I Inherited $8-12 Million of Land And Have No Idea How To Manage The Wealth Responsibly

One of the most challenging things to do is to figure out how to manage any inheritance that comes your way, especially those that are unexpectedly higher than initially believed. A sudden windfall of money sounds great on paper, but in the real world, it can present its own set of challenges.

This is something one Redditor posting in r/inheritance is learning firsthand, having inherited land in Texas almost a decade ago. Ten years later, they have finally determined a path toward development and exiting the land, but it now presents a whole new set of problems as this Redditor tries to figure out how to sell and keep as much of the sale proceeds as they can.

Inheriting a Bunch of Land

According to the original poster, around 10 years ago, they inherited a large amount of land in Texas. Having sat on this land for a while, they have recently come across a promising development opportunity, and this means they are looking to cash out.

With a good realtor at the ready who specializes in selling and marketing large tracts of land to developers, the Redditor believes they are looking at a potential windfall of anywhere between $8 and $12 million.

Unsurprisingly, they are trying to figure out who they need to connect with to manage this newfound wealth. The good news is that they aren’t looking to go crazy and instead want to live off the interest while growing the principal and creating generational wealth that can be passed down to their children.

They are not sure if a 1031 exchange is right for them, or if they should focus on finding someone who charges a flat fee versus a percentage. Rightfully so, they don’t want to mess up a once-in-a-lifetime opportunity to do something special with the money and readily admit they don’t know what they don’t know.

What To Do First

First and foremost, this Redditor needs to be super careful about what they do next. Just about every comment in their Reddit post is a reminder that large developers can be very shady and that they should make sure they have attorneys looking over everything.

Unfortunately, it doesn’t sound like a 1031 exchange will work for this Redditor as the proceeds from the sale would need to be reinvested into a “like kind” property that is of equal or greater value than what is being sold. It could be a giant office building, but it would likely have to be some kind of property.

In other words, if they sell the land for $10 million, they must use this money to purchase a different set of land for $10 million based on the rules of a 1031 exchange. Going down this road would mean the money is tied up, and generational wealth and interest are all off the table.

Most importantly, right now, the biggest need for this Redditor is a good accountant, a fiduciary financial advisor, and a pit bull of a real estate attorney. The attorney is going to be the best person in your life who can make sure that any contract you receive doesn’t allow for loopholes where the developer defaults on the land or doesn’t sell enough property by a specific date, any of which could lead to the Redditor not getting their full payout.

The Next Steps You Need to Take

Right now, the Redditor should be focused on a fee-only advisor who can help manage the wealth from the land sale and create a wealth plan that aligns with the Redditor’s goals. This also means working with this individual or a team that can help set up a diversified portfolio that is full of ETFs and dividends to create passive income and interest simultaneously.

While not often considered, looking at different but more tax-efficient vehicles for investments like a municipal fund could be tax-advantaged. Any conversation with a financial advisor should be two-sided right now, in that, how do you generate enough interest to live off of it right now while also growing the principal for retirement?

An accountant, as mentioned above, is also going to be pretty important as any sale is going to have significant tax implications. This sudden cash flow will immediately bump the Redditor into another tax bracket, so understanding what needs to be paid and what, if anything, can be written off is going to be super critical in the coming years.