[USER]

Married (53 and 57), 2 kids (both 11), live in very HCOL area.  Late to FI.

Own house and have about $440,000 at 3.0% left on it.  Payment of $2000/month.  While it’s a too small starter house, the thought of buying now and having higher monthly and interest rate is not appealing.

Pay off credit cards each month.  One car loan for husband on which we pay double. I’m looking to purchase a new vehicle this year, and can do so comfortably on what we make. 

We both max out retirement accounts, plus 457, plus 2 backdoor Roths .  Have two 529 plans with $72,000 in each.  Also invest about $1000/month into taxable brokerage.  Have adequately funded emergency savings and sinking funds for other expenses. 

Have about $1.2 M in retirement.  About $50,000 in taxable brokerage.  I will have a pension of about $70,000 if I retire at 63 (10 more years).

We go on multiple vacations  a year and enjoy life. 

I don’t want to waste my parents’ hard earned money.  I want it to grow.  Also can’t help but to feel I should not comingle with married money.  Is the only best option to invest it in a solo brokerage?

Thanks for reading.

[Jule]

You can just invest it in a brokerage account in your name only. Nothing wrong with that. Lots of flexibility with a brokerage account.

[David]

I would not touch the mortgage or the car unless the car has an unreasonable rate. Determine what you need to do for kids’ school if you are inclined to pay for it.

After that, I would invest in the brokerage account according to your investment policy statement.

Well, of that amount, take 5% or so and do something fun.

Or make a home improvement.

Unless I was suspect of my spouse, I would (and have) co-mingled the money.

Useful: Inheritance Dilemma: Legal Implications of Family Estate Disputes

[Tony]

What are your goals as you approach retirement? Figure that piece out and then reverse engineer how to best use the inheritance to get there.

[Cheryl]

Don’t commingle the money. Let it sit somewhere while you take some time to figure it out.

[Bill]

If you want to keep the money separate, yes, just put it in your own brokerage.

I would like to push back on the “don’t want to go waste it” idea though. Money is a tool. You should use that tool to accomplish your goals.

[Damaso]

I would earmark it for your kids University Education that way it will be less tempting to spend it because it it already spoken for. I would place it in a low cost S&P500 fund and let it grow until it is time to pay University. If your kids don’t go, then you can reevaluate at that time.

At least this plan will give you 6 years to really plan for your next steps and is not a quick decision.

Related: Roth IRA conversion advice for retired couple: Larger conversions now or let it grow for inheritance?

Good luck!!

[Ron]

Brokerage in whatever investment strategy you have now for retirement. It hopefully gets you closer to your financial goals, whatever that might be. Assess the impact of the addition within the next year.

[Paul]

As a starting point, pay off the car and if you’re buying another car, pay in cash. Why pay interest on a depreciating asset when you don’t have to?

I’d invest the rest. It sounds like you’ve already got education for the kids and retirement figured out. If you don’t like your current house as a long-term proposition, wait for interest rates to drop a bit and consider selling your current house.

You’ll take a hit on the new interest rate, but presumably you’ve been in your current house at least two years meaning as long as you buy a new house, you should be able to avoid capital gains on the sale. Check with your accountant to make sure on that for your specific situation.

[Lisa]

You’ve mentioned not wanting to waste the inheritance which to me translates to wanting to do something meaningful, and you’re already secure financially, so how about setting up a charity or using a portion of the money to help a cause that your parents were interested in? What about donating a bench to their favorite park? Something like that.

[Christina]

We kept my inheritance separate but mine is protected by an inheritance trust. Check your state law regarding marital assets – if you use that money to buy, say a car or a vacation home, the car and home will become marital assets eventho the money was not.

[St Patrick]

You can set up a new 529 in just your name for each of the kids, and use a special election to “superfund” the next five years’ worth of contributions ($18000 x 5 = $90000 each). Then the rest in a taxable brokerage in your name only.

Theoretically you could also gift $180k to your spouse, and they could do the same ($90k for each kid). That would eat up $360k of the $500k inheritance, and add $180k to each kid’s 529 account. That might be overkill, but you never know where they might end up going to school (some already cost over $80k/year!), how long they will go to school, etc., and any excess once they are done can eventually be transferred to a Roth IRA (up to certain limits) or shifted to another beneficiary (perhaps grandkids in the future?).

[Author]

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