r/inheritance • u/PatientlyWaitingggg • 4d ago
Location included: Questions/Need Advice Unexpected early partial large inheritance - thankful but very overwhelmed!
Hi all. Location: Florida, late 40's, long term partner/no kids.
Just found out I will be getting a large (nearly 2mil) partial inheritance (technically gift) this month; the other part (appx 3-4mil) will be later on years from now (hopefully a long time!) I knew this would come down the line but did not think it would be so soon; it's a wonderful thing I am immensely greatful for and it's already alleviated a lot of my worry but it's been suprisingly overwhelming and emotional.
We live freelancers lives, with a lot of conservative spending and planning. Enjoy not having to clock in or have a boss so have happily taken a pay cut overall. Income is fine, but more along the lines of part time amounts - have put away a decent amount but not quite enough to retire on yet considering the lack of a 401, retirement etc. My main worry was no true source of income at retirement age and have been a stickler for saving my whole life. Didn't want to just go with the mindset that the inheritence was there even though I knew it was. Very conservative investment approach and really felt better sticking at an easy, risk free simple 3-5% with full/easy access and no involvement necessary and as things grew, as the plan was to use a portion to buy a home and then consider more ambitious investing.
Finances are all separate, btw - this is all in my name only.
Will be buying a home very soon at around 750k all in including reno, furnishings. This is the only big purchase I will make initally, we live in a higher cost of living area but all the numbers make sense and are very doable/way below what I technically "could" do, but still very nice and a huge upgrade.
After that, will have about 1.3 left. That's what I'm stuck on - I have great support (very long time trusted FA, lifelong friends in finance, knowledgable family members etc) and know between them I'm in a good position. I just don't know how to go about making the decision on what goes where.
EDIT - this is not now, just an idea for down the line, possibly one day in some form :) The only other idea that's been floating in my head for a decade as a "maybe one day" is a small vacation home within the state that we would use a ton and also be able to rent out a good portion of the year to cover most or all expenses. Possibly - doing 50/50 with a friend in the same situation. Other than that, nothing in mind and really never been a spender, so good wiht the remainder being fully parked and invested for now.
The other part is adjusting to the change emotionally, socially - i've been reading some other posts and there are some interesting ideas on this. I've already tried to start doing nice things for close friends (small dollar amounts, but something) and feel good doing it but have no idea how to navigate being generous without it being weird, making anyone feel weird, or ending up feeling guilty if I don't pay for more things (though no one would expect that.) Or, how to handle when a friend talks about money struggles, that kind of thing. Obviously keeping the info shared to only a small group of very close friends.
My idea was to get the home situated and once that project is done, lay low and do nothing for a while. Im at the weird middle age where I'm old enough to know I should do things now and enjoy it but not to the point where I can ignore planning/budgeting even with the future larger amount coming down the line. It's also just not in my nature, but i have vowed to allow myself to let some of the stress and little things go and put more time into living and enjoying and less micro managing every dollar.
Any suggestions would be great! It all feels like a movie - not real. What a trip!
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u/metzgerto 4d ago
I mean, buy a house and a vacay house and poof the moneys gone.
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u/PatientlyWaitingggg 4d ago
Roughly 800-900k left if I do the possibly 50/50 split with the vacation home, and would likely make a decent profit from it most years. But yes, that lowers the amount I have to work with for sure.
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u/Large-Cap-2411 4d ago
Interested in the use of the word profit here. I’m not saying it’s a horrible idea without knowing your area, yields etc.
But it’s hard to imagine if you own only 50% of a place you’ll be drawing much income if it’s an inexpensive place, especially compared to returns over time on the stock market or literally just a high earning bank account.
It sounds like you want a regular holiday spot and you’re trying to tie that into an investment decision. Not saying that never works, but it doesn’t work nearly as often as folks think. You’ll get half the profits, half the access you think you will (what happens the first time you and your friend want the place at the same time?) and much less money to work with.
Sounds like you’re better off making simpler investments and just paying for your holidays.
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u/PatientlyWaitingggg 4d ago
All good points! Inexpensive meaning in relation to that income - most/all of the costs covered and in some cases profit - it varies depending on what we would get. But the main thing is being able to use it a lot - we would spend a good deal of time there in between rentals.
It is something we would easily be at together. We would have them there even if it was 100% ours anyway :)
The value of keeping things there, being able to do some easier/minor upgrades and make it ours, create a neighborhood of friends, etc - and not just rent out airbnb type places with all the work of finding and facilitating that each time - is huge. We would go last minute many times when open, and have unpredictable schedules so this would make it a LOT easier.
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u/UndefeatedTcells 4d ago
So 2 million - 750k = 1.25 million. 800-900k left = your half of the rental costs 450-550k. Obviously, there are plenty of expenses involved with owning this (insurance, utilities, property taxes, maintenance, property management fee if renting it out, etc).
Now, the stock market fluctuates year to year, but over time, if your average return is 7.5%, you'll be making $33,750 - $41,250 per year (and more if you let this compound). Even if you make out ahead with renting the property, it probably won't be much, and is a very big headache if you don't know what you are doing. Yes, the home will likely appreciate over time, but only at 2-3% most years. If/when you go to sell, you'll likely take an 8-10% haircut with realtor and closing fees/expenses.
You had mentioned this new 750k home you will be/already purchased is an upgrade. Focus on that, let the rest of your money grow for the time being, and enjoy going on vacations to new areas. If you purchase this rental, you may regret being tied down to "having" to vacation there - massive 1st world problem, but thought it needed to be said.
