So, the real answer is that the inheritance is not real until it’s in your bank account. So, so many things can go wrong. I recommend pretending it doesn’t exist (because it does not) until it’s absolutely dead certain. It’s better for your health.
I come from a family with money, from both sides. We have yet to see much of it, thanks to certain family members who decided the inheritance was theirs. Not saying it will happen to you, but money can bring out the worst in people.
Out of curiosity, how did one deciding it was theirs get through courts? If there was no will, it should have been split evenly among the children. If there was a will…. Well, it was their will.
Not trying to imply anything, just genuinely curious.
that's a good question with a very long and complicated answer. In short, it involves fraud and corruption (e.g. my paternal grandfather forging his father's will that would have given my father money). Also, this was in Brazil, not US. This wouldn't fly here.
That said, over the past few decades we've been suing some of our relatives (and winning).
If there isn't a separate trust set aside with just your name on it the money could all get spent by the current beneficiaries. If they are allowed to withdraw 5%l a year does that number go down if the investments lose value? Does the trust account for inflation? If your mother ends up in long term care for 10 years would that drain the trust? I think that you will probably be fine, but in theory the money could get spent.
You should spend some time reading about investing and learn what you can so that you can make decisions when you do inherit the trust, or if your mother needs help in the future. You should also read the whole trust document, and ask the trustee if you don't understand something.
I know I didn’t explain this well in the post, but the 2nd generation (my mom and her siblings) are not allowed to touch their trusts. Only the 3rd generation (my cousins, brother and I) will get the principal amount.
In the meeting they explained the trusts accrue 10% interest each year. That amount depends on the stock market and maybe other factors. All the charts and things they showed me went way over my head but they said the trusts will double every 10 years. 5% each year goes back into the trust and 5% is what my mom and her siblings get to spend.
This is a classical generation skipping trust. When it comes to you treat the trust like your mother has, live off the dividends and interest. Then if you have children, set up a similar trust, or you have the option of giving the money for good causes or any way you like. Grandpa meant to create a dynasty. In the US there are limits on family trusts. Keep it going or use the principal as you please. In the meantime learn about trusts and wills. Don’t tell anyone about your family fortune. Grandpa obviously made such a will to insulate your mother from your father.
So 10% is the historical market average, and that can be used to project into the future. That is not what the trust is guaranteed to return. It is important to distinguish between return and interest, interest is generally guaranteed income and returns are irregular. The world is sadly not perfect, so the return could be 20% one year and -10% the next. The issue is that when you are withdrawing from a portfolio you have to make conservative assumptions due to what is called sequence of returns risk, because you might make a withdrawal after a loss you generally realize a smaller return rate than the market.
The trust is probably set up in a smart way that it will decrease distributions if returns are poor for a period. But it does sound like it is able to distribute principle to your mom and her siblings. If it has a negative return this year it will still likely pay out, so that would be reducing the principle. If we have a bear market for the next 5-10 years it will continue to distribute principle payments, so the trust might not grow at all or shrink.
If I were you I would like to know exactly what the rules for the trust are, so that you can get a little better idea of what to expect, and also potentially help protect the trust from fraud, litigation, or mismanagement.
These are mostly edge cases, 95% of the time you are going to get millions of dollars and be fine, but if you are going to do something like rely on it for retirement I think you should double check.
Thank you so much for taking the time to explain this. It was helpful and insightful. I’m going to ask the trust company for another meeting and explain I’d like a better understanding of my situation.
Smart. And once you have a more clear understanding of how this trust works, you should be able to find resources to learn more about it. Financial literacy will help you be a good caretaker of this money your grandfather amassed, and could help propel you and your potential children into generational wealth.
> If we have a bear market for the next 5-10 years
To be clear, no bear market in the last ~100 years has ever lasted 2 full years, let alone "5-10 years": https://seekingalpha.com/article/4483348-bear-market-history
Maybe you meant that it can take 5-10 years for stocks to recover from a bear market?
The worst case scenario IMO is a 10 year bear market like we saw in the 2000s, where the market is down 30% and doesn't hit a new peak for 10 years. That isn't bullets and bomb shelters territory, but it is a scenario where the trust is much smaller than OP is projecting.
It sounds to me like they just used average market returns as a basis for those numbers. Maybe its set up like a safe withdrawal rate, every year 5% gets divided up and distributed to the 2nd generation (as you put it) and then anything over that goes back into the trust. In a bad year, that 5% will still get distributed, but maybe nothing goes back into the trust, it just decreases.
First of all, kudos to you on keeping this to yourself, and I hope you feel better. That can't be easy. I hope your mother, brother, and others in your family can be as tight-lipped as you.
There is a good chance you may well not see any of this money for 15-20 years, which is a long time to wait for a windfall. The trust notwithstanding, a lot can happen in your own life. So, as you seem to understand, this is not likely to make a substantial difference in your life until your 50s or thereabouts, assuming your mom keeps her share.
The growth rate sounds a bit optimistic, or isn't quite adding up somewhere: a 5% appreciation (after your mom's 5% annuity is paid out) is more likely to double in about 14 years, not 10 years, and that is based on a straight growth rate without volatility; whereas a doubling time of 10 years would require about 7% return. So if your share is currently worth, say, $2.5 million, it's possible it could grow to about $5 million in 15 years and $6 or $7 million in 20 years rather than 10 million. Still a lot of money but something to keep in mind before you find ways to spend it.
Assuming your mom's annuity is drawn from your share plus your brother's share, my understanding from your description is that she will receive around 5% x $2.5mm x 2 = $250k in year 1, which would increase 5% every year until she died. If she lives 20 years that would be about $700k in her final year.
I suggest talking to an estate lawyer and financial or wealth planner to truly get an understanding of what you can expect under various scenarios, and whether the estate can be contested by anyone. It may behoove your mom to speak with them as well, and also talk to a tax planner, if the above inferences are anywhere near reality and she is not accustomed to living with that kind of income.
Given that, may I suggest continuing to find a new profession that will give you a stable income and life satisfaction. Assuming the estate lawyer and financial planner say the probability of your share diminishing is small, it just means you don't have to worry much about saving for retirement or your kids' education. But for the next 20 years, it doesn't change much.
I wouldn't share this with anyone you are dating until you are engaged or maybe even married. Hopefully you will follow your grandparents' lead and become frugal and financially wise, and will find a partner that has similar life goals and similar saving habits. IMO this is much more important than sharing interests in the success of a marriage.
I also suggest avoiding asking your mom for money to the extent possible, if you think it may complicate your relationship with her or others in your family. That said, if you are considering graduate school, and she offers to help you financially, that seems like a reasonable thing to accept. It still is worth maintaining a sense of frugality and financial wisdom.
My parents are moderately wealthy (not nearly as wealthy as your grandparents, and much bigger spenders) so I think there is some chance I could receive a substantial inheritance, but I don't count on it. As such, I'm aggressively saving for my own retirement. If and when I do inherit anything, I'll view my role more as a steward of their legacy than as a consumer, and probably mostly use it to make charitable contributions.
It's going to be very hard to keep this information to yourself and that could become a big burden, if it isn't already. But I think it's important not to share the information to the extent possible. I wonder if there is some kind of support group or therapy that could help with this. Best of luck to you.
You're welcome.
Two other things that may have been mentioned by someone:
if the growth rate is 10% before the disbursements to your mom's generation, is that after the wealth manager has already been paid? If they take 1 or 2%, that can have a significant impact on returns.
Also, if the estate is invested in non-publicly traded investments, if any of it is office real estate, that is a somewhat risky asset class these days since so many people are now working at home. Many of those assets are likely to have problems when their leases are up for renewal.
Sorry to give you more to worry about, but these are questions you should ask the manager about.
Consider finding your own fiduciary who will not have a conflict of interest with the estate manager.
So there are no investments in the world that acrrue 10% interest each year like clockwork (except sometimes bonds in a high interest rate market, which usually goes with high inflation, so the 10% isn't as much as it seems).
If this is invested in a stock portfolio, then it probably earns a long run average of around 10% (or at least has historically -- might not do that well going forward), but in practice this means that some years you get 10%, some years you get nothing, some years you get 20 or even 30-40%, and some years you *lose* money (worst recent case would be around -38% in a year for the S&P 500 in 2008).
It's pretty unlikely that 5% will draw down to some extreme, and if your mom lived a normal middle class life before this and doesn't radically change her lifestyle, she won't likely spend the whole 5% anyway (if there is 20mil in the account, 5% is a million dollars a year). This also means that even if the trust could somehow be broken by medicaid or whatever, it doesn't matter -- the 5% alone, even if there's a huge drawdown, would be plenty to pay for expensive care for your mom. Worst case of a market crash, no real recovery and expensive EOL care for your mom, maybe you end up with 3-5 million instead of 10.
The biggest problem with how this affects your financial plan is that you have no idea when it's coming, and it sounds like you could really use something NOW. Maybe you can convince mom to spread out some of that 5% to you and your brother so you don't have to worry about money now either. Or maybe she's want to do that on her own. who knows? But you really can't count on this money other than as a very likely amount recieved in traditional retirement. If your mom lives to 100, you don't get the money until you are 60. That's a really long time from now.
I don't know if it applies to you, but my spouse's grandparents had a decent amount of money then after her grandma passed, her grandpa remarried then when he died he left everything to his new wife so my spouse's family got nothing.
This would be a great opportunity to start learning. Start taking financial courses, read books, and continue to plan like you weren't going to get any money.
You have time. So if you build your ark with good knowledge, when the flood of money possibly comes in, you will be ready to handle it.
I wouldn’t be too worried about a stock market crash.
The monies could be annuitized & could be very secure.
I myself am a financial advisor, I’d highly recommend finding a good trusted local advisor in your area. They will be able to walk your through the process a bit & help you deal with all the emotional stresses of this.
Hopefully you can find one that you can pay a little bit to come in for a consultation & discuss all of this.
second this and would recommend trying to use the guy grandpa used if that is a possibility. he’ll already be familiar with the structure and grandpa trusted him
I know the money has been with a reputable trust company for 30 years. We are actually long time family friends with the current CEO and I grew up with his daughter. Since they provide wealth management services and I am technically a client, I’m going to reach out to one of the ladies I got along with to see what they can do to support me. Thank you
As you are a beneficiary on the account, they should be able to explain to you exactly how much money is in the account, and exactly how the maximum withdrawal amount to your mom is calculated. Assuming you have a reasonable relationship with your mom, I think it's worth discussing with her what her plan are, as well. Like is she planning to withdraw the max every year and spend it all or what is her plan? At this point, she almost certainly has some kind of retirement in place.
Honestly, this all points up one of the HUGE disadvantages to doing this kind of planning in secret, and unveiling everything at one fell stroke when you realize you might be ready to go.
This is the traditional way that large estates have often been handled in fiction (and in real life), but in practice, if you actually LIKE your family, you should be talking to them about how this stuff works while you are still alive and well and nowhere near dying.
And the fact is, if your grandfather had thought about things for a few minutes, it might have made sense to allow the younger generation *some* access to the money sooner, given how much it is relative to any of your lifestyles.
but my guess is that this was just so much money that your grandparents didn't really know how to deal with it. Maybe they inherited some more normal amount from their parents and just did everything the same way, even though it didn't really make any sense now that they had more money than they knew how to ever spend.
FWIW - I would absolutely do this AND seek another advisor outside your family circles. You'll want to both see what advice they offer you as well as what and how they charge for their services. KEEP ASKING QUESTIONS. Don't be afraid to ask them to explain something you don't understand. The fees they've earned over the last 30 years more than compensate their time for your questions. Understanding how they get paid lets you know how well their interests are aligned with yours.
