Author Topic: What would you do with an inheritance?  (Read 1961 times)

CatDog

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What would you do with an inheritance?
« on: March 26, 2019, 04:02:27 PM »
If you received an inheritance and you had no debt, what would you do with it? Would you share it with your spouse? Would your spouse expect it to be shared with them?

radram

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Re: What would you do with an inheritance?
« Reply #1 on: March 26, 2019, 04:11:42 PM »
I would place the inheritance in an account in my name and invest it according to my current plan.

I would treat it like any other account once we began spending it. In my state (WI), an inheritance is not considered marital property. Whoever gave me the money should have known that, and I would assume if that person wanted it to be equally divided, they would have done so. While I could spend it as I wish, I would respect the wishes of the person that gave it to me and keep it separate from my spouse. I consider myself a steward of inherited money.

My spouse would do the same.

londonbanker

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Re: What would you do with an inheritance?
« Reply #2 on: March 26, 2019, 04:17:52 PM »
When some say people with money usually don’t care or talk about money, I feel it’s about the same with people with inheritance.
My parents and in-laws have always been hard working people and managed to accumulate enough wealth throughout their life to live comfortably and have a little nest egg to pass on.
My wife and I will probably inherit the best part of $2m (we both have siblings).
I have never assumed we were to get any of it and never accounted it in our models. We are planning to be FI in our early 40s w a stache of 4-5m on our own.

Given that we have no idea what will happen abt healthcare cost in the future - though a bit more reasonable here in Europe - or nursing home costs, that inheritance is our buffer to cover their cost of getting old / care in their last years, or to cover our own when we get to senile city ourselves.

If we get lucky and there’s still something left to pass on, this will be a bonus which will go straight to our heirs.

Catbert

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Re: What would you do with an inheritance?
« Reply #3 on: March 26, 2019, 04:20:19 PM »
I live in a community property state and would keep the inheritance in a separate account owned by me as separate property.  However, I might choose to spend my mont on "us".

CatDog

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Re: What would you do with an inheritance?
« Reply #4 on: March 26, 2019, 05:07:24 PM »
What if your spouse insisted that it be put in a joint account? Because everything I own is his and vice versa.

jps

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Re: What would you do with an inheritance?
« Reply #5 on: March 26, 2019, 05:11:56 PM »
My spouse's money is mine, and my money is my spouse's. We would decide what to do with it together, according to our plan.

seattlecyclone

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Re: What would you do with an inheritance?
« Reply #6 on: March 26, 2019, 05:16:39 PM »
What if your spouse insisted that it be put in a joint account? Because everything I own is his and vice versa.

Legally speaking, inheritances often do not follow this pattern of joint ownership if the heir takes care to keep the inherited funds separate. Speaking as someone whose spouse is likely to inherit more than I am (hopefully many years down the road in any case), I would never ask my spouse to commingle any inherited funds. Doing so could cause me to have a legal claim to that money in the event of a divorce, which doesn't seem fair to anyone if my name wasn't on the will.

GreenEggs

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Re: What would you do with an inheritance?
« Reply #7 on: March 26, 2019, 05:25:05 PM »
What if your spouse insisted that it be put in a joint account? Because everything I own is his and vice versa.


An inheritance is a gift.  It is yours to do with as you choose, until you comingle it in a joint account. 


If you want to save and invest it I would advise against comingling it, because it could be redirected without your consent. 

Slow2FIRE

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Re: What would you do with an inheritance?
« Reply #8 on: March 26, 2019, 05:37:10 PM »
Since my spouse insists upon separate accounts, if they get an inheritance or I get an inheritance we shall keep it in our own accounts.

Most likely, a portion of my inheritance (if I receive one) will be in the form of several class C/D rental properties and a few class B rental properties.  I would probably work with a real estate agent to see if I could find an investor interested in taking all of them at once (without going too far below FMV) so I could 1031 exchange them into a single more expensive rental property in a HCOL area, wait out the 24 months as required (renting it out at market rates) and then move into the property.  The specific HCOL area is one in which my spouse has always wanted to live.