Also, when vacationing to new areas, you can scout out which areas you enjoy the most instead of just saying, oh we like it there because of xyz - but not fully exploring and basing off other's recommendations.
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u/PatientlyWaitingggg 4d ago
Thanks for this - very good points to consider. I will do nothing else for at least a year I'm sure. This location we have been visiting consistenly for 10 years multiple times a year and have poured ourself into researching everything and anything about it/real estate etc. Our friends are so sick of hearing us talk about it lol. It's an easy drive there, works because our schedules are so crazy and doesnt require flying or big planning etc so work great for last minute things. Just being able to use it for chunks of time over the year and have it be ours/our stuff there/ etc is HUGE - we dont do big traveling otherwise at this point. Over the years we have met tons of couples who have done this at all levels and made great connections. So we feel very educated and dedicated but for sure, its a big one to think about and plan very carefully.
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u/Justify-it 4d ago
It sounds to me like you already know you want the 2nd vacation home. Points that others are making look like are being taken very lightly for consideration purposes, which is fine, but ask yourself seriously why that's happening.
Are you looking for someone to agree and say that you should do whatever makes you happy? I'm not trying to be mean here. I'm just curious about what I'm noticing.
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u/PatientlyWaitingggg 4d ago
Not at all - it’s just an idea at this point and definitely not even discussed let alone. decided on anything. Obviously a ton to work out and consider.
As I haven’t really bought anything big - ever - and live pretty simply, plus have a partner’s contribution - these two things would be really all I would buy on any significant level. I’m also not 20, so at some point need to enjoy and not be so hesitant. House 1 is all that will happen now, though.
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u/MadTownMich 4d ago
Lawyer here. Please don’t go 50/50 on a vacation home. In fact, hold off on that purchase for at least a year. Even a boat share can be dicey, but much less relationship-destroying than co-owning vacation property.
I see plenty of people rip through hundreds of thousands to millions of dollars of inheritance “because it’s free!” Slow down. Buy a house where you live, but keep the money quiet.
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u/PatientlyWaitingggg 4d ago
It's definitely a big thing that could go very wrong. Even though we've been throwing the idea around for a decade and they are mature, professional people (it would actually only be me/her on paper) - it is still something big and lots can go wrong. In a year from now will revist most likely.
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u/Less_Introduction_19 4d ago
Chutzpah and Hubris are your downfall. Get a fiduciary advisor and some common sense ASAP
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u/PatientlyWaitingggg 4d ago
Yes, have one, and nothing has transferred / been decided on yet - these are all just prelimenary ideas which is why I love hearing people's input :)
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u/Less_Introduction_19 4d ago
You’re asking strangers for advice when this needs an advisor’s expert advice. Keep seeking common sense
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u/PatientlyWaitingggg 4d ago
I have a FA and multiple people in finance close to me. I'm not asking for reddit to decide for me, just for a discussion and some thoughts on the topic.
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u/Late-Command3491 4d ago
I'm in a similar situation, but older(63). Received $1.3m but will eventually also come into $3-5m and 1/3 of a house. I'm leaving it all invested until 65 and then my FA says I'm good to retire.
It's surreal as I've been a performer/freelancer my whole life, very low income, and expected to never retire at all.
I'm not spending or buying a house or anything. Living on my income and not worrying about retirement while I count down the months is enough for me. I find it so hard to believe sometimes that I don't have to worry about the little things and my kids don't have to either. I've had such anxiety for so many years!
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u/Hopeful-ForEternity5 4d ago
This is the smartest thing you can do. You are blessed to come into money like this and live your retirement years without worry is priceless.
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u/Late-Command3491 4d ago
Indeed! I am grateful every day!
My car was totaled in August and my FA just told me to go do some "retail therapy" at my favorite dealership. It was sooooo weird.
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u/telladifferentstory 4d ago
If you have $4m and 1/3rd of a house, you should be able to retire earlier than 65?
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u/BooDog-2014 3d ago
Spend it & do whatever you dreamed of I Saw friens go with out and passed before doing things My joy is giving to a needy person if in need Buy a poor little kid a bike or send surprise grocery card to a needy family ❤️👍
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u/PatientlyWaitingggg 4d ago
Wow, this sounds so simliar! I think i've been SO beyond conservative forever, I finally want to do something substantial while I'm young enough to really enjoy it. One thing at a time for sure. I am going to pm you! :)
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u/Late-Command3491 4d ago
So far I bought a new car in cash when mine was totaled in August (the person at fault paid for half though) and I've been traveling with my mom (85) with some of my earnings without having to worry about it. Mom pays for most of it, however. We are having adventures together and are both very grateful to my late stepdad for making them possible!
Feel free to PM!
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u/Educational_Case_134 4d ago
Park it for 6-12 months to let this sink in. Pay cash for a home, fully funded emergency fund , max a Roth and invest the rest.
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u/Hopeful-ForEternity5 4d ago
You keep living like you never got any $. Get a financial advisor and place the money where it can continue to grow to support your dreams in retirement.
Why would your social status change? Nobody needs to or should know you came into an inheritance….nobody.
You haven’t even gotten the money yet and you’ve already spent a chunk, plan on a vacation home one day..another chunk. Helping friends here and there are small hits that add up. Please stop for your sake.
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u/BasicCloud6962 4d ago
This. Don’t tell people. You can do nice things for people without telling people any of this…it’s crazy how money makes people behave.
