On the implications of inheriting several million dollars (or a thinly veiled brag, but seriously)

[AlabamaLibrul]

It's a very long and complex story but apparently I have some folks who we mutually regard as family who are going to be leaving quite a sum behind. It's all very odd because the health of the couple is declining quickly and I knew they were retired and apparently fairly well off, but still lived in her old house from the 60s. I figured they had a little retirement socked away, lived off military benefits and SocSec, and did alright.

Apparently when they're gone, 1) I'm getting about $6m, 2) I'm required to make sure his autistic son gets some money to live on and not be homeless. They have high-priced lawyers and financial advisors apparently ready to swoop in and help the process along for their share.

I have some questions about what this all means, though:
Since I'm officially going to be rich after living off of under $40,000 a year my whole life, do I get access to all the cool loopholes the other rich people use to not have to pay any taxes on the money?

What the hell do you even do with that kind of money if you're used to being broke? I've always wanted to open my own portrait place and have my own little place to work and take photos during the day. Alabama's a right to work state, so I can't run a unionized operation if I stay here. It is bad form to start to pay your help living wages after you get rich overnight?

Does this kind of money make you a different person?

The whole prospect is kind of jarring and scary, especially since these sorts of things always involve people dying.

[flvegan]

1. Will you marry me?

:hide:

:rofl:

[Horse with no Name]

2. I would strongly suggest that you find yourself a financial advisor

and set this up because it could go one of two ways: You could end up blowing it all and paying exorbitant taxes OR you could have someone plan the money and tax shelters to last the rest of your life.
Now, there are some REALLY smart people on DU--but I would listen and then maybe pick their brains and THEN find an advisor.
Good luck.

[Gormy Cuss]

34. And a lawyer. Preferably one who doesn't know the financial advisor.

That way if either one isn't acting in the OP's best interests the other one may pick up on it.

[JackRiddler]

49. Yes, that's it exactly.

Based on the OP... if you're asking these questions HERE, then you really need to get yourself a financial adviser and a lawyer, people you can trust (and don't just trust them, learn as much as you can). Create vehicles for holding the wealth without losing it to taxes. You want the money diversified and secure. You want a conservative portfolio for your own retirement and a paid-off house. Family members or your most important people can get decent but not exorbitant amounts to ease their own situations. Do the math and triple check! If you're smart, you won't change your lifestyle radically, except for some travel. This will allow to live without pressure and leave more to share.

[panader0]

3. I predict many new friends in your future

Congrats!

[AlabamaLibrul]

17. I'll still always be your friend, DU. Even if Palin starts sending me offers for $5k/seat private

dinners.

[bluestateguy]

4. First, I'd get yourself a lawyer who does estate planning

The only advice I would give is to not binge after getting the money as many people who are not used to having that kind of cash tend to squander it. You want to make the money last for a lifetime.

I think the estate tax kicks in after the first $5 million.

Oh, and uh, don't forget to make sure that your favorite Democratic candidates get their cut at election time. To you know, make sure that the rich do in fact pay their fair share :)

[Scruffy1]

39. Financial advisers are just insurance salesmen

You need a trustworthy attorney.

[enlightenment]

5. The best advice I ever heard was

don't spend it. Apparently, people who receive a windfall spend it - a gift to a friend here; helping someone pay off a debt; buying a new car to replace a clunker; investing in a business without a solid business plan; etc, etc.

Sooner than they think, it's gone.

The person I was listening to said don't spend ANY of it for at least one year; another person on the program said, no, pull out a little (less than $50000) to spend, otherwise you'll feel cheated.

I would recommend that you hire one person straightaway - a financial advisor. Perhaps talk to the couple (or their lawyer) about who they used, since it sounds like they made wise decisions.

Good luck!

[librechik]

8. be careful, if they say it's 6M it's probably more like 3 after taxes and fees

and they like to break it up so you don't get it all at once. This happened to us, and the best advice in this thread I've seen so far is the person who said don't spend it. I wish we had taken that advice.

[immoderate]

6. My advice: Don't change your spending habits.

Remember that couple last year, made $10M, bought a place an Saranac Lake and quickly went broke?

I'm the last one to give financial advice except, "don't do what I do." :)

Congratulations and good luck!

--imm

[hedgehog]

7. Getting proper care for the autistic son may be more expensive than you realize -

check into what those costs might be.

[AlabamaLibrul]

12. It is a segregated amount/account

He is high-functioning enough that he lives in regular apartments (also receives SSD) but I guess is in some sort of living arrangement where the case worker lives down the street or in the same building or something where they check up on him often. I think "close" with the family is a bit of a stretch these days, 'cause his antics were enough to ruffle me a bit and they've already had heart scares anytime he comes to stay with them for an extended time.