KBecks

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Re: What would you do with an inheritance?
« Reply #9 on: March 26, 2019, 05:44:27 PM »
I would invest it. I would put it in my account but count it towards our net worth.  Does your spouse want to spend it or something weird like that?  Remind your spouse that this was left to you, from your family. Of course you and your spouse are a team, but it still is from your fam.

gaja

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Re: What would you do with an inheritance?
« Reply #10 on: March 26, 2019, 05:49:11 PM »
What if your spouse insisted that it be put in a joint account? Because everything I own is his and vice versa.

If my partner *insisted*, I would become rather grumpy, and quite surprised. That sounds a bit too controlling.

That said, we would probably end up sharing. That is what we have done so far with our money, so it would feel less stressfull to just treat inheritance like any other money. Maybe we would set something aside for the kids.

ixtap

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Re: What would you do with an inheritance?
« Reply #11 on: March 26, 2019, 05:51:23 PM »
My parents are adamant than anything they give to me is meant for us.

His parents are adamant about blood family.

Inheritances will be treated accordingly.

Cranky

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Re: What would you do with an inheritance?
« Reply #12 on: March 26, 2019, 05:58:03 PM »
In my marriage, there is only “our” money, and that includes inheritances. Our parents are all dead now, and the inherited money is in joint accounts.

radram

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Re: What would you do with an inheritance?
« Reply #13 on: March 26, 2019, 08:24:13 PM »
Most likely, a portion of my inheritance (if I receive one) will be in the form of several class C/D rental properties and a few class B rental properties.  I would probably work with a real estate agent to see if I could find an investor interested in taking all of them at once (without going too far below FMV) so I could 1031 exchange them into a single more expensive rental property in a HCOL area, wait out the 24 months as required (renting it out at market rates) and then move into the property.  The specific HCOL area is one in which my spouse has always wanted to live.

Are you in the US? Why the need for a 1031 exchange? Won't the inherited real estate receive an immediate step-up in basis to fair market value? Just sell it and keep all the cash. No 24 month waiting period needed

Shinplaster

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Re: What would you do with an inheritance?
« Reply #14 on: March 26, 2019, 09:01:13 PM »
DH inherited money last year.  Although our other money is joint (and has been for 40 years), the inheritance is in a separate account in his name only.  He might decide to put it towards joint expenses in the future, or give it to our son, or grandson, or just let it build and grow.  It's entirely up to him - it's not my money.  If he dies before me, whatever amount is there will be passed directly to our son.    Because it is not my money.

I will also most likely inherit sometime in the next few years, and that will be kept separate too.  If I die before DH, he will also pass that money directly to our son rather than keep it for himself.  We have not specified that in our wills - we trust each other enough to know that we feel the same, and it will be done.  It helps that this money is not necessary to fund our retirement, so there is no urgency to use it at this time.  Also that we will both have inherited money, so there will be a balance of sorts. (I might inherit more, but we're not talking millions here).    If circumstances change, we will revisit our decision then.

 I agree with posters above who have said that an inheritance is a gift.  A spouse should never expect to control that gift, or profit by it.  Sharing might be a wise decision, or not.  Only those involved could make that decision, and the recipient's wishes should always prevail.


DirtDiva

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Re: What would you do with an inheritance?
« Reply #15 on: March 27, 2019, 06:26:57 AM »
When my second parent died, I used 2/3 of my inheritance as a down payment on a house and 1/3 on a lot purchase (as an investment).  Goal is to both enjoy it now and make it grow for my son.

I’ve been married for 34 years; my spouse encouraged me to keep it in my name if I wanted, but I  saw no purpose in doing so.  I could imagine doing that if I were younger or had concerns  about my marriage lasting.

Spouse won’t inherit much of anything of value, other than the legacy of two great parents.