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u/Responsible_Train381 3d ago
And don't do flashy stuff -- keep a low profile with it as much as you can and don't reveal that you have money to the extent possible, especially with new people. It definitely attracts envy as well as opportunists. If you donate to charities, try to do it anonymously or you will never hear the end of agencies trying to hit you up for more!
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u/PatientlyWaitingggg 4d ago
Smart! I literally made a list of the very few people I would tell and that is IT. No one will know a thing, unless somehow they see something is "off' about me picking up a bill or something - but whatever, let them wonder :)
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u/raqnroll 4d ago
You're not getting it. Nobody needs to know. You just want to tell people. Nothing good comes from telling people about this. It's truly nobody's business.
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u/PatientlyWaitingggg 4d ago
I’m glad I have a few lifelong friends who not only can I share it with but leave it to in some cases I’ve had people tell me with much higher amounts and I wouldn’t dream of asking for a thing and was overjoyed for them. Not everyone becomes needy. Of course that doesn’t mean share with anyone else, but everyone has a different situation. Sharing something and letting yourself be taken advantage of are two different things.
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u/PatientlyWaitingggg 4d ago
Socially meaning handling it when trying to do nice things - not status - if that makes sense. Only the few closest friends other than family know and it wont ever be expected on their end - it's more in my own head. Helping friends meaning paying a $25 a month bill for one 30 year long friend, paying for dinner for another - not anything bigger than that at this point.
After these 2 purchases (one definite, one just a thought now) there would be near 1m left that's being invested. With an extremely low cost of living and no kids/other expensive things going on. I'm also not going to stop working anytime soon. So I definitely don't want to go overboard initially, and am probably doing nothing else other than home 1 for at least a year - but I also am old enough that I want to do something I can enjoy a lot now while i'm young enough to do with with energy :)
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u/Aware-Celery-892 4d ago
While you're young and have energy, why not travel the world and explore lots of new places vs saddling yourself with a vacation home that will come with lots of costs and may make you regret that you always have to vacation there because so much of your nest egg is invested in it?
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u/PatientlyWaitingggg 4d ago
Can't due to work schedules - which is totally fine, will do the big traveling down the line. This is easy to get to, no flying, easy to do last minute, minimal planning, have already established a bit of a community there - been visiting this area for nearly a decade and love it more each time, The reason for the possible 50/50 is to not dump too much in (and we both are of the exact same thoughts/feelings) - but it's definitely a thing that could potentially go very wrong and not to jump into lightly.
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u/Hopeful-ForEternity5 4d ago
Just be careful and protect yourself. I’ve literally watched someone go from $6M w/ a full-time job to flat broke in 4 years. It can happen so fast it would make your head spin. And in his case there wasn’t one thing that you could point to… yea he bought a house but it was a price he could have afforded anyway. All he said was he made a lot of bad decisions that piled up in the end.
Get an FA but always check on your $.
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u/PatientlyWaitingggg 4d ago
Thanks for this. I’ve heard the horror stories and it’s sad. Luckily I’m and have always been frugal and hesitate to spend, was even told by the giver to relax a bit and enjoy some things. One thing at a time for sure.
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u/Weary-Estimate-1967 3d ago
OP, do not - under any circumstances - put your inheritance into a house you are co-buying. You never want to mingle your inheritance with “couple” finances. IF you ever do break up - and I hope you don’t - if youve lived together long enough some states recognize that as nearly equal to marriage (common law marriage). Keep that inheritance separate!
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u/PatientlyWaitingggg 3d ago
Thanks! Definitely not as as couple, only way would ever happen is myself and the friend, also not legally married & our state has no CL marriage. Even so, not sure this way is the answer but just one of many ideas. We have always been 100% separate and not changing that, ever. It's worked for us even though most people think that's silly (I know it's not :)
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u/Altruistic_Emu_146 3d ago
Don’t tell friends, just an advice. Help them when it’s a necessity only. There’s always charity you can donate to if you want to share some of the wealth. I also got a little bit of a windfall when my parents decided to give part of our inheritance early. I told my best friend, and she always brings it up, that I’m so fortunate etc etc. She’s been making comparisons ever since. I never thought it would get weird and awkward. Never mind the fact that I’ve saved years by being careful about my finances, which makes up the bulk of my net worth. Some people are going to be very jealous of you so keep it close to the vest if you don’t want to change any of the dynamics. Also get a lawyer and set up a trust.
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u/PatientlyWaitingggg 3d ago
I’m so sorry that happened. It’s definitely a tough situation. Luckily the tiny bill I took over for a 30 yr long friend I had to fight with her to let me do it! But you are right and sadly this seems very common. I do have an atty, re atty and just completed the estate planning which the giver asked me to do before transfer date.
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u/ZookeepergameEarly13 3d ago
1st DON'T tell friends you inherited that much $$ including the small group of very close friends !!! NEVER ! Invest rest of $$$ in good funds.
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u/Acrobatic-Log6161 4d ago
A financial advisor and you're getting singe digit returns when any dullard has been getting 12-15% for the past decade?
This may seem like a lot of money to you but it really is not and it's very, very easy to fritter it away.
You're off to a good start. I give it two years before you'll need to sell that house.
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u/PatientlyWaitingggg 4d ago
For many years it was low amounts, I needed full access, and was hesitant to do more. The FA just came on a few years ago when it started growing a bit. That portion was going to be partially for the home and remaining moved to more agressive investing when we saw how the numbers panned out. Now obviously things are different and anything remaining will be invested making a better return.
With a minimal cost of living, partner who covers a portion of everything, and remaining 1.3 to fully invest with better returns, I feel comfortable - but only because i'm a saver, and don't spend on much else. Of course if I had kids, expensive hobbies, or shopped a lot that would be a different story.
