Author Topic: Inheritence  (Read 4507 times)

Jay Bird

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« on: July 05, 2015, 10:59:48 AM »
I know that others have also submitted questions about what to do with inheritance money, so the answers to my questions are likely to be the same, I would like to ask anyway.

I am just about to get an estimated GBP 170,000.00 in inheritance.

About 1/3 of that is currently being held in an off shore account (Isle of Man), and the other coming from the UK company that handled the estate planning/investments.

My concerns are:

I have been speaking to an accountant about this hypothetically and once I know the final situation I will discuss with him again.

I'm trying to make sure that I don't do something really stupid and end up getting taxed too much or twice or something just because I didn't know any better.

I could leave the money where it is I suppose, but again I don't want to put myself in a bad situation tax wise or something, because I didn't understand the implications of what I was doing. (I'm from the UK but live in the US).

Exchange rates will be involved of course. When I was over there recently I was offered the lowest and most ridiculous exchange rate ever, and I certainly don't want to move it and get ripped off that way - so that's just something I myself need to be aware of.

I am 54 and he is 62. We currently have about $270,000.00 in savings (IRA/ROTH, investments).

We owe about $33,000.00 on our house/interest 6.25%.

Other than that we are debt free.

We're both still working. Salaries are around $70K and $45K.

I think that it's likely best for me to do the following:

Move the money to the US.
Talk with the tax man when I have my facts.
Pay off the house.
Invest the rest.

I'm also wondering about where we invest anything.

The investments that we currently have are with Edward Jones, and while I like the person there, I have been feeling lately that there is no real benefit to us being there. We don't have a complicated account that it's worth paying high fees for, and we only meet with him once a year. It seems that we are not really making the most out of the relationship (our fault I know) / and what we pay to have the relationship. I am considering moving our EJ account somewhere else perhaps. But even if I decide not to move it I am thinking that I would invest this money coming to me somewhere else.

Because this inheritance is money that we didn't have, and it's going to be a huge help to our bottom line, I feel rather overwhelmed, and responsible. I want to be sure that I am making the smartest choices, and I don't want to be kicking myself 5 years from now because I just wasn't smart about the choices I made.

Understanding, of course, that nothing is guaranteed.

Thank you for any thoughts anyone would like to share on this.

Jay Bird

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Re: Inheritence
« Reply #1 on: July 05, 2015, 11:24:21 AM »
forgot to add that we do both have some savings in 401K and are still contributing.

I suppose my other thought was to consider buying property and renting it or something along those lines.

Also on a completely different note, can someone tell me how to get rid or change the custom title on the profile? Not sure where that came from and I don't seem to be able to find how to get rid of it.

Sorry, I'm new to being a forum member and should have taken more time before registering perhaps.

Lady Fordragon

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Re: Inheritence
« Reply #2 on: July 05, 2015, 11:30:15 AM »
My suggestion would be to move the money to the US, pay off your house, and invest the rest in a vanguard index fund, which has low fees.  You also might want to consider moving the money that you have at Edward Jones to vanguard as well.  Good luck and congrats on the inheritance!


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Re: Inheritence
« Reply #3 on: July 05, 2015, 11:43:06 AM »
Bogleheads windfall advice may be helpful:
And, if you haven't already, you might consider posting your questions on Bogleheads as well for additional perspective and feedback.

Frankies Girl

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Re: Inheritence
« Reply #4 on: July 05, 2015, 01:13:07 PM »
First, so sorry for your family's loss.

I have no understanding whatsoever of exchange rates, foreign accounts or how the money might actually come over to you, so taking that into consideration...

If the money is not coming over in any specific investment accounts (as they are in IRAs in the U.S. - 401ks/IRAs and the like must be transferred as an inherited IRA/401k with specific rules), then I would pay off the mortgage, and invest the rest with either Vanguard or Fidelity. I would get everything out of Edward Jones as soon as possible after things have settled down and you feel comfortable about shifting your own accounts over.