Dogastrophe

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Re: What would you do with an inheritance?
« Reply #16 on: March 27, 2019, 06:56:06 AM »
Last year I received a small inheritance from my grandparents.  While it wasn't specified explicitly in the will that it was for my wife and I, I treated it as though it had (and firmly believe this was their intent).  We have always treated our money (and our past debts) as 'our' money and didn't see any reason to change this because of the source of the money.

eljefe-speaks

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Re: What would you do with an inheritance?
« Reply #17 on: March 27, 2019, 07:47:51 AM »
I find the question very difficult to tackle without knowing some basics about your spouse and the size of the inheritance. For example, if my spouse is addicted to peyote and gambling on Alliance of American Football games, and the inheritance is $27, I would put the money in my wallet and not tell anyone. 

If I received a sizable inheritance I would definitely share it with my wife. I would first pay off all of OUR debts. She is a very trustworthy woman who regularly takes on a larger portion of our bills because she makes more money than I do.
« Last Edit: March 27, 2019, 07:51:56 AM by eljefe-speaks »

charis

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Re: What would you do with an inheritance?
« Reply #18 on: March 27, 2019, 08:41:57 AM »
If I received an inheritance, I would share it with my spouse, as we do with all of our money and gifts of money.  I can't imagine keeping an inheritance to myself/in only my name and I would be surprised/dismayed if my spouse indicated a desire to do that, partly because I handle all the finance/budgets/bill issues in our house.  But I imagine that if the couple was already wealthy and both spouses came from affluent families, sticking the inheritance in a separate investment account could be the norm.

wenchsenior

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Re: What would you do with an inheritance?
« Reply #19 on: March 27, 2019, 09:24:51 AM »
If I received an inheritance, I would share it with my spouse, as we do with all of our money and gifts of money.  I can't imagine keeping an inheritance to myself/in only my name and I would be surprised/dismayed if my spouse indicated a desire to do that, partly because I handle all the finance/budgets/bill issues in our house.  But I imagine that if the couple was already wealthy and both spouses came from affluent families, sticking the inheritance in a separate investment account could be the norm.

Same.  It doesn't seem weird to me that money would be gifted to 'me' in my name only. But it would seem incredibly weird to me if the gifter expected me to keep it eternally in my name and use it only for myself or my kids  (if I had any), but not use it with/for my spouse or our shared goals.  Maybe if my spouse was known to be an addict or something, then I could understand the gifter hoping that I do so. But if they want to control the inheritance to that degree, they should maybe not gift it at all or set up some sort of legal instrument so that the money is doled out only to the grandkids to pay for college, or only as an annual small allowance to me, or whatever. 

Imma

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Re: What would you do with an inheritance?
« Reply #20 on: March 27, 2019, 10:22:54 AM »
I haven't received an inheritance, but in my country it is extremely common to pass on an inheritance to your blood relative only and specify that in the will. So common that in fact I would be extremely surprised if one of my parents didn't include that clause in their will. Of course the money can be spent on whatever you want to, but in case of divorce the person who received the inheritance could claim their inheritance back from the joint assets (except when the spouse can prove it was spent).

Officially, when there's nothing specified in the will and the couple have completely joint marital assets, the inheritance would go into the marital assets, but actually claiming your part of your spouse's inheritance during a divorce is considered extremely bad form.

Dicey

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Re: What would you do with an inheritance?
« Reply #21 on: March 27, 2019, 10:49:23 AM »
I am co-executor of my parent's modest estate. We're almost done wrapping it up. The checks have come in dribs and drabs. I set up a small Donor Advised Fund, which will cover our joint giving for a couple of years. It's in my name, but only because I handle that portion of our spending. The rest has gone into our joint savings account. It's not life-changing money, and neither of us cares about money enough for it to have even been a topic of anything but passing  discussion. I think my parents would be happy that about half of their gift to me is earmarked for charity.

honeybbq

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Re: What would you do with an inheritance?
« Reply #22 on: March 27, 2019, 10:51:43 AM »
If you received an inheritance and you had no debt, what would you do with it? Would you share it with your spouse? Would your spouse expect it to be shared with them?

