After any taxes or liquidation fees or expenses:

10% for hookers and blow
10% to charities/projects I want to support
10% for durable hardgoods
10% in a CD ladder and Treasury Bonds
40% in VTSAX (US Stocks)
10% VBTLX (US Bonds)
10% VTIAX (International Stocks)

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Use the entire amount to pay taxes on a Roth conversion.

Why?

The best funding source for taxes on a conversion is money that is either not taxed or more lightly taxed. A $1 million inheritance is not taxable income, so when you do the conversion you pay taxes only on the converted amount, and not also on the funds you use to pay the tax. This is better than, say, liquidating assets in brokerage to fund the taxes as those are taxed as long-term capital gains.

You don't want to pay for the taxes from the 401K or IRA you are converting from as that lessens the amount you can put into the Roth forever tax free.

whoa - you don't know this. An inherited IRA is most certainly considered taxable income. It's a life insurance payout that's not taxable

Of course assuming not an IRA. You are not taxed on the amount of the IRA you inherit, but distributions are treated as ordinary income for tax purposes.

If it is cash or stocks (with step-up value) you can liquidate into cash, they are not taxable to the heir, and your taxable income does not go up as a result of the inheritance.

My only debt is my mortgage which is at a low rate and is down to $100k at this point. I would get estimates for improvements to the house and look around and see if it would make more sense for me to buy something with all the things I want vs making renovations to the current house. Then I would invest the rest. My NW right now is a little less than $2million.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Use the entire amount to pay taxes on a Roth conversion.

Why?

The best funding source for taxes on a conversion is money that is either not taxed or more lightly taxed. A $1 million inheritance is not taxable income, so when you do the conversion you pay taxes only on the converted amount, and not also on the funds you use to pay the tax. This is better than, say, liquidating assets in brokerage to fund the taxes as those are taxed as long-term capital gains.

You don't want to pay for the taxes from the 401K or IRA you are converting from as that lessens the amount you can put into the Roth forever tax free.

whoa - you don't know this. An inherited IRA is most certainly considered taxable income. It's a life insurance payout that's not taxable

Anonymous wrote:

Anonymous wrote:Use the entire amount to pay taxes on a Roth conversion.

Why?

The best funding source for taxes on a conversion is money that is either not taxed or more lightly taxed. A $1 million inheritance is not taxable income, so when you do the conversion you pay taxes only on the converted amount, and not also on the funds you use to pay the tax. This is better than, say, liquidating assets in brokerage to fund the taxes as those are taxed as long-term capital gains.

You don't want to pay for the taxes from the 401K or IRA you are converting from as that lessens the amount you can put into the Roth forever tax free.

Anonymous wrote:Pay off the debts, gift my kids max amount every year, and donate max amount annually to the food bank. Live off the interest.

Except this adds to to WAY more than the interest that $1m would generate.

OP: Given that you are still years away from retirement, I would do the following if I were you:
(1) Pay off debt
(2) Set aside emergency fund (in HYIA)
(3) Set aside another $50k (in HYIA) to do something fun and celebrate the life of the person who passed away. (You don't have to spend it all in one year.)
(4) Fund Roth
(5) Invest the rest into VTI

Pay off any debts (but not mortgage if good rate), emergency fund and anything else you need in next five years in money market account and possibly TBills, rest in mix of VTI and VXUS.

Anonymous wrote:Use the entire amount to pay taxes on a Roth conversion.

Why?

I admire your bravery in putting all the money into the US stock market when it has reached unprecedented highs. I further admire your bravery and insight in thinking that crypto and investing in foreign stocks are in any way similar.

Good luck!

Anonymous wrote:Use the entire amount to pay taxes on a Roth conversion.

Interesting idea!

Anonymous wrote:

Anonymous wrote:If you are renting instead of owning, you essentially have perpetual debt. You will always owe someone else for your basic shelter.

Unless you buy your home in cash, you are also in debt, that’s what a mortgage is.

duh. but you are also building equity, which is part of your net worth and can pay off the mortgage. You never have that renting.

Use the entire amount to pay taxes on a Roth conversion.

Anonymous wrote:I would not pay off our mortgage (we have sub 3%, and carrying it is not a risk to us).

We'd probably create a small donor directed fund.

The donor advised fund is a great idea. We set up one fifteen years ago and we essentially gift out the amount it grew the prior year so the principle is about the same as what we put in.

Anonymous wrote:If you are renting instead of owning, you essentially have perpetual debt. You will always owe someone else for your basic shelter.

Unless you buy your home in cash, you are also in debt, that’s what a mortgage is.

I would not pay off our mortgage (we have sub 3%, and carrying it is not a risk to us).

We'd probably create a small donor directed fund.