Inheritance/commingling/wwyd

[Jags4186]

I am set to inherit, once probate goes through, approximately 35-40k.

I am engaged and I'm sure my FI (we haven't discussed and I have yet to tell her about the inheritance) would want to use some of this for our wedding. Both of my parents were matrimonial attorneys and basically always drilled into my head "never, ever, commingle an inheritance".  Is there a diplomatic way of saying "this is mine and it is going to sit in an investment account for the foreseeable future"? 

How have you handled inheritances left to one member of a couple?

[College Stash]

If you bring it up, wait until after you are married and it is already in the investment account. It will be much harder to touch at that point. Just make sure she's on a similar page with you financially. My two cents.

[dandarc]

Curious as to why putting an inheritance into a joint account is such a bad thing?

[Jags4186]

Curious as to why putting an inheritance into a joint account is such a bad thing?

If for whatever reason you two got divorced inheritances are not marital property and not subject to equitable distribution-if you keep the money in your name only.

If you "commingle funds" which can be as simple as putting it in a joint account or using the money for marital things (using inheritance to pay for vacation or for a marital residence house repair, etc.) the money can also be considered commingled and again subject to equitable distribution.

[4alpacas]

I have to disagree with College Stash.  Do not wait until AFTER you're married to have a big discussion about money.  I would recommend having a frank open discussion (and possibly a prenup) as soon as possible. 

[dandarc]

Curious as to why putting an inheritance into a joint account is such a bad thing?

If for whatever reason you two got divorced inheritances are not marital property and not subject to equitable distribution-if you keep the money in your name only.

If you "commingle funds" which can be as simple as putting it in a joint account or using the money for marital things (using inheritance to pay for vacation or for a marital residence house repair, etc.) the money can also be considered commingled and again subject to equitable distribution.

Ah - so begin with the end in mind ;).  I guess I could see worrying about this if it was a lot of money or something, but particularly if you are coming in on roughly equal financial footing, why make it an issue?

Also, be sure you are on the same page on finances before you get married - that's one thing Dave Ramsey says all the time that is 100% right.

[Paul der Krake]

Do you plan on accumulating wealth or achieving FIRE as a couple fairly quickly, say before 45? If you do, knowing that you would get an extra 20k is not much in the grand scheme of things. People with just one million dollars invested in the stock market have seen their balances swing by that much in just one day this week.

[Jags4186]

Haha I'm not thinking about the end--as I said in my OP I am definitely paranoid from being around two divorce attorneys my whole life. I know it's not "a lot" of money but I don't want to be stupid and I don't want to be shortsighted.

[GizmoTX]

Your parents are right. Just open an investment account in your name only now, put the inheritance there, & set it to automatically reinvest earnings. List your estate as the account beneficiary. Never deposit anything into it once you are married, or you will convert it to community property.

You absolutely want to have a frank discussion about financial goals, saving, & spending before you are married -- this is what the engagement period is for. Share credit reports. You can then choose the timing of when to disclose your inheritance, but theoretically she's not marrying you for money & the equal sharing part comes from money earned after the marriage.

Personally, I'd much rather invest some of my stash in a trust than to do a prenup.

[plainjane]

How have you handled inheritances left to one member of a couple?

We used it as part of a down payment on our house.  I guess that is the ultimate co-mingling.  :)

[PencilThinMust]

I think a good marriage is one with honesty and compromise.    I personally would be offended if my wife kept that from me. 

[surfhb]

I think a good marriage is one with honesty and compromise.    I personally would be offended if my wife kept that from me.

Completely!   You are starting this marriage off on the wrong foot

[cotterpin]

One way to handle this is to put it into a separate account, making her the beneficiary and then telling her what you've done. That would also set a precedent. If she receives an inheritance then you can expect her to respond in kind.  Don't necessarily think she won't have any chance of that happening because people's family fortunes can change suddenly.  Do you need the money to pay for the wedding? Will you have outstanding bills from the wedding? Clearing that debt might not be a bad idea, but if it only enables you to increase the expense of the wedding, then I would rethink that idea. 

I've never made very much income personally, being a SAHM for so many years, but I think 30-40K would definitely NOT be worth starting a marital money issue about, considering how long you might be married. I've been married 37 years and I would not want to create an issue over that amount of money. If you're worried about her wanting to blow it, then y'all need to have those hard discussions now, before marriage, because it doesn't get any easier and fighting over money is one of the saddest and most draining things that you can do with your spouse. Try to get on the same page and if you can't make that happen, at least agree on how you will co-mingle your monies.

