Need financial advice...inlaws came into some $$$

[Ladybugsy]

Good Morning Everyone! This is a great day! My inlaws, who are in their 70's, and hardly able to even buy food for the two of them, who live in Tennessee and refuse to move to be near our family because they love the place they grew up, who raised 6 children on a factory workers pay and have buried 2, who live in a tiny apartment that they can barely afford, who take care of everyone that lives near them, and are the most deserving people in the world, got a check yesterday for 387,294.14.

He is a Vietnam vet who has a specific kind of heart disease and prostate cancer that has been linked to a pesticide that was sprayed on them. He is 100 percent disabled now and can finally stop working! He got back pay to 1996 and will also be receiving a monthly check. I am just tickled pink.

Here is my issue. We are not a family who has ever had alot of money. This, to us, is a LOT of money. They are from the hills of Tennessee and neither of them even completed high school. They have asked me to come and help them get everything set up. I am happy to do it, but I really have no idea where to start. He did open a bank account yesterday and deposited the check, and he's told noone in the family other than my husband and me. I am kind of wondering if a money market account would be a good thing for them, and I feel they will also need a will as they still have 4 living children. Two of which would spend every cent if they knew it was there, and my inlaws would let them. They are just very giving, down home people who trust too much. If anyone has any information they could point me to in how to help them with this. Money is like a foreign language to me...lol. We don't have any bills other than our car payment, and we live a very simple life. I have no idea the best course of action here, so I thought I'd turn to my budget board friends for help.

 

[richmond282]

I am no money guru by any means, but I would set up an appointment with a financial advisor or an accountant before doing too much with the money. I would also set up an appointment with a lawyer to draw up a will immediately. Don't be afraid to ask for advice from a professional. Good luck and congrats to them!

 

[mommasita]

What great news!! They sound like great people, and so do you~!

Firstly, I would be looking for a Financial Advisor. They absolutely need to make a living will. A lawyer/notary would be next on my list. Most work together as a team.

 

[punkin]

The limit for FDIC insurance at a bank used to be $100K. I vaguely remember a temporary raise in that during the financial crisis, but I think it it is back down now. If it is over the limit sitting in a bank account, it is at risk.

 

[WDWisTheBest]

Good Morning Everyone! This is a great day! My inlaws, who are in their 70's, and hardly able to even buy food for the two of them, who live in Tennessee and refuse to move to be near our family because they love the place they grew up, who raised 6 children on a factory workers pay and have buried 2, who live in a tiny apartment that they can barely afford, who take care of everyone that lives near them, and are the most deserving people in the world, got a check yesterday for 387,294.14.

He is a Vietnam vet who has a specific kind of heart disease and prostate cancer that has been linked to a pesticide that was sprayed on them. He is 100 percent disabled now and can finally stop working! He got back pay to 1996 and will also be receiving a monthly check. I am just tickled pink.

Here is my issue. We are not a family who has ever had alot of money. This, to us, is a LOT of money. They are from the hills of Tennessee and neither of them even completed high school. They have asked me to come and help them get everything set up. I am happy to do it, but I really have no idea where to start. He did open a bank account yesterday and deposited the check, and he's told noone in the family other than my husband and me. I am kind of wondering if a money market account would be a good thing for them, and I feel they will also need a will as they still have 4 living children. Two of which would spend every cent if they knew it was there, and my inlaws would let them. They are just very giving, down home people who trust too much. If anyone has any information they could point me to in how to help them with this. Money is like a foreign language to me...lol. We don't have any bills other than our car payment, and we live a very simple life. I have no idea the best course of action here, so I thought I'd turn to my budget board friends for help.

The best idea is to find a Certified Financial Planner in the area where they live who will bring in legal and accounting advice. Many CFPs charge only for services rendered, not a percentage. Good luck.

 

[Pixie Dust for Me!]

I found this on fdic.gov: "FDIC insurance covers all types of deposits received at an insured bank, including deposits in a checking account, negotiable order of withdrawal (NOW) account, savings account, money market deposit account (MMDA) or time deposit such as a certificate of deposit (CD)."

As to the insurance amount I found this: "The standard deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category."

They might be best off withdrawing say 1/2 of the money and putting it in a savings account at another Bank until you all can figure out what to do. Make sure the account is eligible for FDIC insurance as my grandparents were once convinced to buy an uninsured "annuity" through a bank...!

It's also wise to have a conversation with them about how people will come out of the woodwork once they know they have some money!

Congratulations to them, though I am sorry to hear that their windfall is due to serious health issues. Hopefully this compensation will help them now to deal with those health issues.

