Sunnybranch 5/5/90 Inheritance Rule Featured in The New York Times
Posted on May 23, 2024 by Katherine Fox.
Sunnybranch 5/5/90 Inheritance Rule Featured in The New York Times
Younger inheritors are having a moment.
Last weekend, The New York Times featured my guidance for Gen X, Millennial, and Gen Z inheritors in the article “Managing an Inheritance: When ‘Mom’s Money’ Becomes Yours.”
From the author, Lisa Rabasca Roepe:
Ms. Fox recommends that her clients follow certain guidelines, regardless of the size of the inheritance.
Spend 3 to 5 percent on something you really want. “This is free money, so do something that makes you happy and is fun,” she said. If you were close to the person who died, consider buying something that reminds you of him or her or that you know the person would have liked for you to have.
Give 3 to 5 percent to charity. “Recognize your privilege and pay it forward,” Ms. Fox said. Consider donating to a charity that would honor your loved one. Mr. Hay and his sisters donated to the Massachusetts Audubon Society because their mother was an avid birder.
Think carefully about what you do with the remaining 90 to 94 percent. “You need to focus on your greatest financial needs,” Ms. Fox said, such as paying off a student loan or making a down payment on a house.
But this advice only scratches the surface.
Why do younger inheritors need unique advice?
If you inherit millions or tens of millions or dollars in your 20s, 30s, and 40s, advice from the traditional financial industry may not be for you.
Why?
Because the traditional finance industry is built to serve the needs of 75-year-old white men. If that doesn’t describe you, you need a different type of advisor.
Traditional financial guidance doesn’t support:
Aligning your wealth with your values
Building simple, easy-to-understand plans to manage large amounts of wealth
Using your wealth to support your goals, rather than just accumulate more money
Customizing your wealth to your needs
Exploring the responsibilities wealthy people have to give back in society
Do you want someone who will listen to you and help you build a plan to reach your goals?
Or do you want someone to shove you into a cookie-cutter version of exactly how your dad/uncle/grandpa/whoever invested?
How did you develop the 5/5/90 method for inheritors?
I’ve worked with a lot of inheritors.
What I’ve seen, over and over, is that people need a push to get started thinking about a large inheritance.
It needs to be broken up into smaller pieces, and you need to find a way for this money to bring you joy.
That’s why I suggest spending 5% on yourself and giving 5% away.
It forms the basis of a lifelong relationship to new wealth: understanding how an inheritance can support your vision of “enough” and provide essential opportunities to redistribute wealth.
What should I do with the 90% of my inheritance that’s left over?
This is where the real hard work starts.
The short answer is, it depends.
First, you need to do the work to define your short, medium, and long-term goals.
Your next step is understanding how you can invest your inheritance in line with those goals.
If you don’t know where to get started, check out my posts on:
5 Things To Do With Inherited Wealth
What To Do After Inheriting Money From Your Parents
Managing Guilt After Inheriting Wealth
How Inheritors Can Redistribute Wealth
I’m going to be SUPER honest with you (that’s kind of my thing).
This is hard work.
Getting an inheritance can be overwhelming and scary, and knowing what to do with it isn’t intuitive.
If you’re looking for a guide to help you along the way, reach out and schedule a time to chat with me.
There’s no fee and no obligation. Sunnybranch is here to help ALL inheritors, regardless of their situation.
Let’s take the next step together
Understanding what to do after you inherit money is not easy. Beneficiaries can encounter a wide variety of different situations requiring knowledge and finesse to manage. If you need more help, you can download The 20 Inheritance Terms You Need to Know, or reach out to Katherine Fox, CFP® and CAP®, a financial planner for inheritors to learn how Sunnybranch can help you build a plan to manage your inheritance.