Inherited money - keep a secret from BFF?

I inherited money. Lots of it. It was unexpected. My immediate family wasn’t all that rich but my extended family was. 

How much you ask? Enough to buy a really nice house in Berkeley and fund college education and retirement. We have a tiny place, we are behind on retirement, and didn’t expect to contribute to kids education. So yeah that’s all great. 

My question is this. My best friend. I haven’t told her how much. I haven’t told anyone really. But it will all become rather clear as we upgrade our lifestyle. 

This makes me feel weird, and distant from the friend I share innermost thoughts with. She’s had financial and personal set backs due to Great Recession and divorce. She’s doing well but will probably not ever buy a house in the Bay Area. She’s had a ton of crap happen in the last ten years. I feel weird not telling her details. And I’d feel weird telling her details. What if she’s jealous? What if by telling her our relationship changes? What if she tells other people?  What if what if. 

Any thoughts about this? Experiences related to sharing money details to people? 

Thank you for your advice! 

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I will be impressed if you are able to navigate this without it changing (harming) your friendship. In my experience, it is tough to be friends with people who have very different financial circumstances from yours.  It's going to hurt your friendship if you don't say anything, either.  I guess I would vote for half-truth. You inherited enough money to be able to buy a house.  I would leave out the fully-funded retirement and the college fund.  The house is hard to hide, but she doesn't need to see your Vanguard statements. 

Also, you didn't ask for financial advice, but be careful with your windfall! Buy a decent house, but don't go nuts. You may need a lot more for retirement than you think - you may want to be able to help your kids beyond their college education - you may have expenses you don't anticipate.  Take advantage of the fact you are used to a modest lifestyle, and don't upgrade too much. And get a good accountant so you stay on top of your tax situation. 

Windfall money is very hard on friendships and relationships.  Lots of people start asking for money. They start expecting you to pick up the tab for dinner, etc...  Somehow, people see it differently than earned money.  It’s tough to navigate.  Is it worth buying a big house if it costs you your longtime friendships?

As to buying a big house, I would think long and hard about it before doing it.  The taxes are enormous and just keep growing each year.  Taxes are a big ongoing cost that you will need to factor into your annual costs both now and throughout retirement.  Truly, talk to a financial advisor before upgrading your house.

As to funding retirement and college—yes!  What a relief to take care of those big items, especially from inheritance money.

Another idea—think about using the money to fund an investment that can earn money for you into your retirement.  Several family members have bought rental properties, and they are very happy with the long term income especially into retirement.  This might take a bit of work to find a well-priced investment property in the Bay Area.

Funding retirement, college, and investments are things that aren’t so visible, so it can be easier on your friendships.  If you have been wanting to dump your friends and make new ones...well, then, it’s another thing.  :)

I think you need to tell your friend. If you keep it from her, she will find out some other way. Secrets like this are never good. She might be envious, or not, but that's okay, if you are good friends you can weather this. Allow her to have whatever feelings she has.  I think she would feel betrayed if you don't talk with her about it. I also suggest that you talk with someone else first to process what this brings up for you. If I were your friend, I would definitely want to know. 

Say nothing. If she asks, say you received some unexpected money and leave it at that. A good friend will not pry, and a good friend will deal with her jealousy and not let it ruin the friendship. For your part, just be discrete and don't brag about it and no one can expect anything more from you. You don't have to apologize for this, or save people from their own emotions. If someone wants to ruin a friendship over their own jealousy there's not much you can do about it. 

I very much agree with the previous advice and find it wise.   You could simply say that the inheritance allowed you to make a substantial down payment on the new house.   I inherited a chunk of money when I was a young adult and felt awkward, so I didn't talk about it but I did things others weren't doing, e.g., travel.   I also know how resentful I feel about friends who are 'trust fund babies.'   So I agree that you shouldn't talk about anything beyond the house but that alone may be trying.  I don't know your m.o., but talking w/ her directly about it as you have in this post would be great---e.g., I love you and our friendship and I don't want this to come between us---gives her permission to express her feelings.   That's ok if it doesn't go on for years.  Perhaps you could invite her out for something special that you normally wouldn't do, and pay for it, as a special treat/celebration.       Also agree that you should talk w/ a financial planner who can help you lay out the next 15 years or so, or longer, with a reasonable spending plan.    