Karen

 

[Marionnette]

The best idea is to find a Certified Financial Planner in the area where they live who will bring in legal and accounting advice. Many CFPs charge only for services rendered, not a percentage. Good luck.

OP, Im sorry for your father in laws health problems. This money is a blessing, Im sure, but it came at such a price. I pray that he gets the medical treatment that he needs. Please encourage your in laws to write a will in order to protect there assets. I also recommend a financial planner but dont just pick a name out of the phone book. Dave Ramsey has endorsed local providers for investing. http://www.daveramsey.com/home/ That might be a good place for your in laws to start. You dont want a greedy someone taking control of there money and lining his own pocket thru various fees. They should also divide that deposit into two or more smaller FDIC insured accounts until they decide what to do with the money long term. The FDIC insures up to $250K per account. Best of luck to them. It sounds like there lives just got easier.

 

[ohlas]

The limit for FDIC insurance at a bank used to be $100K. I vaguely remember a temporary raise in that during the financial crisis, but I think it it is back down now. If it is over the limit sitting in a bank account, it is at risk.

no its 250k at most banks, but that isnt the point.

Wow, Ok you want to sit at kitchen table first with all the bills and expenses they have.

long term in simple terms for them you want to set up a budget and yearly cds at a yearly date that will deposit in to checking/ money market account and yes a new will

lets say they need 20k to live in a year, after the first of the spending spreee is over you set the rest up in chunks of 20k.cds

talk to more then one bank because the money advisers are also salesman for the bank, stay away from stocks/bonds/and putting all of the money in one bank.

good luck and omg i would have a heart attack if i got a real check in the mail for that amount.

 

[akcire]

Long answer....

Current FDIC limits are $250K. So as long as both names are on the account, they should be fine. You could encourage them to open a second account while waiting for some legal documents, so they are extra covered.

Since they are simple people, and probably wont spend a ton of this money. I would have them set up a will and probably a trust for their benefit, with a reputable attorney. If you are not from the area, I would call the probate department of your courthouse and get some recommendations on lawyers--I would not tell them your name, nor the amount of money; but if you told a clerk your in-laws came into some money and you needed direction to a reputable lawyer, they would probably give you a few names. A fair price for a will is up to $500-$700, for a trust depending on the complexity $2500. At the same time they should set up a power of attorney and their healthcare directives.

The trust could then be administered by a bank. Generally larger banks have trust divisions. I would probably take the bulk of the money $300K and set up CD ladders for them--the CD's would have to be titled in the name of the trust. It wouldn't pay very much, but it wouldn't be easy to get if the other family members tried to "help them spend". Out of the other $80K, they should of course pay all their bills and upgrade their lives if they would like.

It sounds like the monthly check they will get will cover their expenses, and this $80K can help to subsidize that--for example if they want a new car, etc. I also suspect that the check stops if your father-in-law dies, so you need to explain to them that the $300K is there for your mother-in-law if she lives longer. That along with any social security she has should be enough to keep her in a nice lifestyle without being a burden to any members of the family (ultimately why we all save for retirement).

If you have more specific questions feel free to send me a PM, I have a lot of experience setting up money for family. Our family has a lot of very hard working old people who saved their whole life, and at the same time a group of people that would rob them blind. The kind of people that if you gave them $5 to go to the corner store and buy milk for your baby, they would disappear and never come back with the milk or your change. We have had to be a bit more creative to keep their resources safe.

My favorite was when one of the old people in our family died, and other family accused us (me & husband) of stealing all the money--we had power of attorney. It was so funny, because we had handled their money for 10 years and never spent one dime, in fact there was significantly more money when they died than before--despite 5 years in a nursing home. I literally had ever bank statement and cancelled check. I never cash out of the account, every expense was paid via check. They actually sued us, and I showed up in court with three boxes of documents. The judge dismissed the case, and advised them I was entitled to fees for managing our old persons money at something like $30 an hour over 10 years (we declined). The best part was the will left al the money to charity, they of course tried to get that thrown out. It had been written in 1985--so pretty hard to claim testamentary incapacity. Their lawyer was yelling at them as they left the courthouse. Good times.

 

[kirstenb1]

Gosh yes, get a financial planner. But second, his health sounds very impaired. Do they have any kind of wish list? I don't know if he could travel, or whatever. I'm not finding the words I want to say exactly...but maybe some of the money could be used to buy a nice, handicapped accessible home in a dream location?

 

[Ladybugsy]

Wow, I knew I could get good advice here! So much to think about!

