Inheritance: When/How to FIRE?

[Fenderist]

I'm looking for some wisdom and motivation. I'm 41, in good health, and increasingly feeling a sense of urgency to have more autonomy and enjoyment over my time. Part of that is reaching midlife. Part of that is seeing my parents' health suddenly diminish and hearing their regrets about working too much for too long. Part of that is finally having 2 beautiful young kids after 15 years of doctors telling us we'd never have children, but spending most of my waking hours working. Part of that is working in a stressful field (law) where literally every minute of your life is recorded and scrutinized in an adversarial setting.

I recently learned that I may soon receive farmland as an early inheritance for my parents' estate planning purposes. That's amazing news, but historically, it is the unwritten rule in my family that the land is never to be sold, and its income is to be reinvested, and basically just stewarded as a family asset for future generations.

I'd like to FIRE as soon as possible, but have a few "snags."

Some beginning information:

Age 41, married to stay-at-home-wife, with 2 young kids (plan to homeschool).
No debt of any kind.
Annual income: $170k.
Retirement Savings: $1.2MM (~$350k in a taxable account available before age 59).
Anticipated Farmland Income: ~$100k.
Annual expenses: ~$100k (we have a spending problem and need a budget).

The "Snags"

First, FIRE anytime soon would be dependent on using income from farmland, but I feel bad spending the income/interest from the farmland just so I can take a mega-luxe early retirement (by normie standards). If I just keep working until I'm 55+ "like a normal person" then all of that income can continue piling up for my kids and grandchildren with compound interest. But at some point it makes me wonder what benefit this great intergenerational asset is if its fruits are never enjoyed. If never enjoyed, it seems more like a burden that we carry for generations until somebody drops the ball and squanders it.

Second, I worry whether I'm seeing things clearly, or whether I'm being unduly affected my emotions (midlife, parents' decline, cute young kids I want to be around more).

Third, I worry that there are major expenses I'm not planning for or thinking of, like health insurance, college, etc. We've saved ~$100k for each kid's college already, but I don't want there to be any surprises.

Finally, FIRE now or later requires getting our spending under control. We have no debt, our house is paid off, we have one car and it's paid off, we don't pay for private school. Frankly, my wife spends pretty freely "because we have the money" and assumes I will keep working until "normal" retirement age, and our interests aren't aligned (she is already experiencing something like FIRE and is only worse off if we save/limit to also quit my job, while the sacrifice of saving would give me a huge freedom benefit). We need to get aligned and get a budget.

Any insights or motivation?

[Tasse]

I guess I'd challenge the idea that your wife "is only worse off" if you also quit. You'd be around at home more! Pitching in on the chores! Being a present father to your children! Travel as a family without having to worry about vacation days! You say she "assumes" you'll work to normal retirement age... does she know you're interested in FIRE? That you miss spending time with your kids? Sounds like a lot of worthwhile conversations to be had there! You have to get on board together with a vision you're both excited about before you can worry about the implementation of getting a budget.

[wageslave23]

I would see if your wife wants to start working in order to fund her desired lifestyle.  If not, then tell her that you also don't want to work anymore. Therefore she has a decision to make, either go to work and continue spending or continue to stay at home and work together to form a sustainable FIRE budget. And yes, spend the income from the farmland, don't sell it - that would be the real dick move. Hoarding the income just seems like some kind of misguided pride thing.

[Fru-Gal]

I think you are in great shape to FIRE and you know what you will have to work on. The fact that you currently have no debt means that you do have the ability to manage money well, even if you have been spending freely due to your high income and zero debt. Remember, you can always go back to work. But you won’t want to. Health is wealth. Time with your kids is a very short 20 years.

[Fru-Gal]

The part you said about your wife “already experiencing FIRE” implies to me that the two of you may not be aligned about child rearing and schooling.

Having children is a massive explosion in responsibility. Especially after 15 years of trying to have kids, finally having them is in a way like FIRE — you won the fertility game (in FIRE you win the savings game), now it’s on to the raising-a-family game. Does she really want to homeschool them on top of that? There are other options, and she could also be experiencing a sense of wanting to be more than a SAHM.

[Turtle]

Managing farmland is still something that will take time, effort, and energy.  In essence, it’s an additional job you would be committing to without the ability to retire from until the next generation was ready to take it over.  Also, teaching your children to appreciate the land and understand what it takes to be good stewards of it is also part of that job.