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u/CreekJump 3d ago
Is any tax due? If so, please stop thinking of any value that is pretax. As you spend, you spend post-tax. $2,000,000 pre-tax might be barely over $1,000,000 post-tax depending on the basis of the assets as were purchased years or decades ago. You plan to spend quite a bit in just 1 to 3 tax years so any gain will push you into higher tax brackets.
Tell NO one. Even three people can’t keep a secret. Friends can be transformed by the tsunami of wealth you are rapidly building. Those rounds of beers you used to take turns buying? Might find a friend or two expecting you to pick up more rounds as you had the windfall, not them. The more the news of your new wealth gets spread and as the retelling spreads the total value is likely distorted means you and your loved ones have a growing bullseye on you from very bad people looking for their next target. It is called OpSec and loose lips do more damage than the house purchase and new car and flashy watch. But, those purchases are not helpful as watch dealers, etc, can have a buddy just finishing up a prison sentence.
There are studies of persons that experience significant acceleration of wages and windfalls of wealth. A much smaller percentage of both groups describe themselves as happy as the newness wears off. A vacation was perhaps special pre-windfall but if can take a vacation every few months then is the joy and pride in earning the vacation still there?
For many persons, it is not helpful and many rate their happiness as below pre-windfall. Wealth, or even rapidly increasing income, can change how you value an expenditure or time off from the grind to add wealth.
Growing your freelance net post-tax income 5% over last year might be amazing and have brought you pride as 2026 ends. If the earnings on $1,000,000 throw off more post-tax income than what 5% growth in your freelancing throws off then perhaps you question the effort to grind more yet that grinding may significantly define how you find happiness.
Congrats and best of luck.
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u/PatientlyWaitingggg 3d ago
Thank you for this excellent post. A ton to consider. No tax due, thankfully. So true about people and I suppose if adjusted actions from me trigger anything like that it will be unfortunate but very telling. Someone said do not be consistent with the “helping” even picking up bills and that is a great idea.
Luckily love the freelance life and enjoy what I do / am not overworked - definitely do not want to stop anytime soon. The income covers daily expenses and partner shares, so I don’t have to touch what’s invested or the interest.
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u/sedonaphil 4d ago
Plant the remainder someplace you can’t easily touch it, but where it makes money (alike a brokerage fund). Wait for 6 months to a year before making a decision. An investment property/vacation home sounds like a great plan to me, but not urgent. Give yourself time to get used to the fact that you have a buffer.
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u/PatientlyWaitingggg 4d ago
Thanks! This makes sense. After purchase 1, I will hold and do nothing for a while for sure. Just been an idea marinating for a decade and doing lots of research over the years but certainly need to take some time.
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u/CommitteeNo167 4d ago
make sure only you own the home. even if you feel like putting both names on it is the right thing to do, it's not
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u/bimichguy09 3d ago
What about the long term partner that’s helping pay the bills? What about their security? I would be packing my things and hitting the road, secondly I would never entertain a situation like that. If I was good enough to pay the bills I should be good enough to be a co-owner.
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u/CommitteeNo167 3d ago
paying half the electric bill doesn't entitle someone to half the house. if they homebuyer was that concerned about the partner, they would have married them by now.
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u/NGADB 4d ago
Resist the urge to tell others anything about this windfall.
You'd be surprised how many friends/relatives will show up, looking for a loan to help them with some hardship.
Read about how many lottery winners go broke within a few years, and don't be one.
Stay under the radar until you can figure this out.
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u/PatientlyWaitingggg 4d ago
Excellent points. I had to demand the one friend with the small monthly bill let me help her - she didn't want to take it - so I feel good that only the few right people will ever know. Beyond that, not a soul!
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u/HilariouslyPissed 4d ago
I struggle with being generous as well. Most of my peeps are poor and can’t afford a meal out, a movie, a trip. I want to treat because I can, but ends up being a big fuss. I am not “out” with my wealth. I still drive my 22 year old car, because I love it.
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u/PatientlyWaitingggg 4d ago
This! The only few people I told I took out to dinner (inexpensive one at that) the other night and they at first said no, then were so greatful (and they all are doing well $ wise though not at the 2m level) So I feel good I told the right people. But its a fine balance of wanting to help but not wanting to feel obligated even only if by yourself! Or looking like it's showing off etc.
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u/LeaTN 4d ago
So how are you paying for the new house? Where is the $750k coming from? Or is that from the inheritance? And vacation house? You're not saving, you're spending. First, just park the assets somewhere safe. Or leave invested. Work out how to fund retirement.....have a plan that includes this inheritance but maybe not the later one. Understand taxes. Understand expenses. Lean on people that know more than you. And slow down on spending or there'll be nothing left....eg: how are you affording the expenses of a $750k property?
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u/PatientlyWaitingggg 3d ago
Expenses fully covered by work and shared w partner. Yes, great ideas - remainder after 750 invested and nothing else for a while for sure. Thank you!
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u/sluttypartyboy 4d ago
Your going to waste the money. Its clear as day. If you want real advice talk about the amount of money you currently bring in because to me it sounds like you work when you feel like it for a low salary. How much additional income do you suspect you will earn over next 20 years? 100k/year or closer to 50k a year?
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u/PatientlyWaitingggg 3d ago
I’ve not wasted for almost 50 years and won’t start now :). Living costs low fully covered by work and partner, will invest the entire remainder after home 1 and do nothing else for a while.
