What sort of pro can help us manage inheritance across US and UK?
February 1, 2011 7:58 PM   Subscribe

Unexpected inheritance of $100,000 - $150,000 complicated by move from the US to the UK in the next year. My wife and I have never dealt with financial matters beyond credit cards and a moderate paycheck before, who do we talk to in Los Angeles/Southern California to make sure we don't screw this up?

(anonymous because we want to keep quiet about both the money and the plans to move for now)

Very surprisingly, it looks like my wife is about to inherit between $100,000 and $150,000. Her relative has passed away, but it will take 3-4 months to find out how much it's all worth as it's a combination of cash, stocks, bonds and other things I don't understand. I believe we will have the option to cash out or keep the parts of it that are invested. It is being sorted out by a trusted relative and their lawyer.

We're not totally hopeless with money, but we're 30 year olds who rent, have basically no debt and no savings, and work regular salaried jobs. We have never dealt with anything more complicated than a car loan or slightly complicated tax return. We did not grow up around much money and this is a big (good) shock for us.

The big complicating factor is that we plan on moving to the UK (where I have citizenship) within about a year (it's flexible). We would probably like to use most of this money for a deposit on a home there in a couple of years. We will likely be in the UK by the time the last of the investments get sorted out, anything we don't cash will presumably stay in a US based account, and some of the inheritance is some kind of mineral options (??!), so more money could show up down the road.

So yay! but also argh! Obviously Mint is not going to cut it this time. We know we need professional help with this, and from someone who knows about both the US and the UK and can teach us about holding accounts in both countries and moving money around. I know it's not billions, but we don't want to mess up something easy and pay tax ten times over or go to jail.

Any suggestions of who to talk to in Los Angeles or even what kind of professional we're looking for? Your anecdotes and advice are also welcome, but we really need a lead on what kind of a money person does this sort of thing.

posted by anonymous to Work & Money (17 answers total) 4 users marked this as a favorite
I just googled 'international accountant' from here in Australia, and got a few hits on companies who boast about having offices here and overseas saying they, for example, provide accounting services for a number of clients who are based internationally with Australian interests as well as local clients with international interests.

Obviously I'm not going to recommend any of them, but have you tried googling 'international accountant'? Then, maybe a few phone calls later, you might have found someone who is affiliated with a UK firm or at least knowledgeable about UK tax laws and whatnot.

Oh, and congratulations both on the windfall and having the sense to prepare to manage it well!
posted by malibustacey9999 at 8:14 PM on February 1, 2011

Start with a certified financial planner who does not work on commission, go from there. You'll likely need to talk to several people over the course of things, both in the states and UK. I have had good luck with Edward Jones personally, but the basics:

Look for someone who has been in the business locally for 5+ years, preferably longer so you know it's a career for them and you know they probably know enough people in various related professions who are not in their core competency to refer you to for specific legal and/or tax matters.

I would work with someone who goes over the entire financial picture with you rather than just how to handle the windfall, you'll get a better sense of them and what their experience is. Multiple options are good and reasonably cost effective. So maybe work withe two people and confirm stuff independently.

Best of luck!
posted by iamabot at 8:48 PM on February 1, 2011

Once again, I cheer: USAA! USAA! USAA! They're used to people living in countries other than the US, and they have financial advisors who can work with beginners. (I'm having Internet problems right now and can't look up the details, sorry.)
posted by The corpse in the library at 9:32 PM on February 1, 2011

There are many options other than putting it into a house in which you live. It's not a bad thing to do, but unless you intend to live somewhere in the UK that $150K, or £97,500, will actually buy you a house(boat?) outright, it is probably better to invest it.

Before doing anything with it, speak to investment advisors. Before doing anything with any of them, speak to others. Seriously consider spending $10,000 or so of it, on investment courses - not the kind that exist purely to pump particular strategies, rather spend it on courses that will teach you how to assess the worth and get the most out of various kinds of investment. Businesses, shares, and property are the major categories, and there are plenty of books, online discussion groups, courses etc that will teach you how to succeed (without of course guaranteeing success, because nothing can) in these areas.