Brainstorming questions in no particular order

How involved have you been currently in the farm management?  What about your own learning curve in taking over?

Farm income tends to be lumpy (& the time commitment is too for that matter) Do you have plans for how to handle that?

What about health insurance?  Kids college funds?

Do you have the flexibility at work to downshift to part time and maintain benefits there while you are transitioning and evaluating/planning?

[TheFrenchCat]

Agreed with Turtle, I feel like we need a bit more information about the farmland and it's income to be able to give advice. 

I think my big question is, how much of that $100k needs to go to taxes/maintenance?  Is the $100k pure profit or is that the revenue?  Farms can be breathtakingly expensive to run.  And you'll want to have some back up cash/investments to ensure you can pay the property taxes if there's a bad string of years so you don't lose the farm.  DH's cousin is a farmer, and in the past 5 years, they've had 3 severe weather events that used to barely happen once in a decade.  So you have to count on bad times.  Just make sure if you're going to spend income from the farm that it's actually something the farm can support.     

[secondcor521]

One thing I may have learned from recent hard personal experience is that you need to have the necessary conversations with the right people.

The right people, in your case, in my opinion, is not a bunch of Internet strangers.  The right people are your parents (to discuss their understanding and expectations and to see if their plans might change given estate tax changes pending in Congress), your wife (to plan a future you can both buy into, as another poster said), and those cute kids (after the other conversations, to let them know what's happening).

[kei te pai]

There are a few things that stand out to me, but they could be summarised as sharing values and direction in life with your wife.
Why is it better to accumulate ( and spend) than to be physically and mentally present for your children?

When you have a sense of a shared vision, then start mapping the path, and the finances.

[AMandM]

I'm speaking here as someone who spent most of her adult life as a stay-at-home homeschooling mother.

Forget the budget, forget the farm income. You and your wife need to sit down for several long conversations, in which you both seek to understand each other. Don't either of you assume you know what the other one wants or thinks; both of you ask, and really listen to the answers, and in turn give honest answers about your own goals and priorities. Don't assume your goals are better or more reasonable than your wife's/husband's. Explore what it might look like to pursue all these goals. Do they seem to conflict with each other? What are the trade-offs? Are there ways in which they actually support each other?

I would refer you to this excellent post by the great @Laura33: https://forum.mrmoneymustache.com/ask-a-mustachian/getting-married-dilemma/msg3365987/#msg3365987

Only once you have mutual understanding of, and respect for, each other's aims, can you begin to define your shared target. Once you have that, you can talk about how to achieve it... and that is when the questions of budget and farm income come into play.

[Dicey]

I'm speaking here as someone who spent most of her adult life as a stay-at-home homeschooling mother.

Forget the budget, forget the farm income. You and your wife need to sit down for several long conversations, in which you both seek to understand each other. Don't either of you assume you know what the other one wants or thinks; both of you ask, and really listen to the answers, and in turn give honest answers about your own goals and priorities. Don't assume your goals are better or more reasonable than your wife's/husband's. Explore what it might look like to pursue all these goals. Do they seem to conflict with each other? What are the trade-offs? Are there ways in which they actually support each other?

I would refer you to this excellent post by the great @Laura33: https://forum.mrmoneymustache.com/ask-a-mustachian/getting-married-dilemma/msg3365987/#msg3365987

Only once you have mutual understanding of, and respect for, each other's aims, can you begin to define your shared target. Once you have that, you can talk about how to achieve it... and that is when the questions of budget and farm income come into play.

Ha! I was just about to say the same thing and link that post from the inimitable @Laura33. Thanks for doing it first.

[Chris Pascale]

QUESTIONS IN NO PARTICULAR ORDER:

Which expenses increase with the farm? Like, do you live around the block from a grocery store now, and the farm is 30 miles from the nearest one?

Is $100k outflow really too much?

Is the $100k income from the farm the expected NET, or will you deduct a lot of things you couldn't with your current income?

Sorry if I missed this part, but do you and your wife want to work the farm? Or is income coming in without much need to work?

Would you want to lease part of the farm to a solar company for added income? Does the farm have tress you'd want to sell, then re-plant?

