but my parents were both frugal and savers, and funded about half my college costs (scholarships for other half). They bought my first and second used cars, and I paid them back monthly for the third. They came to visit me here in my first house, and helped with some expenses such as blinds (I'm still working through the towels and washcloths my Mom bought!)

After my father passed, my mother lived very simply but securely on an even smaller income. But she still saved. She would sometimes refer to leaving my sister and me "a little something," and the two of us would always reassure her that she should spend it on herself. We didn't want her to think of us as greedy or needy.

Now I wish, I really wish, I had found a way to tell her how meaningful my little inheritance of $50,000 was to me. She was very proud of being able to leave something to me, and it made an impactful difference in my life, coming at a time when I was saving hard towards retirement as well. I spent a good portion of it on an HVAC system and new carpeting, and the rest I used to offset an increase in my 401k contribution. Over 5 years I moved a portion of it every month into my checking, while sending an equivalent account of my pay into my retirement account. I had a confused idea that somehow the tax savings was better than some kind of investment.

I sometimes look up and say to her, Mom, you would have approved of the way I used it, and thank you for that and for my ability to save as well. But I wish I had told her when she was alive, that her savings had made a real difference in my life.

 

[BubbaChris]

I ended up with an unusual amount of control over my inheritance.

When my father died 10-years ago I stepped in to manage mom’s finances. I quickly realized it became a potentially dangerous case of managing what my sister and I would inherit, so I was super conservative with investments while spending generously for anything mom needed. About 70% of her net worth was in the house they lived in for over 50-years. We sold it and moved her into something small 2-doors from my sister. Mom's survifor pension covered base-line expenses. There was a stipend I paid to my sister for her involvement, upgrades to her new place, significant money for daily companion visits, and finally a move to assisted living near me. Her net worth dropped by $400K in the 5 years before she passed. In the past I inappropriately used the descriptor of burning through the money. Since the money was used to care for and support her, it did exactly what my father would have hoped.

The other aspect of being directly engaged in defining our inheritance was moving mom from the simple will she and my father had to a revocable trust. Luckily my sister was closely involved in this phase; otherwise, I don’t think we’d be on speaking terms today. Initially I was co-trustee with mom, then sole trustee as vascular dementia eliminated her desire to be involved.

Mom passed about the same time DW went to part-time status with her job. In parallel I came back from a Covid induced furlough and directed 90% of my PT income into my 401k. This qualified us for ACA insurance with incredibly low net premiums. We felt our investments and retirement accounts had enough growth momentum to maintain this strategy until retirement. Sadly we had a friend the same age as us (60) go from cancer diagnosis to death in 7-months.

The Covid interruptions to life combined with our friend dying focused our priorities, early retirement became urgent for us. My mental accounting told me we could use my portion of the inheritance to fund living expenses until we hit 65. Then we’d just coast into our existing retirement plan.

My sister seems to have hit financial potholes 3-5 times a year for most of her adulthood. Bank of Dad was her go-to for decades, and that’s continued with both parents gone. For reasons which make sense in her situatiion, her inheritance is still in the trust with me as trustee. It is awkward to be in-the-know on the ongoing challenges. In spite of good returns on investments, she’s down 20% in value over 5 years. Her retirement is further disadvantaged by all her years owning hair salons with her now ex-husband and minimizing reported earnings. Her SS will be meager, and the last salon was closed and lost all value from Covid. They had no retirement plan beyond selling the salon. I feel her only realistic option is to live with one of her two children at some point.

DW and I are child free. We helped our 9 nieces and nephews with, computers, college, and cars through the 90’s and early 2000’s for $30K total. Now we’re gifting stock slices to the 3 (and soon to be 5) great-niblings.