I agree with previous poster on revealing the house part as that cannot be hidden.  as far as the monetary assets, that I would keep private and/or divulge some of it.  ie: we set up an account with 10k in it to start a college fund.  that can be the truth without divulging that you also have 500k invested elsewhere.  most of my close friends and I do not discuss/disclose exactly what we have/not have financially.  

as far as damaging your friendship?  that's harder to call.  I would spend some serious time thinking about the possible directions this could go.  also, what will you do if she (or anyone else for that matter) asks for financial gifts or loans.  money solves a lot of problems, but also creates them.  make a plan and have boundaries.  a good financial advisor may be able to help you with this.  they work with many folks in your shoes.  be upfront and honest (minus the part you want discreet), and be the person you always have been in the relationship.  you cannot control what she does with the information, all you can do is be compassionate and honest.  this very much reminds me of the situation of infertility and friends getting pregnant.  I was unable to have kids and yes it compel me to distance myself from good and old friends who were blessed with kids.  I miss them, but I was filled with much anguish being around their happiness...  also, I could not be the friend they deserved under the circumstances.  life isn't fair and relationships do not all survive the twists and turns of circumstance.  no good guys, no bad guys.  just life.  best of luck to you.  this is hard.

I understand this one. I didn't inherit as much as you but a lot more than I ever expected or anticipated. My BFF has always been on a very tight budget and it felt weird to suddenly stop worrying so much about money while she had to budget for every latte. I never told her how much I got and she never asked (actually, I don't think that anyone really asked for details. I know that I wouldn't). I really didn't change my lifestyle all that much but I did do things like paint the house, replace windows, replace a gross car, etc. I tried very hard to act exactly the same as I did before towards her. I think that people like to pull their own weight and they don't want to be pitied. If I wanted to do something that I knew she couldn't afford, I'd ask if she'd go with me as my date. I convinced her that it was a lot more fun for me when she was there and she was okay with that sometimes. But I more often tried to plan the things with her that I knew that she wanted to do and could afford. 

My advice is to not worry too much about it. If the money doesn't change you, it shouldn't change your friendship.

This is sticky! Especially if you were transparent about finances previously. Don't tell anybody how much. I think that is inappropriate. And don't talk about money and how to spend or save or invest. And don't start flaunting with expensive jewelry or designer purses. Don't put anything in your husband's name. It is your money. Keep it separate. Men have a way of suddenly turning on their wives. Just say you got a surprise inheritance and money will not be as tight as it has been in the past. 

When people's circumstances are so different, it is hard to be friends. One has kids the other doesn't. One works full time the other doesn't. One is rich one is poor. It is possible, but unlikely. Don't reveal too much. Let her assume that your husband got a promotion. But don't lie either. I would suggest becoming more generous, but don't go crazy. Offer to pick up the tab when you go out. Get her a holiday gift that is a bit nicer than what you got in the past. 

Continue the conversations of the past: kids, politics, hobbies, whatever. Be the same person you always were. And hope for the best. 

So you've had some good luck and your friend has had some bad luck.  Of course she'd be jealous.  Would it ruin the friendship?  Hard to say, but more likely to ruin things if you're dishonest than if you're open and communicate about what is happening.  

But the first thought that came to my mind was: Why don't you share with your friend?  After all, you did nothing to earn this money.  So why are you more deserving of it than your friend?  I'm sure she'll be thinking about that, so maybe you should too.

Imagine on your deathbed you reflect on your life: family, work/career, community, friendships. What do you want to not regret?  What do you want to say you felt good about, accomplished?  Just an idea

I agree with the response not to tell her everything.  My first instinct was also for you to also say, hey, I received this unexpected money and I’d like to gift some to you.  Then pay your luck forward and write her a check.  It might not be enough to change her life but might help ease her burdens.  

I was in a somewhat similar situation a few years ago. I was vague with my closest friends about my finances, and I think that's a good way to go in general. I don't know how my friends paid for their houses, unexpected medical expenses, luxury items, and they don't know how I have paid for mine. It is implied, if you end up buying a house, that you got a down payment from somewhere, so people may still get an inkling that you are either a super-saver or perhaps received a windfall. There are so many things to bond over with your friend, but maybe your different financial worlds don't have to be one of them!

In the meantime, it sounds like you have some great ideas about investing this new-found wealth. Might I suggest sitting with the funds invested as-is for a year or so before making any big moves, get used to the amount and think through how to use them with a financial adviser -- as you may know some people get blinded by the short-term rewards of new money, but I'm sure you won't fall prey to that!

Another poster here brings up a good point about taxes -- if these inherited accounts are from IRAs that would require RMDs, there is a benefit to taking yearly RMDs rather than lump sums. I'm sure you already knew that, but just in case you had not known about that (I had a big learning curve in your situation), make sure to look into it before the end of the year :)

There is no reason you need to share the full financial details of your what received with your friend or anyone else outside of your immediate family or financial/tax professionals you hire.  I would tell her that you got an inheritance and it was enough for you to be able to afford to buy a house.  You owning a home as opposed to renting one should not change your relationship.  Unless you are planning on significantly increasing your standard of living (i.e. getting housekeeper/daily maid, visibly more household help or help with kids, very expensive home, private schools, etc.) then there is no reason she should know how much you have sitting in your bank, brokerage and other accounts.  Frankly I don't even share the actual amount income that I bring home -- I'm sure that based on our standard of living our friends think we make way less than we really do, but this is fine since I don't want others, even friends, to know about the income/assets we have to avoid the exact same issues you are worried about.  If you don't say anything and don't make drastic changes, there is no reason why she should or would ever find out. 

