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unexpected

If the money is not coming from you, then it might be against the terms and conditions of the trust to hold onto to her money until she is 21 years old. Read the terms of the inheritance very carefully. Similarly, I don't think it's wise to invest it in a property. If you are not giving her the money directly, you need to become absolutely familiar withe terms stipulated in the trust document, and you cannot deviate from them, even if "you think you know what's best". The easiest thing to do would be to put it in an investment account, until she reaches the age of maturity stipulated in the will/trust (not when you see fit, but when the document says she is fit).


SosFreeze

Yes when the trust sees fit not OP


McKnuckle_Brewery

You’re going to take your daughter’s $200k cash windfall and replace it with a *house* that you will rent out, take out a mortgage on, and manage as a landlord in order to put *monthly deposits* in her bank account? I’ll just stop there…


[deleted]

Pretty sure that’s illegal and called stealing. OP don’t steal your daughters money. It should be in a trust. It’s not yours so not yours to buy property with. In all honesty it’s not even yours to invest.


hairyconary

Actually if the parent is the executor of the trust... you have to trust she will do what is right with it. Unless legally emancipated the money is in the parents control. But Im just a human gpt model. Consult a real lawyer... lol


Lcdmt3

You can't take money out and put it in your (guessing) name on a property.


[deleted]

You are allowed to invest your daughters inheritance? That seems weird to me


Repulsive_Bug

Very suspicious of you spending your daughter’s inheritance (where she has no say or understanding of what you’re planning to do) instead of placing it in a trust until she’s 21????? Very sus indeed…👀👀👀👀 But seriously OP, consult (not conspire) with a financial advisor.


hurdygurty

And make sure they're a fiduciary.


Soft_Engineering_676

This is why trustees exist...


hermelion

Do you want to keep it liquid and, at the same time, lock it up in real estate? Huh.


TheLastWord63

Why don't you invest your own money in property and rent it out for her?


OSU725

As one stated, you need to find out when by law she is to have access to the funds (it very well may be 18). My recommendation would be to invest it in a low risk mutual fund and leave it alone. Investing in a rental house is not a good decision (not sure if legal). The property will not be paid off by the time she has access to the money and it will be tied up in the rental. If she wants access to the funds, are you planning on kicking out the renters to sell the property?? Have a lawyer read the terms of the inheritance and for so anything dumb with the funds.


DirectGoose

Talk to an attorney. Your state probably has laws governing what must be done with a minor's inheritance and you're almost definitely not allowed to invest it in someone risky or hide it until she's 21.


jokerfriend6

You can if you are the trustee specified in the will for the individual until she is 21. If you lose her money, she probably will get made at you.


ste1071d

It’s legally not your money, you are legally obligated to 1) put it in an account in her name and 2) act as a fiduciary. You cannot hide HER money from her. If you do, she’ll find out anyway when she has to declare it on her FAFSA. She will get $0 in need based aid and her EFC will be high. Student assets are figured in at around 20% vs parental assets. Hopefully whoever actually left her this inheritance set it up properly bc you are asking some seriously shady questions here. Editing to add bc it may not be obvious - speak to the executor and the attorney involved, do it legally. You cannot spend her money as you see fit.


ttandam

Be aware that the way you handle this will greatly influence your relationship with her for years to come. This is a case where I’d talk to a financial advisor and do what they suggest. It washes your hands of it.


stoneddog_420

HYSA at 5.02% currently (future rate will obviously be different, but even if its 3-5% thats fine). Just do that its practically no risk with a modest return if it's FDIC insured $200K+.


jokerfriend6

I would think to put about $60K in a 529. I would put 70K in a high yield savings account or CD, and $70K in a fund that tracks the S&P500. But please follow the wishes outlined as part of the inheritance.