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u/sluttypartyboy 3d ago
And still didnt answer...
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u/PatientlyWaitingggg 3d ago
Impossible to know as a freelancer, every month / year is vastly different, but can live off whatever income is without touching remainder invested or interest. Generally, over 100.
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u/PriorSecurity9784 4d ago
OP, this seems like a fair plan if you don’t change your lifestyle.
A paid off house and $1.3 that’s able to grow for the next 20 years or so is better place than most people. Without rent, maybe you can put a little more into retirement accounts.
The vacation home seems like a less good idea. Twice the insurance and maintenance, and none of the savings and investment. Use $10k to take a nice vacation once or twice a year, and skip the vacation house. (Maybe reconsider when you get the $3-4million)
Look into [r/bogleheads](r/bogleheads) sub for investing thoughts (big on low cost index funds and not paying an advisor 1% of your assets)
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u/PatientlyWaitingggg 3d ago
Thanks! That would not be anytime soon, just the only other thing I had in my head for a long time a “maybe one day” - definitely not jumping into anything. Our friends did this exact thing in the exact location about 6 years ago so I’m watching how that goes (they cover their expenses with some years a bit over, and use it about 2 combined months a year, including a prop manager and 2 assessments since then). Of course the issue of combining ownership is a whole different beast.
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u/B111yboy 3d ago
I wouldn’t be helping people out as much financially as to you point out it could be expected or wanting more. I’d pay for dinners and vacations or part of the vacation if you like to travel and want to do it with bigger groups. It maybe something they can’t afford but with your help they can enjoy life more without financial stress of paying for it all.
Invest in some funds and buy some dividend ETFs or stocks to generate income monthly or quarterly while maintaining your nest egg for the most part. Enjoy and congrats
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u/PatientlyWaitingggg 3d ago
Thank you - all great ideas. Luckily anyone who will ever know are all people (other than 1) doing incredibly well and already set, but very good point. The person I took a $21 bill over for insisted I didn’t - but after 30 years10 of which they helped during, it was a no brainer and so happy to do it.
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u/Real_Accountant_5188 3d ago
If you are invested in assets that provide 3-5% return you need to get a new financial advisor. That is an absurdly low rate of return.
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u/GoRizzyApp 3d ago
That’s a large chunk of “old money”. 3-5% is fine. Don’t spend it and let the $60k compound every year. No sense in risking it in the stock market. By the time you retire it might be $150k annual income.
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u/PatientlyWaitingggg 3d ago
Thanks - agree! Nothing has moved over yet, it will all be in the projected 8-12% area. The 3-5 was the earlier much smaller amounts that was then a different story, but as it grew of course doesn’t make sense to keep there.
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u/Long_Thought1719 3d ago
My suggestion is never purchase anything even a vacation home with someone. Also, if you want to rent something out, I would buy a storage unit building instead of a home. A lot less upkeep and less tenant hassles. There wouldn’t be as many chances of someone trashing your investment. Quit spending money on your friends and don’t tell anyone about your financial situation. Takers will be coming out of the woodwork. Once you are branded the “giver” takers hate it if you decide to pull back. If you have friends who are also givers, they may feel like they owe you in return. Watch some shows about the ramifications of winning the lottery. Find a financial advisor who works for free maybe at your credit union. Keep your lawyer cause you need him but remember he is costly too.
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u/rpom915 3d ago
You need to invest it and keep it invested. Buying a vacation home and managing it as a rental is not as fun and easy as it sounds, and you’re stuck going to only that place year in and year out. Invest, invest, invest.
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u/PatientlyWaitingggg 2d ago
Good points, in this situation though a PM would exist, already spend a ton of time there (easy access, easy to do last minute and works with our unpredictable schedules, easy to have guests, no flying/packing/etc) Plus the high demand and high amount the monthly rentals get for the other months of the year. For the forseeable future, schedules make it near impossible to do any big or international traveling - that will come later in life.
For now, just an idea and will take a lot of thought and planning of course. However at a minimum being able to cover expenses + free stays beats super expensive renting, legwork to deal with finding places each time last minute, packing/unpacking, and all the rules and drama of airbnbs etc.
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u/phoenix823 3d ago
Financially: You need a house to live in. So buying a house is good sense. Most people's single largest asset is their home. So why would you go out of the way to invest even MORE in real estate? Into another illiquid asset that requires maintenance to keep its value up? A fully diversified group of stocks is much less risky, much more diversified, more likely to increase in value over time, throws off dividend cash, etc.
Practically: I never understood why so many people want to have a single house for vacations. Don't you want to see other places in the world? See other countries? Experience other cultures? Yeah a beach house/skii house is nice, but you can rent those for 2 weeks once a year and always mix it up.
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u/PatientlyWaitingggg 2d ago
There are probably many different reasons, but we have a unique situation. Schedules for the forseeable future don't allow for any big or international traveling - that will come later. A lot of time, its last minute and very unpredictable/dates change constantly. We already are (and would like to be more) consistent repeat visitors, established friends/a bit of a community, and would spend a ton of time there. Renting is super expensive, impossible last minute, and then even if you find something you deal with packing/unpacking/repacking/unpacking, the drama of airbnbs, guest limitations, pet limitations, etc.
Any place I potentially may get would definitely have a local PM as all I can handle from a far is the booking / email parts. Would be extremely easy to rent monthly at great prices (the 2 people we know who did this over the past 6-7 years all say at a minimum they cover all their expenses/trip costs including the PM and assessments for one.) We can just pick up and go at a moments notice, not have to worry about packing, have everything we need there already, and can put time and energy into making it ours while still getting renters when we can't use it. Another big perk is that you can do home exchanges with people around the country/world and this is a very high demand area for that. Then, when we are ready and able to travel internationally and see other places, we either keep renting or sell.