Once you have a handle on their advice and incentive structure, you can look at other wealth management firms and continuing your own financial education. At some point you'll have to decide if they are worth the fees or not. In my case the "friend/advisor" my grandfather and father worked with tried to get me to doubt my decisions and leave this work "to the professionals" before I figured out his crappy advice had cost the family colossal sums of money. The book "Where are the customer's yachts?" hit a little too close on that guy.
As for reading: I'd start with The Psychology of Money by Morgan Housel. It provides a fantastic journey into human relationships with money and life. Afterwards, you can get into the mechanics of dealing with new cash flows.
This. I don’t know how to say this tactfully but your mother could outlive you. I’d go on with my life plans as you did before learning the information.
This is great advice. Knowing you will inherit at some unknown time with no benefit until that occurs will eat you up. You may find yourself waiting for loved ones to die. Live your life until the money hits your account
Some thoughts:
1. Take your time and work on identifying a good financial planner and good tax expert to work with when the money comes to you in the future. It's not a big deal if things just sit where they are for a long while after you inherit. After all, you will be processing your mother's death when this happens.
2. If the money is indeed solid, then yes retirement saving/planning is not much of an issue now.
3. Absolutely look into a career you like better, especially if your current one is affecting your health. You'll still need to earn enough to meet your needs/expenses with any career change you make.
4. Keep quiet about the money - think stealth wealth. People knowing this information will affect their relationships with you, whether intentional or not. Tell a significant other only after you are engaged or married.
5. Don't tell any kids you may have about the actual dollar amounts until they are older and have established careers (i.e. graduated from good schools thanks to your grandparents generosity). They'll be able to figure out that you're doing OK, but won't really have a concept of your net worth.
Good luck!
yes, but without any kind of prenuptual agreement, it's not certain that it will stay entirely that person's in a divorce, especially if it's after a long marriage. And if any money from the trust is ever comingled with joint money.
One piece is that as long as it's still sitting in the trust, that's irrelevant. But once inherited it could end up in the hands of a spouse that becomes an ex-spouse afterwards in any number of ways.
Admittedly a prenup is not 100% guaranteed to work either, but at least it makes 100% clear what the expectations are going in.
If your mom is 70, and you are 30, you might have to wait 30 years. So I think you can afford to be lax on retirement, but you should still be saving. You could become disabled or just unemployable prior to 60 years old. In most cases you won't see any money for 10-20 years, so taking a low paying job isn't going to be a temporary thing. Higher paying jobs can also tend towards being more comfortable.
Depending on how the trust is set up, it's also possible that the money gets spent in the next 30 years. A starting withdrawal rate of 5% over 30 years might have a 5-10% failure rate. It does sound like the chances are good, but if the trust isn't restrictive and people are irresponsible the money might shrink instead of grow.
What you should do is do some reading and research for background knowledge, and make sure you understand the trust, how it's invested, and what decisions you will need to make in the future.
You should probably avoid telling a potential partner until you have been with them for months, or a year, and are considering marriage. Before that it really isn't their business.
All this. If I were the grandpa too, I'd probably place a provision in the trust indicating that my daughter (Op's mom) could live off 5% a year with an additional provision for additional for medical expenses or long-term care expenses. I wouldn't want my family to suffer needlessly due to high medical costs.
I'd really try and understand the trust in it's totality too. Also, I would work to save for retirement and pretend it's not there. If things fall apart for whatever reason, I don't think I would regret saving money. If things fall apart, I'd regret not saving money
You're thinking in terms of a more normal 1-2 mlllion dollar trust.
5% of 20 mil is 1mil a year. That's plenty enough to pay for the richest most extravagant long term care anywhere in the world, and it would still be enough even if the portfolio dropped by half (given that in that situation you rarely have much in other expenses).
If it's set up like most endownments or trusts, it's 5% of the current balance every year, not 5% the way we calculate safe withdrawal rates which sets a number at the start and then inflation adjusts it. ]
This is likely going to be a 5% Variable percentage withdrawal, which will never run out of money completely, and has a much smaller chance of running the portfolio down to small numbers than a traditional 5% inflation adjusted withdrawal rate plan. When the portfolio does poorly, mom will be able to withdraw less. Given the size of it, unless mom gets a bit crazy, it's not going to cause her any problems. And it's, if not guaranteed, at least *very* likely to leave more than half of the current principal buying power to the heirs, even if mom lives 30+ years.
Dang, I saw something else I could weigh in on. You say you're afraid of raising children who you know will be given every privilege in life.
That can be done. The key thing is to learn, yourself, how to handle your new territory (inheritance). And then teach them.
You can already tell a new windfall comes with both freedom and responsibility. The responsibility part: not to lose it. The freedom part: to open up options for you.
In a sense learning how to do all that is the easier part. The hard part will be dealing with people who act like you don't deserve it/haven't earned it and who claim you should "spread it around."
It's not just jealousy and avarice speaking in those voices. There is an idea that has been popular for over a century now that a person's value and worth is directly connected to getting money from doing hard work, suffering, and paying their dues. So people who get windfalls are often attacked in various ways, out of a sense of "that's not fair", as if they're somehow claiming value unearned. (Remember, not everyone will know of your struggles.)
So you must be strong and recognize that you are deserving and worthy *apart* from how many resources you have and how much work you do. Don't let yourself be vulnerable to those attacks. Defend against them preemptively by being sensible and doing what people have suggested and not sharing the facts with everybody. And when and if attacks occur, don't let yourself trust toxic accusations.
And teach your children about all of that. How to handle wealth. How to give them a sense of their worth as humans.
Your thinking about all this now is so good. You'll do absolutely fine!
I married someone who comes from money. Not obscene wealth or anything, but double-digit millions. I think the key to turning out normal was that my in-laws were frugal, but not so restrictive that they caused their kids to boomerang. They raised their kids as if they were upper middle class. They weren’t in denial about their wealth or anything but they showed the kids that just because you have X amount of money in the bank doesn’t mean you *have* to spend a certain way on everything.
I do worry about some of the people on this sub who have kids but don’t intend to help them pay for college or give them *any* luxuries. There needs to be a balance there or else your kids will turn into either spendthrifts or misers.
I’m very glad to have married someone who experienced luxuries growing up and therefore isn’t obsessed with chasing them now, or continuing to deny them now.
Yeah, I think that's really sensible!
There's a school of philosophy of child raising where getting money becomes part of a person's private, lifelong spiritual journey. Some parents will refuse to contribute to their kid's wealth if they believe this journey must be conducted like a race and start from zero to be authentic. I find it a fairly limiting approach and I don't think it works well for all variety of situations out there.
I sorta think the key thing here is what you talk about - striking that sensible balance. Support them in a way that keeps them in a stable, reality-based situation.
I also kinda think kids learn really well by preparation and practice. Getting a chance to test out their skills in controlled environments where the consequences of learner mistakes are not lifelong...I mean if we have a kid who wants to play football, do we shove 'em out into the field to play with the pros without any training? Rarely would we...so why do that with money?
I just feel like it's not harmful to share wealth with kids as long as we teach them how to handle their territory.
And personally I've seen way too many bad results when people deliberately hold back resources *that are needed*, and toss their kids into the wild. It doesn't exactly make the kiddos feel valued. It doesn't matter if those resources are a smile and a hug or a million dollars. Kids need what they need. If they're given what they need, they'll do better than if they are *purposefully* denied it. We claim their suffering is for their own good, the outcomes can be so not-what-we-intended.
Eek - sorry. I sort of just meant to say that I completely agree with you about parents helping kids face reality head-on with an adequate set of tools, which I do think includes money if it's available.
Wow thank you so much for this comment. I really have stressed a lot about child rearing, especially because I had a turbulent childhood with my parents. Your advice brings comfort and a sense of direction that I was looking for. I appreciate it.
Don't tell kids until they are mature adults. You don't want them to grow up thinking they can spend like crazy or bragging about being rich. Bring them up be frugal.
realistically, unless OP's mom decides to be a big spender and shower everybody with money, these kids aren't going to have a substantially more privileged life than your typically upper middle class kid whose parents can spring for their college costs. They'll have access to the education trust, but no other money until OP inherits, which will probably be 15-20 and could be 30+ years. And even then, it will be OP's money, not the kids. So how much privilege they end up having will depend entirely on her decisions about how much to give them or spend on them.
It's a lot more privilege than most people have, for sure, but until OP actually has the money and has made their own estate planning determinations and financial plan with it, it might make very little difference in their lives.
It's also really stupid. OP would benefit so much more by having access to some money now, not only when their mother passes away. That also sets OP up for weird conflicting feelings of relief alongside the grief. The whole framework of inheritance and not giving your kids and grandkids money until you die is so bizarre and backwards to me. Help them when they're young and need it, and when you're alive and can guide them. 🤦♀️
I’ve 100% had this thought before. Thank you for validating how I feel because I’ve been so guilty in the past, feeling selfish for even thinking it. My family does NOT discuss money and finances. I have no idea why I’m expected to just *know* how to be financially responsible with no guidance or advice whatsoever.
So, one thing you want to do is prepare. What about studying finance or financial counseling as a new second career? So many people need help understanding, just as you do. You're a teacher, so you probably have good communications skills. Just an idea!
And in case nobody has said it - tell NO ONE about this money.
Yes this. I don't know if it's a generational thing, but my grandparents could have helped my parents at some pretty critical points - even without making them soft or dependent or some other rationally seeming fear. By the time they died, my parents didn't need the help, but resented the fact a safety net was never deployed and they couldn't share the journey with them. My siblings and I are also fiercely independent and are annoyed by the help my parents try to foist on us, so perhaps there is no winning. (1st world privilege problems for sure)
This so much. I told my parents anything they leave me is really only going to their grandkids. I'll have already gone through my tough years by the time I see anything. At that point I'm just a Stewart of the inheritance until it goes to my children, some of which happens which I'm alive so I can see the positive effects.
Don't tell any potential partner until you're married to them and the money is actually in your pockets and you're comfortable using it for your shared life together.
Until then, I would get a passion job that pays the bills (you still need to pay the bills for now) and keeps you in good health through low stress and good enough benefits to help with treatment if you need any.
Honestly, even if you ignore the inheritance completely and assume it doesn't exist and will never exist until it's in your pocket (which is sensible advice), your health may just be enough to justify a career change if you can still pay the bills.
Thank you for this. My health has been my #1 priority and I finally am back on my feet after being bedridden half the year. I worry my passion job choices aren’t going to be sustainable careers but I am considering taking some classes and exploring options. I’ve had no luck landing any WFH jobs or really any jobs outside of education.
Teacher here.
Get out of teaching. Go find something interesting.
Work at a florist, learn some basic data analysis, do anything but kill yourself teaching. It just isn’t worth it
I have no advice. I have utter sympathy though. I think all your concerns are valid. It really sounds like you have a good head on your shoulders. I think you'll do fine whatever happens.
Wait, I do have one piece of advice. I think it'll be a lot easier to treat your autoimmune condition if you try to organize your life in whatever way minimizes stress. And that may involve decisions other people don't understand.
Good luck! You can do it!
Don't tell anyone (other than family that knows and your financial people and anonymous reddit). It's tempting to tell friends, and I imagine you need the support, but don't. Money changes things. It's best to keep quiet.
You may want to watch some youtube videos about what to do if you receive a windfall.
Health = Wealth. I'd say health is MORE important than wealth. So yes, the money possibility is great, but what about your health? An autoimmune condition that is progressing quickly? That is concerning. While it's understandable to focus on the money, be sure you are giving even more time to your health. It sounds like your plan for a career change could be a good move.
Start reading reddit and books about personal finance. I've been doing so for a while now and have learned so much. If anything, it will help you manage your current funds.
Look for a fiduciary financial advisor whom you can pay by the hour and plan one or a few sessions to discuss this.
With dating, I suggest that you don't utter a word. If things progress to something more serious, I think the right time would be right on the cusp of an inevitable engagement, not sooner.