Like the previous poster stated, buy a modest house, don't go nuts. Like the advice many give when you get a raise at work, keep the same lifestyle and day-to-day budget, save more. You will probably need more money for retirement and higher education. 

Speaking from a similar situation, money makes things complicated with relationships, even the most honest and open ones. In an age of wanting to share everything with everyone, privacy and modesty should be just as important. 

I basically agree with the advice to tell the almost-whole truth: we're buying a house with the inheritance I got from my extended family. Don't complain to her about all the work that comes with managing money or the difficulty in finding just the right house. She may want some distance from you in the short term or the long term; respect that and don't make it any weirder than it needs to be for her. Or, she may be perfectly happy for you and not feel the need to compare her situation to yours. Just be aware of not "rubbing it in" by for example, not taking her along house-hunting.

I would say it's not unusual for friends to have radically different financial circumstances. Share your joy with her, and yes, tell her how happy you are about buying a house. She will share in your joy, if not, there's something wrong. There s no reason to be specific about the numbers.

Why not share? People in this country are weird about money. Do you love your friend? Why not make a little sharing fund for yourself and find small ways to share the windfall with her. Clearly all your needs are covered now, how hard could it be to open about it and share. 

Is it possible to update your lifestyle more incrementally, and attribute vaguely to a combination of work/career success and some inheritance? I minimize (and make vague) the actual dollar amounts. I say this because it's actually easy to have a lot of money in the bay area and not be super showy about it, just because living here is so expensive. We've had a single-earner household with an income that's gone from 400k a year five or so years ago now to 1million (post tax) this past year. We have a house we bought for around 700k and go on vacations, but besides that, no one could really tell how much $ we have. We give 10% of our net income and fully fund retirement/kids' education - but these things are done privately. What people see is that we don't go out to eat a ton, we shop at Berkeley Bowl and Trader Joes, we buy clothes from Banana Republic and Old Navy during the holiday sales and buy what we can discounted after Black Friday. I don't think you need to change your lifestyle thaaaat much. 

Not directly addressing your question about your friend (others have offered a lot of input on that), but wanted to add - be sure you immediately take care of designating beneficiaries for wherever the money is at the moment.  If you haven't already, you'll want to consider setting up a trust (not just a will) with that many assets. Just in case!!  (I'm not an attorney, just sharing what I've learned)

Original poster here. Thanks for the stories and advice. We are hiring a financial planner and thinking hard about things. No big upgrades planned as of yet! I think I’ll continue to be vague and hope for the best. 

I will weigh in because no one has answered who has been on the receiving end of this. My BFF inherited enough money so that she never had to work again. She told me all the details about the lump sum she got immediately and the trust set up to give her money each month. Her monthly amount was more than I make.

It was a little hard at first but within a month or so things were back to normal. If it had been a couple years earlier when we almost lost our house, it would have been harder but we still would have gotten through it. If we had been about to lose our house and she offered us $10K so we wouldn’t, I would have accepted and it wouldn’t have ruined the friendship (at least on my side) but if she offered or we expected a monthly maintenance fee, I think that would have broken us. If it hadn’t been a dire circumstance it would have been weird to be offered money. She was already better off than we were but by the time she got the money we weren’t struggling so much.

Her lifestyle has changed; she has “people” for most mundane tasks — house cleaner a full day a week (who also does all laundry), a dog walker, a handyman who comes by on a semi-regular basis to do any accumulated tasks, someone to do errands 20hours/week, a gardener,.... But with all that, I don’t think she is happier. There are definitely a lot of people who try to take advantage of her.

On my side, I have had to be careful to make sure I don’t slide into letting her pay for stuff. I generally pay for lunch at the hole-in-the-wall restaurant we both like. We split bills when I don’t pay. I don’t go out to $300/person dinners with her since while we could pay for it, we very definitely notice it and I find myself bitter about the money spent. I’m sure there are similar adjustments on her side.

Good luck.

Thanks for asking this question so honestly--and so fascinating to hear the range of responses. 

One resource I would suggest is an organization called Resource Generation. While their focus is around young people (which I think they define as younger than 30) who have inherited wealth, they have some good articles about how to handle money, privacy and wealth, while keeping important relationships in your life. They also have a big social-justice sense and framework.

I'd also recommend Iris Brilliant, who used to work for Resource Generation, and now has a consulting business that works specifically with people around inheritances.

A financial advisor is never a bad idea, and Iris Brilliant may have suggestions of who would be a good financial advisor for someone with this kind of inheritance situation. 

Not sure if you are married, but realize that an inheritance to you is not community property in California.  It belongs only to you and in case of divorce you keep it all no matter the circumstances.  However, if you commingle the inheritance with marital property it becomes community property like all the marital assets.