We transferred it to a joint investment account. It was my spouse's choice, however, as in my state the funds are retained by the individual who inherited them. However, he wanted to just throw it in the common pot as we do with all the rest of our money.

For us, it was not a life shattering amount. It was nothing to sneeze at- but like people who agree about money matters - it wasn't a big to do. Just added it to the pile.

driftwood

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Re: What would you do with an inheritance?
« Reply #23 on: March 27, 2019, 11:53:00 AM »
What if your spouse insisted that it be put in a joint account? Because everything I own is his and vice versa.

To answer your question, if the current status of your finances is "everything I own is his and vice versa", and you both are happy with that, and you've both contributed to that, then keeping an inheritance 'to yourself' could upset that balance, but usually talking it out and some time to process the emotions could help. Though I keep it to myself, if anyone I know gets a windfall I do get a bit jealous because I haven't and won't have any type of financial windfall events in my life. But then I get over it. It's a bit harder if it's someone you're married to.

There are a lot of variables that could be part of this discussion... And some of it depends on the past financial history of your relationship. If you already have separate accounts then keeping it separate may be fine. If everything is joint, with years of unequal earning going towards a common goal of FI and maybe RE, then keeping it separate may be divisive.

If my spouse had just spent the last 5 years paying off my student loans or debt I brought to the marriage, and I received an inheritance, then I would think it would be fair for that to become joint money, and to mix it with our other joint accounts so that is basically unrecognizable as a separate amount.

If I made far more than my spouse but also worked more hours and had less life flexibility, then I may consider keeping it 'for myself' if all other financial bases are covered, and having it as something I could spend however I want.

But honestly, we can only give our opinions based on our own situations (which for me is a currently divorced male). For me, If my (future) spouse received an inheritance, I'd like her to keep it as hers. I would like a future spouse to be financially independent of me, and always have the financial option of leaving if the relationship doesn't work. I like knowing she's with me every day be cause she wants to be, not because she has to be.

If I received an inheritance, it gets trickier. I don't know what I'd want to do with it in this hypothetical future. It does depend on our joint and individual financial positions. If we don't need it, then I may want to use it to fulfill an expensive dream option, now that it wouldn't hurt financially to do so. Honestly, whatever I'd pick would really benefit us both, but would be more fun for me just by virtue of it being one of my 'lottery fantasies'... land/travel/investments.


Spiffy

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Re: What would you do with an inheritance?
« Reply #24 on: March 27, 2019, 12:58:31 PM »
After Thanksgiving dinner this year, my Mom took the opportunity to talk to us about inheritance stuff since we were all together. All three of her children, plus our three spouses, where sitting around the table and my mom came around to each of us, just her children, and patted us on our arms and said " I am talking to you, and you, and you" leaving out our spouses! She told us that if we wanted to sell the parcels of land that each of us would inherit to please give right of refusal to another family member (one person, who she named). I thought it was a little odd to so obviously leave out the spouses, but now I think it is because one of my brothers doesn't have children. I have heard my Mom say that she wants my brother to leave the land to his nephews and niece so it doesn't go to his wife's side of the family is he dies first. If there are children involved, I think it is appropriate to make provisions so that the inheritance stays in the family that is came from.

Cranky

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Re: What would you do with an inheritance?
« Reply #25 on: March 27, 2019, 02:40:41 PM »
After dh and I had been married about 20 years, my in-laws changed their will so that in the event that dh predeceased me, the inheritance would come to me rather than skipping to our kids. I took that to mean that they intended it to be a joint inheritance.