It's a few hundred bucks a month, and just make sure he's not smoking teh marijuanas. I'm not planning on conducting a urinalysis over it as long as the people who keep up with him say he's doing fine.

[DURHAM D]

9. Do they have a special needs trust for their son?

Are you a trustee? Or do they have a will?

Are you their only heir other than the son?

Note: The taxes and loop hole questions are totally premature as is the question about changing.

[Sonoman]

10. First, find a good adviser.

And not some Edward Jones hack, either.

Do it sooner than later. Find a good, independent adviser with local clients and a good track record.

If you can restrain yourself, try to live at your current standard for a couple of years. That way, the money is less likely to change you.

Try not to let too many people know about your good fortune until you are well-grounded with it. There are barracudas everywhere.

Get a good attorney who specializes in financial matters and put her/him on retainer.

Do not sign anything without your attorney's council. I cannot stress this enough. No matter what anyone says, there is nothing that cannot wait for a few days.

Count your lucky stars - every day.

Never forget who you really are and where you came from. This is important and will keep you in balance.

Buena suerte.

Sonoman

[Bluenorthwest]

11. It is bad form to ask for free advice when wealthy

also dangerous. I'd never post that information on the internet. I'd get a lawyer. The estate has one, you should as well, particularly as it sounds like there are responsibilities tied to the cash. Lawyer up, hire from a locality that is not near that of the estate.
Also, that is lots of money, but not all that much in the big pic, so enjoy, but do not go nuts, not at all. Go slow.

[AlabamaLibrul]

16. Yes, you're right.

I figure after taxes and all of that I have enough to live very well for the rest of my life, but not like a multimillionaire. Certainly buying a very, very modest house or commercial property (I have seen suitable ones with nice buildings on them for around and under $150,000) and a "new" car. I've been conditioned not to have rich thoughts, I guess. I am generally not a fan of paying people to do things for me but clearly this one is above my head.

[Bluenorthwest]

19. Your new role in life is to pay people to do things! That's the

good part. Sounds like you have a good grip on things. Moderation and all. Also, enjoy the fuck out of the comfy chair aspect of it. You are very fortunate indeed.

[AlabamaLibrul]

21. The true epitome of an American job creator.

You people are gonna have me tombstoned by the end of the week talking like this!

[uppityperson]

13. Congratulations. You will not have to consider ever dime spent.

To me that would be the most wonderful thing, to not have to stress over every little thing. That alone will change you. The only way you will become a different person is as you wish to. Yes, you can ignore the things you used to think were important, but you don't have to. You can continue in the same way as you have, but without the continual money worries.

You can take some time to decide what do you WANT to do? For yourself. For others.

And then do it.

Good luck and congratulations.

[MadHound]

14. A few pieces of advice,

First, don't quit your day job until you get your financial situation in order.

Second, think about putting everything, the money, your house and possessions in a trust, with you as the sole trustee.

Third, if you take six million, invest it in tax free muni bonds, which have around a five percent return rate, you will get somewhere around three hundred thousand a year for the rest of your life without touching the principle. You can have a comfortable life with that money and still give plenty away to charities of your choice.

Fourth, you are going to get bombarded by people and companies who will try to separate you from your money. Long lost relatives, friends from decades ago, companies that want venture capital, etc. etc. Stay strong, say no.

Fifth, Congratulations, enjoy.

[BlueIris]

15. Good advice in this thread, much to my shock. Mine: Learn to say no.

Also, remember the fact that you can't save everyone. Or, really, anyone.

[grasswire]

18. I read an article about how much $ is required to make a person feel rich.

Lots of people with money were interviewed for the study. The finding was $17 million. Less than that means a person is still worried about running out, spending it all, etc. But at $17 million a person is able to relax and consider himself/herself rich.

YMMV.

[SDuderstadt]

20. Be careful...

according to some people in this forum, becoming wealthy means you're evil and they want you to "run for your life".

Other than that, congratulations and do good for yourself and, especially, others.

[Gin]

22. I'm available for adoption...

[SDuderstadt]

26. Send me a picture...

BTW, it's Alabama Librul who is inheriting the money, but I'll take your picture anyhow.

[Gin]

27. hey...I'm a wonderful person....who cares what I look like...I am

adoptable...but I don't do windows. :)

[SDuderstadt]

31. That's okay...

all mine got broken out, anyhow.

Now, if I could just get AL to float me a loan...

[Mike 03]

23. Number one, Just keep calm and get a fucking grip on yourself

I have been in your shoes, not because of inheritance but because of investments that paid off.

