$750,000

iVillage Member
Registered: 07-08-2005
$750,000
16
Thu, 07-14-2005 - 9:06pm
what would you do if inhertied $750,000- had no house but no debt and two chldren. Oh- also, neither of the two parents had a job. this is the scenario of a friend of mine and i have been wondering what i would do. Any ideas?

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iVillage Member
Registered: 02-19-2004
In reply to: grippy2005
Thu, 07-14-2005 - 10:04pm

1. Give $10k to my x-bf so he could go back to court and get more visitation with his son. I think $10k is the amount you can give someone (a gift) without them or you paying taxes, and that is where the number comes from. I'd give him $10k next year too and then if he wants to he can move to be near his son and have a relationship with him again. Even though he's my x-bf, he's the most deserving of a gift of money of anyone I have ever met. He's the most caring, loving father and his ex and the courts have stripped his son of a father and it's so unfair. Even if I only inherited $100k I would give him some money.
2. Set up a 529 college savings plan for dd, my niece and nephew and put as much in it tax free each year as I could. I think you can put in $40k per year.
3. Set up a Roth IRA and put as much in that and my 401k as I could.
4. Buy a house ($350k - the price of a nice townhome in my area). Set aside some money for taxes and maintenance for the next 5 years or so.
5. Pay off my credit cards and car loan ($19k)
6. Pay off my student loans ($40k) and go back to school for something else ($20k?)
7. Find out from an attorney if I have to give any to my ex in the form of additional child support, hopefully $0.
8. Invest the remainder in a diversified portfolio.
9. I read heather's post and realized I forgot charity. I'd give some to my church and some to the non-profit birth center I volunteer for. Not sure how much, I think I'd want to give some each year from my investment earnings vs. a big chunk all at once.

Can you tell I think about winning the lottery a lot? Too bad I don't play the lottery.




Edited 7/14/2005 10:34 pm ET ET by firstamendment

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iVillage Member
Registered: 03-27-2003
In reply to: grippy2005
Thu, 07-14-2005 - 10:04pm

The first thing I would do is hire a fee-only financial planner, one with an outstanding reputation and the recommendation of several trusted acquaintances.

$750,000 should be plenty to set them up pretty well for life if they handle it well. On the other hand, it's a small enough amount that they could blow it all pretty easily on overpriced houses, vehicles, and other nonsense if they're not careful.

As for jobs--I would think they'd want to look at doing something for income, but if they live modestly they should be able to pick and choose, maybe starting a home business that they can work on together or doing non-profit work or pretty much whatever appeals to them.

Let us know what happens for them. Sadly, many people who receive a windfall like this end up blowing it frivolously and back in the same financial situation they were in before. I hope they beat the odds and set themselves up really nicely and help them achieve their life dreams. A fee-only financial planner should be able to help them with that.

Boy, if *I* inherited that kind of money, in my situation, I'd hire the financial planner and probably a) pay off all my debts then b) purchase our dream property in the country and c) invest the rest in a diverse but focused portfolio designed to provide us reliable income. We'd go off the grid, learn to grow all our own food, and probably take an exotic vacation once a year. Oh, but only after we'd given 10% of the money to charity, and 10% of our income from it each year as well.

Fun question!

Heather

iVillage Member
Registered: 03-27-2003
In reply to: grippy2005
Thu, 07-14-2005 - 10:21pm

Good point about not giving the 10% all at once. On the other hand, with $75k to give, it would be fun to set up a trust--perhaps a scholarship trust, or something to support a particular aspect of a favorite charity. A horse rescue I support needs a new barn, to the tune of about $250k. $75k would go a long way toward that goal. Or it could be done as a matching challenge grant--for every dollar raised between now and, say, Sept 1, I contribute a dollar. Anything left from the $75k could go to a different charity with the same matching challenge.

Boy, I'm really warming up to this now. It's fun to think about what to do with all that money. :)

On the other hand, just to stave off any possible bad luck from the discussion, I would definitely *not* want it as an inheritance any time soon. I'd rather have my parents and my grandparents stick around for a long time, thank you. :) I've been incredibly blessed in that respect--I'm 31 and still have all four of my grandparents and both my parents living. Wouldn't trade it for all the inheritance money or lottery winnings in the world.

:)

Heather

iVillage Member
Registered: 08-19-2003
In reply to: grippy2005
Thu, 07-14-2005 - 10:25pm

I would buy a less than $200000 house outright. An then I would invest the remainder so that I could have some income. Really $750,000 is not enough money to drastically change your lifestyle. You need to earn more money with it. Especially for people that have no jobs.

For example thats 12 years of my husbands salary. What would we do for the rest of our lives if we were not going to work, and did not invest properly? We would be flat broke in no time at all.

Considering that most people do go out and buy, buy, buy when they get a windfall, I would think they will only be rich for a very short time!