Don't rush into anything in particular, especially tying it up into a (small portion of the value of a) house. I suggest putting $100,000 of it into a term deposit for 6 months while you take a bit of a holiday, take some time off work, travel a bit, do some things you've always wanted to do, and most importantly educate yourselves financially. Speak to "finance people" of various kinds. Figure out if the jobs you're working at the moment are actually the kind of jobs you want to work in for the rest of your lives. If not, work out what else you can do. $100,000 will buy you a business, but make sure it's the kind of business that works for you, that you could leave for a few months and still have a business, rather than one that owns you.

Again, read books on the subject. "Rich Dad, Poor Dad" by Robert Kiyosaki is a good start. If business appeals to you, read "The E-Myth Revisited" by Michael Gerber.
posted by aeschenkarnos at 9:37 PM on February 1, 2011

yah, i just came in to suggest that instead of purchasing a home y'all should put that into your retirement. seriously - it is amazing that you have no debt but you really need to have something squirreled away for the future! :) if you buy a home and goodness forbid, lose the income to pay for the home, everything goes away and you're back at square one. if you have a nest egg of savings and continue to live as though it doesn't exist, i guarantee that one day it will come in handy! regardless, CONGRATS!
posted by 2003girl at 10:02 PM on February 1, 2011 [2 favorites]

I disagree with some of the other advice. No way I would pay 10 thousand bucks to take classes - you can learn it for free if you are sufficiently motivated. 10 grand is 6-10% of the money, for that price you could hire an expert who will know a lot more than you can learn for 10 thou. Also, if you take off a significant amount of time travel etc you will burn through your capital in a hurry. 100++ is NOT life changing typically, but it can be a serious leg up in accumulating assets. If you burn through 1/3 -1/2 of it messing about you will have a good time but why pass on a chance to begin to accumulate real wealth. If you can invest it in education that would be life changing for you I could see that.

Here are a few ideas... Start by putting 10 each in a roth right now (2010 &2011). Assuming you are 30 now, that will likely be worth 250000 AFTER TAX dollars or so when you are 65, not adjusted for inflation... Not enough to retire on, but you will be glad you have it I assure you. Consider buying a MODEST house if you know you wish to stay in an area for a length of time. I say this because getting a long term loan at a low interest rate (such as we have now) is a GIFT and if the gift makes sense for your circumstance, take it. FOR GODS SAKE DONT DO WHAT THE AMATEURS DO IT AND PAY IT OFF EARLY. Set aside 12 months into emergency fund. That means, you will have a modest start on retirement, you will control a very nice asset (5% money long term) and you will have a nice emergency fund. Many around you would do much to be in such an enviable position.

I can not give you any counsel whatever re moving the money, and some of this may not make sense in England. I can tell you it is pretty prudent course here in U.S., and a prudent course that allows for significant development of assets with some hedge against inflation...

I would be VERY wary of buying a business. Most fail. My next door neighbor is number one business broker in our county in California, and mostly he sells the same businesses over and over again. He makes plenty, rarely do his clients.

Sorry about the long post, I am really just touching the tip of the iceburg here, cant possibly give you complete answer. Also, consider reading Your Money or Your Life... It has changed the way many people think of money. Good luck.
posted by jcworth at 10:09 PM on February 1, 2011 [5 favorites]

The reason I would start with a financial planner is they can help you go through goals, timelines, and risk tolerance profiles.

I would hazard to say that anyone you meet with that doesn't specifically talk to you about what you want to do 5-10-25-etc years out and doesn't run you through some exercises to guage and level your risk tolerance isn't worth spending more time on.