GreenEggs

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Re: What would you do with an inheritance?
« Reply #26 on: March 27, 2019, 03:11:04 PM »
After dh and I had been married about 20 years, my in-laws changed their will so that in the event that dh predeceased me, the inheritance would come to me rather than skipping to our kids. I took that to mean that they intended it to be a joint inheritance.


That's not how it sounds to me.  If your husband dies before you do, you become next in line, before the your kids. 


It's not joint, but you should still feel honored that they bumped you above their grandkids.




Cranky

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Re: What would you do with an inheritance?
« Reply #27 on: March 27, 2019, 06:55:34 PM »
As it is, that inheritance is in a joint account and the odds of dh remembering the password is pretty much zilch. ;-)

GreenEggs

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Re: What would you do with an inheritance?
« Reply #28 on: March 27, 2019, 09:10:25 PM »
As it is, that inheritance is in a joint account and the odds of dh remembering the password is pretty much zilch. ;-)


I have recently had problems with recalling passwords too.  lol! 

historienne

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Re: What would you do with an inheritance?
« Reply #29 on: March 28, 2019, 08:22:31 AM »
What if your spouse insisted that it be put in a joint account? Because everything I own is his and vice versa.

If my partner *insisted*, I would become rather grumpy, and quite surprised. That sounds a bit too controlling.

That said, we would probably end up sharing. That is what we have done so far with our money, so it would feel less stressfull to just treat inheritance like any other money. Maybe we would set something aside for the kids.

Ditto this.  If I go an inheritance, I'm 99% sure that I would, in fact, put it into our joint accounts.  But I would be extremely bothered if my husband demanded that I do so.  And I would never make that demand of him.

I would not expect to use the money on luxuries for myself.  It wouldn't be cool to use it to fly myself to Europe and stay in fancy hotels by myself, while our family vacations consist of camping at parks within driving distance of our home.  But entirely reasonable to keep it in a separate account.

iris lily

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Re: What would you do with an inheritance?
« Reply #30 on: March 28, 2019, 08:57:19 AM »
What if your spouse insisted that it be put in a joint account? Because everything I own is his and vice versa.

 DH will be getting his father’s estate in the next few years in the amount of  $2+ million dollars that he shares with several siblings. His father died recently and it will take a while to iron out disposal of their family farm.

I suggested to him that he consider placing it all in a separate account just to keep things cleaner in an eventual divorce between us. I don’t think that will happen but you never know.

 However, I fully expect to be a participant in whatever that money buys. I think we’ll have a big blowout trip to Europe probably. We may use part of it to renovate our weekend house to make it habitable full-time.

When my mom died 10 years ago she left me $60,000. I always referred to it as “my” money even though it went into our joint pot. I kept an accounting of how I spent it (and
I pretty much spent it all!) so  that he knew where it went. A fair amount of it say $8,000 to $10,000 went to organizations I want to help. Another large chunk, say $20,000 to $30,000 went to DH on paper to “pay him “to finish our renovation in the house we live in. He was in the handyman/light construction biz.

So, this mom money was in a joint accout and went to things enjoyed by DH, but I considered myself the main decider of what happened to the money. If
I wanted to give $3,000 to bulldog rescue,
I informed DH but didnt ask him or negotiate that with him.



« Last Edit: March 28, 2019, 09:00:19 AM by iris lily »

Villanelle

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Re: What would you do with an inheritance?
« Reply #31 on: March 28, 2019, 09:46:39 AM »
Some of this would depend on how much, and at what stage of life we inherit.  $10k at 75 is much different than $10m at much younger. 

If it's a more modest amount, I'd just chuck it in an investment account, for sure.

For a large amount, I'd likely be conflicted.  If I did end up keeping it separate somehow, I am quite sure that as it was spent, it would end up commingled anyway.  We might by our forever home, for example, in which we'd both live, and it might be purchased in part with money from the sale of one of our joint properties.  We'd travel, we'd retire if w e weren't already and use that as part of our living expenses' fund, etc.  But the unspent part might stay in an account in mine name, which would maybe be split between DH and my sibling when I die if that's what I thought my parents would want.  I don't know. Interesting question. 

