New inheritance...need guidance

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Topic Author
VTAbound
Posts: 5
Joined: Fri Apr 30, 2021 5:17 pm

New inheritance...need guidance

Post by VTAbound »

First, thank you for reading my post.

I recently came into an inheritance that I was not expecting. Good problem to have, for sure. I'm so torn on how I should move forward to best serve myself and family. Let me give you a bit on my background, inheritance and future goals.

I'm a married 43 year old woman with 3 young children (15, 10 and 6). We reside in So Cal and own our home. My husband and I both work full time. I have a 401k and 457B plan that I contribute the maximum annual contribution on both (19,500x2) My husband has none. We have 6 months reserve for an emergency fund.

Gross annual income together: $160,000

House mortgage: $260,000 left on loan at 1.8%/30yr fix

No debt except house mortgage (no car payments, no credit card debit, no school loans, etc.)


Inheritance:
$374,000 in cash
$198,593 in assets

Assets: estimated
Mcdondalds $48,000
Johnson & Johnson 41,000
Kimberley Clark $33,000
Limoneira $22,000
Calavo $16,000
Bristol Meyers $15,000
At&T $13,000
Avanos Medical $1,000
RIG $251
Occidental Petroleum $5,000

What should my next step be? I would like to retire in my late 50's or early 60's (if I can make this possible). Not planning on taking social security until 70yrs old.

Do I sell all assets and start a 2 or 3 way portfolio? Or other actions I'm not aware of. I appreciate any advice that is given to me. Thank you in advance.
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retired@50
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Location: Living in the U.S.A.

Re: New inheritance...need guidance

Post by retired@50 »

Has the cost basis for the inherited shares been updated, based on the date of death of the person that gave you the inheritance?

This is pretty important, so be sure to check.

You may or may not feel compelled to keep some of the individual stock shares, but I always advise folks to take care of the money in a way that actually suits your investment taste, not the person who died. Individual stocks are riskier than owning an index fund, so I'd advise selling off the individual stocks and buy an index fund instead. You can honor the memory of the deceased in other ways, you don't have to hold onto a risky portfolio, it's not disloyal.

Another common issue is how the inherited assets are titled. Typically, they would stay in the name of the actual inheritor, and wouldn't necessarily become "joint" property within the marriage.

Regards,
Last edited by retired@50 on Fri Sep 17, 2021 3:28 pm, edited 1 time in total.
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Gill
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Location: Florida

Re: New inheritance...need guidance

Post by Gill »

One step you should take now is to sell all those stock holdings. There will probably be very little gain or loss and then you can invest in a manner more appropriate to your situation.

In May you posted you had received an inheritance that increased your income by $80,000 a year. Is this in addition to that inheritance?

Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
deikel
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Joined: Sat Jan 25, 2014 6:13 pm

Re: New inheritance...need guidance

Post by deikel »

Other then odd circumstances, your husband could at least have an IRA/Roth-IRA account ?

Not sure how CA works, you may want to consider moving these assets into separate accounts under your name to separate them out from other marital assets. I know its a sucker thought, but divorces are real

Now is the chance to open 529 college funds for the three kids and fund them this year and early next year, that should make a dent in your cash position. You should also have your own IRA/Roth IRA that you could fund this year and next (plus your husbands, above)

The single stocks should probably be converted to index funds to spread out the risk and not depend on these singular companies and their market so much

You could consider to pay off the house. Mathematically probably not the best choice, but reducing outgoing cash flow can help in a pinch an it's a great feeling.

The 15 year old may need transportation soon, so maybe you upgrade yours and have a car for the kid.