You do not need to buy anything, outside of maybe an hour or two worth of time with a financial planner that you've previously vetted, and even then odds are you won't have to pay for anything. Please _please_ do not spend 10k noted above for advice, or classes or anything else. It's a waste of time and depending on your long term plans could be much better "spent" by following a financial planners advice and let it grow at a stable rate over a long time horizon.

The volumes of cash you're speaking about aren't huge and happen with relative frequency so it's not an out of left field situation for someone professional and educated in this space.
posted by iamabot at 10:25 PM on February 1, 2011 [2 favorites]

$10k on investment classes would be insane. No class is going to teach you how to beat Goldman Sachs or anything like that, and I think the idea that you can somehow turn money into more money without doing any actual work is kind of played out.

When the market goes up, you'll make money, and when it goes down, you'll lose money, basically. But the market is going up right now and probably will be for a while, but who knows?

Unless you're really fascinated by high finance and reading about investments and stuff it's probably not worth your while to try it. Just put your money in the bank and relax. Maybe you can find a money market account that gets 3-5% or something. Maybe an index fund of somesort over the long run.

Btw, be careful about financial advisers. I know someone who inherited some money in 2008, and had a financial adviser recommend buying stock in companies like bear sterns and lehman brothers. In the end, the person kept their money and didn't invest at all. And because of that they kept all the value, which would have gone down quite a bit in the crash.
posted by delmoi at 10:42 PM on February 1, 2011 [1 favorite]

You could just sit on it at 3 - 5% interest and wait for a truly great opportunity. If nothing comes along, it's a retirement account. It will be a wonderful feeling to go through life with a big fat cash cushion. You will be surprised at how things change if you do not spend it moreso than if you do.
posted by nickrussell at 12:58 AM on February 2, 2011 [1 favorite]

I paid less than $10k to do my CFA certification, so yeah... It's not like 100k is so much money that you have to actively manage it at all.

Agree that a financial planner is what you want. Most likely they'll recommend putting a few months salary in a savings account you can get to within a few days, another few months of salary in CDs (these being challenging and trying times). Anything over a year's living expenses in some kind of index fund or other low cost vehicle. Speak to someone familiar with US and UK tax law to see what the best way is for you to put money away for retirement.
posted by atrazine at 2:06 AM on February 2, 2011 [1 favorite]

Well the good news is that inheriting money isn't a taxable event. Estate taxes, which aren't likely to apply to an estate this small, are paid before you get the money, not after it. So as far as that goes, there isn't a lot to screw up, particularly if the estate is being handled by an attorney.

As to what you do with the money now? Yeah, financial adviser might not be a bad idea, but feel free to both 1) ignore his advice, and 2) shop around. You need to find someone who shares your perspective on how money is to be used.
posted by valkyryn at 3:54 AM on February 2, 2011

If you are going to use this money to buy a home in the UK then really you don't need a planner. Cash it all out and put it in a money market account until you find a place to buy. It really is that simple. I personally would convert it to GBP ASAP - on a PPP basis the pound is pretty weak at the moment, so why get cute with timing on that. I agree with jdroth wrt to the value of a low interest rate loan, but that advantage in the UK is not the same as in the US given the term of home mortgages over there. So then the tradeoff between saving vs home ownership is much less a question of which is smarter, but which you guys prefer.

If you want to save it for your retirement then yes things are different. And in that case it is quite complicated by the fact that you are a UK national and your wife is American. You need to find a planner with specific experience in handling situations like that just to find the most tax efficient way to handle the savings. You also might want to have a discussion about where you want to retire before you have that conversation with a professional. Honestly tax planning for you is probably going to trump asset allocation - especially if you don't have a green card.
posted by JPD at 6:19 AM on February 2, 2011

As others said - for tax implications for dual residency between USA and UK etc - you are probably better off seeking professional advice. You sometimes do end up spending away more - if you dont plan for these events.

For investment advice, You may want to read up on the subject yourself before you make a decision to find an investment adviser. There are all sorts of advisers - some may steer you towards loaded funds or towards investments that you may not have the risk appetite for after wards. You also may not get the best advisers for management of $150k. You are better off having some foundational knowledge before you speak with an adviser. I personally believe that no one will care as much about my money as I would.

