Making the most out of Mom's giftAnne Schuette and Magnus Nicklasson are $400,000 richer. But now what? Certified financial planner Deborah Maloy of Wakefield, Mass. weighs in with three suggestions. Save for college Anne and Magnus are adopting - a good reason to put $115,000 of their money into a 529 plan. That's enough, in one fell swoop, to cover future college expenses at a private school. Since their state has no tax deduction, they should consider Michigan's low-cost 529 plan (misaves.org). Build a new bathroom The couple want a second bathroom, and they can get one by cashing out Anne's mother's annuity. It barely keeps up with inflation, and as its value has barely increased, the tax bite should be small. The $45,000 they free up for a new bath will also help boost their home's value. Fund their 401(k)s Anne stopped contributing to her 401(k) in 2003. If she doesn't take full advantage of her employer's matching provision, the rest of their money must go toward retirement. If Anne does restart her retirement savings, she and Magnus will have enough left over to buy a second home. Go back to Getting wise about a windfall |
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