Anonymous
Post 04/21/2022 14:44     Subject: Spouse inherited $3 million
Anonymous wrote:
Anonymous wrote:I think what I need the most help with, though, is learning to spend some money for the enjoyment of my family. I’ve gotten a lot of great ideas for that. Looking at a new car and a couple of vacations this year. I was perusing rental vacation properties this morning before work. The other step I am considering is eliminating sending money to taxable savings. I think we should challenge ourselves to spend it rather than stuffing it in our taxable account. I have no desire to leave millions of dollars to our child. I want to enjoy our lives.


That sounds like a very good plan.


Thank you, I appreciate the encouragement. I haven’t quite brought myself to cancel our auto investment from our checking account yet. Maybe tomorrow? The next one happens on the 28th.
Anonymous
Post 04/21/2022 14:40     Subject: Spouse inherited $3 million
Anonymous wrote:I think what I need the most help with, though, is learning to spend some money for the enjoyment of my family. I’ve gotten a lot of great ideas for that. Looking at a new car and a couple of vacations this year. I was perusing rental vacation properties this morning before work. The other step I am considering is eliminating sending money to taxable savings. I think we should challenge ourselves to spend it rather than stuffing it in our taxable account. I have no desire to leave millions of dollars to our child. I want to enjoy our lives.


That sounds like a very good plan.
Anonymous
Post 04/21/2022 14:39     Subject: Spouse inherited $3 million
I think what I need the most help with, though, is learning to spend some money for the enjoyment of my family. I’ve gotten a lot of great ideas for that. Looking at a new car and a couple of vacations this year. I was perusing rental vacation properties this morning before work. The other step I am considering is eliminating sending money to taxable savings. I think we should challenge ourselves to spend it rather than stuffing it in our taxable account. I have no desire to leave millions of dollars to our child. I want to enjoy our lives.
Anonymous
Post 04/21/2022 14:37     Subject: Spouse inherited $3 million
I appreciate the advice, I really do. I actually completed the entire course sequence for a CPA but never sat for the exam. I worked as an accountant in a tax planning firm for two years when I was young. Aside from some fancy tax situations for the very, very wealthy, I didn’t see anything that would materially change decisions for people at our level.

I mean, aside from sheltering as much money from tax as possible and using tax efficient investing strategies, I’m not sure what else a tax planner would say. But perhaps I don’t know what I don’t know and it’s worth a look. My spouse is completely uninterested so it all falls on me and since I work full-time I prefer a set it and forget it strategy.
Anonymous
Post 04/21/2022 11:17     Subject: Spouse inherited $3 million
Anonymous wrote:
Anonymous wrote:I am not sure there is anything a tax planner can tell us. The investments are in tax-efficient index funds and we are maxing out all tax-preferred savings options.

What is the advantage of I-Bonds? I guess I need to research those more, but I'm hesitant to complicate our portfolio. We have everything at Vanguard except for one 401(k) which is at Fidelity and the HSA at HealthEquity.

I found a podcast "I will tell you how to be rich" that seems to focus several episodes on moving to a mindset where saving is not the ultimate goal. "What are you saving for?" and all that. I feel that way with this additional money. Since I don't want to retire, I may need to work on spending money for enjoyment more.

It doesn't sound like you really want advice. None of us know enough about your portfolio to tell you if a tax planner could be helpful, and you have convinced yourself that you know everything. It's just strange to me and sounds very much like the mindset of someone who isn't used to the potential pitfalls of having a large sum of money. At the end of the day, the biggest risk is that you make decisions that significantly increase your tax liability and/or you get a much lower return on your funds than you could, neither of which are a catastrophe. But there are other concerns with whether your money is protected from law suits and stuff.

I grew up with more money than you I'm guessing, and I suspect that informs our different attitudes. Personally, I would at least talk to a tax advisor in case they see something I don't. There is no obligation to following their advice. Think of it like consulting a doctor when you are on the fence about whether something is benign. What's the harm in getting an expert opinion?


I agree. And unlike financial advisors, tax advisors are not angling to skim of 1% of your assets a year in management fees.
Anonymous
Post 04/21/2022 10:55     Subject: Spouse inherited $3 million
Anonymous wrote:I am not sure there is anything a tax planner can tell us. The investments are in tax-efficient index funds and we are maxing out all tax-preferred savings options.

What is the advantage of I-Bonds? I guess I need to research those more, but I'm hesitant to complicate our portfolio. We have everything at Vanguard except for one 401(k) which is at Fidelity and the HSA at HealthEquity.