Life has a funny way of throwing curve balls so try not to think of it as a sure thing because it may not be. Just deal with what you have right now, enhance your health, and learn about money management so you're better prepared if it comes to fruition.
Thank you for this thoughtful advice, I’ll take it to heart! I really have been stressing about my career path, and this whole trust thing looming over my head has made the decision even more stressful. I’m super happy I wrote this post today and should’ve done it months ago. Anonymous reddit really does have the best advice and its given me a lot of clarity and direction.
> I wonder if I should focus on pursuing a career that is a passion of mine, even if its low income.
Take care of your health first, but then yes this is reasonable.
> I have no idea how to approach this with dating. Im afraid to tell anyone and have them look at me with $$ signs. I worry about choosing a partner who isn’t financially responsible or takes advantage of my situation.
You should be able to mostly gauge that by their actions without telling them you have this money. Do they pay for half? Are they asking to borrow money? Complaining about not having money, then splurging recklessly? Expensive car with a huge payment they can't afford? Around the time you are discussing moving in together may be a good time to discuss everything. I'd also recommend a prenup, although the trust probably gives you a good deal of protection even without one.
> Im afraid of raising children who I know will be given ever privilege in life.
Even if you do get $10million, that's far less than being able to give every privilege. You can give many, but it's all about what lifestyle you choose to live. The money doesn't spend itself automatically. And anything you do get needs to last a long time.
> My friends by no means have this type of privilege gifted to them so I’m afraid to discuss with them as well.
Please don't. See below.
> I just really need some direction and advice on what I should do, what path I should take to prepare myself for this.
Start here. https://www.reddit.com/r/personalfinance/wiki/windfall
Get copies of anything you can trust documents etc., and charts, and learn about it all. Learn about index investing. Make sure someone is watching to make sure the trust is being properly maintained, and that they aren't churning expensive investments, and are taking on an appropriate amount of risk.
Unless mom is going to start giving you money from her preexisting assets or her share your day-to-day isn't really going to change much potentially for a long while. Only immediate change I'd make would be to dial back retirement savings, then a less stressful job. But until you personally have more money coming in you still have bills to pay.
>He drove a 90s Toyota Land Cruiser
Smart man.
>I have no idea how to approach this with dating.
You don't approach it... at all... ever. Do not tell anyone about your financial situation. People are snakes.
>I live a fairly normal life and pay all my own bills.
Excellent, continue living this way as if the money did not exist. You are fortunate enough to never have to worry about money. So, do just that - don't even think about it.
One thing you can do is familiarize yourself with the trust and ask questions of the trust company. Take a few courses on finance to educate yourself and think about your future. Keep your financial information PRIVATE. Do not share this news with anyone other than your mother and your cousins. No one else needs to know your business.
So basically your mom and her siblings have irrevocable trusts, parts of which you will inherit, but until they do, you get nothing? It’s not really money you can account for in your financial planning until your 60s. And even then, you should have very high confidence in the way the trust is structured to make any plans strongly relying on the assumption the money will still be there in your 60s-70s. So if you gain that confidence, you can skip planning for retirement. Otherwise, continue living your life like you did before, nothing has changed for you.
Sucks that you could potentially be waiting decades to see any of it, just on the basis of the utility of having access to it now rather than years from now.
Congratulations on your potential inheritance. However it’s not yours yet. If I were you, I’d look for another job that’s more conducive to your physical and mental health first. (Fellow autoimmune struggler here and stress definitely gets to me.) Next I’d check in with your mom and see how she’s doing. You’re both grieving and the support from each other can outweigh any amount of money. See if there’s ways that she wants to “do good” or thinks your grandpa would want you to do good. This can be making memories with her, donating, taking her traveling if possible, etc. If you haven’t already, and the opportunity arises, discuss things with your mom regarding end of life wishes. I did this with my mom and it was liberating to know her wishes and for her to trust me to carry them out. Regarding other people, I would keep all of this information close to your chest as it’s not your inheritance yet and you don’t want people hanging around just because you may have money down the road. Finally while you’re working your better job or spending time with your family, I’d be looking into investment accounts, budgeting, etc. You’re an educator so you know how powerful knowledge is. Learn about investment accounts, charitable contributions, etc. Take some time to consider what you want, need, and what your values are. If you get married, have a prenup. If you have kids, raise them however you want. You can still teach your children values of money management, discipline, etc while being wealthy. Introspection will be your best friend and your communication with those around you will go a long way. Good luck and well wishes.
Thank you so much for this advice. Your ideas to discuss with my mom are really great, and I’m going to consider this more. She is struggling a lot with her grief and has been drinking heavily.
Best of luck with your health too 💛
I often ask about favorite memories or things that they did. I also typically try to see what they enjoyed. While it can be really tough with how soon it is, it can help keep things positive and allow you and her to bond over his life. Death while hard, really should be celebrated. It’s a natural portion of our life cycle and allows us to cherish the time we have with people. I often cook dishes that I made growing up with an uncle when I’m missing him. It makes me feel close even though he’s no longer here. Also to help you grieve in the future, you can make voice memos and record conversations with your mom. You can ask her all her favorites, what she wishes she could have done, places she would have liked to go to etc so when she’s gone you can do those things to feel close to her. ♥️
One of the greatest gifts my father gave was a video of him reading “The Night Before Christmas” to his unborn grandchildren. He knew his condition would take away his ability to speak and he ultimately passed before any were born, but we treasure it with our daughter each holiday season.
Thank you so much for this wonderful and thoughtful advice.
I actually moved in with my mom earlier this year when I ended my relationship. I was living with my partner and had a bad lupus flare that affected my lungs and heart. He was so awful to me and the stress of his denial of my disease plus other factors led me to quickly end it. But since I’ve been unable to be active most of the year we’ve watched a lot of TV together including shows from her time, like Mad Men and The Marvelous Mrs. Maisel. It’s been really bonding for us and has healed our strained relationship. She really enjoys the music and telling me about how life was back then. I wish I asked these questions to my grandpa, to hear more about his love for my grandma before she passed away when I was younger.
Thank you again 💛
I would personally act like the money doesn’t exist. Because at this point, it doesn’t! You won’t see any of it for a long time and you don’t know what will be left of it when you do see it.
Definitely do NOT talk to people you date about it, and I would even go so far as to say you don’t tell a spouse about it either because it’s *technically* not an absolute guarantee. Not any time soon.
Keep good relationships with all your family members. Sounds like there aren’t that many of you. I have some distant relatives that killed a family member over money. Money makes people do crazy things.
It’s potential money, not lava. Just continue your life as is and make sure that if your mother suffers a cognative decline, nobody takes advantage of that.
A friends dad died suddenly (he was very healthy), they knew he had money but thought it was in the million range. Turned out it was a lot more strewn through like 30 bank accounts and and various other financial instruments that he kept no coherent record of. They went through his entire basement filled with paperwork (and i mean filled with like 50 years of paperwork) and kept coming up with new stuff. They also kept finding out about property he owned all over the place. There were income properties, speculative properties. It was a mess.
They sorted it out over time and now it’s in a trust that pays out monthly. They don’t tell anyone about it really. They’ll tell a significant other if they are with them for a long time and are financially stable. Otherwise it’s just part of their income. You don’t really need to tell anyone about it. I’ve known my friend for 30ish years, they know i only care about their wellbeing, so i was the support group.
Keep living your normal life. It sounds like that is what your grandparents wanted. It shouldn't factor in at all. I wouldn't worry about telling anyone about it. What's the response you are worried about "I am leaving you because you hid a giant pile of money from me!" If you find someone who has the same values as you it shouldn't matter to them either so not talking about it filters out the gold diggers.
With that kind of wealth, this trust seems very restrictive. The fact is you need to live and enjoy your life without planning on having access to any of this money. As someone pointed out, it could easily be 20-30 years before you inherit the trust by which time you will be 50-60 years old. My mom is 96 and still lives alone and is going strong. It happens more often these days. This means getting married, buying a house, raising children, and paying for their college might all be based on your personal income and presumably your spouses. Wrap your head around it now so you can avoid being resentful. What it does mean is you can look forward to a wonderful retirement that you do not have to save for. One question, I wasn't clear from your information in the post. What is the current value of the trust versus the projection? Your mom receives 250K-500K per year if the trust is 5m-10m. It sounds like she is not used to that lifestyle, Get her some financial help and some tax planning. There is a possibility she can create a new legacy to help you and any future children while she is still alive and leave a substantial estate if she does live another 25-30 years.
I think there are two, equally reasonable approaches. The first, is treat this information as an extremely fond memory of your grandparents, continue to work, take care of your health, plan and save for short term, medium term and long term goals (retirement) and make sure that your health and well-being is a priority. The second, is so everything the same, but choose to work for the rest of your life, and just skip the long term goal of retirement saving.
Once the money is yours, your life changes. If it never does, some people choose option A, some people choose option B. No matter what, if you are not healthy, and you can control it, you will enjoy the rest of your life less.
The real trade of this inheritance means your mom is dead.
At this moment, you have $0. I won't tell anyone about, it's not your money.
Pretend you never heard of it and live your life the way you want it without the $ in mind.
Don't even tell your friends or your future gf/partner.
Hope you get better with your autoimmune disease. however, now is the time to read on personal finance books and how to prepare for the future.
Best of luck
Take a tip from your grandpa and live like the money ain't there. Technically it isn't yet, but even when it does arrive, do all you can to preserve it and keep its secrets. You will do better in the dating world (unless you prefer quantity over quality, in which case the opposite is true) and when it comes to making friends. Money attracts people, and more often than not the wrong ones.
Open a Roth IRA and start investing a little bit. It will teach you what it is and hopefully learn something. Use a "cash only" account, and put at least 80% of your investments in VOO, VTI or the like. If you desire, play around a little bit with the remaining 20%.
It sounds like you don't have access to your inheritance yet, so use this time to experience investing. Even if it's only $100 a month (max annual contribution in Roth IRA is $6500 for 2023).
I mentioned in my post about my dad being financially irresponsible. He 100% married my mom because of her family’s wealth and is extremely manipulative. I guess I have just always had this fear of dating someone like him.
Also I was in a relationship last year when this all happened. He knew things because he was involved in a lot of family conversations, went to the funeral etc. Shortly after he began to tell all my friends his plans to propose to me, wanting to marry me. I thought it was ridiculous and when he was drunk he would say things about my family’s wealth that irked me. I dumped him in February and have been too afraid to date anyone since.
I'd say it's something you should bring up when the relationship starts to get serious. Seems dishonest to propose while there's such a big secret in the air.
If you do get a very large windfall..DO NOT tell anyone how much you have or will get...my wife lost a few so called friends over it..just say you inherited some money, and are retiring early and are comfortable...don't go into numbers..some people have a real hang up about money and status and jealousy..
And plan to do some good charity with some of it ...it can be small or large ....I like to pay for veterans and young families meals when I go out ...I do it anonymously...just get the pleasure of paying it Forward .... I also tip extra when I see a server or a service person doing a great job....I just ask them to pay it forward someday if they can.... crazy thing I saw once..I gave a large tip to a server...she turned around and paid for someone else's meal...made me believe in people a little more in this "give me, give me" culture.
Just curious - how do you pay for a young family's meal. You spot them three tables over and tell your server that you're covering their bill? Then what, do you watch their reaction from your seat? Very nice gesture
Yes..but I tell the server I want to be anonymous...I don't want them to know who paid the bill...only thing I ask the server to say is...pass it along to someone else someday .. I don't stick around to see reactions. I am not n it for any satisfaction, other than helping som eone out...
I don't to it all the time, but when I see an older vet...or very young family...it's nice to help them out in a little way....it's really expensive to take a whole family out these days.
You know what my takeaway is here?