I spoke to her just now, and she said she would not be moving, or buying a house, she only wants hardwood floors and new furniture in her apartment. She said, " My car runs good", (a 95 Saturn) "and I have plenty of clothes, I just want to go to the store and buy all the groceries I want...but Claude (her son, who is 44, lives with them and a drunk) would eat them all up before tomorrow! " I told her to go buy herself a good used refridgerator and put it in the shed and lock the shed.

Simple but good people.

As for his health, he had open heart surgery a while back and is doing well. His prostate cancer is very slow growing, and the doctor said it's not something that would kill him, it's just going to be symptomatic. He also had a stoke a few years back, but he still drives, gets around, and has a good quality of life. Nothing debilitating so far, thank goodness.

Thanks for all the help! I have some research to do, I see. But at least I have a good direction to start in. I'm very grateful!

 

[DCLbrideSept2009]

Absolutely get a financial planner! I also second the suggestion of going on the Dave Ramsey site to find what he calls ELPs - "endorsed local providers." Would even suggest calling into Dave's show, getting some of his books, etc. It is a good chunk of money but could EASILY be gone QUICKLY if not managed correctly and smartly! We've all heard about lottery winners who are now BROKE because they just blew through the money without any sort of plan/budget. Especially when you've come from REALLY having a hard time financially to suddenly having a big chunk of money.... all to easy to just blow through it! Definitely get a plan for the money and also a will in place like yesterday!

 

[Ladybugsy]

Long answer....

Current FDIC limits are $250K. So as long as both names are on the account, they should be fine. You could encourage them to open a second account while waiting for some legal documents, so they are extra covered.

Since they are simple people, and probably wont spend a ton of this money. I would have them set up a will and probably a trust for their benefit, with a reputable attorney. If you are not from the area, I would call the probate department of your courthouse and get some recommendations on lawyers--I would not tell them your name, nor the amount of money; but if you told a clerk your in-laws came into some money and you needed direction to a reputable lawyer, they would probably give you a few names. A fair price for a will is up to $500-$700, for a trust depending on the complexity $2500. At the same time they should set up a power of attorney and their healthcare directives.

The trust could then be administered by a bank. Generally larger banks have trust divisions. I would probably take the bulk of the money $300K and set up CD ladders for them--the CD's would have to be titled in the name of the trust. It wouldn't pay very much, but it wouldn't be easy to get if the other family members tried to "help them spend". Out of the other $80K, they should of course pay all their bills and upgrade their lives if they would like.

It sounds like the monthly check they will get will cover their expenses, and this $80K can help to subsidize that--for example if they want a new car, etc. I also suspect that the check stops if your father-in-law dies, so you need to explain to them that the $300K is there for your mother-in-law if she lives longer. That along with any social security she has should be enough to keep her in a nice lifestyle without being a burden to any members of the family (ultimately why we all save for retirement).

If you have more specific questions feel free to send me a PM, I have a lot of experience setting up money for family. Our family has a lot of very hard working old people who saved their whole life, and at the same time a group of people that would rob them blind. The kind of people that if you gave them $5 to go to the corner store and buy milk for your baby, they would disappear and never come back with the milk or your change. We have had to be a bit more creative to keep their resources safe.

My favorite was when one of the old people in our family died, and other family accused us (me & husband) of stealing all the money--we had power of attorney. It was so funny, because we had handled their money for 10 years and never spent one dime, in fact there was significantly more money when they died than before--despite 5 years in a nursing home. I literally had ever bank statement and cancelled check. I never cash out of the account, every expense was paid via check. They actually sued us, and I showed up in court with three boxes of documents. The judge dismissed the case, and advised them I was entitled to fees for managing our old persons money at something like $30 an hour over 10 years (we declined). The best part was the will left al the money to charity, they of course tried to get that thrown out. It had been written in 1985--so pretty hard to claim testamentary incapacity. Their lawyer was yelling at them as they left the courthouse. Good times.

Thank you for such a detailed answer. I thought about a trust, but I'm just not sure what the benefits are. Do you know where I could get more info on that?

 

[It'sWDW4me]

I found this on fdic.gov: "FDIC insurance covers all types of deposits received at an insured bank, including deposits in a checking account, negotiable order of withdrawal (NOW) account, savings account, money market deposit account (MMDA) or time deposit such as a certificate of deposit (CD)."

As to the insurance amount I found this: "The standard deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category."

They might be best off withdrawing say 1/2 of the money and putting it in a savings account at another Bank until you all can figure out what to do. Make sure the account is eligible for FDIC insurance as my grandparents were once convinced to buy an uninsured "annuity" through a bank...!