I found a podcast "I will tell you how to be rich" that seems to focus several episodes on moving to a mindset where saving is not the ultimate goal. "What are you saving for?" and all that. I feel that way with this additional money. Since I don't want to retire, I may need to work on spending money for enjoyment more.

It doesn't sound like you really want advice. None of us know enough about your portfolio to tell you if a tax planner could be helpful, and you have convinced yourself that you know everything. It's just strange to me and sounds very much like the mindset of someone who isn't used to the potential pitfalls of having a large sum of money. At the end of the day, the biggest risk is that you make decisions that significantly increase your tax liability and/or you get a much lower return on your funds than you could, neither of which are a catastrophe. But there are other concerns with whether your money is protected from law suits and stuff.

I grew up with more money than you I'm guessing, and I suspect that informs our different attitudes. Personally, I would at least talk to a tax advisor in case they see something I don't. There is no obligation to following their advice. Think of it like consulting a doctor when you are on the fence about whether something is benign. What's the harm in getting an expert opinion?
Anonymous
Post 04/21/2022 10:48     Subject: Re:Spouse inherited $3 million
How about charitable donations or starting a non-profit? Yes, splurge on yourself, but share the wealth too
Anonymous
Post 04/21/2022 08:50     Subject: Spouse inherited $3 million
Anonymous wrote:I am not sure there is anything a tax planner can tell us. The investments are in tax-efficient index funds and we are maxing out all tax-preferred savings options.

What is the advantage of I-Bonds? I guess I need to research those more, but I'm hesitant to complicate our portfolio. We have everything at Vanguard except for one 401(k) which is at Fidelity and the HSA at HealthEquity.

I found a podcast "I will tell you how to be rich" that seems to focus several episodes on moving to a mindset where saving is not the ultimate goal. "What are you saving for?" and all that. I feel that way with this additional money. Since I don't want to retire, I may need to work on spending money for enjoyment more.


I agree with you OP. You are doing the right things. I certainly would continue with your savings plan but fund it with your inheritance. i.e. if you are saving 100K at work, move 100k from your inheritance acct to your spend account. Effectively, you are reclassifying your inheritance into multiple tax-efficient buckets (401K, Roth, etc.).

iBonds are popular now given the high interest rate which are expected to continue for a while. Between the three of you, you could invest 55K each year:
10K each in individual names
10K each - you and spouse - in the name of your revocable trusts
5K - joint - tax refund

Benefits: No state tax on interest; federal tax deferral upto 30 years (or whenever you withdraw).
Anonymous
Post 04/21/2022 08:26     Subject: Spouse inherited $3 million
Anonymous wrote:I am not sure there is anything a tax planner can tell us. The investments are in tax-efficient index funds and we are maxing out all tax-preferred savings options.

What is the advantage of I-Bonds? I guess I need to research those more, but I'm hesitant to complicate our portfolio. We have everything at Vanguard except for one 401(k) which is at Fidelity and the HSA at HealthEquity.

I found a podcast "I will tell you how to be rich" that seems to focus several episodes on moving to a mindset where saving is not the ultimate goal. "What are you saving for?" and all that. I feel that way with this additional money. Since I don't want to retire, I may need to work on spending money for enjoyment more.


You are fine today from a tax planning perspective. What a tax planner could be helpful for is looking ahead to retirement and beyond. Take SS early or late? What will your tax situation be when you have to take required minimum distributions? Should you start converting your 401k to a 401k Roth , if your plan allows it? What about future estate taxes, should you want to leave an estate to your child.
Anonymous
Post 04/21/2022 08:22     Subject: Spouse inherited $3 million
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Buy some incoming producing prostitutes


Properties, not prostitutes


I just spit out my coffee! Lol!


🤣 I keep forgetting to create a DCUM Hall of Fame thread. Remind me later.


I shall not soon forget income producing prostitutes!
Anonymous
Post 04/21/2022 08:05     Subject: Spouse inherited $3 million
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Buy some incoming producing prostitutes


Properties, not prostitutes


I just spit out my coffee! Lol!


🤣 I keep forgetting to create a DCUM Hall of Fame thread. Remind me later.
Anonymous
Post 04/21/2022 08:05     Subject: Spouse inherited $3 million
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:We discussed keeping the inheritance separate but spouse was adamant that we commingle it. We have a strong marriage and I think there is gratitude that I have been the primary wage earner for our entire marriage. That’s a good idea to pump up the 529 since our daughter has been talking about graduate school. She hasn’t decided but it would be good to begin funding that. We could always transfer it to a grandchild if necessary. If we were to take nicer vacations I would have to reduce savings. That would be hard for me but I guess our kid will only be with us a few more years so it’s probably worth it.

