Dear Penny: Can I Keep My $150K Inheritance Secret From My Kids’ Dad?

Dear K.,

Suppose your kids’ father would somehow learn of your inheritance. It really wouldn’t matter because he wouldn’t be entitled to it. Even when two people are married, inheritances and gifts belong solely to the inheriting spouse. So the worst-case scenario is that your ex finds out about your $150,000 windfall, asks you for money and you refuse to give it to him. (The one exception here would be if you owed him child support, in which case the state’s child support agency could go after you for the money.)

Depending on how your father left you this money, your inheritance may be a matter of public record. If he left you money in his will, your children’s father could find out about your inheritance if he requested probate court records for your father’s estate. But if you received this money through a trust or you were the beneficiary of a retirement account or life insurance policy, this information would generally be confidential.

But let’s be realistic. What are the odds that your kids’ father would go snooping through court records to see if you got an inheritance? Loose lips seem like a far likelier source of this information.

The best way to stop your ex from discovering your inheritance is to not talk about your inheritance. Not with him, obviously. Not with mutual friends and acquaintances. And not with your kids, assuming they don’t already know.  It’s not fair to ask them to keep a secret from their father, especially if they’re young. 

Now let’s talk about what to do with that money. The first step I’d take is to establish a six-month emergency fund for you and your kids. You always want money stashed away for an unexpected expense or loss of income, but that’s especially important as fears of a recession grow. Keep that money in a high-yield savings account so you can access your cash when you need it while earning a bit on your principal. If you have debt other than a mortgage or a low-interest car loan, paying it off would also give you a good return since you’d save money on interest.

Once you have your six-month emergency fund, I’d recommend simply putting it in an S&P 500 index fund and letting the money grow. With an S&P 500 index fund, you’re investing across 500 companies representing roughly 80% of the U.S. stock market. 

Some years (ahem, 2022), your investment will be down, but the S&P 500 has a remarkable track record of delivering profits over long periods. In an average year, returns are around 10%. If you earned average returns, a $100,000 investment would grow to over $670,000 in about 20 years, even if you never contributed another cent.

It’s essential that you keep that money put so it can grow. Establishing your emergency fund provides a safeguard so you don’t have to withdraw your money for short-term needs. But it’s just as important that you commit to saying “no” to your children’s father if he comes to you asking for money. I don’t know the nature of your current relationship, but it’s pretty clear that his destructive spending has affected you. Even if he would somehow discover your inheritance, make a firm commitment that you won’t use a dime of this money to bail him out of any future messes.

A $150,000 inheritance can buy you significant financial security, but it’s not a winning Powerball ticket. It’s not enough to splurge on a new home and luxury car or the kind of lifestyle upgrades that would draw attention. If you don’t broadcast your inheritance, odds are good that you can keep it private. 

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].