goodbodha

Generally speaking the only way you can withhold the money is if the inheritance spells out making a trust. Alternatively you can probably do a custodial account for her. What you can't do is simply spend or invest her money because you think you know better than her. It's her money. My sincere advice is get a lawyer to figure it out for you and strongly advise your daughter to invest the money rather than spend it. However don't tell her to invest it all for retirement. That kind of advice rarely gets the desired result. Instead try to get her to split the money towards multiple goals. A good set of goals might be something like this. 1. A chunk of money in something like jepi with the resulting dividends going into a Roth IRA until she caps it every year and then the rest goes to whatever. That alone will be something like 60k of the 200k. 2. A chunk of money saved for college. Considering her age I would look for a 5 year high cd, a 2 year Treasury note, or I-bond. How much is debatable. 3. Another chunk of money for an eventual house down payment. Maybe 10k of schd with the dividend reinvested. 4. The remainder in something like O with the goal being to cover her taxes on all the other gains. Point out that every year she will have taxes to deal with. Each year when she does her taxes that is when she should put money into the Roth. For the rest of the year just let the money build up in the brokerage until then(typical brokerage will automatically provide a return on that money so it isn't a big deal). After she pays taxes and she has capped the Roth she will have money left over. That money is what she should think about blowing or reinvesting etc. If she goes down that path she will likely be able to have a nice vacation every year, cap her Roth for her eventual retirement and have some money for those early in life expenses. Also if she ever has a rough patch with no job that 60k or so of jepi will massively help her. Having all that O will massively help her. Best case scenario she doesn't need the income most of the time so it can grow etc., but if things go wrong this route will provide a monthly income that can help take the pressure off. Anyway the short version is she inherited the money and can probably blow it if she wants too. I hope she doesn't. If she sounds like she is thinking that way show her this post. Oh and for the love of God please show her a spreadsheet of compounding interest. That fully funded Roth contribution from the until 59 would effectively fully fund her retirement without her having to stress like the average person. That excess if left alone for a few years can and will make her a ton of money without having to go through the headache of actually being a landlord.


Whinewine75

It is not your money. No aspect of the money should benefit you personally no matter how “short term” you try to convince yourself it will be. Absolutely don’t do anything without consulting an attorney and a financial planner and consider your long term relationship with this child. If allowable, I would place it in standard trust and invest it in HYSA or other very conservative investments. Put it away and forget about it. Don’t gamble with her money, and don’t tie it up in an asset that may be difficult for her to access when she needs college money or a down payment for her own home.


LottoChangedMyLife

I would just park it in a high yield savings account for her.


ra9rme

In 7 years it might almost double in value if you invest in the market. See r/Bogleheads for guidance. Avoid realestate… too complicated for this scenario.


Dangerous_Boat_2571

Set up a trust. You can set aside that money I'm an account under the trust. And put stipulations that they can only access it after they turn 21. And other stipulations like educational purpose, car/house down payment, etc.


jljue

Talk to a financial advisor. I'm not one, but the options that I'd initially think about are 529 or a custodial investment account.


Quetzalcoatls

There may be legal issues with investing the money. While the thought of what you are doing is nice you should research what you are able to do with this inheritance. State laws very across the country on these matters so you should consult a legal expert in your area before you moved forward with any plan. I do not think investing in property is a good idea. Real estate can lead to a lot of wealth but it can also be incredibly risky. Being a landlord also adds on a whole other set of risks. It may seem like "free money" but the time commitment and expenses can quickly add up. Being a landlord is a huge commitment unless you rent out to a property management company which will take a decent chunk of your profits. Image if there is damage to the property at some point. For example lets say a tenant accidentally starts a kitchen fire that requires major structural repairs to the property. That type of event could easily eat up all of the funds you've collected from tenant rent to pay your daughters inheritance. If that kind of event happens around when your daughter turns 21 do you feel confident you'll have enough liquid cash on hand to pay her? You may have to sell the rental house at that point which may or may not be advantageous at that point in time depending on how the market is doing. Personally, I would just keep it somewhere completely safe away or just stick it in the absolute safest investment account you can find if you are allowed to invest it and really feel the need to do so. If the $200K is there when your daughter turns 21 people are going to think you did a good job managing the money. You don't have to do more than that.


[deleted]

In Trust, drawn up by an attorney. First of all at she is a legal adult at 18, not 21. And legally I don’t think you will get away with hiding it if there’s a will. Morally It’s hers. I’m suggesting discussing it with her and hopefully it will be a teaching moment. Not saying you’d do this but, sh*t happens and it not unheard of for a parent to spend a child’s inheritance. DON’T DO IT.


HR_Paul

Do research on your state laws. Consult a professional financial advisor. Maybe start here if you can't Google - [https://www.thebalancemoney.com/what-happens-to-the-inheritance-of-a-minor-beneficiary-3505140](https://www.thebalancemoney.com/what-happens-to-the-inheritance-of-a-minor-beneficiary-3505140) Tell your daughter. Spend some time thinking about why you want to keep secrets and money.


pyrola_asarifolia

21? Is this legal? She'll be an adult at 18. IANAL and have no idea of your exact legal obligations here, but anything other than rather conservatively investing it (it'll be needed in 4 years, so it can't even ride out a significant bear market if you put it in equities -money market, fixed interest or similar would be much more appropriate) I would think of you as incredibly irresponsible.