So many ways to spend money in a future direction, good luck...
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.
PNWpilot
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Joined: Fri Sep 17, 2021 12:48 pm

Re: New inheritance...need guidance

Post by PNWpilot »

Paying off your home makes a lot of sense. $260k at 1.8% x30 years is nearly $80k in interest depending on how many years you have left on the loan. There's a lot of freedom that comes with paying off your mortgage that will likely be invaluable to you and your family as well.
Topic Author
VTAbound
Posts: 5
Joined: Fri Apr 30, 2021 5:17 pm

Re: New inheritance...need guidance

Post by VTAbound »

Gill wrote: Fri Sep 17, 2021 3:27 pm One step you should take now is to sell all those stock holdings. There will probably be very little gain or loss and then you can invest in a manner more appropriate to your situation.

In May you posted you had received an inheritance that increased your income by $80,000 a year. Is this in addition to that inheritance?

Gill


Hi Gill. Yes, that is supposed to occur. The extra $80,000/yr. was the first part of the inheritance that I was made aware of. However, it has to do with a piece of family property that I now own at 12.5%. The property has leases for oil and a cell tower. I don't want to count or plan on this income at this time until I receive confirmation that I will indeed receive revenue. So, when I posted in May, I wasn't completely aware of the additional inheritance that I just posted. If this makes sense? Thank you.
GP813
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Re: New inheritance...need guidance

Post by GP813 »

In my opinion it makes no financial sense to pay off your home with an interest rate that low. Use your cash to build a Vanguard portfolio, a mix of total stock market/total bond market in an allocation that suits your needs. Over time this should greatly surpass the interest you save from paying off your home early.
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Toons
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Location: Hills of Tennessee

Re: New inheritance...need guidance

Post by Toons »

Hurry Up And Do Nothing
For a while
collect your thoughts,with your husband of course.
You will have evolving thoughts with each passing day and
You will become more comfortable with your situation.
Ask questions like you are doing now.
Garner more knowledge.
When the time comes to start making any "changes"
You will know
Patience
Sidenote-15 years ago we inherited 300k from passing of family member,
It remained in a money-market account for over year until
I was "Ready" to redirect it.
:wink:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
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Lee_WSP
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Location: Arizona

Re: New inheritance...need guidance

Post by Lee_WSP »

Have you read this article from the wiki yet?

https://www.bogleheads.org/wiki/Managing_a_windfall
single2019
Posts: 269
Joined: Thu May 27, 2021 12:13 pm

Re: New inheritance...need guidance

Post by single2019 »

deikel wrote: Fri Sep 17, 2021 3:39 pm
Not sure how CA works, you may want to consider moving these assets into separate accounts under your name to separate them out from other marital assets. I know its a sucker thought, but divorces are real

THIS
DavidW
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Joined: Wed Jan 24, 2018 3:14 pm

Re: New inheritance...need guidance

Post by DavidW »

PNWpilot wrote: Fri Sep 17, 2021 3:52 pm Paying off your home makes a lot of sense. $260k at 1.8% x30 years is nearly $80k in interest depending on how many years you have left on the loan. There's a lot of freedom that comes with paying off your mortgage that will likely be invaluable to you and your family as well.
+1. No matter what happens to the economy/jobs..., you and your family will have a home you own.
deikel
Posts: 1616
Joined: Sat Jan 25, 2014 6:13 pm

Re: New inheritance...need guidance

Post by deikel »

DavidW wrote: Fri Sep 17, 2021 9:49 pm
PNWpilot wrote: Fri Sep 17, 2021 3:52 pm Paying off your home makes a lot of sense. $260k at 1.8% x30 years is nearly $80k in interest depending on how many years you have left on the loan. There's a lot of freedom that comes with paying off your mortgage that will likely be invaluable to you and your family as well.
+1. No matter what happens to the economy/jobs..., you and your family will have a home you own.
Many people go with this logic of making yourself a safe haven with your paid of home....unfortunately, if you live in a high property tax state/school district....that is the furthest from the truth. The tax men can kick you out of your home with more rights and power then any bank ever could. If you are unable to pay the property taxes you are toast....if you can not pay the mortgage you can negotiate with the bank some and buy some time...

Datapoint: my mortgage is 2.75%, my property taxes (in NY) is 3.85 % of market value (county and school together) - it sucks.
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.
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