How to invest inheritance - 60 years old disabled and unable to work

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NotACat
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How to invest inheritance - 60 years old disabled and unable to work

Post by NotACat »

Posting on behalf of a family member.
  • They have about $50k in stock/bond investments - unsure of allocations.

    They have about $75k in cash from a home sale.

    They will be receiving a $500k inheritance.

    They are permanently disabled and unable to work and from that they receive monthly social security payments and they are on Medicaid.

    They currently rent an apartment and would likely like to buy a home at some point. Realistically, we have considered trying to find a duplex or home with an in-law suite of some sort where they can handle a down payment and my spouse and I take on the mortgage.
I am familiar with the general timeline of typical boglehead investing of more bonds, less stock as you age and approach retirement, but I really don't have any idea how to allocate money here, since they are unlikely to ever work again.

Any suggestions or resources on how to handle this incoming inheritance, alongside other assets. Not sure what types of accounts it should be put into, how much to invest, how much in bonds, etc.
aristotelian
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by aristotelian »

I would keep it in cash until they buy the home since they may have a hard time finding a mortgage in their situation.

After that, depends on their risk tolerance. How much of their spending is covered by disability?
Call_Me_Op
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by Call_Me_Op »

I assume there is a Special Needs Trust to hold the $500k inheritance?
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Sam_957
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by Sam_957 »

Some things to consider. What are their expenses and income? How much would this house cost? Consider taxes for the inheritance (taxable vs retirement account differ). Look into time limits and taxes on that 75k real estate sale. Can you afford to pay the mortgage without them and still meet your goals?
My other vehicle is an index fund.
TheGreyingDuke
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by TheGreyingDuke »

Call_Me_Op wrote: Tue Jan 18, 2022 7:56 am I assume there is a Special Needs Trust to hold the $500k inheritance?
Good point, their Medicaid would disappear if they directly inherited $500k, that's my understanding
"Every time I see an adult on a bicycle, I no longer despair for the future of the human race." H.G. Wells
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Watty
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by Watty »

NotACat wrote: Tue Jan 18, 2022 7:43 am They currently rent an apartment and would likely like to buy a home at some point. Realistically, we have considered trying to find a duplex or home with an in-law suite of some sort where they can handle a down payment and my spouse and I take on the mortgage.
How much does housing cost in your area?

If it is expensive then do they have any responsible relatives like adult kids that live in lower cost of living area that they could move to in order to buy a house or condo for cash?
Gill
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by Gill »

Call_Me_Op wrote: Tue Jan 18, 2022 7:56 am I assume there is a Special Needs Trust to hold the $500k inheritance?
There should be but there is no indication of such an arrangement. Unfortunate.
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
dbr
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by dbr »

As to asset allocation, too little in stocks is less sustainable under withdrawals. It might be around 50/50 is a pretty good compromise. I would not follow an age in bonds rule.
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Watty
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by Watty »

NotACat wrote: Tue Jan 18, 2022 7:43 am Realistically, we have considered trying to find a duplex or home with an in-law suite of some sort where they can handle a down payment and my spouse and I take on the mortgage.
One more thought. It was a bit different but when my mom was older she insisted on staying in the family home I was raised in. I can understand that but it was very socially isolating for her and she drove a lot longer than she should have just because she had no alternative. Over the years her friends also got older and either moved away, became less mobile too, or died. My siblings and I lived in different cities so she would often go for several weeks where the only person she really saw was the house keeper who came in several times a week and would do things like take her to doctor appointments.

For years we tried to to get her to move to some sort of retirement community(not assisted living) so that she could be around more people. She was dead set on staying in her home but that was her choice.

Buying some sort of suburban property might not be a real good choice for them so pay a lot of attention about what sort of social situation they will be in.

Many retirement communities have different sections that go from independent apartments, different levels of assisted living, to a skilled nursing facility. An apartment in some place like that might make a lot of sense because they could have a lot of activities with other people living there.
manuvns
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by manuvns »

find out how much house they want to buy and keep DCA the remaining money into age appropiate portfolio .
Thanks!
Topic Author
NotACat
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by NotACat »

Gill wrote: Tue Jan 18, 2022 9:15 am
Call_Me_Op wrote: Tue Jan 18, 2022 7:56 am I assume there is a Special Needs Trust to hold the $500k inheritance?
There should be but there is no indication of such an arrangement. Unfortunate.
Gill
I do not believe there is. It is my understanding that they will lose medicaid but retain medicare.
Topic Author
NotACat
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by NotACat »

manuvns wrote: Tue Jan 18, 2022 11:16 am find out how much house they want to buy and keep DCA the remaining money into age appropiate portfolio .
That was my instinct, but I wasn't sure if for some reason people suggested a different strategy due to not working and no future income (aside for social security).
Topic Author
NotACat
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by NotACat »

Watty wrote: Tue Jan 18, 2022 9:28 am
NotACat wrote: Tue Jan 18, 2022 7:43 am Realistically, we have considered trying to find a duplex or home with an in-law suite of some sort where they can handle a down payment and my spouse and I take on the mortgage.
One more thought. It was a bit different but when my mom was older she insisted on staying in the family home I was raised in. I can understand that but it was very socially isolating for her and she drove a lot longer than she should have just because she had no alternative. Over the years her friends also got older and either moved away, became less mobile too, or died. My siblings and I lived in different cities so she would often go for several weeks where the only person she really saw was the house keeper who came in several times a week and would do things like take her to doctor appointments.

For years we tried to to get her to move to some sort of retirement community(not assisted living) so that she could be around more people. She was dead set on staying in her home but that was her choice.