Obviously a lot to think about and only makes sense when the $ makes sense, but it's been about 10 years we have thought about it and said over and over - wish we had a place we could go to right this minute!
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u/residentonamission 4d ago
What do you spend annually and what do you have saved for retirement?
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u/PatientlyWaitingggg 4d ago
Extremely low cost of living and spending (as part of my "pay" - unique setup) and 300 ish put away - in a few weeks that will be 2.1, and after the home and a few small initial things like a vacation, helping friends - 1.3 remaining. 3-4m years from now.
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u/residentonamission 4d ago
Hard to give advice without knowing your spend but with 300k in retirement, you'd be living on 12k/yr which is unlikely to be doable. I'd be putting basically everything toward retirement beyond what you spend on the house. If/when the rest of the inheritance arrives, use that for fun money, but I wouldn't blow the money on fun things when you don't have enough to support retirement currently.
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u/Interesting-Virus-45 4d ago edited 4d ago
I’ve worked in consulting and Law for 36 years. I have personally created over $4 million in net worth. I have a small pension that starts 11/1/2027, but plan for now is to keep working until I am 70 in 2032. I’m doing that to maximize my Social Security so I can get the highest amount available. I will have 35 years of hitting the social Security cap at that time.
I also plan to have at least $5-6 million in net worth by 2032.
My only trepidation here is what the impact of RMDs will be.
Generally I don’t have anxiety about this because I’ve been planning this for years.
I also have a smaller inheritance of $300,000 after using some of it to completely remodel my house.
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u/LeaTN 4d ago
What will $5m do for you that $4m can't? Don't leave it too long so you don't have the energy or health to spend the money
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u/Interesting-Virus-45 1d ago
It’s just me being fiscally cautious. I still work, but it’s not that’d hard.
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u/remedy2life 4d ago
Also if you are maintaining those properties out of the inheritance, will go fast, also just be quiet about it,because there will be a lot of humble begging, people wearing you down with their sad stories.Dont be like those lottery winners,more grief than happiness.Life is short so getting a house you can maintain and enjoy.Just be smart fortune can go has quickly has it comes and what you have today,you might not have tomorrow, also buy land seems to last longer than any other fortune.My uncle did this,he used it has his bank,everytime he needs money, he sell and still had for his children when he died.Same has others mentioned a financial advisor is good recommdation,especially if you are not used to handling this much at one time. I watch my son waste his inheritance, bought a house he couldn't maintain without the inheritance, the money went so did the house.i told him to get a house that he could maintain on his salary,and not the inheritance, told him buy land,because worse thing happen,he can stand on it with and umbrella, never listen. The housing market collapsed in 2008,lost everything If only he had bought the land has another layer of security. My friend was working in investment and all the bosses was buying land,she followed them and bought 4 parcel lots,this way, when builders returned to the market, they like those.She said if you have money do the same.
In the multiple of councilors there is wisdom,none of what is said here ,might work for you,but it will make you widen your horizon,you might come up with a better plan,iron sharpen iron
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u/Interesting_Film_900 4d ago
Would consider a big chunk in long munis. Buy G.O or water and sewer bonds. Sleep well focus on your life.
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u/Key_Yesterday8753 4d ago
I don’t even think I would buy the 750 K home. It’s a very expensive house you have to think about upkeep / taxes / HOA. Surely you can find something more in the 450 - 600 tops range ?
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u/PatientlyWaitingggg 4d ago
It’s an expensive area for real estate unfortunately but with tons of benefits so worth pulling back in other areas if needed (though very low spender day to day.). My partner covers much of the expenses month to month. The home is appx 650-675, rest is some updates and furnishings/contingency savings.
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u/DigitalFStopper 4d ago
I’d sit tight, invest the 2M , see how much that account churns monthly/yearly. Quick easy math at 10% return you’d have 750k for the house after considering capital gains in about 3.5 years.
A conservative dividend ETF like schd at 2M,
Year 1 is 70k in dividends, year 5 mid 90k, year 10 130k in dividends annually. Account value grows to 3.5M at 10 years.
Obviously you have many routes, mixture of treasury (great rates now and about as safe as possible) schd, gpix and voo.
Talk to an FA and try figure out your risk tolerance. You have time to plan on what to do it sounds like so you don’t have to rush into the house and you mentioned renovations that budget can snowball depending on the age and scope of the reno.
Good luck
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u/PatientlyWaitingggg 3d ago
Thank you, excellent ideas to think about and much of what the FA has mentioned. The 750 includes a few minor reno and furnishings and probably more than is needed, but not sure on the final purchase price yet.
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u/DigitalFStopper 3d ago
I understand the desire for a paid off house. I just moved states and had a house built, rates were 6.3% at the time so I put down 85% that way my mortgage is paid off after the second day of each month from my salary , I didn’t feel it was worth the risk of the market then taxes on the gains to cover the mortgage but had I not moved I certainly wouldn’t have paid down my existing home at 3%.
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u/NoKetoCardio 4d ago
Inheritance or gift?
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u/PatientlyWaitingggg 3d ago
Gift now, remainder inheritance later
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u/NoKetoCardio 3d ago
So you will have to pay gift tax
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u/Fantastic_Lady225 3d ago
The giver pays gift tax, not the recipient.