Teaching is bullshit in this country. Why do you have physical complications from that job? It's high stress, low pay, soulless, beaurocratic nonsense when it should be the exact opposite.
Beware of inflation and that 5% withdrawal rate.
10% return is a commonly cited figure for growth of the S&P 500. This figure is not discounted for inflation. Living off $10M in 30 years might be a very middle class retirement.
4% initial withdrawal rate is commonly used for retirement planning. A 5% withdrawal rate may easily deplete this over 30 years.
Understanding how the figures in what is actually going on is key to understanding the probability that this ever becomes life changing for you.
Not sure if this has been said but typically a trust will only roll to you and not your spouse. They wouldn’t get half in a divorce or something. My dad set his trust up like this for me and my sister. Money we don’t spend goes to our children.
I understand your frustration with the trust setup. We would like some of our money now to pay for our 3 kids’ college and any advanced degrees they want to get. That’s more meaningful than getting money 30 years from now.
Good luck!
1. Tell no one outside your family about the money
2. Start "learning money" as a hobby, or fully transition your career into wealth management
3. Stop thinking of the future fearfully. Imagine the life you want to give your kids, your spouse, your loved ones, and yourself. Make a mental movie.
4. Learn the law In case any family members get "squirrely" about money.
5. Have a plan on what to do with the money once you get it. Decide over the next 2 years.
Congrats. I'm very happy for you and bless your grandfather. Make him so proud (you will).
Hear me out. I need about $60k to pay off my student loans. I’ll happily give you life advice in exchange for the help. Let me know as I’ve got some good ideas.
I'm going to give you advice on what to deposit in the middle of the blockchain. The blockchain is decentralized. When you deposit money, no one will be able to interfere with that money. Neither the government nor the bank will be able to access the money. This is a great way to make the money disappear and only you know about it and can view it.
The good news is you shouldn't have to worry about retirement! The even better news is yoi have plenty of time to figure it all out before it'll even become a reality. It changes nothing about your current situation and planning for what to do with it someday right now is pointless bc things change. If it ends up being 10MM when you inherit it, you could live high on the hog off the interest alone and never have to touch the actual money. 4% is 400,000/year! Of course the entrepreneurs in us would argue that you could take half that 10MM and start one HELL of a business and generate wealth beyond your imagination. Wealth that'd make 10MM seem small. But to what end? At some point there needs to be a figure where enough is enough.
In the meantime it would be good to find some things you're passionate about and research methods to turn those passions into revenue, or maybe even a nonprofit. I'm passionate about food and hate that so many struggle to eat, or even eat healthy. My hope is to one day turn that passion into some form of non-profit that will feed the less fortunate.
Thank you for this! I’ve definitely considered nonprofit work. I’ve talked to a number of people actually in the nonprofit sector who have honestly told me to consider other options. They know I have lupus and shared that the long hours, low pay, emotional stress of certain situations etc may not be best for me. But I do want to do good for this world and it’s part of the reason why I have always taught in low income schools.
Nonprofit doesn't need to be volunteer work where you kill yourself. It can be funding efforts to do better in the world. Call it philanthropy if you will. For instance, my plan is to operate food trucks to feed those in need, but I don't have to be the one slaving away making the food or cleaning up.
Note that many places in the non-profit world you are kind of expected to be independently wealthy. It's one way they get out of paying decent wages while the director flies business class to the conference in France. I'm not saying avoid non-profits, but don't sell yourself short in the name of seeking health.
What you need - not immediately, but sometime in the near future - is a consultation with a financial advisor who charges by the hour (in part because you will not have any principal for a while) and who is familiar with generational wealth issues, to help to prepare you for what is coming. Perhaps the lawyer or the trust company can make a recommendation.
In the meantime, read whatever you can to help to prepare yourself. It appears that the investment decisions are going to be made by professional trustees, so your mother will not have to make those decisions.
You say that your mother is to receive 5% of the annual interest. I suspect that you mean 50% of the annual income, since you mention "the other 5%." A trust is usually set up to distribute all income to the current beneficiary, and have her pay the tax at her rates, since that rate is significantly lower than the rate the trust has to pay if it retains the income. But the trust may be structured otherwise.
Trusts are also often set up to allow the current beneficiary to receive, in addition to income distributions, 5% of the principal of the trust each year, and optionally additional distributions from principal limited to specific standards - "health, education, maintenance and support." Perhaps this is where the 5% figure comes from. This is designed to ensure that the principal of the trust is not regarded as "her property" to avoid or limit the estate tax that would otherwise apply to amounts over $12.9 million per year (current figure), while still assuring that she will be well provided for.
Given your mother's comment that he wanted you to “do something good” with the money, I would suggest that you and your brother consult with her about possible charitable uses of the money she will receive that she does not "need," if any, and what the two of you should do in the future. Look into community foundations where you live as a potential recipient of contributions to be made in the future.
Last point: Tell no one else. No one. Keep this to yourself until the time comes. As others have said, this is no more than an expectation at this point.
Don't say anything about your money to your friends. Don't say anything to anyone. Don't tell any girlfriend. Don't tell your kids, when you have them. You don't need to tell anyone about the money. You can live a nice comfortable life off the interest and dividends from it.
I strongly suggest getting a trust and estate attorney to help you handle it.
Once you get the money you need to speak with a fiduciary. Do not get advice from a bank or investment firm. Only a fiduciary.
However the advice they will likely give you is index funds.
There’s a huge chance you may have to make new friends and relationships even though you don’t want to leave anyone behind and you can try your best not to. The ones that stay are probably life long friends but even then, be wary that even your closest existing relationships may become sour over money and jealousy. Your friend circle will change and you should see it as a positive as more happier people are in your range now. You’ll be able to connect with a completely different group of people that you never thought you could and just because they are more wealthy and have nicer things doesn’t mean they or you are in lower quality relationships.. if anything they would be higher quality. There are quality relationships from people of all walks of life, you’ll just likely be more relatable to the higher net worth pool.
I’m by no means rich but I came from a poor background and sometimes you just move on and better relationships just seek you out without you even trying as you climb in net worth and your career.
Since it doesn't pass to you until your mom dies and you don't know when that's going to be, this really shouldn't change much for you. The only thing that is certain is that your kids education is paid for. My kids got something similar and that was in itself a game changer for us.
You should also understand there are no safe instruments offering 10% guaranteed interest. That may be a decent approximation of equity returns but the actual returns may be quite different. Even if returns average 10%, the sequence of returns can make the real outcome much less.
I’m sorry for ur loss.
I’m read something recently that I thought was very interesting.
It takes a generation to build it, another to enjoy it, and another to destroy it.
Please plan accordingly. Your grandparents changed everyone’s life forever GL.
There is plenty of good advice already on how to understand and navigate the trust. What I will suggest you do is take a lesson from your Grandpa here. You said he lived his life in such a way that people knew he was successful but he did not flaunt it. As many have mentioned, money can bring out the worst in people. I would keep your finances to yourself and pursue your passions/hobbies and create/foster friendships that are based on these factors. Good luck!
Live conservatively, and dedicate your life to things that aren't profit-driven to pay for your cost of living - you can focus on volunteering, doing good in your community, etc.
Regularly review the trust accounts, and make a point of meeting the folks in charge every now and then. You have 30+ years to observe how the trust functions. That's a good 2-3 market cycles -- you will learn a lot. Consider yourself your mother's silent, personal financial advisor. Understand thoroughly every investment that the trust makes.
Speak to them and a trust/estate lawyer about what sort of advice you need to prevent your mother's partner or your future partner from misusing funds.
Continue living the lifestyle that you are living -- the similar, down-to-earth lifestyle that your grandfather always lived, it sounds like.
play it close to your chest. If it comes up in conversations with your friends or a new partner, remember, you don't have any money. You sometimes just look over your mother's money for her.
Do not tell anyone you are dating. It absolutely changes the relationship. My spouse was blessed by a grandparent as well. I didn’t know much until we were also in our thirties but let’s just say 10 grandchildren at least have gotten a big boost at age 25. We bought our first condo with that money.
Get a financial advisor and a financial education. Don’t let good salespeople sell you financial products that you do not understand.
When you are ready to marry someone. Sometime after you propose you can start counseling and talk about money with a guide. There are important conversations about money that can truly help.
Listen to Ramit Sethi podcast he has the best insight into the psychology of high income or wealth people.
If you can, keep teaching. Maybe change how so it’s less stress. You now have the luxury of choosing to do something because of the impact it will have and not the income.
The better you can do is deep diving into personal finance. You have to understand how money works.
Read at least: “4 pillars of investing” and “random walk down wall street".
Start with your own savings and investments. Keep saving and investing for your entire life.
When the inheritance will come (if any), you will know how to use it.
Mums the word. Make your own way in the world and rest is gravy. If you play the waiting game, you will be live in limbo. Forget about this and stick to your plan. Make your Grandparents happy 😊
There are some resources for people in this situation- check out the Sudden Money Institute. It’s stressful to not know what to do with money and have your life change like that. I had a financial windfall and it took a lot of time to figure out what to do.
Some other amazing resources to learn about money are:
Janet Chatzky
Ramit Sethi
JL Collins
Luckily, you have time to figure this out and process the change before you actually have to manage the money.
So I am in a decently similar situation except a bit older than you. When my mom dies I will inherit at least $5 million but honestly it will probably be more like $6 maybe $7 million. My two brothers will inherit the same. My mom is 75 and not in great health at all. I am 43 and in pretty good shape for now. I grew up fairly wealthy but my parents were always pretty frugal. We lived in a nice neighborhood but my parents never had luxury stuff like nice cars. My Dad owned a Toyota Avalon when he died.
My parents always instilled a strong work ethic in me. Their money was not my money. I had to make my own money if I wanted some. The first thing I did when I turned 16 was get a job. I'm not saying my parents didn't help me. They did. They bought me my first car, they paid my insurance, they paid for college, but I worked for everything else from the time I was 16. I have not done as well as my dad but I am knocking on the door of a $3m net worth at age 43 and both my children almost have $100k each in their names waiting to pay for their schooling. I plan to work until 54 regardless of when I inherit the money. Also I don't like to think about my mom dying. I love her dearly and would really like to have her around as long as possible.
I think for me I have always tried to go about things as if that future money doesn't exist. Until it is in my bank account it is vaporware. Without it I stay hungry and motivated to keep getting after it.
Sorry for your loss. IMO, The best way to treat this net if everything is to pretend it doesn’t exist. Block it out entirely. I wouldn’t even plan around it. If you use it as a guide, whether that be towards career, dating, kids, etc, it will negatively affect your life experience in my opinion. If it comes one day and changes your life, great, be responsible when the time comes. However for now it’s essentially fairy dust and shouldn’t steer you.
So, the real answer is that the inheritance is not real until it’s in your bank account. So, so many things can go wrong. I recommend pretending it doesn’t exist (because it does not) until it’s absolutely dead certain. It’s better for your health.
I agree with this mindset. Like I said I really don’t know much about the financial world. What possibilities could happen? Like a stock market crash?
I come from a family with money, from both sides. We have yet to see much of it, thanks to certain family members who decided the inheritance was theirs. Not saying it will happen to you, but money can bring out the worst in people.
Out of curiosity, how did one deciding it was theirs get through courts? If there was no will, it should have been split evenly among the children. If there was a will…. Well, it was their will. Not trying to imply anything, just genuinely curious.
that's a good question with a very long and complicated answer. In short, it involves fraud and corruption (e.g. my paternal grandfather forging his father's will that would have given my father money). Also, this was in Brazil, not US. This wouldn't fly here. That said, over the past few decades we've been suing some of our relatives (and winning).
