Have you made plans for what you would do with any inheritance you might receive from your parents’ estates when they die? It’s not the most pleasant subject to think about frequently, but every now and then I come back to it. I haven’t sat down with my parents to have an in-depth conversation about it, but it has come up. My parents are not yet elderly, but they’ve already made significant preparations for their senior years. I’m sure they have wills, too.
Let me make clear that I’m not discussing this because I’m interested in the material gain. No! I just want to make sure that I’m taking the best care of what they’ve been able to leave behind. After all, they’ve done it to help support me, and I want to make sure I honor that. On the other hand, they’ve also been planning to help out financially more while they’re still alive since that’s the easier way to do it.
What about your own parents? Are they making plans to leave money behind? Have you sat down and talked with them about it?
Personally, whatever finances they leave, I’d want to make sure that it goes to the best use. I’m just not sure yet what that best use would be. A savings account? Invest in semi-secure stocks? Bonds? Pay off a mortgage? What’s the best way to use the money that would do the most honor to my parents and also preserve itself, so that it may also grow?
Here are a few of the options I’ve thought of. This is all based on my financial situation at the moment, of course – in twenty or so years, it could be quite different. It seems as though there are four basic options:
Save it.
Saving their money would keep it secure and in a proper high-interest account would ensure some degree of modest appreciation. The question here, again, is when to spend it, if ever? What to save it for? Should I even bother treating their wealth as though it is some representation of them, their life, how hard they worked? Is that a debasement of their memory, or an honoring of it?
Invest it.
This reminds me of the Biblical parable (I’m sorry I forget the book) wherein there are three brothers who have been entrusted with some talents whilst the father goes on leave. Only one of the brothers invests his talents, and it is he who is praised because he tried to make the most of the money. Is this what I should do? What you would do? I can think of some blue-chip dividend stocks to invest it in, but then what to do with the dividends? I suppose I could let the money accumulate in a DRIP. But then again, when to ever spend it? What’s the exit strategy? My parents would probably like to see me keep it for my own retirement.
Pay off debts?
This might provide good short-term benefits and leverage, but the money would disappear. I don’t think I’d be in such a dire debt situation in twenty years that I would need to take this option. I don’t think I’d be able to let myself, either! Perhaps the only way I could see myself taking this option is if I used it to pay off my mortgage and I continued to rent out a room and take in extra cashflow that way. Cashflow that could ultimately be used to buy another house and rent it out.
Buy something you really need?
Wouldn’t this be the worst way to deal with an inheritance? Unless one used some of the money for something like planting trees in their memory, perhaps. Or giving some of it away to charity (but then, if they’d wanted to do that with their estate, they could have stated that in their own will). I don’t think I’d ever go with this, except perhaps in my own senior years, in order to travel or something and enjoy real living the way they would have liked to too.
What are your own ideas – have I left anything out? Is this a morbid issue to be thinking about like this? I bring it up because of a comment I just read on another blog about someone running through some inheritance money, and it made me shudder for a moment. I’ve thought about this before, too. It would be great to hear others’ thoughts on it.
Related Posts - How To Protect Your Wealth From Hyperinflation
- 4 Tips for Having Conversations with Parents (and Others) About Money
- 8 Ways You Can Start Investing As A Student – Part 1
- Frugal Tips for The Rest of Us - How To Save Money You Barely Have
- Stock Market Trends in December 2009: What Should You Invest In At the End of the Year?
Related Articles From Other Websites
-
{ 16 comments }
I think I would invest it properly. Maybe some real estate, maybe Internet business.
Buying estates for rent is a little risky nowadays but I think it would change in few years.
This is a super-interesting topic. For me, I don’t have a problem paying off debt as long as you change any behaviors that are associated with that debt.
In other words, don’t pay off a big portion of credit cards if that will just give you an excuse to charge them back up.
Also, I’d tell people to not make decisions when they are grieving. Although it might be tough most people advise waiting 6-12 months before making any big decisions!
Wow – I hope I do not have to go through this one again anytime soon! From what I learned last time around I know that I shouldn’t just waste it and that I should probably park it and take time to grieve.
I suppose how I would use it long term would probably depend on how much the inheritance turned out to be. At this point in my life my priority would probably be to pay off debt, then savings and then investing.
oops – didn’t fill out the name field right. Sorry about that MoneyEnergy – it was me stopping by though.
@Kotlina – an internet business sounds too risky for me for that type of money. I’d rather put my own dollars into that.
@Baker – good point that I overlooked: definitely not to make these decisions while grieving. So maybe (among all the other things you’d have to deal with) if there is an inheritance, just keep in a high-interest, solid savings account until life is reasonably back to normal?
@Matt – size of the inheritance is a good question… I hadn’t thought about whether there would be significant differences that way. At this point I think I’d still want to take even $1000 and save it or put it in a DRIP and reinvest dividends.
With Matt on this on not wanting to go through this anytime ever, but, I’d much rather that they donate it all to charity.
I think I would use it in a way my parents would see fit.
That would probably mean college education for grandchildren, real estate, and a vacation to take my mind off of my loss.
MLR
@Manshu – yes, especially if your parents mentioned giving it to charity – I know you mentioned this on your own blog.
@MLR – I agree, that’s exactly how I was feeling – how would my parents see fit to use it, and I should honor that. Makes good point for maybe talking about it while they’re around. Real estate is also always a solid deal, since it’s a real asset (if you can own it outright).
Well lets first consider if there will be anything in the estate, besides a bunch of debt and mortgage to pay off.
And really, its not like i am counting on getting anything because the worse i can do is depend on that to get me by.
This is an easy one for me. My parents and my in-laws won’t have much to leave us, so we won’t have to worry about what to do with it!!!
I’d like to throw a little experience into the mix. I think you were really accurate by saying that you need to take some time to grieve. I can’t explain how screwed up your head is after losing a parent. There is no shortcut and there is no timetable to get through it, but a good starting point would be to put the inheritance in a one year CD to let your head clear. I think you would end up making much better decisions.
I chose to put the money in some really long term investments which should make a significant difference in my retirement years.
This is a great topic, heavy, but well worth talking about. Thanks.
@tom, doughroller – good point; not all estates will involve monetary inheritance.
@Andy – thanks for confirming this point. I will keep the one-year CD idea in mind for sure.
This is a good post. You are absolutely right!
Many people never think about it.
Thanks for sharing the information :)
It is very useful!
Everyone should be aware that sometimes what the parents say is not what they do. My husband’s parents always told him he was the executor of their estate and everything would be divided equally among my husband and his sister. His mother died years ago, his father died last year. When we received a copy of the will, my husband and his issue were disinherited and everything was left to his sister. My husband did not even get a picture or coffee cup. Life goes on….Don’t ever, ever, ever, count on anything. Rely on yourself. This was a total surprise.
My dad’s side of the family live a long time. I wouldn’t be surprised if I’m almost 70 by the time inheritance was a concern. So if there were anything to inherit I’d probably shore up my own retirement funds, if we were in bad shape there, or more likely give it to charity. I’ll hang on to the photos and some bits and pieces like that.
Having said that, I hope they spend it all.
@Wendy, sorry to hear about that. I agree with you that we need to rely on ourselves, because life is unpredictable. That said I hope that I never find myself in such a situation, where the will becomes more important than the memories of my parents. Another good reason to talk things over in advance.
@guinness416 – I wouldn’t mind being much older with an inheritance, either! I’d probably use it on a vacation at that point – that’s what my parents would tell me to do anyway:)
Comments on this entry are closed.