Good Luck and I hope it all works out!!

[Astatine]

I think a good marriage is one with honesty and compromise.    I personally would be offended if my wife kept that from me.

Completely!   You are starting this marriage off on the wrong foot

Yep. Everyone is different, but man, if my DH had done that before (or after) we got married, I would have lost a lot of trust in him. Possibly forever.

[TerriM]

My mom has insisted that anything I inherit from her stay in my name.  I don't know if she's said it in front of my husband, but these conversations always happened with him in the house, so it's not like she's hiding anything.

Her concerns are this:
1. She would like the money to go to me or her grandkids.   It's her money, and I respect that.
2. She doesn't like "tying money up in trusts."
3. If I commingle the money, die, and my husband remarries, and dies, then his wife gets the money, and my kids get zilch.  This is not as far-fetched as it might sound, and it's a lot of money to be concerned about.

So, since I don't care about my husband's future wife (no offense), and I love my kids, I intend to do as she says.  Either way, I'm doing my husband a favor if the kids inherit it, because it's that much less he'll have to give any of them for college, a wedding, or a house.  If for some reason he really needs some money, I'll probably write up a will that splits it evenly between all of them.

[TerriM]

I think a good marriage is one with honesty and compromise.    I personally would be offended if my wife kept that from me.

Completely!   You are starting this marriage off on the wrong foot

Yep. Everyone is different, but man, if my DH had done that before (or after) we got married, I would have lost a lot of trust in him. Possibly forever.

I think I'd have been pleasantly pleased, but you have to spin it right.... "I wanted it to be a surprise, and I'm saving it for a downpayment for a house for us"  ....not..... "I don't want you to have the money in case we get divorced."

I had no idea how much my husband had in savings, and I doubt he knew how much I had in mine until we started talking about the wedding.

[kyanamerinas]

My mom has insisted that anything I inherit from her stay in my name.  I don't know if she's said it in front of my husband, but these conversations always happened with him in the house, so it's not like she's hiding anything.

Her concerns are this:
1. She would like the money to go to me or her grandkids.   It's her money, and I respect that.
2. She doesn't like "tying money up in trusts."
3. If I commingle the money, die, and my husband remarries, and dies, then his wife gets the money, and my kids get zilch.  This is not as far-fetched as it might sound, and it's a lot of money to be concerned about.

So, since I don't care about my husband's future wife (no offense), and I love my kids, I intend to do as she says.  Either way, I'm doing my husband a favor if the kids inherit it, because it's that much less he'll have to give any of them for college, a wedding, or a house.  If for some reason he really needs some money, I'll probably write up a will that splits it evenly between all of them.

Surely a decent will would stop it going to anyone you didn't want it to? Say all your mums money (or equivalent amount) to your kids and anything else to your husband.

[TerriM]

My mom has insisted that anything I inherit from her stay in my name.  I don't know if she's said it in front of my husband, but these conversations always happened with him in the house, so it's not like she's hiding anything.
...
3. If I commingle the money, die, and my husband remarries, and dies, then his wife gets the money, and my kids get zilch.  This is not as far-fetched as it might sound, and it's a lot of money to be concerned about.

PS:  This is exactly the reason her inheritance is in her name only--she knows that my dad would consider getting remarried if she dies, and she doesn't want his second wife to get any of it--she wants it to go to her children.  So she lives what she preaches and I don't think my father minds.

[TerriM]

My mom has insisted that anything I inherit from her stay in my name.  I don't know if she's said it in front of my husband, but these conversations always happened with him in the house, so it's not like she's hiding anything.

Her concerns are this:
1. She would like the money to go to me or her grandkids.   It's her money, and I respect that.
2. She doesn't like "tying money up in trusts."
3. If I commingle the money, die, and my husband remarries, and dies, then his wife gets the money, and my kids get zilch.  This is not as far-fetched as it might sound, and it's a lot of money to be concerned about.

So, since I don't care about my husband's future wife (no offense), and I love my kids, I intend to do as she says.  Either way, I'm doing my husband a favor if the kids inherit it, because it's that much less he'll have to give any of them for college, a wedding, or a house.  If for some reason he really needs some money, I'll probably write up a will that splits it evenly between all of them.

Surely a decent will would stop it going to anyone you didn't want it to? Say all your mums money (or equivalent amount) to your kids and anything else to your husband.

Once it's mixed, I don't think a will does anything--it's your husband's property, so a will doesn't apply.