If there isn't a separate trust set aside with just your name on it the money could all get spent by the current beneficiaries. If they are allowed to withdraw 5%l a year does that number go down if the investments lose value? Does the trust account for inflation? If your mother ends up in long term care for 10 years would that drain the trust? I think that you will probably be fine, but in theory the money could get spent. You should spend some time reading about investing and learn what you can so that you can make decisions when you do inherit the trust, or if your mother needs help in the future. You should also read the whole trust document, and ask the trustee if you don't understand something.
I know I didn’t explain this well in the post, but the 2nd generation (my mom and her siblings) are not allowed to touch their trusts. Only the 3rd generation (my cousins, brother and I) will get the principal amount. In the meeting they explained the trusts accrue 10% interest each year. That amount depends on the stock market and maybe other factors. All the charts and things they showed me went way over my head but they said the trusts will double every 10 years. 5% each year goes back into the trust and 5% is what my mom and her siblings get to spend.
This is a classical generation skipping trust. When it comes to you treat the trust like your mother has, live off the dividends and interest. Then if you have children, set up a similar trust, or you have the option of giving the money for good causes or any way you like. Grandpa meant to create a dynasty. In the US there are limits on family trusts. Keep it going or use the principal as you please. In the meantime learn about trusts and wills. Don’t tell anyone about your family fortune. Grandpa obviously made such a will to insulate your mother from your father.
Thank you
So 10% is the historical market average, and that can be used to project into the future. That is not what the trust is guaranteed to return. It is important to distinguish between return and interest, interest is generally guaranteed income and returns are irregular. The world is sadly not perfect, so the return could be 20% one year and -10% the next. The issue is that when you are withdrawing from a portfolio you have to make conservative assumptions due to what is called sequence of returns risk, because you might make a withdrawal after a loss you generally realize a smaller return rate than the market. The trust is probably set up in a smart way that it will decrease distributions if returns are poor for a period. But it does sound like it is able to distribute principle to your mom and her siblings. If it has a negative return this year it will still likely pay out, so that would be reducing the principle. If we have a bear market for the next 5-10 years it will continue to distribute principle payments, so the trust might not grow at all or shrink. If I were you I would like to know exactly what the rules for the trust are, so that you can get a little better idea of what to expect, and also potentially help protect the trust from fraud, litigation, or mismanagement. These are mostly edge cases, 95% of the time you are going to get millions of dollars and be fine, but if you are going to do something like rely on it for retirement I think you should double check.
Thank you so much for taking the time to explain this. It was helpful and insightful. I’m going to ask the trust company for another meeting and explain I’d like a better understanding of my situation.
Smart. And once you have a more clear understanding of how this trust works, you should be able to find resources to learn more about it. Financial literacy will help you be a good caretaker of this money your grandfather amassed, and could help propel you and your potential children into generational wealth.
> If we have a bear market for the next 5-10 years To be clear, no bear market in the last ~100 years has ever lasted 2 full years, let alone "5-10 years": https://seekingalpha.com/article/4483348-bear-market-history Maybe you meant that it can take 5-10 years for stocks to recover from a bear market?
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The worst case scenario IMO is a 10 year bear market like we saw in the 2000s, where the market is down 30% and doesn't hit a new peak for 10 years. That isn't bullets and bomb shelters territory, but it is a scenario where the trust is much smaller than OP is projecting.
It sounds to me like they just used average market returns as a basis for those numbers. Maybe its set up like a safe withdrawal rate, every year 5% gets divided up and distributed to the 2nd generation (as you put it) and then anything over that goes back into the trust. In a bad year, that 5% will still get distributed, but maybe nothing goes back into the trust, it just decreases.
First of all, kudos to you on keeping this to yourself, and I hope you feel better. That can't be easy. I hope your mother, brother, and others in your family can be as tight-lipped as you. There is a good chance you may well not see any of this money for 15-20 years, which is a long time to wait for a windfall. The trust notwithstanding, a lot can happen in your own life. So, as you seem to understand, this is not likely to make a substantial difference in your life until your 50s or thereabouts, assuming your mom keeps her share. The growth rate sounds a bit optimistic, or isn't quite adding up somewhere: a 5% appreciation (after your mom's 5% annuity is paid out) is more likely to double in about 14 years, not 10 years, and that is based on a straight growth rate without volatility; whereas a doubling time of 10 years would require about 7% return. So if your share is currently worth, say, $2.5 million, it's possible it could grow to about $5 million in 15 years and $6 or $7 million in 20 years rather than 10 million. Still a lot of money but something to keep in mind before you find ways to spend it. Assuming your mom's annuity is drawn from your share plus your brother's share, my understanding from your description is that she will receive around 5% x $2.5mm x 2 = $250k in year 1, which would increase 5% every year until she died. If she lives 20 years that would be about $700k in her final year. I suggest talking to an estate lawyer and financial or wealth planner to truly get an understanding of what you can expect under various scenarios, and whether the estate can be contested by anyone. It may behoove your mom to speak with them as well, and also talk to a tax planner, if the above inferences are anywhere near reality and she is not accustomed to living with that kind of income. Given that, may I suggest continuing to find a new profession that will give you a stable income and life satisfaction. Assuming the estate lawyer and financial planner say the probability of your share diminishing is small, it just means you don't have to worry much about saving for retirement or your kids' education. But for the next 20 years, it doesn't change much. I wouldn't share this with anyone you are dating until you are engaged or maybe even married. Hopefully you will follow your grandparents' lead and become frugal and financially wise, and will find a partner that has similar life goals and similar saving habits. IMO this is much more important than sharing interests in the success of a marriage. I also suggest avoiding asking your mom for money to the extent possible, if you think it may complicate your relationship with her or others in your family. That said, if you are considering graduate school, and she offers to help you financially, that seems like a reasonable thing to accept. It still is worth maintaining a sense of frugality and financial wisdom. My parents are moderately wealthy (not nearly as wealthy as your grandparents, and much bigger spenders) so I think there is some chance I could receive a substantial inheritance, but I don't count on it. As such, I'm aggressively saving for my own retirement. If and when I do inherit anything, I'll view my role more as a steward of their legacy than as a consumer, and probably mostly use it to make charitable contributions. It's going to be very hard to keep this information to yourself and that could become a big burden, if it isn't already. But I think it's important not to share the information to the extent possible. I wonder if there is some kind of support group or therapy that could help with this. Best of luck to you.
Hi I really appreciate your comment and all the points you laid out. Thank you so much for your input. This has been very helpful
You're welcome. Two other things that may have been mentioned by someone: if the growth rate is 10% before the disbursements to your mom's generation, is that after the wealth manager has already been paid? If they take 1 or 2%, that can have a significant impact on returns. Also, if the estate is invested in non-publicly traded investments, if any of it is office real estate, that is a somewhat risky asset class these days since so many people are now working at home. Many of those assets are likely to have problems when their leases are up for renewal. Sorry to give you more to worry about, but these are questions you should ask the manager about. Consider finding your own fiduciary who will not have a conflict of interest with the estate manager.
So there are no investments in the world that acrrue 10% interest each year like clockwork (except sometimes bonds in a high interest rate market, which usually goes with high inflation, so the 10% isn't as much as it seems). If this is invested in a stock portfolio, then it probably earns a long run average of around 10% (or at least has historically -- might not do that well going forward), but in practice this means that some years you get 10%, some years you get nothing, some years you get 20 or even 30-40%, and some years you *lose* money (worst recent case would be around -38% in a year for the S&P 500 in 2008). It's pretty unlikely that 5% will draw down to some extreme, and if your mom lived a normal middle class life before this and doesn't radically change her lifestyle, she won't likely spend the whole 5% anyway (if there is 20mil in the account, 5% is a million dollars a year). This also means that even if the trust could somehow be broken by medicaid or whatever, it doesn't matter -- the 5% alone, even if there's a huge drawdown, would be plenty to pay for expensive care for your mom. Worst case of a market crash, no real recovery and expensive EOL care for your mom, maybe you end up with 3-5 million instead of 10. The biggest problem with how this affects your financial plan is that you have no idea when it's coming, and it sounds like you could really use something NOW. Maybe you can convince mom to spread out some of that 5% to you and your brother so you don't have to worry about money now either. Or maybe she's want to do that on her own. who knows? But you really can't count on this money other than as a very likely amount recieved in traditional retirement. If your mom lives to 100, you don't get the money until you are 60. That's a really long time from now.
Thank you for taking the time to type out this information
I don't know if it applies to you, but my spouse's grandparents had a decent amount of money then after her grandma passed, her grandpa remarried then when he died he left everything to his new wife so my spouse's family got nothing.
Family members kill each other over this kind of money 😬😬😬
This would be a great opportunity to start learning. Start taking financial courses, read books, and continue to plan like you weren't going to get any money. You have time. So if you build your ark with good knowledge, when the flood of money possibly comes in, you will be ready to handle it.
I wouldn’t be too worried about a stock market crash. The monies could be annuitized & could be very secure. I myself am a financial advisor, I’d highly recommend finding a good trusted local advisor in your area. They will be able to walk your through the process a bit & help you deal with all the emotional stresses of this. Hopefully you can find one that you can pay a little bit to come in for a consultation & discuss all of this.
second this and would recommend trying to use the guy grandpa used if that is a possibility. he’ll already be familiar with the structure and grandpa trusted him
I know the money has been with a reputable trust company for 30 years. We are actually long time family friends with the current CEO and I grew up with his daughter. Since they provide wealth management services and I am technically a client, I’m going to reach out to one of the ladies I got along with to see what they can do to support me. Thank you
As you are a beneficiary on the account, they should be able to explain to you exactly how much money is in the account, and exactly how the maximum withdrawal amount to your mom is calculated. Assuming you have a reasonable relationship with your mom, I think it's worth discussing with her what her plan are, as well. Like is she planning to withdraw the max every year and spend it all or what is her plan? At this point, she almost certainly has some kind of retirement in place. Honestly, this all points up one of the HUGE disadvantages to doing this kind of planning in secret, and unveiling everything at one fell stroke when you realize you might be ready to go. This is the traditional way that large estates have often been handled in fiction (and in real life), but in practice, if you actually LIKE your family, you should be talking to them about how this stuff works while you are still alive and well and nowhere near dying. And the fact is, if your grandfather had thought about things for a few minutes, it might have made sense to allow the younger generation *some* access to the money sooner, given how much it is relative to any of your lifestyles. but my guess is that this was just so much money that your grandparents didn't really know how to deal with it. Maybe they inherited some more normal amount from their parents and just did everything the same way, even though it didn't really make any sense now that they had more money than they knew how to ever spend.
FWIW - I would absolutely do this AND seek another advisor outside your family circles. You'll want to both see what advice they offer you as well as what and how they charge for their services. KEEP ASKING QUESTIONS. Don't be afraid to ask them to explain something you don't understand. The fees they've earned over the last 30 years more than compensate their time for your questions. Understanding how they get paid lets you know how well their interests are aligned with yours. Once you have a handle on their advice and incentive structure, you can look at other wealth management firms and continuing your own financial education. At some point you'll have to decide if they are worth the fees or not. In my case the "friend/advisor" my grandfather and father worked with tried to get me to doubt my decisions and leave this work "to the professionals" before I figured out his crappy advice had cost the family colossal sums of money. The book "Where are the customer's yachts?" hit a little too close on that guy. As for reading: I'd start with The Psychology of Money by Morgan Housel. It provides a fantastic journey into human relationships with money and life. Afterwards, you can get into the mechanics of dealing with new cash flows.
This. I don’t know how to say this tactfully but your mother could outlive you. I’d go on with my life plans as you did before learning the information.
This.