Don't make a fool of yourself by posting posts like you just posted.

Sit down and think.

And then repost, something sensible requesting intelligent advice.

Good luck. It is not as easy as you think, falling into a ton of money. Look at your post. That was really dumb.

[mmonk]

24. You can give it to me for safe keeping.

[catabryna]

25. I'm glad this family has you...

I won't address the money issue, but their son is going to need you at some point in his life; of that you can be certain.

[Book Lover]

28. Forgive me, but I have to wonder why they need you to ensure their son gets his money?

These kinds of trusts can be arranged without dragging in someone who, again forgive me but this is what I'm getting from your tone, isn't that interested in the job.

[JI7]

33. if they are leaving him 6 million, i'm guessing he is someone they feel mostly positive about and

trust to make sure their son is cared for.

[notesdev]

29. It's like winning the lottery

so be aware that almost ALL lottery winners are broke within a few years of winning.

DON'T:

- let anybody know you have money
- adopt a new lifestyle
- keep it all in one bank - distribute it to as many banks as you need to get fully covered on FDIC

[nadinbrzezinski]

30. Get yourself a finantial advisor NOW

also the best way to dea with their son is a trust... have a lawyer help you with that.

Oh and it is easy to piss off six million if you are not careful.

[csziggy]

32. Don't spend it - sure take a small amount and treat yourself

But don't go out and spend big bucks.

Get a good financial advisor - talk to several prospects and pick the one you are most comfortable with. Remember, since they are in the financial business, they will likely not have the same political philosophy you have, but make sure they are someone who will treat you and your views with respect.

I had a similar windfall years ago, though much smaller than what you are expecting at the time it probably had the same spending value. I got ripped off by a financial institution, not intentionally but it cost me over a year's income from the money and the institution never made good on that loss. The best investment I ever made was a piece of property that I paid cash for and still own free and clear. I have enough money to supplement what my hubby makes but not enough to live on.

What we did not have is the commitment to another person which you will have. Do you personally need to do the daily care or is the son in a living situation? Check the costs of his care and see about setting up an annuity or trust to insure his maintenance for his lifetime. You need something that will guarantee his care no matter what happens to you or to the economy, as much as is possible. I would take care of that FIRST.

What we did right - tried to invest it wisely and only splurged with a little of the money. Bought land at a great low price in the right location to grow in value (paid $2100 an acre and even now land near us is going for over $30,000 per acre), worked rather than tried to live on just the proceeds.

What we did wrong - trusted people we thought were our friends. At least two ripped us off big time. Trusted the tax accountant that was recommended for the first year - he screwed up and cost us a lot the first year. We got that back, but it took time. Trusted the financial institution blindly - If we have been on top of things, their mistake would not have cost us so much.

If you like your job, keep it. BUT - Since you want to start a business, research it and see if you can do it for a reasonable amount. Small businesses can make great tax shelters, if done correctly. If you do start your business, get a really good CPA, someone who will sit down with you and help you set the business up as far as record keeping. Ours (the one we found on our own) was an ex-IRS agent and he saved us tons of money over the years. We paid him for tax preparation and the rest of the year he did not charge us when we needed to call or visit to ask questions. Ask about "carry back losses" - if that is still in the tax code it is worth finding out if and when you could use it.

Be prepared for an audit or three. You are going from a small income to a BIG windfall. This sets all kinds of flags on your file. So keep good records on every expense. We got audited four years in a row with no significant changes before they finally decided we were not collecting drug money or something nefarious. Quicken is good for accounting with knowing anything about it and can be used for small businesses, no problem. If you start a business, have separate checking accounts and make sure you do not cross over with expenses. Even keep track of any expenses you have in researching starting your business - you can write off some of that once it is going.

Sorry this is so long - I hope it helps.

[JI7]

35. how much will you have after Taxes, how much will it cost to care for their son ?

while 6 million is a lot. it's a one time thing and a lot of people start spending a lot and lose it easily like the lottery winners.

especially if you do things like buy a house in some expensive area, and of course the cars, vacation etc.

i would say if you are living comfortably stay where you are. make sure the son is well cared for. take a vacation and start the small business you are interested in .

[katanalori]

36. Free advice -

NEVER, EVER EVER EVER tell anyone (except spouse) that you have this kind of money! Have you seen the stories of the lottery winners? Most soon go broke, as they have no idea how to manage money.
Please stay MUM - honestly, this is NOT a good idea.

[pitohui]

37. eyes roll, DO spend it (i had a relative inherit like that)

the advice NOT to spend it is just fucked, so then you can die and somebody else (maybe some hanger-on thinks they will eventually get the money?)

