Inheritance question

**bustedparts** · 03-17-2011, 05:55 PM

I receive an inheritance later this year and need some advice. I am 32 and my dh is 31, he's the only one that works making about $22,000 a year. the only debt we have are some medical bills we are paying on. we have less than $3000 in savings and we have no retirement saved up. we rent our home and both of our cars are paid for. we also have 2 young children. the inheritance will be about $75,000 before taxes.

my question is should we put all of it away for retirement?

or

should we put most of it away for retirement and use some of it as a down payment on a house?

either way, something is going in an IRA for retirement. I just don't know what to do with it...

thanks in advance for any advice

**grneyegrl** · 03-17-2011, 06:10 PM

put the amount that you would be able to deduct on your taxed..in other words if as a couple $4000 is allowed then save that as its deductable..

i would save the rest,some in a savings bond and the rest in a regular account.. your husbands income is low and it must be hard to save much..so i would save every dime i could

**MaryCarney** · 03-17-2011, 06:18 PM

I don't think you'll pay any taxes on that amount.
Here's another thought - could you use some of it to get some training for your husband to increase his income? That might be the best long-term use of part of it. Even with a down payment, you're going to have a hard time getting a mortgage with such a low income.

**jas** · 03-17-2011, 07:26 PM

When my dad passed (nine years ago today) we were not taxed on our inheritance.

**bustedparts** · 03-17-2011, 07:36 PM

my husband is already going to school. he should graduate this year. whether or not he will be able to find a job in his field is a totally different story. would rather be low income than no income

**bustedparts** · 03-17-2011, 07:43 PM

Originally Posted by jas

When my dad passed (nine years ago today) we were not taxed on our inheritance.

sorry about your dad

**Spirit Deer** · 03-17-2011, 08:10 PM

Whether or not you will be taxed depends on your state's tax code. You will need to do some research to find out if or how much you may be taxed.

If you're planning to move, such as if your husband may have to relocate to find a job in his field, I wouldn't buy a house yet.

I think I would keep a big chunk of it liquid until you know what's going to happen when your husband finishes his education. You may end up moving and then want to buy a house. Just be sure you don't go dipping into it for this and that, keep it in a big chunk for something important.

**heartofmine** · 03-17-2011, 08:57 PM

It has to be 2 million before you pay inheritance taxes. If the money was in accounts drawing interest...like a cd or savings account you will have to pay income tax on the interest only. This is what dh had to do when he inherited from his sister and then again when he inherited from his dad.

As far as what to do with the money...my dh and I were in the same situation...low income, only debt was our home and doctor bills. The first thing dh and I did was pay off our home and put the rest into cd's where we knew it would be safe. The doctor bills we just continued to pay payments on because there was no interest on them. They are now paid too.

For myself if I were in your situation instead of continuing to pay rent I would buy a home and put as much down on it as I could and see about borrowing the rest. With a substantial down payment and only borrowing so much you could probably get payments that would be less than your rent you are paying now and it would be yours. Don't go overboard though and get more house than you can pay for. I don't know what home prices are like but since you have time before you get the money it won't hurt to take a look around. Play it smart and it will be a win win situation for all your family. Good luck.

**MaryCarney** · 03-17-2011, 09:12 PM

Originally Posted by bustedparts

my husband is already going to school. he should graduate this year. whether or not he will be able to find a job in his field is a totally different story. would rather be low income than no income

What's he going to school for???

**NikoSan999** · 03-17-2011, 09:34 PM

Originally Posted by jas

When my dad passed (nine years ago today) we were not taxed on our inheritance.

Florida dosen't have an inheritance tax. Some states do. Thank goodness cause we're in Fl also. They are trying to pass for Florida to have one tho. Don't know what's going on with it.

As for buying a home there's always owner financing when the time comes. More and more sellers are going that route to get rid of the house. Have a good real estate attorney that's on your side go over the contract.

Good luck. And yes low income is better than no income. Every time.

**bustedparts** · 03-17-2011, 09:36 PM

Originally Posted by MaryCarney

What's he going to school for???

IT, computer programming

**bustedparts** · 03-17-2011, 09:56 PM

Originally Posted by heartofmine

It has to be 2 million before you pay inheritance taxes. If the money was in accounts drawing interest...like a cd or savings account you will have to pay income tax on the interest only. This is what dh had to do when he inherited from his sister and then again when he inherited from his dad.

As far as what to do with the money...my dh and I were in the same situation...low income, only debt was our home and doctor bills. The first thing dh and I did was pay off our home and put the rest into cd's where we knew it would be safe. The doctor bills we just continued to pay payments on because there was no interest on them. They are now paid too.

For myself if I were in your situation instead of continuing to pay rent I would buy a home and put as much down on it as I could and see about borrowing the rest. With a substantial down payment and only borrowing so much you could probably get payments that would be less than your rent you are paying now and it would be yours. Don't go overboard though and get more house than you can pay for. I don't know what home prices are like but since you have time before you get the money it won't hurt to take a look around. Play it smart and it will be a win win situation for all your family. Good luck.

we don't have many more medical bills, thank goodness! and when they are paid the money that is going towards those will be going into savings. dh would like to buy a house, but wants to wait until he finishes school. our rent is outrageous, although for a 3 bedroom it's cheap for our city. we definitely wouldn't go overboard on buying a house. the bigger the house, the bigger the tax bill, electric bill, and more cleaning and repairs you have. no thanks!

we have discussed 2 charities we want to donate to. one that has helped my daughter and the other my husband and son will choose. we just have to decide how much to give them. decisions, decisions....

**heartofmine** · 03-17-2011, 11:30 PM

I would wait until your dh finishes school too since he doesn't know where his new degree may take him. In that case I'd put the money you want to put aside for a house into a cd drawing some interest until you are ready. I mentioned we put the rest of ours into cd's drawing interest. We did that because we were planning on building a new house when the time felt right. We are getting ready to do just that.

**Lora88** · 03-18-2011, 07:37 AM

Probably gonna get slammed here but I have to say this you will owe no federal in come tax on that money State tax depends on where you live some states have one some dont depends on the state where the person died and they have an exempt amount regardless there is a chart on the internet just google estate tax and and its gives info on estate tax inheritance tax for each state I dont think you will owe anything on that amount personally. That said an inheritance is not subject to distribution in the event of a divorce unless it is co mingled with other martial funds I know you said your income was low and you are probably not un happily married however when you receive the money keep it in your name only and wait awhile till you decide what to do with it take it from me I have seen alot in my years dont mean to be cyncial but life can be funny Ok everyone flame away

**jas** · 03-18-2011, 08:02 AM

Originally Posted by Lora88

Probably gonna get slammed here but I have to say this you will owe no federal in come tax on that money State tax depends on where you live some states have one some dont depends on the state where the person died and they have an exempt amount regardless there is a chart on the internet just google estate tax and and its gives info on estate tax inheritance tax for each state I dont think you will owe anything on that amount personally. That said an inheritance is not subject to distribution in the event of a divorce unless it is co mingled with other martial funds I know you said your income was low and you are probably not un happily married however when you receive the money keep it in your name only and wait awhile till you decide what to do with it take it from me I have seen alot in my years dont mean to be cyncial but life can be funny Ok everyone flame away

Would not flame you. Stuff like that does happen all the time. Just this past week someone one here was saying that a spouse just got a settlement (which is different than inheritance) and now wants to bolt the marriage.

Nothing has to be done right away for sure other than keeping the money in a safe place.