"Rich Dad, poor dad" was a good recommendation. I had benefited greatly from "A random walk down wall street" (although I haven't chosen to adopt Malkiel's passive investment philosophy, the book did help shape by thoughts).

Most financial guides typically suggest looking at your financial / investment strategy holistically (based on your age, financial tolerance, risk appetite etc). Putting up all your entire inheritance for buying a house will be somewhat unconventional going by what we generally read.

There is an enormous amount good quality investment education stuff on the net. You may want to take look at - Yahoo finance and Morningstar. I had liked and learned from Morningstar's education content - however I can't seem to find it now. (Some of the Morningstar forums also provide a lot of help to investors - you may want to check them out for more specific advice. I would not recommend paying for their premium version for someone starting out. Neither would I pay any heed to to their stock recommendations).

I saw USAA mentioned earlier in the thread. In general, USAA investment options didn't appear to be all that great. I am certainly no expert ...you should do your own due diligence.
posted by justlooking at 7:48 AM on February 2, 2011

Unsure of what you mean in regard to USD / GBP:

USD / GBP is a bit volatile but the futures are in line with current pricing.

That being said, if the US can't appreciate the dollar soon, then perhaps in time you will become correct.
posted by nickrussell at 7:54 AM on February 2, 2011

futures are a terrible guide for future pricing .

On a purchasing power parity basis the pound is cheap relative to the dollar. Doesn't mean it won't get cheaper, or that it won't get more expensive, just that if you are looking to mitigate risk (which you should be doing if you have an intended use for the money in the next few years) then it isn't a bad time to buy pounds.
posted by JPD at 9:05 AM on February 2, 2011

Totally agree with 2003girl. Open a retirement account with Schwab (established, huge and easily accessible via the internet). Just a basic IRA should be fine, but you can ask them about a Roth if you're interested. Put ALL of the money into this account. Invest it in ETF (Exchange Traded Funds). These are just like mutual funds, except you can trade them more easily if you want to. There are ETFs to follow the S&P Index, this index, that index, whatever you can think of. ishares.com has some really good ones you can read about. I'd probably invest 80% of it in stuff that's fairly conservative (like index funds) and about 20% in something a little riskier, just because you're young yet. I have some money invested in ishares Latin American emerging markets fund, and it has been great.

My husband and I did the math at age 35. If we had invested $50,000 in the market that year, figuring a modest return of about 7% until retirement age, we would NEVER HAVE TO CONTRIBUTE TO OUR RETIREMENT FUND AGAIN. Seriously. And we redid the math after the market fallout in '08 and it would still have held true. You will do yourselves the biggest favor of your lives if you just park this money in conservative investments and pretend it doesn't exist.

Oh, and if you have a choice between inheriting cash vs. investments, just cash everything out and get the cash. A fresh start is easier to deal with.
posted by wwartorff at 11:05 AM on February 2, 2011 [1 favorite]

This is assuming that you are going to move permanently to the UK.

Leave the inheritance invested until you can speak to a UK based financial advisor. You should get in touch with one before you move. UK and US tax codes are very different, and what may be a good US tax reduction strategy may not work in the UK. There are far more advisors in the UK who know about US taxes than there are US advisors who know about UK taxes. If you want to talk to someone in the US, one of the big accounting firms should be of some help, though not at all cheap. My employers paid for advice from Price Waterhouse when I moved in the opposite direction.

In particular, the US taxes you on all of your income worldwide , no matter where you live, but the UK only taxes you on income you bring into or earn in the UK. There is a tax treaty which means in the worst case you will pay the higher of either UK or US taxes.

I can't think of any conceivable reason why opening up a US tax advantaged retirement account would be a smart thing for a UK resident to do.
posted by monotreme at 2:27 PM on February 2, 2011

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