[kyanamerinas]

My mom has insisted that anything I inherit from her stay in my name.  I don't know if she's said it in front of my husband, but these conversations always happened with him in the house, so it's not like she's hiding anything.

Her concerns are this:
1. She would like the money to go to me or her grandkids.   It's her money, and I respect that.
2. She doesn't like "tying money up in trusts."
3. If I commingle the money, die, and my husband remarries, and dies, then his wife gets the money, and my kids get zilch.  This is not as far-fetched as it might sound, and it's a lot of money to be concerned about.

So, since I don't care about my husband's future wife (no offense), and I love my kids, I intend to do as she says.  Either way, I'm doing my husband a favor if the kids inherit it, because it's that much less he'll have to give any of them for college, a wedding, or a house.  If for some reason he really needs some money, I'll probably write up a will that splits it evenly between all of them.

Surely a decent will would stop it going to anyone you didn't want it to? Say all your mums money (or equivalent amount) to your kids and anything else to your husband.

Once it's mixed, I don't think a will does anything--it's your husband's property, so a will doesn't apply.

Mm, fair point. OK.

[innerscorecard]

This inheritance is honestly pretty trivial so I'm surprised you'd even consider shielding it from your spouse.

Same thoughts here. It would be a serious black mark for me.

[HappierAtHome]

Are you saying that you're engaged to somebody, but you haven't had 'the conversation' with them yet about how you'll approach finances in your married life?

Pretty sure you should be having the conversation now about whether you'll do shared or separate finances, and including inheritances as just one aspect of what you discuss.

[fiftyincher]

I agree with others, don't hide it.

And by all means, discuss your financial future. You're on here, does she follow the same premises?

While you're at it, discuss any future children too. When, how many, etc. You might both want kids (my wife and I did), but how many? I was fine with 2. Turns out my wife kinda wanted 3. We communicate openly and it wasn't a huge deal but it could've been. When we were dating, it was just we want kids. Never thought about how many.

[TerriM]

I agree with others, don't hide it.

And by all means, discuss your financial future. You're on here, does she follow the same premises?

While you're at it, discuss any future children too. When, how many, etc. You might both want kids (my wife and I did), but how many? I was fine with 2. Turns out my wife kinda wanted 3. We communicate openly and it wasn't a huge deal but it could've been. When we were dating, it was just we want kids. Never thought about how many.

hehehe.  Wanting kids and having them are two different things.  You can discuss all you want now, but be aware that people change their minds on things after they've been pregnant and given birth.

[socaso]

When I had been married 2 years I inherited $20k from my grandmother. I admit I was nervous that my husband might want to go a bit crazy but we talked about it and we paid off the credit card (couple of thousand on that) recovered the sofa ($500) and the rest went into savings. It also gave us a forum to talk about future inheritances. We are both the executors of our respective parents' estates and we agreed that when the unfortunate day comes any money we receive will go into investments and retirement accounts. Another poster said this was a trivial amount of money and I agree. You have to open the door for these conversations. When I talked to my husband about it one tactic I used was saying that I knew my grandmother had left the money to me to help me and she would want to know that her grandkid had an emergency fund. It's hard to argue with the dead so you can use a similar tactic "I know Uncle Buddy wanted me to put this in savings/pay off my student loans/use it for a house downpayment, etc."

[MooseOutFront]

The biggest risk here is that your fiancé is wedding crazy and would want to ramp up the festivities if she knows about this money.

Are you guys going into debt for the wedding?  If not then if you simply put the money in a brokerage account in your name then the problem is solved.  Not hiding it or anything, just received an inheritance and so I invested it.  Not sure what there would be for a spouse to get offended by in that process.

[CheapskateWife]

I see this as a terrific opportunity to broach the subject with your potential life mate and see how she responds to your wishes for the funds.  It is a modest enough amount that I could see a reasonable person saying "Oh honey, put that in your retirement account" and a not-so-reasonable person saying "Oh honey, now we can have the wedding of my dreeeeeems!"

Then you get to decide if said partner is a keeper or not.  Bottom line is its your money right now, and a partner who would look to squander it for selfish gain is not a keeper.  Many couples find this out about eachother AFTER the wedding.  You have a golden opportunity to figure this out now before money issues become cancer in your relationship, don't squander it!

[Gin1984]

Curious as to why putting an inheritance into a joint account is such a bad thing?

If for whatever reason you two got divorced inheritances are not marital property and not subject to equitable distribution-if you keep the money in your name only.

