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WHEN I WAS A YOUNG adult, my parents sat me down and explained that I might at some point inherit money from my grandfather’s trust, which had also helped put me through college. My grandfather passed away in 1984, and his wife—my father’s stepmother—became the trust’s beneficiary.
My father was an only child. The trust stipulated that, if his stepmother died before him, he would receive two-thirds of the trust, while my two siblings and I would share the other third. But my father died relatively young, predeceasing his stepmother. This meant that, when my father’s stepmother—my step-grandmother—died, my siblings and I would each receive a third of the trust, instead of the one-ninth we would have gotten if my father had still been alive.
My step-grandmother passed in January 2005, and we began receiving information from the bank that was administering the trust. Our individual portions were delivered in cash, stocks and bonds, which were transferred into my Charles Schwab account. In addition, we each inherited shares in a golf course in Canton, Ohio. It wasn’t so much money that we could quit our jobs, but enough that it could make some things easier.
At the time we received this windfall, I was age 44. I was married with two daughters, then 16 and 11. My husband and I were gainfully employed. He was an attorney for a state agency, while I was a university professor. We made enough money to live comfortably but not lavishly in Northern California, but we had little money saved for retirement or for our kids’ college. Neither of us, though we were well-educated professionals, knew much about managing money.
Doug Texter wrote last year about the purposeful way he handled a family inheritance. Unlike Doug, when we got the inheritance, we weren’t prepared to deal with it wisely. Though we did a few things well, we made some mistakes, too.
No regrets. Our older daughter was a junior in high school when we received the inheritance. She was a brilliant student, and it was great to tell her that she could apply to whatever schools she aspired to and not worry about the cost.
As it turned out, she ended up going to the University of California at Berkeley, not a private school, but it still wasn’t cheap. Even in 2006, when she started college, we were probably spending $25,000 a year on tuition, room, board and other expenses. But we have no regrets about allowing her to pursue her degree without taking on debt.
We also took a couple of great trips in 2008—a first vacation to Europe for my husband and me to celebrate our 25th anniversary, and a family trip to New Zealand when I was invited to speak at a couple of academic conferences in Auckland. Though I leveraged points and miles for the Europe trip and got some of my expenses paid for the Auckland trip, being able to supplement those sources with my inheritance allowed us to make some special memories.
One of the first things we did when we got the trust money was to buy our older daughter a car, for which we paid cash. While buying new cars isn’t always a great financial decision, in this case it turned out well: Today, she’s still driving that 2005 Mazda3 hatchback. When our younger daughter turned 16 in 2010, we bought her a car, as well. We also made some needed updates to our home, investments that paid off years later when we sold that home at a substantial profit.
Finally, because we had extra money to backfill our household budget, my husband and I began fully funding our retirement accounts every year. At that point, as state employees, we both had access to 403(b) and 457 accounts. Being able to max out those retirement vehicles saved us a lot in income taxes, and it was great to jumpstart our retirement savings.
Wish I had a mulligan. Because of my ignorance, I wasn’t smart when tapping the trust for money. I didn’t like dealing with all the individual stocks and the bond funds, so I rolled everything into Vanguard Group’s low-fee mutual funds. I’d started reading Money magazine, so at least I knew to do that much.
But I didn’t look to minimize taxes when selling the stocks. To this day, I still don’t know whether it was a dumb idea to divest myself of those stocks, some of which were blue chips. Then, when the 2008-09 recession hit, I was selling the mutual funds at greatly reduced values to pay college bills and fund our retirement accounts. I’m certain I didn’t handle any of this very well.
The other dumb thing I did was to sell the golf course shares. I didn’t like owning them. I had to pay taxes on them every year, and they added cumbersome paperwork. When our younger daughter started college, I felt I needed more cash, so I arranged to sell the shares. My brother had sold his shares right away, too, and we both lived to regret it. I got about $40,000 for the shares, money which was helpful in the moment. But a few years later, the golf course was sold to a developer. My sister, who had held onto her shares, got about $200,000 for her stake.
If I had it to do over, the first thing I’d do is march into a financial planner’s office and get advice about how to handle the windfall. I’m certain I could have been much smarter about the whole thing. I’m kind of embarrassed when I think about it now.
