Best use for 1.6 million inheritance

[Anonymous]

I would buy a second home in my own name as an investment. For me, that would be $800k-$1M. Then I would max out the college funds, $200k per kid. Then I would do a small splurge - a big trip, something fun for the family? Then I would invest the rest in a trust.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Put 1/4 towards the mortgage, 1/4 to invest, 1/4 towards retirement, and splurge 1/4.

No. They have three children to put through college. They should not splurge a fourth of 1.6 million!

+1. And I'm paying for grad school right now!

[Anonymous]

Where did the inheritance come from? I will potentially receive a large inheritance when my parents pass. They will never tell me what to do with it, but I know what they value- financial security, education, my kids, and for fun- travel. So I would likely make decisions based on that. Shore up my own finances as needed, pay for my kids college/grad school, set up a trust for my kids to receive at a certain age, and splurge on a dream vacation or two for the whole family.

[Anonymous]

Anonymous wrote:Inheritance is a separate property of the spouse who inherited it. Don’t invest in anything joint - you are gifting your spouse 50%. Is it what you want ?

I would buy a separate rental property or a brokerage account and put it into a irrevocable solid divorce proof trust with mine and kids names on it. Way too many divorces when kids are off to college in mid 50s….

As a 23-year spouse to someone who received a many millions dollar trust fund and has been very careful not to co-mingle, I assure you, this kind of behavior is one way to ensure that empty nest divorce. My spouse will live a very lonely life because of this kind of attitude. You sound as hateful, paranoid, and insecure as my spouse. Enjoy your money, alone.

[Anonymous]

Anonymous wrote:I really appreciate all of the advice.
I did not really realize our retirement savings is low but yes, that makes sense given our high cost of living.
I also did not realize that there was good reason to think about not commingling the funds. I am the lower earner by a drastic difference, so yes, I need to think about that.

I don’t think it’s low per se, but definitely not great. Sounds like you are paying for private school at the expense of your own retirement.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Late 40s with such low retirement? I would invest it for retirement, OP.

This assumes that you can carry college costs solely on your income, as you've suggested.

I wouldn't pay down the house, unless you cannot cover college tuition and private school with your income. Of course this all depends on your mortgage rate, compared to rate of return you might get by buying at a low in the stock market. Expectations are that the stock market will hit hit bottom 3 to 6 months into the war in Ukraine, but we're not there yet, and there's a stagflation/recession looming for next year, so, the usual rule of thumb applies: don't try to time the market exactly, start buying solid company stocks if they've tumbled significantly from their 52 week high.

Seriously, only DCUrban would consider that low!

I mean, 2.8m with an average 7% annual rate of return would be 5.6m by their late 50s with no further contributions!

[Anonymous]

Anonymous wrote:I would buy a second home in my own name as an investment. For me, that would be $800k-$1M. Then I would max out the college funds, $200k per kid. Then I would do a small splurge - a big trip, something fun for the family? Then I would invest the rest in a trust.

I'd pay off my existing mortgage before I went into more debt at today's interest rates, but that's just me. There is a lot of obsession on DCUM with investment properties.

[Anonymous]

Anonymous wrote:I would buy a second home in my own name as an investment. For me, that would be $800k-$1M. Then I would max out the college funds, $200k per kid. Then I would do a small splurge - a big trip, something fun for the family? Then I would invest the rest in a trust.

The first two items would already max out the inheritance BEFORE taxes

[Anonymous]

Whatever you do do not comingle. You can certainly decide that money should be spent for tuition or other joint expenses, the money must be kept strictly separate from joint accounts.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Inheritance is a separate property of the spouse who inherited it. Don’t invest in anything joint - you are gifting your spouse 50%. Is it what you want ?

I would buy a separate rental property or a brokerage account and put it into a irrevocable solid divorce proof trust with mine and kids names on it. Way too many divorces when kids are off to college in mid 50s….

As a 23-year spouse to someone who received a many millions dollar trust fund and has been very careful not to co-mingle, I assure you, this kind of behavior is one way to ensure that empty nest divorce. My spouse will live a very lonely life because of this kind of attitude. You sound as hateful, paranoid, and insecure as my spouse. Enjoy your money, alone.

You are bitter and paranoid. We are not suggesting OP to hold everything separate. She can purchase a rental property in a trust for herself and her kids, and then commingle the trust income with her spouse on family related expenses. But the underlying asset which generates income would be hers only. Not sure how this affects her spouse negatively.

