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Well color me shocked!

February 20th, 2009 at 09:57 am



The other day my Mother & her husband gave me & my siblings a gift each of $**,***.**. TOTALLY UNEXPECTED!

I am awaiting as I type a call back from our accountant verifying my thoughts on keeping this VERY generous gift tax free for years to come. I'm thinking of my state's municipal tax bonds, and not co-mingling it with any other monies currently so as to always know where any income it generates came from.

I do believe it will soon be enough to pay my house taxes each year if I let it compound and grow (assuming we stay in the same house).

THANKS MOM & HUBBY!!!

edited to add: The accountant says since we aren't in a high tax bracket to begin with it doesn't really matter if we pay taxes on it or not. Hmmmm, I just hate paying taxes, and currently my state's municipal bonds are paying a nice interest considering the economy. I haven't checked their ratings yet, but I'm still going to mull over my options. If you've any good ideas, pipe up, I'd love to hear them. I could conceivably put this money inside my Roth and finish fully funding it for 2008, all of 2009 and some of 2010 when we get to that point. For today, I'm taking it to the bank to deposit then moving it to a savings vehicle until I make a final determination as to what to do. I'm thinking NICE & CONSERVATIVE on this pile. Of course, there is a tithe to be returned on this, so after paying that I may have to add some of our other funds in to meet some of the bonds purchase price.

And, I'd like to hear any ideas on what extra special thoughts should be included on the thank you note I'm currently writing.

Please, let me hear your thoughts...I'm open to everyone's ideas.

16 Responses to “Well color me shocked!”

  1. Analise Says:

    That is very generous of your mother, and I'm sure it gives her great joy to see her children benefiting from her gift in her lifetime rather than after she is gone.

    What a nice problem to have... where to stash the windfall. ;-) I definitely vote for a conservative place, where your principal remains intact even if it means getting a smaller rate of return.

  2. Live Free Says:

    Hi Lux,
    This is a wonderful gift: I know it meant as much to your Mom to give it as it does to you to receive it.

    I've been in the investment business for over 30 years. (Even though I am a woman....insert a big smile and a small sigh---interesting business for a woman). Anyway, be very careful with muni bonds now. Even if the rating is currently good, ratings can change and are changing. If that is the route you go, you might want to make sure it is a General Obligation municipal which is backed by all of the taxing authority of that goverment rather than one specific part of the government income.

    Good luck!

  3. Ima saver Says:

    I would suggest the highest paying c.d. that you can find. That is what I am doing with all of my spare cash.

  4. Aleta Says:

    I would look at what you owe on your mortgage. Nothing like owning your own home. I don't know how much your mortgage is, but I can bet that you're not making that in any investment that you have.

    Our real freedom came when we paid off our mortgage. You have time, so think about it.

  5. creditcardfree Says:

    I think a CD is probably the way to go for now. The Roth isn't a bad idea, but not exactly conservative with the way stocks are right now.

    Aleta's idea of the mortgage is nice...you owe less than $16K!

    What a wonderful gift! How do you show appreciation for such a nice gift? It seems like thank you is just not enough, but I doubt they want you to buy a thank you gift. I think conveying the joy or freedom you feel because of the gift, might bring them joy of knowing it was appreciated.

  6. LuxLiving Says:

    Aleta, we've got the money in the bank already where we could pay off the mortgage, just can't get the Hubster off the fence to do so. Hooohummm. That would've been my first inkling to do as well.

    Although I live in a community property state my Mom would ideally like me to keep it separate for myself rather than co-mingle it with Hubster & my's joint funds. She loves him dearly just wants to make sure I'm okay into my golden years. Understandable. It's a moot point really. He's okay with me keeping it separate, but I'll be listing him as first beneficiary on anything I do most likely anyway, so, whatever! It's all our money anyway, if we need it to live on, guess what? I'll be digging it out for us to live on. This way it just comes way down on the list of $$'s to withdraw from first.

    I would love to pay off the house. BELIEVE ME. Financially wiser to keep it mortgaged according to Edelman, but still - I'd love it paid for. That's just me. Hubster is fine with us having the cash to pay it off if we want to, OR having that cash available for whatever else we want to spend it on. It's a nice option/position to be in, but like I said I have an opinion, one I've voiced loudly and long over & over but he gets the final vote here and we're going with his decision at this time. Should God forbid something happen to him? I'm paying that sucker off post haste!

  7. frugaltexan75 Says:

    That is a nice gift!

  8. homebody Says:

    I vote to use it to fund your Roth, in CD's like Ima suggested. That's what I think I would do.

  9. NJDebbie Says:

    A nice vacation?

  10. Amber Says:

    That was really nice...how about paying down the mortgage

  11. baselle Says:

    An unusual, but conservative idea if you like - I-bonds for a bit of it. You can only do 5K/year per type (5K paper, 5K online).

    You didn't tell me what kind of taxes you hate to pay. The I-bond is federal tax deferred, no state tax. If you use it for education (books and tuition), no tax. Right now the fixed rate is .7%, variable 4.92%, 5.64% total.

    The interest rates won't that nice in May, we definitely have deflation according to the CPI-U - but if the fixed rate is good then, its something to consider.

    And for laughs, if you are thinking Mad Max apocalyptic, there's always gold and bullets. Smile

  12. Aleta Says:

    I totally understand where you are coming from with not wanting to comingle the money. Women need to think about that.

    What my Mom did was to use her savings to pay off the house and then she paid back her p & i each month into a separate account. Her mortgage was only about %18,000 when she started and I think paid if off at about $13,000. She was paying more than $1,000, a year in interest but wasn't making that much on her bank interest. I'm glad that she did this because she now has alzheimers and it has made everything so much easier for the family to deal with her finances.

  13. crazyliblady Says:

    I would suggest one of the following: 1) emergency savings or 2) paying off your mortgage, or 3) some combination of 1 and 2. If you put it into a high rate cd, as another poster suggested, you would get much better than 0.5%. I don't think you can beat the security of having your house paid off and a financial cushion in this economy. Kudos to your mother for such a tremendous gift!

  14. LuxLiving Says:

    crazyliblady - there is money in the bank/brokerage to payoff the mortgage and also we have a years income in the emergency fund. Hubster doesn't want to pay off house just yet. Before a decision is made I'll investigate the I-bond route, or CDs. I'm still waiting on Hubster to go get the taxes done to see if putting it in the Roth is what the accountant advises after seeing where we're at tax wise since all the FIL estate stuff has settled out.

    NJDebby, we already vacation yearly quite nicely via our timeshare exchange. BUT, I can't imagine spending that much money on a vacation! GAAA, my frugal butte would pucker beyond all enjoyment that might be garned from the sightseeing!

  15. monkeymama Says:

    Well, good luck! & congrats on the nice gift! Lots of good suggestions... I'd personally just go for a C.D. A short-term one until rates get a little better. Actually you could invest in C.D.s in ROTH accounts if you don't want to do riskier investments right now. Just another idea. ROTHs are nice because if you need the money later you can always take it out. But if you don't max out you won't get the chance to contribute again for a missed year.

    I just wanted to add that Aleta's mom's plan would not fly in a community property state, which I am sure you are well aware of. You can't make income, earned while married, become separate property. Likewise, using the money to pay the mortgage would make it joint property. Pretty lose-lose if you use the money to pay the mortgage. It's really difficult to maintain separate property in community property states.

  16. LuxLiving Says:

    Thanks MonkeyMama, I do appreciate your thoughts. Hopefully the community property issue is moot - we've been married 27 years. Looks like if either of us was leaving we'd of done it by now. Big Grin

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