It's also wise to have a conversation with them about how people will come out of the woodwork once they know they have some money!

Congratulations to them, though I am sorry to hear that their windfall is due to serious health issues. Hopefully this compensation will help them now to deal with those health issues.

Karen

No need to get a second bank involved. The key is the ownership category. I would recommend that they withdraw $150,000 from the first account (I'm assuming that was opened as a joint account - Mr. or Mrs. Jones). Open two new accounts with $75,000 for each one of them - one Mr. Jones only, one Mrs. Jones only. Now there are two kinds of ownership categories - joint as well as individual - both category insured up to $250k per person. The full $387k is now completely covered.

I definitely agree that finding a financial planner and lawyer (will + living will) is they're next step.

Congratulations to MIL & FIL!!

ETA: the multiple accounts I'm just recommending as a temporary FDIC insurance coverage thing until they decide what they're going to do with the money long-term

 

[Sadie22]

Thank you for such a detailed answer. I thought about a trust, but I'm just not sure what the benefits are. Do you know where I could get more info on that?

An elder law or estate planning attorney can explain the options to you. One in the community may give you a free consultation or you could pay by the hour to learn these options. Laws vary by state, so you can get some ideas by reading library books or researching on the Internet, but it's best to talk over the options with someone local who is familiar with the laws in that state.

 

[Ladybugsy]

Ok, I've made an appt. with a financial advisor in their area. The receptionist said there was no charge for the appointments, or any phone calls, ect. That the fees are if we decide to go with what the financial advisor is suggesting, and then it's a percentage. Like I said, this is very new to me. I did get the CFP's name from the Dave Ramsey site (Thanks to Marionnette for suggesting that) but I'm just not sure what that means. Does that mean we turn the money over to him and he invests it? And he gets a percentage? What might that percentage be? So many questions. I just want to do the right thing for them.

 

[blackforest]

Our finacial provider, who is a dream by the way, only "gets paid", for any product we buy (life insurance and the like).

A couple of points,

* Make all accounts ~or~ like a pp said. Heaven forbid that something should happen to either party, the other can still have access. Keep some money "liquid". Don't get everything tied up that expenses can't be met, and then there would be a penalty for withdrawls.

* Can they set up accounts that they have to be notified about account action? With an alcoholic step-father, there are always risks that money gets "borrowed" without the account holders knowledge. So sorry to be so synical (sp?) but I've just seen to many of these kinds of things happen.

Please tell your DFil that we thank him for his service and that what he is receiving is an acknowledgement of his sacrifice!

 

[kwitcherkicken99]

Good on not telling the family now. Let mom and dad be the ones to share the news or gift out the money as they see fit.

When my dad retired, he got a substantial lump sum. He did something similar (didn't tell my brother so they wouldn't beg for money) and had me hold it for them.

We placed a good amount into a CD. The return rate stinks because it's so low, BUT it is a very safe investment. There are other types of accounts that are equally safe. I would suggest that they meet with an actual investor vs. going at this alone.

 

[pigletto]

I have no actual financial advice. What I do want to caution is preparing them for the people who may attempt to take advantage of them or their generosity. Maybe help them decide ahead of time what they would like to gift to any family and talk to them about how they have taken care of others and now it is time to make sure that they are secure in their golden years before they spend it on everyone else. I know it is a sensitive topic, I would just hate to see all kinds of drama and resentment for them when they don't need it.

 

[cm8]

I have no actual financial advice. What I do want to caution is preparing them for the people who may attempt to take advantage of them or their generosity. Maybe help them decide ahead of time what they would like to gift to any family and talk to them about how they have taken care of others and now it is time to make sure that they are secure in their golden years before they spend it on everyone else. I know it is a sensitive topic, I would just hate to see all kinds of drama and resentment for them when they don't need it.

Agreed. I would also not let the 44 year old know it since he seems to want to eat everything. Maybe it's time that he move out.
Your MIL should be able to buy ANYTHING they want and not have to worry about someone else eating it. I would also go as far as to make sure they get some POA for you and your DH in case some one tries to take them to court and get conservatorship and or guardianship over them. People are willing to do anything when it comes to money that don't belong to them.

They should be careful not to disclose to him that they have that money as well too. He could take them to court and demand that they "pay" him for taking care of him for all these years and that he is entitle to a certain lifestyle . Please make sure that the financial counselor has their best interest at heart. Some local CU give free advice and you get all those services for free just for being a member. Good luck and though I know that they are glad to have some money at this time. The reasons for them are sad. May God bless and keep them.