Assets and income from assets can be separate, the trust fund terms can be specifically set to reflect this. If your spouse has a different lifestyle receiving income from his trust fund and not sharing it with the family, that's a different thing from treating the asset separate by placing it into a trust fund

[Anonymous]

Anonymous wrote:

Anonymous wrote:I would buy a second home in my own name as an investment. For me, that would be $800k-$1M. Then I would max out the college funds, $200k per kid. Then I would do a small splurge - a big trip, something fun for the family? Then I would invest the rest in a trust.

The first two items would already max out the inheritance BEFORE taxes

There are no taxes on an inheritance for the heir.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Inheritance is a separate property of the spouse who inherited it. Don’t invest in anything joint - you are gifting your spouse 50%. Is it what you want ?

I would buy a separate rental property or a brokerage account and put it into a irrevocable solid divorce proof trust with mine and kids names on it. Way too many divorces when kids are off to college in mid 50s….

As a 23-year spouse to someone who received a many millions dollar trust fund and has been very careful not to co-mingle, I assure you, this kind of behavior is one way to ensure that empty nest divorce. My spouse will live a very lonely life because of this kind of attitude. You sound as hateful, paranoid, and insecure as my spouse. Enjoy your money, alone.

Are you struggling without the inheritance? I ask because I think DH will receive an inheritance and I will not, and if he's careful not to commingle I wouldn't be particularly upset because it goes to our kids eventually. I might even be able to loosen the savings strings a bit and spend more on day-to-day with that safety net in the background.

If you're living on rice and beans while your spouse is living it up on separate funds I could see that being very upsetting.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Inheritance is a separate property of the spouse who inherited it. Don’t invest in anything joint - you are gifting your spouse 50%. Is it what you want ?

I would buy a separate rental property or a brokerage account and put it into a irrevocable solid divorce proof trust with mine and kids names on it. Way too many divorces when kids are off to college in mid 50s….

As a 23-year spouse to someone who received a many millions dollar trust fund and has been very careful not to co-mingle, I assure you, this kind of behavior is one way to ensure that empty nest divorce. My spouse will live a very lonely life because of this kind of attitude. You sound as hateful, paranoid, and insecure as my spouse. Enjoy your money, alone.

Are you struggling without the inheritance? I ask because I think DH will receive an inheritance and I will not, and if he's careful not to commingle I wouldn't be particularly upset because it goes to our kids eventually. I might even be able to loosen the savings strings a bit and spend more on day-to-day with that safety net in the background.

If you're living on rice and beans while your spouse is living it up on separate funds I could see that being very upsetting.

Exactly: there are trust funds that are structured in a way that the recipient of the income can use this income on his/her daily needs. It's up to a spouse whether to use inheritance on family needs. But the underlying asset remains separate property which is protected in divorce/remains with ex spouse who received it. This is done to protect children interests in the first place, so that inheritances are not diluted in subsequent remarriages/go to steps and other "no blood line" relatives down the line.

[Anonymous]

Anonymous wrote:I’m thinking fully fund the college accounts? DH wants to pay down the house.
We have only 300k in the 529s and we have three kids (16,14,5)
We have about 2 mil in retirement (late 40s)
About 800k in taxable investments.
We both work.
We have a very expensive mortgage.
We pay for an expensive private school so we are accustomed to the tuition bills every year so DH doesn’t think we need more saved for college.

Because of this, I wouldn't lock up too much money in 529s. You can invest the money in a brokerage account, and still use it for college if needed. But if you don't, then it's much more flexible and can be used for retirement or other goals you may have.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I’m thinking fully fund the college accounts? DH wants to pay down the house.
We have only 300k in the 529s and we have three kids (16,14,5)
We have about 2 mil in retirement (late 40s)
About 800k in taxable investments.
We both work.
We have a very expensive mortgage.
We pay for an expensive private school so we are accustomed to the tuition bills every year so DH doesn’t think we need more saved for college.

Because of this, I wouldn't lock up too much money in 529s. You can invest the money in a brokerage account, and still use it for college if needed. But if you don't, then it's much more flexible and can be used for retirement or other goals you may have.

Terrible advice. They should be overfunding 529s, which can be used for the expensive private school *and* college *and* grad school. If not "needed" because of a scholarship they can pull an equivalent amount out penalty free. Money that goes into a brokerage is getting no tax advantages no matter what it's used for.