Handling an Upcoming Inheritance

Jill on Money with Jill Schlesinger

Host Jill Schlesinger guides Seattle resident Jane through a $1.75 million inheritance from her late mother-in-law, reviewing the couple's current financial

Key takeaways

• Jane and her husband have $1.75 million in retirement accounts and $200,000 in accessible cash while spending roughly $20,000 monthly.
• The inheritance will arrive in 6–12 months after two properties sell, prompting a need for immediate account structuring.

Main topics

• Inheritance strategy
• 529 college savings plans

Notable quotes

It's like the difference between saying I can plan proactively to I can be reactive to if there is a huge event like a layoff.

Conclusion

The episode underscores that windfalls require deliberate structuring and

Transcript preview

Speaker 2 (0:03) Welcome to the Jill on Money show. It's Friday, October 2nd, and we are here trying to help you get wherever you want to go financially. If you've got a question we'd love to hear from you, go to JillOnMoney.com, click the contact us button, write us a note, and if you wouldn't mind. If you'd like to join us on the air live, check the box. And that would be so great because then we could have you on the air. We can ask lots of nosy follow-up questions. While you're on the website, check out all the content that lives there. There's resources. There are my books. There are videos, blog, everything. And also a link to our other program. It's called Money Moves. And that is a YouTube show. And Mark and I co-host that. And it's just, it's a blast. So check that out. Okay. Now, today we are joined by... Jane in Seattle. So Jane, you had a little technical difficulty. Are you back with us? I Speaker 3 (0:56) am. Speaker 2 (0:57) Fantastic. Tell us what's going on. How can we help you out? Speaker 3 (1:00) Well, my mother-in-law recently passed away and we learned that her trust is going to be leaving us about $1.75 million. Speaker 2 (1:13) Wow. Speaker 3 (1:15) And yeah, it was very unexpected. And we had, yeah. We didn't have any idea that that was coming our way. And we felt very lucky and also a little confused about what is the best thing to do with it. Speaker 2 (1:32) So let's just kind of go backwards for a little bit here. And let's talk about what's going on before this occurred. So you're married. And how old are you and your spouse? I Speaker 3 (1:43) am 52. And he is about to turn 50. Speaker 2 (1:46) Okay. And are you both working full time? He Speaker 3 (1:50) works full time and I work part time. How much do you guys earn together? About $400. Wow, Speaker 2 (1:57) that's a lot. Do you guys have children? We have two. They're both in middle school. Do you want to save or have you saved for college? Speaker 3 (2:06) We do plan to at least help them with college. My husband and I both came from blue collar backgrounds and we want them to you know, respect and earn part of what they're getting so that they can understand the value of it. But I mean, we definitely don't want them to start life with a ton of debt, but we do plan to make them work for it some as well. Speaker 2 (2:29) Okay. So that is, so potentially one use of this inheritance could be to, to boost their education funds and throw a little bit money aside for them. So the next question I have for you is, How much have you guys saved so far for yourselves? So let's start with traditional retirement accounts. Speaker 3 (2:53) We have about 1.75 in traditional retirement accounts right now. That's the Speaker 2 (3:01) number of the day, 1.75. Okay. I know. Okay. And what about in Roth accounts? Speaker 3 (3:08) That total value of 1.75 includes our Roth. our 401k and employee stock. So it's kind of all together. Speaker 2 (3:19) Okay. But is the lion's share of this not been taxed? I guess that's the question. Speaker 3 (3:24) About two thirds of it has not been taxed. Speaker 2 (3:27) Okay. Next question for you. Do you guys have money outside of your retirement account, whether that is a brokerage account or also savings accounts? Speaker 3 (3:38) Outside of our retirement account? I mean, we have Speaker 3 (3:43) Probably $200,000 accessible cash. Okay. Speaker 2 (3:47) That's a lot. Good. Is that what you mean? Yep. Yep. And do you have a brokerage account? Something that is like an investment account that's not a retirement account? Speaker 3 (3:57) No. We don't have like a separate brokerage account. Okay. Okay. So you would be starting fresh if you were going to put some of this money. Yeah, Speaker 2 (4:03) exactly. Speaker 3 (4:04) So you own your home? We owe about $425,000 on it, and it's worth about $1.2. Speaker 2 (4:14) What is the interest rate on that Speaker 3 (4:17) mortgage? On Speaker 2 (4:17) our Speaker 3 (4:17) mortgage, there's $2.8. We refinanced during pandemic. Speaker 2 (4:20) Oh, my gosh. And