I appreciate the reassurance that early retirement is not the answer here. I didn’t think so. And I don’t really want to retire yet.


I'm not sure I understand the bolded. You would have to reduce your pre-inheritance savings balances? your regular contributions to those savings? Why?

If you are saying it would mean spending some of that "extra" 3M to take a vacation, well of course. But then what even is the question you are asking?


I guess it just feels weird not to save as much as we had been saving before. What I mean is that if I wanted to take nicer vacations, I would need to reduce our current savings levels. I can’t imagine withdrawing from the investments to do so. I guess that wouldn’t make any sense anyway. So I suppose my question is would you reduce your savings goals because you now had more in your investments?


Yes, I absolutely would reduce my savings due to the nest egg. For years we save a lot because we were saving up for a home. Then we saved up to pay the difference between our current home and a large one. Now we’re in our “forever home” and we continue to save for college and retirement, but we no longer aggressively save because we met our goal. Our current savings are enough to purchase cars as needed and do the home improvement projects we have planned. If something used a portion of our emergency fund, we could save more until it was refilled.
What are you saving for? You are 50 and your kid is set up for college. Don’t wait until you are frail and immobile to enjoy your savings a little. Yes - take nicer vacations. Do a few things that make your life easier. You won’t blow $3M overnight if you take 1 cruise and start paying for cleaners every 2 weeks.
Anonymous
Post 04/21/2022 07:49     Subject: Spouse inherited $3 million
I am not sure there is anything a tax planner can tell us. The investments are in tax-efficient index funds and we are maxing out all tax-preferred savings options.

What is the advantage of I-Bonds? I guess I need to research those more, but I'm hesitant to complicate our portfolio. We have everything at Vanguard except for one 401(k) which is at Fidelity and the HSA at HealthEquity.

I found a podcast "I will tell you how to be rich" that seems to focus several episodes on moving to a mindset where saving is not the ultimate goal. "What are you saving for?" and all that. I feel that way with this additional money. Since I don't want to retire, I may need to work on spending money for enjoyment more.
Anonymous
Post 04/20/2022 22:19     Subject: Spouse inherited $3 million
Anonymous wrote:I think you’re right, a vacation sounds like a great way to start. Kid goes to camp for six weeks this summer and we are talking about what we can do during that time just the two of us. We haven’t been away alone together since she was born, 16 years ago. We bought an expensive telescope ($1,800?) during the pandemic and we are thinking of going somewhere with less light pollution to use it. Maybe we could take a new car. Bogleheads is a great resource and where I modeled our portfolio from. I am comfortable investing although I acknowledge that tax planning has become exponentially more difficult since I was in my 20s. I used to be able to figure my taxes on the simple spreadsheet and now that’s just about impossible.

I have been viewed as a cheapskate in the past (not recently) and I don’t want to be that. I want to enjoy a rich, full life. And have health insurance subsidized for another decade or so.

Maybe start by hiring an accountant who works with wealthier individuals? That might at least give you some insight into how to optimize your tax return with your current portfolio, and that might clue you into changes you want to make (whether in how you spend or how you invest).
Anonymous
Post 04/20/2022 22:18     Subject: Spouse inherited $3 million
Anonymous wrote:Thank you for the very solid comments here. I also did a double take at “income producing prostitutes.” Hilarious. I do like the idea of taking some set amount of money and deciding to spend it each year. We are financially conservative, although not for any particular reason. Like many, we have saved regularly and our investments have done well over the past two decades. We were unable to have additional children so that kept our expenses low. That said, we don’t deny ourselves anything. It would take some thought to spend an extra $50,000 a year. I think I’d like to put us on a waiting list for a new car. There are a few new electric cars coming out that interest us.

I know there are some software programs that model how much you can spend, I like to do my own research rather than hire help. My experience with hired financial advisors has not been great. Our estate documents will funnel this money to our child so that has been done. Spouse is already basically retired, working one or two days a week for pure pleasure.

If this is the case, the inheritance isn't fully commingled...just FYI.

Something about your posts suggests to me that even the amount of money you had pre-inheritance is more than you are prepared to handle, which makes me think some kind of financial or wealth management training might be of value to you even if you don't want to hire anyone. (And I agree that it's hard to find good financial planners these days, as most of them are moving away from fee-based models.) You might simply not care at all if money is wasted etc, which is fine. But you should think about it and affirmatively decide that. I wish I had a good recommendation, but I don't. I've heard "Rich dad, Poor dad" is good, but I haven't read it.