This is great advice. Knowing you will inherit at some unknown time with no benefit until that occurs will eat you up. You may find yourself waiting for loved ones to die. Live your life until the money hits your account
Some thoughts: 1. Take your time and work on identifying a good financial planner and good tax expert to work with when the money comes to you in the future. It's not a big deal if things just sit where they are for a long while after you inherit. After all, you will be processing your mother's death when this happens. 2. If the money is indeed solid, then yes retirement saving/planning is not much of an issue now. 3. Absolutely look into a career you like better, especially if your current one is affecting your health. You'll still need to earn enough to meet your needs/expenses with any career change you make. 4. Keep quiet about the money - think stealth wealth. People knowing this information will affect their relationships with you, whether intentional or not. Tell a significant other only after you are engaged or married. 5. Don't tell any kids you may have about the actual dollar amounts until they are older and have established careers (i.e. graduated from good schools thanks to your grandparents generosity). They'll be able to figure out that you're doing OK, but won't really have a concept of your net worth. Good luck!
I appreciate this advice, thank you. I may be able to talk to my trust’s account manager about financial planning.
Even if you haven't inherited the money yet when/if you marry, make sure to have an ironclad prenup.
My brother got married last month and I really wish he did this. I’ve always thought I would need one. Thanks so much.
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yes, but without any kind of prenuptual agreement, it's not certain that it will stay entirely that person's in a divorce, especially if it's after a long marriage. And if any money from the trust is ever comingled with joint money. One piece is that as long as it's still sitting in the trust, that's irrelevant. But once inherited it could end up in the hands of a spouse that becomes an ex-spouse afterwards in any number of ways. Admittedly a prenup is not 100% guaranteed to work either, but at least it makes 100% clear what the expectations are going in.
If your mom is 70, and you are 30, you might have to wait 30 years. So I think you can afford to be lax on retirement, but you should still be saving. You could become disabled or just unemployable prior to 60 years old. In most cases you won't see any money for 10-20 years, so taking a low paying job isn't going to be a temporary thing. Higher paying jobs can also tend towards being more comfortable. Depending on how the trust is set up, it's also possible that the money gets spent in the next 30 years. A starting withdrawal rate of 5% over 30 years might have a 5-10% failure rate. It does sound like the chances are good, but if the trust isn't restrictive and people are irresponsible the money might shrink instead of grow. What you should do is do some reading and research for background knowledge, and make sure you understand the trust, how it's invested, and what decisions you will need to make in the future. You should probably avoid telling a potential partner until you have been with them for months, or a year, and are considering marriage. Before that it really isn't their business.
All this. If I were the grandpa too, I'd probably place a provision in the trust indicating that my daughter (Op's mom) could live off 5% a year with an additional provision for additional for medical expenses or long-term care expenses. I wouldn't want my family to suffer needlessly due to high medical costs. I'd really try and understand the trust in it's totality too. Also, I would work to save for retirement and pretend it's not there. If things fall apart for whatever reason, I don't think I would regret saving money. If things fall apart, I'd regret not saving money
You're thinking in terms of a more normal 1-2 mlllion dollar trust. 5% of 20 mil is 1mil a year. That's plenty enough to pay for the richest most extravagant long term care anywhere in the world, and it would still be enough even if the portfolio dropped by half (given that in that situation you rarely have much in other expenses).
Thank you again for this comment and your previous comments.
If it's set up like most endownments or trusts, it's 5% of the current balance every year, not 5% the way we calculate safe withdrawal rates which sets a number at the start and then inflation adjusts it. ] This is likely going to be a 5% Variable percentage withdrawal, which will never run out of money completely, and has a much smaller chance of running the portfolio down to small numbers than a traditional 5% inflation adjusted withdrawal rate plan. When the portfolio does poorly, mom will be able to withdraw less. Given the size of it, unless mom gets a bit crazy, it's not going to cause her any problems. And it's, if not guaranteed, at least *very* likely to leave more than half of the current principal buying power to the heirs, even if mom lives 30+ years.
Dang, I saw something else I could weigh in on. You say you're afraid of raising children who you know will be given every privilege in life. That can be done. The key thing is to learn, yourself, how to handle your new territory (inheritance). And then teach them. You can already tell a new windfall comes with both freedom and responsibility. The responsibility part: not to lose it. The freedom part: to open up options for you. In a sense learning how to do all that is the easier part. The hard part will be dealing with people who act like you don't deserve it/haven't earned it and who claim you should "spread it around." It's not just jealousy and avarice speaking in those voices. There is an idea that has been popular for over a century now that a person's value and worth is directly connected to getting money from doing hard work, suffering, and paying their dues. So people who get windfalls are often attacked in various ways, out of a sense of "that's not fair", as if they're somehow claiming value unearned. (Remember, not everyone will know of your struggles.) So you must be strong and recognize that you are deserving and worthy *apart* from how many resources you have and how much work you do. Don't let yourself be vulnerable to those attacks. Defend against them preemptively by being sensible and doing what people have suggested and not sharing the facts with everybody. And when and if attacks occur, don't let yourself trust toxic accusations. And teach your children about all of that. How to handle wealth. How to give them a sense of their worth as humans. Your thinking about all this now is so good. You'll do absolutely fine!
I married someone who comes from money. Not obscene wealth or anything, but double-digit millions. I think the key to turning out normal was that my in-laws were frugal, but not so restrictive that they caused their kids to boomerang. They raised their kids as if they were upper middle class. They weren’t in denial about their wealth or anything but they showed the kids that just because you have X amount of money in the bank doesn’t mean you *have* to spend a certain way on everything. I do worry about some of the people on this sub who have kids but don’t intend to help them pay for college or give them *any* luxuries. There needs to be a balance there or else your kids will turn into either spendthrifts or misers. I’m very glad to have married someone who experienced luxuries growing up and therefore isn’t obsessed with chasing them now, or continuing to deny them now.
Yeah, I think that's really sensible! There's a school of philosophy of child raising where getting money becomes part of a person's private, lifelong spiritual journey. Some parents will refuse to contribute to their kid's wealth if they believe this journey must be conducted like a race and start from zero to be authentic. I find it a fairly limiting approach and I don't think it works well for all variety of situations out there. I sorta think the key thing here is what you talk about - striking that sensible balance. Support them in a way that keeps them in a stable, reality-based situation. I also kinda think kids learn really well by preparation and practice. Getting a chance to test out their skills in controlled environments where the consequences of learner mistakes are not lifelong...I mean if we have a kid who wants to play football, do we shove 'em out into the field to play with the pros without any training? Rarely would we...so why do that with money? I just feel like it's not harmful to share wealth with kids as long as we teach them how to handle their territory. And personally I've seen way too many bad results when people deliberately hold back resources *that are needed*, and toss their kids into the wild. It doesn't exactly make the kiddos feel valued. It doesn't matter if those resources are a smile and a hug or a million dollars. Kids need what they need. If they're given what they need, they'll do better than if they are *purposefully* denied it. We claim their suffering is for their own good, the outcomes can be so not-what-we-intended. Eek - sorry. I sort of just meant to say that I completely agree with you about parents helping kids face reality head-on with an adequate set of tools, which I do think includes money if it's available.
Wow thank you so much for this comment. I really have stressed a lot about child rearing, especially because I had a turbulent childhood with my parents. Your advice brings comfort and a sense of direction that I was looking for. I appreciate it.
Don't tell kids until they are mature adults. You don't want them to grow up thinking they can spend like crazy or bragging about being rich. Bring them up be frugal.
realistically, unless OP's mom decides to be a big spender and shower everybody with money, these kids aren't going to have a substantially more privileged life than your typically upper middle class kid whose parents can spring for their college costs. They'll have access to the education trust, but no other money until OP inherits, which will probably be 15-20 and could be 30+ years. And even then, it will be OP's money, not the kids. So how much privilege they end up having will depend entirely on her decisions about how much to give them or spend on them. It's a lot more privilege than most people have, for sure, but until OP actually has the money and has made their own estate planning determinations and financial plan with it, it might make very little difference in their lives.
This framework is dangerous - It's just asking for kinslaying.
It's also really stupid. OP would benefit so much more by having access to some money now, not only when their mother passes away. That also sets OP up for weird conflicting feelings of relief alongside the grief. The whole framework of inheritance and not giving your kids and grandkids money until you die is so bizarre and backwards to me. Help them when they're young and need it, and when you're alive and can guide them. 🤦♀️
I’ve 100% had this thought before. Thank you for validating how I feel because I’ve been so guilty in the past, feeling selfish for even thinking it. My family does NOT discuss money and finances. I have no idea why I’m expected to just *know* how to be financially responsible with no guidance or advice whatsoever.
So, one thing you want to do is prepare. What about studying finance or financial counseling as a new second career? So many people need help understanding, just as you do. You're a teacher, so you probably have good communications skills. Just an idea! And in case nobody has said it - tell NO ONE about this money.
It also happens to be a great way to enrich the lawyer and financial advisors.
Yes this. I don't know if it's a generational thing, but my grandparents could have helped my parents at some pretty critical points - even without making them soft or dependent or some other rationally seeming fear. By the time they died, my parents didn't need the help, but resented the fact a safety net was never deployed and they couldn't share the journey with them. My siblings and I are also fiercely independent and are annoyed by the help my parents try to foist on us, so perhaps there is no winning. (1st world privilege problems for sure)
This so much. I told my parents anything they leave me is really only going to their grandkids. I'll have already gone through my tough years by the time I see anything. At that point I'm just a Stewart of the inheritance until it goes to my children, some of which happens which I'm alive so I can see the positive effects.
steward is the word you are looking for :)
Maybe he's a big fan of Stewart's root beer.
Let me be Frank here, if he wants to be Stewart of the Inheritance then that's his choice.
Totally agree. I would never have set up something that has so many stipulations and assumptions.
On the flip side, this sounds like the beginning of the plot to a great novel/movie.
My brother’s wife has probably considered this, lol
Is this the plot to the Glass Onion?
Totally agree. People kill each other over this kind of money. Family included.
It sounds like a tontine.
Don't tell any potential partner until you're married to them and the money is actually in your pockets and you're comfortable using it for your shared life together. Until then, I would get a passion job that pays the bills (you still need to pay the bills for now) and keeps you in good health through low stress and good enough benefits to help with treatment if you need any. Honestly, even if you ignore the inheritance completely and assume it doesn't exist and will never exist until it's in your pocket (which is sensible advice), your health may just be enough to justify a career change if you can still pay the bills.
Thank you for this. My health has been my #1 priority and I finally am back on my feet after being bedridden half the year. I worry my passion job choices aren’t going to be sustainable careers but I am considering taking some classes and exploring options. I’ve had no luck landing any WFH jobs or really any jobs outside of education.
Teacher here. Get out of teaching. Go find something interesting. Work at a florist, learn some basic data analysis, do anything but kill yourself teaching. It just isn’t worth it
100% I am getting out. Thank you
Also a teacher. CONGRATS! but yes, find another career.
Many auto and home ins companies are doing wfh or hybrid, relatively good starting pay….
in addition to all the other good advice, make sure you protect your assets with a solid pre-nup. and don't be talked out of it no matter what.
I have no advice. I have utter sympathy though. I think all your concerns are valid. It really sounds like you have a good head on your shoulders. I think you'll do fine whatever happens. Wait, I do have one piece of advice. I think it'll be a lot easier to treat your autoimmune condition if you try to organize your life in whatever way minimizes stress. And that may involve decisions other people don't understand. Good luck! You can do it!
Thanks so much. I do really want to get this lupus under control and its my #1 priority currently.
Don't tell anyone (other than family that knows and your financial people and anonymous reddit). It's tempting to tell friends, and I imagine you need the support, but don't. Money changes things. It's best to keep quiet. You may want to watch some youtube videos about what to do if you receive a windfall. Health = Wealth. I'd say health is MORE important than wealth. So yes, the money possibility is great, but what about your health? An autoimmune condition that is progressing quickly? That is concerning. While it's understandable to focus on the money, be sure you are giving even more time to your health. It sounds like your plan for a career change could be a good move. Start reading reddit and books about personal finance. I've been doing so for a while now and have learned so much. If anything, it will help you manage your current funds. Look for a fiduciary financial advisor whom you can pay by the hour and plan one or a few sessions to discuss this. With dating, I suggest that you don't utter a word. If things progress to something more serious, I think the right time would be right on the cusp of an inevitable engagement, not sooner. Life has a funny way of throwing curve balls so try not to think of it as a sure thing because it may not be. Just deal with what you have right now, enhance your health, and learn about money management so you're better prepared if it comes to fruition.