Dana Ferris and her husband live in Davis, California. She’s a professor in the writing program at the University of California, Davis, and is the author or co-author of nine books on teaching writing and reading to second language learners. Dana is a huge baseball fan and writes a weekly column for a San Francisco Giants fan blog under the nom de plume DrLefty. When not working, she also loves cooking, traveling and working out. Follow Dana on X @LeftyDana and on Threads, and check out her earlier articles.
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You did great. The only suggestion I would add is that before you “marched into a financial planner’s office…” you would read up on personal finance. This would have helped avoiding a poor financial planner, and with a good financial planner you would be a better client. In a better position to decide financial moves with your FP rather than just doing whatever the FP suggests (which many do). I’ve heard of so many financial windfalls blown to no good end, anyone who successfully uses a windfall, even if not optimally, is far ahead of the pack.
Maybe what I really meant to say was that I should have consulted with a tax professional about how I withdrew from the inheritance. I’m sure I didn’t do that in a smart way as to the tax hit.
Dana – I look at this completely differently. You received a windfall at the perfect time of peak family expenses, and then you optimized your family’s overall experiences through this mid-life period. It could hardly have worked out better.
I compare that to my grandparents’ trust that tied up their inheritance for 34 years – past both my parents’ deaths and onto me at age 68. I’m grateful, but it is too late to impact our living or comfort standards. This is why my wife and I are trying to share more of our wealth with our children at an earlier stage in their life regardless of whether it is tax or investment optimized.
BTW, my father-in-law invested in a golf course 35 years ago and lost maybe $100K. It was his biggest financial setback, so these kind of investments can go both ways.
Thanks! It certainly was a welcomed windfall at the time, especially about a year and a half before our firstborn started college. That’s a good way to think about it. And now that we’re almost to our mid-60s, we’re definitely thinking about responsible ways to share wealth with our adult children and other causes we care about. The book “Die with Zero” made an impact on my thinking.
I have always been an over simplistic guy. I believe we all make decisions based on our personality and the information before is. I appreciate your article and the premise of it.
I’ve always wanted to make money by owning rentals, but guess what, I have no repair skills and the thought of dealing with a bad renter would keep me up at night. So I am a VTI guy.
Could I have been more financially successful choosing another investment, probably. But do I sleep well at night, always. We all choose differently but I always hope that all of us do well.
Sleep Well
That’s so funny you said that. I’ve always been enticed by the idea of wealth through rental real estate but have never gotten into it, mainly because of the lack of repair skills (me and my husband) and just not really having the bandwidth to deal with renters on a regular basis.
We have kept things pretty simple, too. Our retirement accounts are in target date funds with Vanguard and Fidelity. Our cash is in high interest online savings accounts. Could there be tweaks for optimal returns? Probably, but we just leave it alone and don’t worry about it much.
Doesn’t sound like too many mistakes. Sure you could have financially optimized aggressively and made decisions like whether it was better for your daughter to take on college debt while investments compounded. But peace of mind is worth something too. Including knowing your kids had reliable new cars when young rather than clunkerz.
I was fortunate to get through college and grad school with no debt, and that was a gift I was happy to give my kids.
Dana,
Thank you for posting this wonderful story of your money journey!
It’s post like these that make HD one of the websites I try to visit every day.
They say ‘misery loves company’. Kind of nasty I suppose but it’s nice to know others have made less than optimal financial choices too. Ours would require writing a book likely longer than “War and Peace”.
Thank you! I’m glad you enjoyed it! I have a few other suboptimal financial choices in my history, but that’s for another day…
I’d be less concerned about selling a golf course too soon, then about buying a 16 year old a new car. You rationalize it by I mentioning it’s longevity, though what kind of example does that set?
Statistics show (don’t ask me where I got this from, probably somebody told me) that girls are much more responsible teen drivers than boys. But, hey, lots of people buy their 16 year olds new cars, for all kinds of different reasons, but especially if they can afford to. And if they are a good student, hard working and maybe even have a part time job?
What a negative comment. What example does that set? Perhaps, Mike, you might reconsider not just your comment’s tone, but also that the financial stakes with owning a partial share of a golf course are greater than those when buying a car.
Failing golf courses are common where I live.
You don’t know me or my daughter. If I wanted to give my daughter a gift from my inheritance from my grandfather nearly 20 years ago, I think that’s my business. I didn’t ask for your retroactive judgment on my parenting.
It’s your business, but your business becomes public when you choose to write about it on a public blog that invites comments from readers. You should understand that some of those comments might be critical.
