Got an inheritance? Don't do THIS...

A friend revealed to me that her mother, age 62, is in dire financial shape two years after the death of her successful husband.   I'm shocked, I never thought it would happen.   The problem is that Mom didn't have a plan to manage her money and the kids didn't want to hurt her feelings and butt in when they realized she was depressed and spending too much.   The reality is hard to understand - Mom went through $600,000 in a little over two years.   More than a half a million dollars in 24 months.   It's a shame because, if managed well, Mom could have lived comfortably for the rest of her life.  Now Mom's renting an apartment and selling off her antiques.  Her large home is for sale.  She's living on a meager social security payment - her husband died before he began to collect social security so she's collecting earlier than she might if he'd lived.  It's nice that the funds are available but the payments would be more if she'd waited to collect later in life.

Here's WHAT to do if you get an inheritance:  I write this for people over 55-60 - those who are faced with living on a limited income.  The idea is to create stable living conditions, minimizing costs overall so that living on a limited income is manageable and doesn't cause hardship.

Seek advice from a banker or financial professional. There are plenty of funds where you can put money that will generate interest or receive dividends even if the annual payoff is low.  It might not be as much as riskier investments but it's steady and you won't risk the principle or bulk of your money.  Think if it as a source of long-term annual income:  Let it sit in a special fund and at the end of a year 1 , you could have 20-30-40,000 to spend during year 2 while your nest egg sits and grows money for year 3.  (I've discussed this scenario with representatives from Edward Jones Financial, but any reputable financial firm should be able to help.)
Seek to make the money LAST - don't go on spending sprees. Don't do a bunch of cosmetic work on your home to make it look prettier. 
Seek emotional counsel if you have the urge to buy and buy and buy - this is a sign of depression.  I believe we get a little spike in endorphines when we spend money - this feels good so we do it a lot when we're depressed.   This is RISKY - try to resist the urge to shop; if possible avoid the mall, don't watch shopping channels and don't splurge.
Consider setting up a trust or annuity for yourself - this will ensure that someone doles the money to you over time.
Invest in things that will make your life more stable:  Pay off credit cards then CUT THEM UP. Pay off your house and make repairs that will ensure it's in good shape for the long term. Note that I said REPAIRS not improvements  - only make improvements if it make it safer or will increase the selling price.
Buy or pay off a quality car that will last you a good long time - consider a brand that will require minimal repairs and will last miles and miles.  Be sure it's a size that you'll be SAFE driving - think automatic transmission, 4 door-sedan not oversized SUV with 4-on the floor!

What NOT to do:

Don't go on vacation after vacation without consulting a financial adviser. Understand if you can AFFORD a lot of travel.  Spend it on travel ONLY after you've made arrangements for the long term.
DO NOT LOAN money to kids, grand kids or friends. Often people have every intention of paying money back but when all you have is one big chuck of money, it's value is in the potential it has to earn more. Don't whittle it away a few thousand dollar loans at a time; before you know it, the funds are gone and collecting those loans is probably impossible.
Don't make a lot of cosmetic changes to your home - unless you'll sell soon and you are SURE it will pay off big!  Example:  if your living room is painted dark brown, it might be wise to paint the walls a neutral color before showing it for sale - the brown color will make the room look smaller and won't suit everyone's tastes.
 Don't buy a lot of flashy gifts.  you don't have to buy off family or friends, they should WANT your long term financial security not a bunch of "stuff". 

What should I do with dads life insurance? what should I do with my  inheritance?

Great site for special needs clothes!

Find clothes is so hard for mom now that she's weakened due to arthritis.   I just came across this site when I searched for clothes for a "dowagers hump"...  Though some of the things are spendy, I think there are some good options here - especially for easy-on slippers.   I will also look at the clothes in depth to see if I can modify any of mom's existing cloths for easier dressing (think off and on) or just to look better in general.

The name of the online store is Silverts, found here:  http://www.silverts.com/default.cfm?adv=AAA


Clothing for the elderly, clothing for dowagers hump, clothes for dowagers  hump, shoes for old feet, shoes for arthretic arthritic feet, shoes for hammer toes

Grandpa came through - sort of...

Update on my last post of March 30 - my friend grandfather WAS as sharp as we expected.   "G" went to his bank to advise them of this death and look for outstanding checks. She learned she was his one and only beneficiary on several accounts.  She has also been in touch with insurance carriers who advise her that she is the beneficiary of those accounts as well - it's enough to put her two youngest kids through college and start a nice retirement nest egg for herself.    

The two things Grandpa did not take care of - the title to his trailer home and brand new Lincoln  - will require that she go through probate in the state where he lived and died.   The attorney tells her that it will, by law, go to her father but she's okay with that.   She was so appreciative for the savings and insurance that she will not argue over these assets.   In the end, she almost feels sorry for her father because of what he missed not knowing his dad.  She's taking the high road and I'm proud of her.  I'm sure her Grandpa is too.

A friends kids miss out if she can't find grandpa's will

This weekend I've spent all my time with a  friend whos' grandfather just passed away.  She tried hard to quickly travel across the country to be with him in my town before he passed away.  Unfortunately, she was 3 hours too late.  She's never dealt with the business side of a death.  There are all sorts of things one must do - find wills, life insurance policies, savings or checking accounts, conduce probate, bills and funeral expenses.   It's detailed and things must be done legally..

My friend, we'll call her  "G",  was close to her grandfather and held his Power of Attorney for medical care.  For years he told her that he wanted her to have all of his savings and that it should be used to put her two youngest kids through college.   G never asked about wills, or amounts, or locations because she didn't want to be rude. She respected and loved Grandpa and didn't keep in touch with him because of this potential inheritance.   Her grandfather was really sharp until the end and had a good head for business; she assumed he'd taken care of it all.... 

So today, only 8 hours after Grandpa passed,  I helped her search his home for important papers and we found one document - a bank statement from January 2011.   Her son searched his computer for anything that might give a clue to his income and debts -  life insurance, check register, bills, car titles, deeds,   - anything that might help her understand Grandpa's financial status.   Nothing.  Just one bank statement with checking and savings and a small charge card balance.   Damn.......I thought about all the legalities necessary..... "Double Damn."  Then  an "oh shit!!" moment......

We sat down for a break and it dawned on me - if Grandpa did nothing, even though he told G what he wanted to happen,......  if Grandpa put nothing in writing.  If Grandpa didn't NOTARIZE anything, then, ...  "oh shit!!" ... everything would go to his son.  EVERYTHING.  Everything would go to a drug addicted, low-life that had not seen his father for more than 20 years.   Everything would go to a guy who did nothing but cause his parents deep hurt and take advantage of them.   I didn't want to say it out loud but I could not let G begin to conduct this business without that knowledge.  

I called some friends and got a reference for an attorney.  She called the bank to understand what they needed to set up an checking account for Grandpa's estate.  She can't do anything with out two things:  1. Death Certificates and 2. being named by the county as the Personal Representative for his estate.    Damn... 

The bottom line is that Grandpa died without a will and this WILL cause a huge mess. .  Unless he was astute enough to name her as beneficiary on his accounts and his life insurance then the law of the state prevails.     So now, she'll become his "personal representative" and start the probate process.   

The lesson for anyone else is clear:  write shit down!!!  Notarize it!  Have it recorded at the county clerk/assessor!!!  Make a will!  Fill out the beneficiary forms for life insurance, savings, checking, retirement accounts.  Don't wait, it could cost your loved ones and your wishes might not be honored.
Does grand pa grandma need a will?  Grandpa died without a will.  Why should i do a will.