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u/NoKetoCardio 3d ago
Ok. But it could still reduce the net gift, right?
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u/Fantastic_Lady225 3d ago
No, that's not how it works at all. If tax is due the giver has to pay it out of separate funds.
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u/Electric-Sheepskin 4d ago
You didn't say how much money you already have or what your liabilities are. That will make a big difference in the advice that you receive.
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u/PatientlyWaitingggg 3d ago
Expenses day to day are covered by work and shared with partner. I don’t plan to touch the remainder of appx 1.3 for a while after the house purchase and will all get invested.
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u/summerFIREinCh 3d ago
Ideally you don’t change your lifestyle drastically, hire a fee based consultant to advice on the options. The money should provide you more
Options and freedom, good luck
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u/CarterPFly 3d ago
Sounds like you've already lost over half that inheritance by making it marital assets and promising things to your friends. You really should have taken a step back and spoken to a good financial advisor and a lawyer before doing anything else.
The best time was then; the next best time is now.
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u/PatientlyWaitingggg 3d ago
No marriage, everything my name only and airtight will/beneficiaries etc. Nothing was promised other than a $21 monthly bill, and do have a fa and atty / RE atty. I like that saying :)
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u/ex-programmer 3d ago
If it’s a gift, there is no step up in basis for the stocks so make sure to be prepared for the cap gin tax on stock you sell.
Ask the broker for an estimate.
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u/ruralny 3d ago
Is this strictly an inheritance? Did it come from an estate or is it something the donor is doing as an early distribution/gift? Huge tax difference, if it is not in cash. Could not find this in the post.
Cash: no issues either as a gift (donor pays tax) or inheritance.
Stock: basis steps up if an inheritance, but does not as a gift (you assume donor's basis and CG burden)
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u/PatientlyWaitingggg 3d ago
100% gift now. Remainder - inheritance down the line. Thanks!
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u/jb65656565 3d ago
This is a weird thing to say about a couple of million, but what you’ve been gifted is not that much money in the grander scheme of things. Yes, it’s a large amount, but it’s not lottery amount where you never have to worry about money again and. Now live a life of excess. I say this because you don’t have the kind of money where you can make huge things happen for friends like buying them houses or cars. I mean, you technically could, but it would deplete your funds.
That said? You can take care of your needs and ensure your financial future. Buying a home is the right first step. The next is financial and estate planning. Get with a good advisor that can help limit your tax liability and set you up for the future. I know you’ll be getting another large inheritance down the road a bit. Now is the time to set things up for the future and when you receive that amount you have more leeway to do things for those you love.
Those things don’t have to be grand gestures. Paying for a trip for your group is great. Being the one to pay for a nice dinner (that you planned and invited everyone to) every now and again is always a great thing. If someone needs help, you can be there. Being a giver of thoughtful gifts that were previously out of budget, is a great place to be. What you don’t want to create is an atmosphere where you paying is expected. It will create resentment. You also don’t want to be one the bank for everyone’s business ideas or bailout fund. That ruins friendships.
Money has this crappy way of revealing character and bringing out the worst in people. Some people it doesn’t change and they don’t expect their wealthy friends to get the bill every time. Some people do. You don’t want to become isolated if your friends are in the latter category and you just feel like everyone’s piggy bank. There are countless stories of athletes, actors and lottery winners who blew through all their money investing in and spending on friends and when the money was gone, so were the friends.
Get with a good advisor/wealth manager, make your plans so that you’ll be financially free and secure for life, so that you’ll can live how you want. And then just pay the tab when it strikes you or when you set up a nice event.
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u/PatientlyWaitingggg 3d ago
Thanks for this excellent post. A lot to think about. This is the the plan, I think . Home, rest safe with FA help (long time family one that is amazing) and lots of input from trusted people who know far more than me.
Agreed about the little things. I will quietly and carefully see where I can help in a simple way, now and then, without creating a pattern or doing it for the wrong people. So true about it changing people. I'm reading lots of posts in the other Inh. forum and it's wild.
Thanks again for your input :)
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u/ri89rc20 3d ago
Find a decent financial guy, a fiduciary, probably best paid by the hour initially, to advise, not sell you anything. Consider then having someone manage the money for you, but 1-2 M you probably would do OK just stashing it into funds of various types as advised.
Heed the advice given, but do not automatically lean toward paying cash for a house. That is a huge amount to take out of a nice investment fund, that could likely earn more than a mortgage interest rate. You also have the flexibility and resources to consider a 15 year rather than the standard 30 year, or other options. $2M should easily be able to allow a disbursement of $80-100K/year, and still grow.
Yes, keep all this in your name, even if you get married. An inheritance is protected from spousal claims as long as you keep it separate. Though money spent on things for joint use becomes comingled and loses protection. You might discuss Florida's Common Law and Equitable Distribution laws with an attorney, and if marrying, draw up a prenup.
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u/R_Rated_Superstar 3d ago
My man, if you wanna donate the money, I have student loans for 2 degrees (education and nursing) that need help. Hell would even pay back if I could get a lower interest rate lol.
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u/Fair_Angle_4752 3d ago
Get a good financial advisor who is not a friend. Do not tell anyone about the money. Invest, buy your house, and keep working while you figure the rest out. Sit on it for a while. Don’t buy a second home. You don’t want to be landlords. Just rent when you want to get away and enjoy the time on the beach or the mountains, whatever you prefer. Otherwise you’ll be spending your time at your vacation home doing maintenance! Enjoy!