My article was about how I used my inheritance and whether in hindsight I thought I made good or bad decisions, financially speaking.
This commenter chose to suggest that I’m a bad parent because I bought my daughter a car. I’m not sure if it was because it was a new car or any car, but it doesn’t matter. His criticism is off the topic of my article and unfairly critical and judgmental.
But for the record, two things. First, my husband’s father bought him a car when he turned 16, so that was part of his history, and he was happy we could do it for our kids. It wasn’t a fancy car, but it served him well as a high school and college student and us as young marrieds. My husband has a college degree, a master’s degree, and a law degree, and he has pursued a successful career as a lawyer. Receiving a car didn’t ruin his work ethic.
Second, the daughter who received the car, which as I mentioned she is still driving 19 years later, completed her degree at Berkeley and two graduate degrees and is productively employed in San Francisco. Receiving a car at 16 didn’t ruin her, either.
Finally, this is not the first time this commenter has made a snarky comment about one of my articles. Apparently he has appointed himself my personal troll.
Disagreement is one thing. Unnecessarily harsh criticism is quite another. If folks want to write in the tone that Mike used, they should take their unresolved anger issues and find some other place to work through them.
Dana – I’m sure there are tons of “right decisions” that you’ve forgotten. You’ve just concentrated on your perceived mistakes.
Thanks!
Dana, Kim Z commented that hiring a financial advisor comes with its own risks and I whole heartedly agree with her. I would tend to trust an hourly paid advisor like Adam Grossman, but they are not always easy to find. Many fee or commissioned based advisors have their own agenda; advising a client to pay down debt or help family members does nothing for their own bottom line. And who knows what they would have put your money in; variable annuity anyone?
Getting the kid through college without loans is very good thing. You did well.
Thank you!
Well Dana, shame on you for not having a crystal ball! 🙂
Maybe that golf course would have gone under and you would have lost everything.
My parents died in 2007 and 2008. Our inheritance plummeted since my father worked for Ma Bell (AT&T) and had a lot of AT&T stocks. I sold everything and wrote off the losses on my taxes. Should I have held those stocks? I never looked back….
That’s a great point. At the point I sold the shares, I just thought it was a nuisance, and it literally was costing me money.
One might think a math teacher would intuitively know how to manage money, but no, I didn’t start figuring it out until my late 40s. No surprise, trial and error led to my making some mistakes. By chance, some of these did little harm, including what I did with a modest inheritance from my maternal grandfather when I was still in college.
For the other mistakes with more significant consequences, I had learned to say “How human of me!” and let them go (and learn from them). How I recovered from my perfectionism was thanks to the “Dare to Be Average” chapter in the book on cognitive behavioral therapy by David Burns, Feeling Good: The New Mood Therapy. My life has been a lot less anxious since then.
Love this. I’m fine being average!
Dana, your article was interesting I think you managed it very well. We all make a few mistakes, and tend to be a little more impetuous when we’re young.
You were wise to self educate..a never ending quest, and fortunate to have the intelligence to sort it all out.
Thanks, very kind.
Sounds like you could have done much worse, and if you’d gone to the wrong financial planner you could well have done worse!
I think you’re right!
Great article Dana. Taking care of ill parents really spurred me to learn more about personal financial planning. It sounds like this was a great forcing function for you to advance your knowledge.
Us too. Because of my mother-in-law’s Alzheimer’s and my husband being the executor/trustee for their estate, we’ve had a crash course over the past year or so in long-term care policies and care options, final arrangements, and estate planning. Seeing the chaotic state of their finances and paperwork spurred us to get much more organized with our own money. I still have tasks to do, but if something happened to one or both of us today, our heirs will have an easier time than they would have a couple of years ago.
There no perfect answers when it comes to investing money. In fact, I am impressed with how you managed your inheritance. Hiring a financial planner comes with its own risks.
Reading this again, I have fewer regrets than I thought. One good outcome was that I did start self-educating about personal finance at that point, and now here I am, part of Humble Dollar!
I think you’re brave to go public about your mistakes. I also think seeking advice about unfamiliar financial decisions is wise—something for both of us to consider for the future.
Thanks! So many authors and regular commenters here seem to be so great with money. I feel that I’m doing much better now, after stumbling through several decades of adult life, but new phases will likely bring new learning curves.