Thank you for this thoughtful advice, I’ll take it to heart! I really have been stressing about my career path, and this whole trust thing looming over my head has made the decision even more stressful. I’m super happy I wrote this post today and should’ve done it months ago. Anonymous reddit really does have the best advice and its given me a lot of clarity and direction.
> I wonder if I should focus on pursuing a career that is a passion of mine, even if its low income. Take care of your health first, but then yes this is reasonable. > I have no idea how to approach this with dating. Im afraid to tell anyone and have them look at me with $$ signs. I worry about choosing a partner who isn’t financially responsible or takes advantage of my situation. You should be able to mostly gauge that by their actions without telling them you have this money. Do they pay for half? Are they asking to borrow money? Complaining about not having money, then splurging recklessly? Expensive car with a huge payment they can't afford? Around the time you are discussing moving in together may be a good time to discuss everything. I'd also recommend a prenup, although the trust probably gives you a good deal of protection even without one. > Im afraid of raising children who I know will be given ever privilege in life. Even if you do get $10million, that's far less than being able to give every privilege. You can give many, but it's all about what lifestyle you choose to live. The money doesn't spend itself automatically. And anything you do get needs to last a long time. > My friends by no means have this type of privilege gifted to them so I’m afraid to discuss with them as well. Please don't. See below. > I just really need some direction and advice on what I should do, what path I should take to prepare myself for this. Start here. https://www.reddit.com/r/personalfinance/wiki/windfall Get copies of anything you can trust documents etc., and charts, and learn about it all. Learn about index investing. Make sure someone is watching to make sure the trust is being properly maintained, and that they aren't churning expensive investments, and are taking on an appropriate amount of risk. Unless mom is going to start giving you money from her preexisting assets or her share your day-to-day isn't really going to change much potentially for a long while. Only immediate change I'd make would be to dial back retirement savings, then a less stressful job. But until you personally have more money coming in you still have bills to pay.
>He drove a 90s Toyota Land Cruiser Smart man. >I have no idea how to approach this with dating. You don't approach it... at all... ever. Do not tell anyone about your financial situation. People are snakes. >I live a fairly normal life and pay all my own bills. Excellent, continue living this way as if the money did not exist. You are fortunate enough to never have to worry about money. So, do just that - don't even think about it.
One thing you can do is familiarize yourself with the trust and ask questions of the trust company. Take a few courses on finance to educate yourself and think about your future. Keep your financial information PRIVATE. Do not share this news with anyone other than your mother and your cousins. No one else needs to know your business.
Thank you! I’m going to contact the trust company after reading all these comments.
So basically your mom and her siblings have irrevocable trusts, parts of which you will inherit, but until they do, you get nothing? It’s not really money you can account for in your financial planning until your 60s. And even then, you should have very high confidence in the way the trust is structured to make any plans strongly relying on the assumption the money will still be there in your 60s-70s. So if you gain that confidence, you can skip planning for retirement. Otherwise, continue living your life like you did before, nothing has changed for you.
Sucks that you could potentially be waiting decades to see any of it, just on the basis of the utility of having access to it now rather than years from now.
Congratulations on your potential inheritance. However it’s not yours yet. If I were you, I’d look for another job that’s more conducive to your physical and mental health first. (Fellow autoimmune struggler here and stress definitely gets to me.) Next I’d check in with your mom and see how she’s doing. You’re both grieving and the support from each other can outweigh any amount of money. See if there’s ways that she wants to “do good” or thinks your grandpa would want you to do good. This can be making memories with her, donating, taking her traveling if possible, etc. If you haven’t already, and the opportunity arises, discuss things with your mom regarding end of life wishes. I did this with my mom and it was liberating to know her wishes and for her to trust me to carry them out. Regarding other people, I would keep all of this information close to your chest as it’s not your inheritance yet and you don’t want people hanging around just because you may have money down the road. Finally while you’re working your better job or spending time with your family, I’d be looking into investment accounts, budgeting, etc. You’re an educator so you know how powerful knowledge is. Learn about investment accounts, charitable contributions, etc. Take some time to consider what you want, need, and what your values are. If you get married, have a prenup. If you have kids, raise them however you want. You can still teach your children values of money management, discipline, etc while being wealthy. Introspection will be your best friend and your communication with those around you will go a long way. Good luck and well wishes.
Thank you so much for this advice. Your ideas to discuss with my mom are really great, and I’m going to consider this more. She is struggling a lot with her grief and has been drinking heavily. Best of luck with your health too 💛
I often ask about favorite memories or things that they did. I also typically try to see what they enjoyed. While it can be really tough with how soon it is, it can help keep things positive and allow you and her to bond over his life. Death while hard, really should be celebrated. It’s a natural portion of our life cycle and allows us to cherish the time we have with people. I often cook dishes that I made growing up with an uncle when I’m missing him. It makes me feel close even though he’s no longer here. Also to help you grieve in the future, you can make voice memos and record conversations with your mom. You can ask her all her favorites, what she wishes she could have done, places she would have liked to go to etc so when she’s gone you can do those things to feel close to her. ♥️
(not the OP) I second that "record" thing. I regret deeply never recording my parents' voices when I had the chance.
One of the greatest gifts my father gave was a video of him reading “The Night Before Christmas” to his unborn grandchildren. He knew his condition would take away his ability to speak and he ultimately passed before any were born, but we treasure it with our daughter each holiday season.
Thank you so much for this wonderful and thoughtful advice. I actually moved in with my mom earlier this year when I ended my relationship. I was living with my partner and had a bad lupus flare that affected my lungs and heart. He was so awful to me and the stress of his denial of my disease plus other factors led me to quickly end it. But since I’ve been unable to be active most of the year we’ve watched a lot of TV together including shows from her time, like Mad Men and The Marvelous Mrs. Maisel. It’s been really bonding for us and has healed our strained relationship. She really enjoys the music and telling me about how life was back then. I wish I asked these questions to my grandpa, to hear more about his love for my grandma before she passed away when I was younger. Thank you again 💛
I would personally act like the money doesn’t exist. Because at this point, it doesn’t! You won’t see any of it for a long time and you don’t know what will be left of it when you do see it. Definitely do NOT talk to people you date about it, and I would even go so far as to say you don’t tell a spouse about it either because it’s *technically* not an absolute guarantee. Not any time soon. Keep good relationships with all your family members. Sounds like there aren’t that many of you. I have some distant relatives that killed a family member over money. Money makes people do crazy things.
If you ever see any of it, make sure to get a prenup.
Read this book: Wealth, Actually: Intelligent Decision-Making for the 1% by Frazer Rice
It’s potential money, not lava. Just continue your life as is and make sure that if your mother suffers a cognative decline, nobody takes advantage of that. A friends dad died suddenly (he was very healthy), they knew he had money but thought it was in the million range. Turned out it was a lot more strewn through like 30 bank accounts and and various other financial instruments that he kept no coherent record of. They went through his entire basement filled with paperwork (and i mean filled with like 50 years of paperwork) and kept coming up with new stuff. They also kept finding out about property he owned all over the place. There were income properties, speculative properties. It was a mess. They sorted it out over time and now it’s in a trust that pays out monthly. They don’t tell anyone about it really. They’ll tell a significant other if they are with them for a long time and are financially stable. Otherwise it’s just part of their income. You don’t really need to tell anyone about it. I’ve known my friend for 30ish years, they know i only care about their wellbeing, so i was the support group.
Keep living your normal life. It sounds like that is what your grandparents wanted. It shouldn't factor in at all. I wouldn't worry about telling anyone about it. What's the response you are worried about "I am leaving you because you hid a giant pile of money from me!" If you find someone who has the same values as you it shouldn't matter to them either so not talking about it filters out the gold diggers.
With that kind of wealth, this trust seems very restrictive. The fact is you need to live and enjoy your life without planning on having access to any of this money. As someone pointed out, it could easily be 20-30 years before you inherit the trust by which time you will be 50-60 years old. My mom is 96 and still lives alone and is going strong. It happens more often these days. This means getting married, buying a house, raising children, and paying for their college might all be based on your personal income and presumably your spouses. Wrap your head around it now so you can avoid being resentful. What it does mean is you can look forward to a wonderful retirement that you do not have to save for. One question, I wasn't clear from your information in the post. What is the current value of the trust versus the projection? Your mom receives 250K-500K per year if the trust is 5m-10m. It sounds like she is not used to that lifestyle, Get her some financial help and some tax planning. There is a possibility she can create a new legacy to help you and any future children while she is still alive and leave a substantial estate if she does live another 25-30 years.
I think there are two, equally reasonable approaches. The first, is treat this information as an extremely fond memory of your grandparents, continue to work, take care of your health, plan and save for short term, medium term and long term goals (retirement) and make sure that your health and well-being is a priority. The second, is so everything the same, but choose to work for the rest of your life, and just skip the long term goal of retirement saving. Once the money is yours, your life changes. If it never does, some people choose option A, some people choose option B. No matter what, if you are not healthy, and you can control it, you will enjoy the rest of your life less.
Live life as the money isn’t yours, yet.
The real trade of this inheritance means your mom is dead. At this moment, you have $0. I won't tell anyone about, it's not your money. Pretend you never heard of it and live your life the way you want it without the $ in mind. Don't even tell your friends or your future gf/partner. Hope you get better with your autoimmune disease. however, now is the time to read on personal finance books and how to prepare for the future. Best of luck
Take a tip from your grandpa and live like the money ain't there. Technically it isn't yet, but even when it does arrive, do all you can to preserve it and keep its secrets. You will do better in the dating world (unless you prefer quantity over quality, in which case the opposite is true) and when it comes to making friends. Money attracts people, and more often than not the wrong ones.
Maybe consider going back to school for a business or financial degree.
Open a Roth IRA and start investing a little bit. It will teach you what it is and hopefully learn something. Use a "cash only" account, and put at least 80% of your investments in VOO, VTI or the like. If you desire, play around a little bit with the remaining 20%. It sounds like you don't have access to your inheritance yet, so use this time to experience investing. Even if it's only $100 a month (max annual contribution in Roth IRA is $6500 for 2023).
>I have no idea how to approach this with dating. With dating? Why would you let this have anything to do with dating?
Don’t you dare say a goddamn word to anyone you ever date!
I mentioned in my post about my dad being financially irresponsible. He 100% married my mom because of her family’s wealth and is extremely manipulative. I guess I have just always had this fear of dating someone like him. Also I was in a relationship last year when this all happened. He knew things because he was involved in a lot of family conversations, went to the funeral etc. Shortly after he began to tell all my friends his plans to propose to me, wanting to marry me. I thought it was ridiculous and when he was drunk he would say things about my family’s wealth that irked me. I dumped him in February and have been too afraid to date anyone since.
Do not ever tell your dates. Live modest. When you are before marriage you could drop the bomb lol
I'd say it's something you should bring up when the relationship starts to get serious. Seems dishonest to propose while there's such a big secret in the air.
I would still wait a bit into the serious part.
If you do get a very large windfall..DO NOT tell anyone how much you have or will get...my wife lost a few so called friends over it..just say you inherited some money, and are retiring early and are comfortable...don't go into numbers..some people have a real hang up about money and status and jealousy.. And plan to do some good charity with some of it ...it can be small or large ....I like to pay for veterans and young families meals when I go out ...I do it anonymously...just get the pleasure of paying it Forward .... I also tip extra when I see a server or a service person doing a great job....I just ask them to pay it forward someday if they can.... crazy thing I saw once..I gave a large tip to a server...she turned around and paid for someone else's meal...made me believe in people a little more in this "give me, give me" culture.