Shannon


Pregnancy%20ticker
iVillage Member
Registered: 02-19-2004
In reply to: grippy2005
Thu, 07-14-2005 - 10:33pm
I don't think I'm going to jinx anything. My parents are wondering how they are going to survive throughout their retirement. People don't think about the fact that their prescriptions might cost as much as a small mortgage. If I were to come into any money, it would be through the lottery.

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iVillage Member
Registered: 08-19-2003
In reply to: grippy2005
Thu, 07-14-2005 - 10:34pm

Oh you are so lucky.. 3 out of 4 of my grandparents have been dead for years. And my moms mom, my favorite grandparent, and best friend, died last August. Not a day goes by that I don't think about her and miss her so much. I wish my daughter could have spent more than 8 months getting to know her. No amount of money in the world could make me miss her less.

BTW-My grandmother gave us money when she was alive. And I still have the cars that she bought me. We will never get rid of them.

If my parents die before me, I will one day inherit lots of money. But if I could choose the money or my parents, I would want my parents to be here forever.

Ok going to bed since I now have a crying headache. Thanks Heather!

Shannon

Shannon


Pregnancy%20ticker
iVillage Member
Registered: 02-19-2004
In reply to: grippy2005
Thu, 07-14-2005 - 10:36pm

>>>I would buy a less than $200000 house outright.<<<

My dream! Where I live that would get you a 2 bedroom townhome with one parking space in a not so nice neighborhood.

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iVillage Member
Registered: 02-19-2004
In reply to: grippy2005
Thu, 07-14-2005 - 10:39pm
I thought of something else. I have heard (and someone might have posted it once on this board I think) that if you come into a lot of money you should do nothing, spend nothing, change absolutely nothing about your life for one year. That gives you plenty of time to go through a million ideas of what to do with it before you commit yourself to any one plan.

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iVillage Member
Registered: 03-27-2003
In reply to: grippy2005
Thu, 07-14-2005 - 10:47pm

I'm so sorry!! I didn't mean to make you sad... I know it won't help to make you feel better, but I wanted to add that my cousins, who are only a little younger than I am, both inherited quite a lot of money when their dad died a few years back. They have always been very well off, and they certainly never have to worry about money. Once, I started to feel jealous until I realized that I wouldn't trade with them for the world. I still have my dad. Worth more than all the riches in the world.

And, for another sad story, because you mentioned that your grandmother died in August, my dear friend and mentor died in August also. She had two children, each a year or so older than my two children. She introduced me to a lot of the parenting principles I live by today, and helped me at the birth of my first child (she would have helped with the second, but by that time she was in Hawaii trying to beat her cancer). Her two little girls are *so* little, and it's just so sad, and we miss her so much, it breaks my heart. Oh, and while she was very well insured, her husband is so terrible with money that the girls are unlikely to see any of that money either.

Okay, so I think we're all agreed that inheritances suck, right? I don't want one.

Now, I'm going to go to bed before I think of any more depressing stories to share. Hug your children. Keep your grandmother alive in your heart. I believe she's watching you with love.

Peace,

Heather

iVillage Member
Registered: 02-19-2004
In reply to: grippy2005
Thu, 07-14-2005 - 10:49pm

Ok, I'm just full of thoughts. I've been reading some personal finance books and it's not a bad idea to have a goal of having $1 million saved for retirement. That could be in retirement savings, real estate (owning your own home or income producing property), and investments. So they should think about how to use the $750k to make sure they have at least $1 million (or $2 million or $3 million) when they are ready to retire. A good financial planner could help them with whatever their goal is.

And remember from my earlier posts, prescriptions can be extremely expensive. You could plan to own your home by retirement age and then end up spending $1,000 each month on drugs. It seems like a lot, but you never know. My mom and I both take a medication that costs around $1,300 per month for rheumatoid arthritis. I have a job with good health insurance coverage. My mom is on disability and her medicare covers $1,200 per YEAR for prescriptions. That is just one drug. She's on a program to get it at a discount, and she's taking less than the prescribed dose so she can make 9 months worth of medicine last for 12 months. She takes another one for seizures (a side effect of brain surgery she had a few years ago to fix an aneurysm) that is $600 per month. There is no generic alternative and she *has* to take it or she won't be able to drive and she'd pretty much have seizures all day long. That is just two drugs that would run her $1,900 per month if the RA drug didn't have a special program. Next year medicare is supposed to cover more prescription drugs, but when we retire who knows if there will be a good program or a worse one. If everyone planned for this expense, those that found themselves in relative health in retirement could travel and enjoy the money. Much better than thinking you'll be healthy and then not being able to afford the medicine you need to stay healthy, or having to choose between getting your prescriptions or keeping your home.

So my advice to your friend is think long-term.




Edited 7/14/2005 10:51 pm ET ET by firstamendment

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