Buying some sort of suburban property might not be a real good choice for them so pay a lot of attention about what sort of social situation they will be in.

Many retirement communities have different sections that go from independent apartments, different levels of assisted living, to a skilled nursing facility. An apartment in some place like that might make a lot of sense because they could have a lot of activities with other people living there.
Yeah, the duplex/house idea is kind of just an idea but what you mentioned is something to consider. All just ideas now as we await for some other items to clear up.
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celia
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by celia »

NotACat wrote: Tue Jan 18, 2022 7:43 am They are permanently disabled and unable to work and from that they receive monthly social security payments and they are on Medicaid.
The plural "they" sounds like they are a married couple. Please confirm. Also confirm if they are both over 62. If under, they would probably be collecting SSI or SSDI instead of SS. What are they doing for health insurance?
They currently rent an apartment and would likely like to buy a home at some point. Realistically, we have considered trying to find a duplex or home with an in-law suite of some sort where they can handle a down payment and my spouse and I take on the mortgage.
What is your suggestion for this housing? Would they pay for their "half" outright and you get a mortgage for the other "half"? Who would inherit their half after they die? And how are they related to you (or an inheritance of their "half" would normally go to you anyway)? Are there many such properties in your area with ground floor units that are handicap accessible?
I am familiar with the general timeline of typical boglehead investing of more bonds, less stock as you age and approach retirement, but I really don't have any idea how to allocate money here, since they are unlikely to ever work again.
I agree with the comment to not invest until the housing situation is settled.
phxjcc
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by phxjcc »

NotACat wrote: Tue Jan 18, 2022 7:43 am Posting on behalf of a family member.
  • They have about $50k in stock/bond investments - unsure of allocations.

    They have about $75k in cash from a home sale.

    They will be receiving a $500k inheritance.

    They are permanently disabled and unable to work and from that they receive monthly social security payments and they are on Medicaid.

    They currently rent an apartment and would likely like to buy a home at some point. Realistically, we have considered trying to find a duplex or home with an in-law suite of some sort where they can handle a down payment and my spouse and I take on the mortgage.
I am familiar with the general timeline of typical boglehead investing of more bonds, less stock as you age and approach retirement, but I really don't have any idea how to allocate money here, since they are unlikely to ever work again.

Any suggestions or resources on how to handle this incoming inheritance, alongside other assets. Not sure what types of accounts it should be put into, how much to invest, how much in bonds, etc.
MediCARE is available at 24 months after the Disability Eligibility Date….which is not necessarily the first month that monthly SSDI was paid. And not the same as the First Disabled Date.

If they are on ssDi and not SSI, then the SSDI amount is their FRA amount…and will be paid from now until forever, with COLA adjustments the same as Old Age SS payments.. At their FRA age, the amount stays the same…it is just that the dollars come from a different GOVT account.

Having said all that….
Advice at this point is tough to give without knowing the income vs expense picture.
Can you provide a SWG at the income vs expense picture?

Also, not to be morose, but if life expectancy is forecasted to be shortened, then the 4% SWR makes no sense…and that will also play into it. Life Expectancy tables with Condition “X” are usually available from the National “X” Societies and from research hospitals.

Sorry to hear about this.
Topic Author
NotACat
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by NotACat »

celia wrote: Tue Jan 18, 2022 9:58 pm
NotACat wrote: Tue Jan 18, 2022 7:43 am They are permanently disabled and unable to work and from that they receive monthly social security payments and they are on Medicaid.
The plural "they" sounds like they are a married couple. Please confirm. Also confirm if they are both over 62. If under, they would probably be collecting SSI or SSDI instead of SS. What are they doing for health insurance?
They currently rent an apartment and would likely like to buy a home at some point. Realistically, we have considered trying to find a duplex or home with an in-law suite of some sort where they can handle a down payment and my spouse and I take on the mortgage.
What is your suggestion for this housing? Would they pay for their "half" outright and you get a mortgage for the other "half"? Who would inherit their half after they die? And how are they related to you (or an inheritance of their "half" would normally go to you anyway)? Are there many such properties in your area with ground floor units that are handicap accessible?
I am familiar with the general timeline of typical boglehead investing of more bonds, less stock as you age and approach retirement, but I really don't have any idea how to allocate money here, since they are unlikely to ever work again.
I agree with the comment to not invest until the housing situation is settled.
They is one person but me being vague to just avoid any identifying information. Turning 60 soon, receiving SSDI currently on medicare/medicaid.

The individual is my spouse's parent and due to our jobs (mostly remote) we are flexible to move anywhere really, so we could find a house like this somewhere. We aren't in a permanent spot right now. The housing suggestion is just basically an idea at this point, but the general idea is they do some sort of down payment and we do mortgage and tax payments (I realize this is complicated and will require some kind of plan/legal doc for who inherits it and whatnot).
Topic Author
NotACat
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by NotACat »

phxjcc wrote: Wed Jan 19, 2022 12:14 am
Having said all that….
Advice at this point is tough to give without knowing the income vs expense picture.
Can you provide a SWG at the income vs expense picture?
I definitely need more info on income vs expense. What is SWG?
phxjcc
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Re: How to invest inheritance - 60 years old disabled and unable to work

Post by phxjcc »

NotACat wrote: Wed Jan 19, 2022 7:26 am
phxjcc wrote: Wed Jan 19, 2022 12:14 am
Having said all that….
Advice at this point is tough to give without knowing the income vs expense picture.
Can you provide a SWG at the income vs expense picture?
I definitely need more info on income vs expense. What is SWG?
Scientific Wild Guess
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