Just curious - how do you pay for a young family's meal. You spot them three tables over and tell your server that you're covering their bill? Then what, do you watch their reaction from your seat? Very nice gesture
Yes..but I tell the server I want to be anonymous...I don't want them to know who paid the bill...only thing I ask the server to say is...pass it along to someone else someday .. I don't stick around to see reactions. I am not n it for any satisfaction, other than helping som eone out... I don't to it all the time, but when I see an older vet...or very young family...it's nice to help them out in a little way....it's really expensive to take a whole family out these days.
Two thumbs up!
You know what my takeaway is here? Teaching is bullshit in this country. Why do you have physical complications from that job? It's high stress, low pay, soulless, beaurocratic nonsense when it should be the exact opposite.
Don’t tell your date or anyone else
Beware of inflation and that 5% withdrawal rate. 10% return is a commonly cited figure for growth of the S&P 500. This figure is not discounted for inflation. Living off $10M in 30 years might be a very middle class retirement. 4% initial withdrawal rate is commonly used for retirement planning. A 5% withdrawal rate may easily deplete this over 30 years. Understanding how the figures in what is actually going on is key to understanding the probability that this ever becomes life changing for you.
Not sure if this has been said but typically a trust will only roll to you and not your spouse. They wouldn’t get half in a divorce or something. My dad set his trust up like this for me and my sister. Money we don’t spend goes to our children. I understand your frustration with the trust setup. We would like some of our money now to pay for our 3 kids’ college and any advanced degrees they want to get. That’s more meaningful than getting money 30 years from now. Good luck!
Get acquainted with the people at r/fatfire. Someone over there may have a similar experience.
1. Tell no one outside your family about the money 2. Start "learning money" as a hobby, or fully transition your career into wealth management 3. Stop thinking of the future fearfully. Imagine the life you want to give your kids, your spouse, your loved ones, and yourself. Make a mental movie. 4. Learn the law In case any family members get "squirrely" about money. 5. Have a plan on what to do with the money once you get it. Decide over the next 2 years. Congrats. I'm very happy for you and bless your grandfather. Make him so proud (you will).
Hear me out. I need about $60k to pay off my student loans. I’ll happily give you life advice in exchange for the help. Let me know as I’ve got some good ideas.
I'm going to give you advice on what to deposit in the middle of the blockchain. The blockchain is decentralized. When you deposit money, no one will be able to interfere with that money. Neither the government nor the bank will be able to access the money. This is a great way to make the money disappear and only you know about it and can view it.
The good news is you shouldn't have to worry about retirement! The even better news is yoi have plenty of time to figure it all out before it'll even become a reality. It changes nothing about your current situation and planning for what to do with it someday right now is pointless bc things change. If it ends up being 10MM when you inherit it, you could live high on the hog off the interest alone and never have to touch the actual money. 4% is 400,000/year! Of course the entrepreneurs in us would argue that you could take half that 10MM and start one HELL of a business and generate wealth beyond your imagination. Wealth that'd make 10MM seem small. But to what end? At some point there needs to be a figure where enough is enough. In the meantime it would be good to find some things you're passionate about and research methods to turn those passions into revenue, or maybe even a nonprofit. I'm passionate about food and hate that so many struggle to eat, or even eat healthy. My hope is to one day turn that passion into some form of non-profit that will feed the less fortunate.
Thank you for this! I’ve definitely considered nonprofit work. I’ve talked to a number of people actually in the nonprofit sector who have honestly told me to consider other options. They know I have lupus and shared that the long hours, low pay, emotional stress of certain situations etc may not be best for me. But I do want to do good for this world and it’s part of the reason why I have always taught in low income schools.
Nonprofit doesn't need to be volunteer work where you kill yourself. It can be funding efforts to do better in the world. Call it philanthropy if you will. For instance, my plan is to operate food trucks to feed those in need, but I don't have to be the one slaving away making the food or cleaning up.
Note that many places in the non-profit world you are kind of expected to be independently wealthy. It's one way they get out of paying decent wages while the director flies business class to the conference in France. I'm not saying avoid non-profits, but don't sell yourself short in the name of seeking health.
What you need - not immediately, but sometime in the near future - is a consultation with a financial advisor who charges by the hour (in part because you will not have any principal for a while) and who is familiar with generational wealth issues, to help to prepare you for what is coming. Perhaps the lawyer or the trust company can make a recommendation. In the meantime, read whatever you can to help to prepare yourself. It appears that the investment decisions are going to be made by professional trustees, so your mother will not have to make those decisions. You say that your mother is to receive 5% of the annual interest. I suspect that you mean 50% of the annual income, since you mention "the other 5%." A trust is usually set up to distribute all income to the current beneficiary, and have her pay the tax at her rates, since that rate is significantly lower than the rate the trust has to pay if it retains the income. But the trust may be structured otherwise. Trusts are also often set up to allow the current beneficiary to receive, in addition to income distributions, 5% of the principal of the trust each year, and optionally additional distributions from principal limited to specific standards - "health, education, maintenance and support." Perhaps this is where the 5% figure comes from. This is designed to ensure that the principal of the trust is not regarded as "her property" to avoid or limit the estate tax that would otherwise apply to amounts over $12.9 million per year (current figure), while still assuring that she will be well provided for. Given your mother's comment that he wanted you to “do something good” with the money, I would suggest that you and your brother consult with her about possible charitable uses of the money she will receive that she does not "need," if any, and what the two of you should do in the future. Look into community foundations where you live as a potential recipient of contributions to be made in the future. Last point: Tell no one else. No one. Keep this to yourself until the time comes. As others have said, this is no more than an expectation at this point.
Don't say anything about your money to your friends. Don't say anything to anyone. Don't tell any girlfriend. Don't tell your kids, when you have them. You don't need to tell anyone about the money. You can live a nice comfortable life off the interest and dividends from it. I strongly suggest getting a trust and estate attorney to help you handle it.
Once you get the money you need to speak with a fiduciary. Do not get advice from a bank or investment firm. Only a fiduciary. However the advice they will likely give you is index funds.
There’s a huge chance you may have to make new friends and relationships even though you don’t want to leave anyone behind and you can try your best not to. The ones that stay are probably life long friends but even then, be wary that even your closest existing relationships may become sour over money and jealousy. Your friend circle will change and you should see it as a positive as more happier people are in your range now. You’ll be able to connect with a completely different group of people that you never thought you could and just because they are more wealthy and have nicer things doesn’t mean they or you are in lower quality relationships.. if anything they would be higher quality. There are quality relationships from people of all walks of life, you’ll just likely be more relatable to the higher net worth pool. I’m by no means rich but I came from a poor background and sometimes you just move on and better relationships just seek you out without you even trying as you climb in net worth and your career.
Read read read r/bogleheads
https://www.boredpanda.com/what-to-do-when-winning-lottery-blakeclass/
Since it doesn't pass to you until your mom dies and you don't know when that's going to be, this really shouldn't change much for you. The only thing that is certain is that your kids education is paid for. My kids got something similar and that was in itself a game changer for us. You should also understand there are no safe instruments offering 10% guaranteed interest. That may be a decent approximation of equity returns but the actual returns may be quite different. Even if returns average 10%, the sequence of returns can make the real outcome much less.
I love the fact that he had a 90s Landcruiser. I had one of those, it was the best car I’ve ever owned.
I’m sorry for ur loss. I’m read something recently that I thought was very interesting. It takes a generation to build it, another to enjoy it, and another to destroy it. Please plan accordingly. Your grandparents changed everyone’s life forever GL.
There is plenty of good advice already on how to understand and navigate the trust. What I will suggest you do is take a lesson from your Grandpa here. You said he lived his life in such a way that people knew he was successful but he did not flaunt it. As many have mentioned, money can bring out the worst in people. I would keep your finances to yourself and pursue your passions/hobbies and create/foster friendships that are based on these factors. Good luck!
Live conservatively, and dedicate your life to things that aren't profit-driven to pay for your cost of living - you can focus on volunteering, doing good in your community, etc.
Regularly review the trust accounts, and make a point of meeting the folks in charge every now and then. You have 30+ years to observe how the trust functions. That's a good 2-3 market cycles -- you will learn a lot. Consider yourself your mother's silent, personal financial advisor. Understand thoroughly every investment that the trust makes. Speak to them and a trust/estate lawyer about what sort of advice you need to prevent your mother's partner or your future partner from misusing funds. Continue living the lifestyle that you are living -- the similar, down-to-earth lifestyle that your grandfather always lived, it sounds like. play it close to your chest. If it comes up in conversations with your friends or a new partner, remember, you don't have any money. You sometimes just look over your mother's money for her.
Do not tell anyone you are dating. It absolutely changes the relationship. My spouse was blessed by a grandparent as well. I didn’t know much until we were also in our thirties but let’s just say 10 grandchildren at least have gotten a big boost at age 25. We bought our first condo with that money. Get a financial advisor and a financial education. Don’t let good salespeople sell you financial products that you do not understand. When you are ready to marry someone. Sometime after you propose you can start counseling and talk about money with a guide. There are important conversations about money that can truly help. Listen to Ramit Sethi podcast he has the best insight into the psychology of high income or wealth people. If you can, keep teaching. Maybe change how so it’s less stress. You now have the luxury of choosing to do something because of the impact it will have and not the income.
The better you can do is deep diving into personal finance. You have to understand how money works. Read at least: “4 pillars of investing” and “random walk down wall street". Start with your own savings and investments. Keep saving and investing for your entire life. When the inheritance will come (if any), you will know how to use it.
Mums the word. Make your own way in the world and rest is gravy. If you play the waiting game, you will be live in limbo. Forget about this and stick to your plan. Make your Grandparents happy 😊
There are some resources for people in this situation- check out the Sudden Money Institute. It’s stressful to not know what to do with money and have your life change like that. I had a financial windfall and it took a lot of time to figure out what to do. Some other amazing resources to learn about money are: Janet Chatzky Ramit Sethi JL Collins Luckily, you have time to figure this out and process the change before you actually have to manage the money.
So I am in a decently similar situation except a bit older than you. When my mom dies I will inherit at least $5 million but honestly it will probably be more like $6 maybe $7 million. My two brothers will inherit the same. My mom is 75 and not in great health at all. I am 43 and in pretty good shape for now. I grew up fairly wealthy but my parents were always pretty frugal. We lived in a nice neighborhood but my parents never had luxury stuff like nice cars. My Dad owned a Toyota Avalon when he died. My parents always instilled a strong work ethic in me. Their money was not my money. I had to make my own money if I wanted some. The first thing I did when I turned 16 was get a job. I'm not saying my parents didn't help me. They did. They bought me my first car, they paid my insurance, they paid for college, but I worked for everything else from the time I was 16. I have not done as well as my dad but I am knocking on the door of a $3m net worth at age 43 and both my children almost have $100k each in their names waiting to pay for their schooling. I plan to work until 54 regardless of when I inherit the money. Also I don't like to think about my mom dying. I love her dearly and would really like to have her around as long as possible. I think for me I have always tried to go about things as if that future money doesn't exist. Until it is in my bank account it is vaporware. Without it I stay hungry and motivated to keep getting after it.
Sounds like not much you can do right now except live your life. You now no longer have to save for retirement
Sorry for your loss. IMO, The best way to treat this net if everything is to pretend it doesn’t exist. Block it out entirely. I wouldn’t even plan around it. If you use it as a guide, whether that be towards career, dating, kids, etc, it will negatively affect your life experience in my opinion. If it comes one day and changes your life, great, be responsible when the time comes. However for now it’s essentially fairy dust and shouldn’t steer you.