$6 million is a lot of money and even tho they are likely exaggerating what you'll really get -- i don't know why, but people about to leave you money like to throw around all these big figures -- when you inherit a lot of money (or even a little bit of money) it is sort of your responsibility to take a chunk of it and spend it on something special you otherwise would never be able to do

otherwise what's the point? hoarders just passing down money no one is brave enough to spend?

a close relative of mine inherited a bundle and, yah, she now goes on a cruise every month, it's better than sitting on her ass and letting "financial advisors" steal the money --- the inheritance was originally going to be multi millions but needless to say, almost all of it was mysteriously stolen before it got to her, so MOST of the money that her relative meant to leave to her never got to her THANKS TO FINANCIAL ADVISORS

don't make that mistake, don't pinch a pinny so a stranger can end up with most of it

yes, use financial advisors IF they're doing really serious standard insured investments but don't put all your money in one basket, and don't expect one financial advisor to point out the next one is a thief, they're kinda all thieves -- have at least SOME of the money in plain vanilla t-bills, CDs, or something of that type that you can handle yourself, that's all the money you're guaranteed if my relative's experience is any evidence

and DO spend it, DO let it change your life, there was no point in having this money come to you if you're going to just piss on it and let it stay buried in a hole

what is your dream? make it happen...a real dream, not a tedious "i've never had a good job so i'll buy a job" like the portrait studio unless for some reason you really like taking pictures of stupid ass ugly people too stupid too operate their own camera -- not trying to be negative, trying to point out the reality of day to day

forget about being sensible a minute, what is your REAL dream? take the money and make it happen

$6 million is the time and freedom to do what you like, it's time to let your imagination expand, no it won't make movies and no it won't rebuild disaster zones but it will do PLENTY

if you get snarled up in a knot of "i can't tell anyone, i can't spend this" then nobody wins except the corrupt nursing home operator when you're like 90

money is worth more when you're young enough to travel and do something with it, and let the nursing home operator whine to medicaid instead of being a billionaire...

[Luciferous]

38. I don't have any advice that hasn't already been posted, but congratulations!

[Name removed]

40. Deleted message

Message removed by moderator. Click here to review the message board rules.

[thelordofhell]

41. It seems like the couple already has some good advisors.....use them

And don't do anything obscene, like turning into a republican.

My condolences on your eventual loss of some very good friends.

[burrowowl]

42. Make sure you take care of the autistic son

We had a friend who died ( very middle middle-class neighborhood at the time) and she left a million dollars for his care in a very good group home. Thank God the money lasted until he died.
He really liked my Dad and when he had to move to another state, they still kept in touch.
And yes a good financial advisor and lawyer to look after both your interest.

[FedUpWithIt All]

43. I inherited a small chunk of cash when i turned 18

My father had passed when i was 11 and my mother had won a wrongful death case.

Anyhow, my only advice, has to do with the fact that inherited, or won money, does not feel the same as earned money. This may sound strange but there can be a type of embarrassment or perhaps it feels more like guilt that can happen with a sudden windfall. It can make you less responsible with the money and more likely to "share" it. It is almost like you feel weird having possession of it and so you are looser with it.

I don't know if this is the case for everyone, or just myself and my brothers due to our age and the circumstances that led to us inheriting, but it is certainly something to be aware of and try to watch out for.

Like anything, mental prep goes a long way. Good luck to you.

[BlueIris]

45. Good call. The psychological effects of sudden money are hazardous.

It can make one a major target for grifters, gold diggers and opportunists. Or even not so greedy people you still aren't obligated to "share" with.

[FedUpWithIt All]

48. I am all for sharing, think it is really important, but i noticed that i would feel sort of guilty

when i used the money on myself and not others because it wasn't something i myself had earned. It got to the point where others actually expected or took liberties because they realized how i was feeling.

Just something to be careful about.

[Aristus]

44. I have no advice to offer. I just want to say, I'm happy for you.

That's quite a windfall.

Must be a wonderful, slightly overwhelming feeling. B-)

[Dappleganger]

46. But they're not actually family?

If they're not then fully expect their "blood" to step forward and challenge the inheritance. If it was me I'd keep it as quiet as possible, stay in the same house for several years and hold on to it. Maybe take a trip and do some repair work around the house. Then when the dust settles, make further decisions.

Personally, I wouldn't hire the same attorneys at all--get your own. A financial planner, too.

[snooper2]

47. Well, really you don't need that much money...

From memory of threads here..

You should be taxed around 90% on everything over $250,000


:P