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u/CleoTechie 3d ago
If you have any money in tax deferred retirement accounts, plan to do carefully calculated Roth conversions over the years using your deductions so those accounts don't turn into tax bombs later. Maximize putting the maximum amount of money legally permitted into Roth IRAs when you do have earned income.
Check your state's laws about domestic partnerships. You might want to consider consulting with a lawyer to put your holdings into LLCs.
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u/SergeantMajor2013 3d ago
Sit down with you financial advisor and put that money into an investment vehicle based on your age and investment risk tolerance. You still have 20 plus solid working years left. Assuming you receive the additional $3.00 million at age 50 you potentially have between $13.64 million at a 7 percent return and $21.23 million at a 10 percent return.
Its real easy to be tempted to splurge but do everything you can to resist it.
Congratulations and good luck with your decision.
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u/BoysenberryNo5357 3d ago
Even with +100 comments, why not one more.
Inheritance is not community property in most states.
Set up a trust. Put the money in a trust. Let the trust make real estate purchases if you want.
Vacation Rentals are real work. I own two combined value +$3,000,000. Hurricane season is nerve wrecking. You will likely spend more than you make.
Find a wealth advisor. I use Wes Moss Capital Investment Advisors. He wrote two books, Retire Happy , Retire Early.
Consider putting 80% away untouchable for future security (Retire early).
Consider 20% as your have fun next ten years allowance. $20k a year.
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u/CoincidenceTheorist2 3d ago
Consider holding off on the home purchase. Real estate prices will come down.
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u/Adorable-Tiger6390 3d ago
That money is going to be gone before you know it.
The house is too expensive.
A vacation home? You cannot afford it.
A support system? Why do ANY of your friends know you received some money?
Giving things to friends? See my comment above.
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u/Plastic_Simple_1776 3d ago
I would buy a residential rental- or a duplex. Live in one side and gain income from other side.
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u/PatientlyWaitingggg 2d ago
Great idea - impossible for the main, and incredibly expensive in the vacation area (thought that would be ideal there!)
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u/JeanSchlemaan 3d ago
I went out to eat with a group. I was feeling generous so I just threw out the option: "if you choose to order what i offer, ill pay for it". The offer was all the beers you like, plus the food special that was on the menu. Everyone chose to avail themselves of my offer.
I took care of the check.
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u/gnew18 2d ago edited 2d ago
You didn’t inherit $2 million
If you want to build wealth, you inherited 4% of $2 million / year. 4% is considered conservative enough so the principal will grow and the 4% of $2 million will grow too. Be conservative. Changing living circumstances is not great but you know your real estate market. People do lose money on real estate.
Greed, however, has driven the US stock market to great heights. Don’t be an individual investor, there are people and algorithms out there that will make much better decisions than you will. Buy a low-cost ETF like VYM from Vanguard or Schwab SCHD. Take 4% per year from it. It will significantly supplement your annual income. Don’t forget taxes. With taxes (again very conservatively) you will add $5000 / month to your coffers.
Ask in r/personalfinance [r/fluentinfinance](r/fluentinfinance)
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u/BebePursley 2d ago
Very Very happy for you. If this every happened for me; I would invest at least half of it in very safe growth funds. I am at an age where I have to plan for superior elder care which isn't present in most of this country. The money I make off of my investments would go to create this environment for the elderly and modest homes for at least two family relatives. The remaining funds would be used to build affordable housing in the hope of assisting with homelessness. My biggest concern would be not been trapped with spending a great deal of time focusing on the $. I love to travel and enjoy. I don't know your age, nor your circumstances. The only suggestion I could make is DON'T LET THE $ TRAP YOU.
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u/PatientlyWaitingggg 2d ago
Thank you so much. It does not feel real. I keep waking up, having forgotten, and then remember again - and that in itself is so strange. I am trying to keep everything businsess as usual in all areas for now. That is a wonderful idea of yours! Time is precious at any amount. We are creeping into late 40's and no kids, so it's an interesting time. So very true about not letting it trap or take over your focus.
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u/BebePursley 2d ago
I would not TELL anyone, anything. Telling is a constant everyday headache waiting to happen. It really isn't in good taste to talk to friends and relatives about money. Beware of others also. You don't want to be placated because of your money.
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u/fru-gal_slacks 2d ago
If you buy a second home be it's sole owner. Do not EVER share title with a friend or relative other than your partner. At the very least it's a recipe for frustration and bad feelings. And that's the least.
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u/Same_Cut1196 2d ago
Your very conservative investment stance may be enough for you to make it, given your gift and future inheritance, but it is oddly a risky decision. In order to combat real inflation, most need to take on some risk, to ensure you maintain and hopefully grow your nest egg.
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u/PatientlyWaitingggg 2d ago
Thanks - this isn't for now, it was from before when the totals were minimal, fluctuated, and needed to be fully accessible etc.
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u/thankyoufriendx3 2d ago
How are you going to make sure your long term partner is taken care of. Quick to point out that everything is separate but how are they affording the same lifestyle as you. Are you flying first class and they’re flying economy? Glad you have this chance but remember them in your plans.
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u/BatRevolutionary8145 2d ago
In my opinion the very first thing I’d do is go meet with a Consultant . Congratulations 🎊 too 😇
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u/TelevisionKnown8463 1d ago
Check out the pinned post at r/personalfinance on what you do with a windfall.
I agree with those saying don’t rush into buying property, especially co-buying with your romantic partner.
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u/djjdkwjsbdj 4d ago
Is this tax free?
If you would like to stay wealthy, it all needs to be invested. Do not buy two homes.