If you "commingle funds" which can be as simple as putting it in a joint account or using the money for marital things (using inheritance to pay for vacation or for a marital residence house repair, etc.) the money can also be considered commingled and again subject to equitable distribution.

Ah - so begin with the end in mind ;).  I guess I could see worrying about this if it was a lot of money or something, but particularly if you are coming in on roughly equal financial footing, why make it an issue?

Also, be sure you are on the same page on finances before you get married - that's one thing Dave Ramsey says all the time that is 100% right.

My husband and I are on the same page, I can in with assets and he came in with debt, he loves me, why would he not wanted me protected?  Some of my premarital assets are set so he would not have a claim over them.

[Meggslynn]

My hubby inherited 50K right before we got married.


$9K went to the ultimate honeymoon (he loves to travel).

$5K went to our wedding

$15K was added to the downpayment of our house

The remaining $21K is still in our TFSA's.

[FLBiker]

Interesting topic.  Here's my experience:

I got married about 4 years ago.  I don't remember exact numbers, but I probably had ~$150K in investments and no debt.  My wife had ~$30K in student loans and < $10K in investments.  I thought about getting a pre-nup or something, but a good friend told me that, if I didn't go into marriage with a "what's mine is ours" mindset, it wasn't going to work.  For me, I think this was great advice.  If I'd have gone in with an eye on the exit, I think I'd always be keeping score.

Now, we've got about $400K in investments, a $100K mortgage, and $15K in student loans.  Far more important than "protecting what's mine" has been marrying someone with whom I have open lines of communication and similar financial values.

[Jags4186]

Hello all,

While I wasn't expecting all this vitriol about my relationship--we have had money discussions, we both know exactly how much each other has, we both have given each other copies of our credit reports, we both know exactly what each other makes, and we already budget as a household and pay for things proportionally--I decided that with the money I am going to pay off my car loan, throw $25,000 into a savings account as a real emergency fund (with $10,000 earmarked to pay off her car loan once we are married), and use the remaining $10,000 or so towards a down payment on a house when we are eventually ready to purchase a home.  It's not enough money for me to be paranoid over.

I had a discussion with my FI and explained to her that I would be receiving this money, I was not going to use this money towards the wedding, and we would "save up" out of our income as initially planned.  This would prevent us from going over the top.  My FI is very frugal but I can tell she has wedding fever.  As far as I'm concerned, until we are married, this is very much "mine" and not "ours".

If this makes me a shitty partner, oh well!

[MooseOutFront]

well done in my opinion.  thanks for the follow up.

[TerriM]

I had a discussion with my FI and explained to her that I would be receiving this money, I was not going to use this money towards the wedding, and we would "save up" out of our income as initially planned.  This would prevent us from going over the top.  My FI is very frugal but I can tell she has wedding fever.  As far as I'm concerned, until we are married, this is very much "mine" and not "ours".

If this makes me a shitty partner, oh well!

I think you did the right thing.  You're not married until you're married.  I've seen people break off the wedding at the last moment--in fact, I know someone who got dumped by two different fiances (they all fought a lot, so I thought it was wise).

That said, if your wife wants to get married asap, why not discuss a smaller wedding?  Or is wedding fever the "this is going to be the perfect
day of my life?"    There are a lot of ways to cut the cost of a wedding--I remember seeing another thread on it.  Lunch instead of dinner, smaller wedding, but a larger party with extended friends later. 

[cotterpin]

Hey Jags,

Sounds like you handled it well and you're marrying someone on the same page as yourself financial wise. That is huge!!

Your original post did not make you sound like a shitty partner, but it did open the door for a very important discussion that many folks dread. A lot of people will read this thread and come away knowing how important it is to not put off that "talk" no matter how awkward it may be.

Congratulations on your upcoming nuptials. :)

[CheapskateWife]

Good Job Jags!  Glad to hear that you kept the communication lines open!

[dunhamjr]

Ah - so begin with the end in mind ;).  I guess I could see worrying about this if it was a lot of money or something, but particularly if you are coming in on roughly equal financial footing, why make it an issue?

Also, be sure you are on the same page on finances before you get married - that's one thing Dave Ramsey says all the time that is 100% right.

its might only be $35-40k now.  but what happens if they commingle the inheritance BUT do invest it?
10yrs later that $40k is going to be significantly more if invested properly with compounding, etc...

don't thinking of it as losing $40k, when it could easily end up being over $100k in just 10 years.