Kind regards,
Chris

 

[Texas Proud]

I have a very wealthy aunt, and she was my God Mother and still living and is around 100 years ago. I was always very close to till about 6 years age when she made a statement about some are trying to butter up to me to get my money. In so many words and how I read her statement. Since about that time I have stopped calling and haven't made the effort to contact her anymore.
I don't want to be someone after her money, so I stopped all connections. I have wondered who will be get her estate, but it really doesn't matter at this point.

I think this is sad if you had a normal relationship with her...

You can always say that I have enough and do not want anything but to visit with you...

From what you posted it sounds like you were only calling etc. to get her money in her mind as you cut off all contact.

 

[TheWizard]

mine also said to have cash stashed on the side to leave a marriage. In fact more recently she's been giving me cash for it. I just decided to leave it be. More questions if i deposited couple grand every so often.

These marriage things sound dangerous.
I'm glad I'm a single person at this point...

 

[RetiredHappy]

We always keep our earnings and savings separately in our marriage, and I have been married 3 times. Divorces are easy, we don't owe each other anything, other than paying legal fees to get it done.

 

[street]

I think this is sad if you had a normal relationship with her...

You can always say that I have enough and do not want anything but to visit with you...

From what you posted it sounds like you were only calling etc. to get her money in her mind as you cut off all contact.

Well, it is sad but there was a little more to the story, but I will leave it like that.
My wife does send a Christmas card and a few words, but I never hear from her now either. Whenever I talked to her in the last, she always talked about her sister's daughter and her family. She has no living family except a couple of nieces on her side. She was an aunt through marriage not blood family.

 

[aja8888]

Both my parents were alcoholics and dad died at 62 (liver failure), leaving nothing except my mother, who was not in good shape from a previous stroke and living in a rental apartment.

The word "inheritance" or "pay for college" was not in our family's vocabulary.

My two younger sisters worked low paying jobs out of high school (and eventually found husbands), but I got lucky and went to college after serving in the military for four years (the military saved my life, so to say). I had a great job and handled my Dad's burial and took care of mom for another 20 years.

 

[MinnUser]

An older brother recently passed away and left me about 200k in total. 50k in a life insurance policy in my name, 122k in a Vanguard inherited IRA (so taxable), and the rest from his checking account that I had access to while I conducted all his affairs whilst the cancer slowly took him. I still have his truck, it's probably worth 10k, and an old record collection that I will keep, some are worth some money.

I immediately used the 50k to help pay cash for a new BMW after selling my vehicle, and the IRA I am leaving alone. I actually used to tell him to spend his money and enjoy life while he was alive, he always wanted a new Dodge Challenger, he was a veteran of Vietnam, and always loved the old Chrystler muscle cars, especially the 1968 Charger. I told him right out that I was buying a new BMW with his savings and even showed him pictures of it. The assisted care facility he was in was really draining his savings, and he used to grouse about it. I said hey bro, it's my inheritance you're spending here, enjoy it.

I was actually sole beneficiary of his 401k, which was 370k, but I talked him into giving his two boys each one third. They had a falling out, and he didn't want to leave them any money, but they each did get a house, he owned two. At the end everybody came around, and he actually liked the facility he was in, he got more visitors than when he was at home by far. He reconnected with his boys, and it was so cool to see them hanging out with him, laughing about old times.

I certainly would have been okay without the inheritance, just maybe take a year or two off my working life. I'd much rather have my brother back, watching him deal with lung cancer 10 years ago, then have it come back and kill him really sucked. My father also died of lung cancer, but almost all of my family except me smoked Chesterfield King cigarettes for their entire life. I often wonder if growing up in a home where everyone smoked affected me, I would think so. I do hate my parents for doing that, but I don't hate them overall.

That much money isn't enough to push me into retirement. But I have a cousin that is supposedly giving 6 of us each a share of about 2.2m, that might really help. But I'm not wishing for anyone to pass away so I can have money.

 

[Koolau]

^^^^^^

I'm sorry for your loss. It sounds like you had a great relationship with your brother.

I lost my younger sister (when she was age 40) many years ago. It's really tough losing a sibling.