If you are unable to put much of the inheritance into tax deferred inherited accounts in the US (since I have no idea how they are currently set up, I assume that you won't have that as an option), you will definitely need to keep in mind the efficiency of the funds you place in the taxable brokerage accounts. I am assuming that you have the option of contributing to a Roth or traditional IRA for the both of you, but that only takes up 11K a year (5,500 for you and your spouse), so there will be lots of overage unfortunately that may only be able to go into a taxable brokerage...

And if you aren't both already maxing your 401ks, do this after the inheritance money comes through. You can use the cap gains or dividends (that are already going to be taxed if you're in the 25% taxable bracket) to fund your living expenses or just use some of the cash you inherit if you need it, but maxing the 401ks will drop your total income down so you might not even be in the same tax bracket while at the same time funnel more money into tax deferred accounts... so do look into this and get it set up when you are sure of the inheritance (and can still live off of your salary or the cash part).

You can call up Vanguard and discuss it with them as well - with that amount of money, I'm pretty sure they'd be open to walking you through the process if you're unsure how to go about it. But mostly I think it's going to be waiting to see how the UK accounts will be transferred to you, and then contacting Vanguard or Fidelity and asking them for help getting things into the US accounts for you.

You need to read the following to get up to speed on how investing works, what you personally want to set for your goals and then decide on an asset allocation.
^investing primer - great reading and you'll know how it all works after getting through it
^why you are investing and what your plans and goals are
^how you will invest
^simple "lazy" portfolios which will perform quite well with little effort

If you prefer Fidelity, it is still possible to get good index funds and no fees other than rock bottom expense ratios (similar to Vanguard):

And I had no interest in real estate (sounds like a huge mess/headache as far as I'm concerned), but there are many successful real estate investors on here that might steer you in the right direction if that sounds like something you might be interested in.

Good luck!
« Last Edit: July 05, 2015, 01:17:16 PM by Frankies Girl »


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Re: Inheritence
« Reply #5 on: July 05, 2015, 01:36:46 PM »


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Re: Inheritence
« Reply #6 on: July 05, 2015, 02:15:28 PM »
Here is my Edward Jones story.  About 2 years ago, I was laid off from my job and I decided that I should start an IRA (only had 401ks previously).  This was before I found MMM, obviously.  I liked the idea of having a local financial advisor, so I took my $5,500 and opened a EJ account.  I already had some knowledge and knew fees were bad, but I was still rather naive.  He advised some fund, I don't even recall what that had up front fees, but he assured me that the extra performance would make up for the fees.  Since I was doing this as somewhat of an experiment, I went with it. 

I know, dumb.  However, in my defense, not to long afterwards I started doing a lot more research and figured out that it was probably a bad deal, but I let it ride since it was a small amount compared to my 401k accounts.  But, I did my research and learned more about investing and decided to roll over my horrible company 401ks to a Vanguard account and all index funds.  Yay!

Fast forward earlier this year, I get a call from my EJ advisor telling me that I need to reinvest my money (wtf?), apparently these funds are "term" funds and after like 18 months you get basically kicked out and have to either reinvest or pick a new fund.  Seriously???  Well that was the kick I needed, I told him I needed to think about it (he was promoting energy/gas stocks) and that I would call him back.  The next day I called Vanguard and initiated a rollover.  When I got my final statement the amount of my "investment" was $5,458.88 after they charged me a $135.00 fee for the privilege.  So I lost $41.12 after almost 1.5 years of "investing".  Needless to say, I am not a fan of Edward Jones.

I know, *facepunch*.  I am just glad that I decided to try a small amount of money first and that I found this site and others that helped me learn from my mistakes.

Please consider moving your funds away from Edward Jones.
« Last Edit: July 05, 2015, 02:37:09 PM by SunshineAZ »

Jay Bird

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Re: Inheritence
« Reply #7 on: July 06, 2015, 08:30:10 PM »
Thanks to all for the comments. All very helpful. I appreciate them.