Sugaree

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Re: What would you do with an inheritance?
« Reply #32 on: March 28, 2019, 09:52:11 AM »
In my case, an inheritance is more likely to be from my husband's parents.  I would encourage him to put into retirement accounts in his name (i.e. live off the money while contributing as much as possible to a tax-advantaged plan through his employer).

MDfive21

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Re: What would you do with an inheritance?
« Reply #33 on: March 28, 2019, 10:28:02 AM »
the likelihood of divorce is the same likelihood i would keep the funds separate in an account owned only by me, in a bank that neither one of us has done business with before, and i would use a new bank so spouse doesn't know where to look.  especially if it's life-changing amounts of money that would make either one of us greedy enough to get divorced over it.  if we're talking a $million or more, some people, even 'happily married' would be tempted to divorce and take half.  more cash than that and the temptation increases.  jaded?  yup.

also, if spouse is spendy, that increases the likelihood i would keep it separate.  if spouse doesn't understand it's my legal right and custom to keep it separate at least for a while and gets antsy or demanding about putting it in a joint account, that's a massive red flag.  the general advice is to keep it separate and sit on it for 6mo to a year while you grieve, wrap your head around the windfall and develop a plan for the money, so if spouse is demanding you do anything with it, definitely put the cash on ice away from prying eyes and fingers.

i recommend searching up this topic on bogleheads.com forum also.  there's a lot of good discussion over there regarding what to do with a windfall/inheritance and how to do it.

MDfive21

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Re: What would you do with an inheritance?
« Reply #34 on: March 28, 2019, 10:38:49 AM »
i just read your other thread.  since this involves jointly owned family property and ongoing rental income there is no way in hell any of that would go into a joint account.  in the event of divorce or your untimely death, commingled assets will turn into a legal snafu.

i STRONGLY recommend that you consult an attorney who specializes in this area in your jurisdiction.  a bunch of randos on the internet don't know enough about your situation to advise you.  :) 




https://forum.mrmoneymustache.com/ask-a-mustachian/anxious-and-upset-over-inheritance-issues/

MDfive21

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Re: What would you do with an inheritance?
« Reply #35 on: March 28, 2019, 10:57:38 AM »
What if your spouse insisted that it be put in a joint account? Because everything I own is his and vice versa.

i know there are two sides to every story and maybe he's just trying to be helpful, but he's already got you in trouble with your sisters so frankly, i would tell him to Shut The Fuck Up in no uncertain terms.  he's also sorely wrong about "everything I own is his and vice versa."  the inheritance you have received is NOT HIS.  it is yours to do with as you wish and that includes doing nothing until you and your sisters work out your complicated situation.


robartsd

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Re: What would you do with an inheritance?
« Reply #36 on: March 28, 2019, 01:30:18 PM »
I would put an inheritance in an account in my own name, but include it in financial planning with my spouse. I would expect the same of my spouse. As long as we remain together I would use it as "our" money, but if we decided not to remain together, I would keep any portion that that remained in addition to my share of community property.

In my case, an inheritance is more likely to be from my husband's parents.  I would encourage him to put into retirement accounts in his name (i.e. live off the money while contributing as much as possible to a tax-advantaged plan through his employer).
Although the employer sponsor account is in his name, in a community property state both spouses have claim on the money in it because the money earned by one spouse belongs to both. In a good relationship, I would probably agree to something like what you propose though - put inheritance in account in beneficiary's name only, use inheritance account to maximize contributions to beneficiary's name IRA (separate IRA that has not received any funding from martial money), withdraw from inheritance account to pay current expenses sufficient that earned income can maximize contributions to other tax advantaged accounts. This would minimize the commingling of funds - providing more benefit to the beneficiary than the spouse should a separation occur - without decreasing the advantage to a partnership that remains together.