[Much Fishing to Do]

First, FIRE anytime soon would be dependent on using income from farmland, but I feel bad spending the income/interest from the farmland just so I can take a mega-luxe early retirement (by normie standards). If I just keep working until I'm 55+ "like a normal person" then all of that income can continue piling up for my kids and grandchildren with compound interest. But at some point it makes me wonder what benefit this great intergenerational asset is if its fruits are never enjoyed. If never enjoyed, it seems more like a burden that we carry for generations until somebody drops the ball and squanders it.

I think that's quite the false dichotomy you're creating for yourself (spending all farm income instead of some, retiring at 55+ instead of 41, etc).

Even your current (self-labeled spendy budget) could be covered by 4% of your portfolio and half of the farm income.  Given dollars are fungible and a lot of the portfolio is in retirement accounts, maybe it does make sense to just spend the farm income, but that means your portfolio will grow like crazy over the rest of your life given how young you are. The source of the inheritance you pass on to future generations doesn't matter except for the land itself, which you will also pass on some day.

I made good money thru my career and therefore desired to use that ability to work a little more than I needed to to help my kids start life without debt (student/car loans).  But that's certainly not full time lawyer work for an additional 15 years...

i think you have time to figure all this out and have needed conversations, I can't imagine you'll get a good sense of the reliability/variability of that farm income until after you've owned it for a couple years.

[JimDogRock]

There is a lot of missing info around the farmland.
OP said that there is an unwritten rule to not sell the land, but there legitimately could be written rules on this depending on how your parents transfer the shares to this inheritance. If the land is put into a trust(s), there can be various stipulations put in place.

Until more details of the situation are known, it's hard to give good advice around what to do with the farmland inheritance.
It could be that the totality of the farmland gets managed by a farmland asset management company and the profits are held in a trust to be distributed to the inheritors.
Or it could be the OP's parents want to give more flexibility and give specific portions of the land(s) to the children separately so that each child can decide if they want to farm it, lease/rent it out, or sell it.
Or a multitude of other scenarios.

Here are some basic starting points to what things could look like.
https://www.extension.iastate.edu/agdm/wholefarm/html/c4-07.html

[RedmondStash]

<snip>

she is already experiencing something like FIRE

</snip>

Um. Dude. No. If you really believe this, I invite you to learn more about the 24/7, exhausting life of a stay-at-home parent. Unless you've hired tons of household staff to nanny, cook, clean, shop, chauffeur, teach, referee, project-manage, doctor, launder, and be on call ALL THE TIME, you are vastly underestimating how much work your wife is doing.

If you want her to really understand your life, and your needs and preferences, the best first step is to really understand her life and just how much work she's doing. It may be easier to bring her around on your FIRE ambitions if she sees that you do understand, respect, and appreciate her labor -- and if you can make good arguments for how her labor will be reduced by your FIRE-ing because you will take it on.

Basically, the best way to sell her on the idea is to show her how it does benefit her.

[Catbert]

JImDogRock touched on something I was going to.  How is the "early inheritance" coming to you?  Is it a gift where their presumably low basis comes along with it?  What are your parents expectations whether written or just understood?  Are you willing to violate their expectations in order to RE?  If this land has been in your family for generations I suspect that it's in a trust of some sort which will come along with very specific rules and tax ramifications. 

Finally, does this land really consistently generate 100K net yearly?  Is the work involved something you are willing and able to do?

[Chris Pascale]

<snip>

she is already experiencing something like FIRE

</snip>

Um. Dude. No. If you really believe this, I invite you to learn more about the 24/7, exhausting life of a stay-at-home parent. Unless you've hired tons of household staff to nanny, cook, clean, shop, chauffeur, teach, referee, project-manage, doctor, launder, and be on call ALL THE TIME, you are vastly underestimating how much work your wife is doing.

If you want her to really understand your life, and your needs and preferences, the best first step is to really understand her life and just how much work she's doing. It may be easier to bring her around on your FIRE ambitions if she sees that you do understand, respect, and appreciate her labor -- and if you can make good arguments for how her labor will be reduced by your FIRE-ing because you will take it on.

Basically, the best way to sell her on the idea is to show her how it does benefit her.

I was the at-home parent for a few years, which I wanted to be, and can say that it is not the FI/RE lifestyle we think of.

Tasks never get completed. You wash the dishes, and the sink fills up. You sweep a floor, and people walk on it. AND HOW MANY TIMES HAVE I TOLD YOU THAT THE SHOES GO WHERE THE SHOES GO!?!?!?!!