Hello fellow CB'ers. It's been awhile, but I have been trolling a lot recently.

My father in law will be settling an almost 8 year old disability suit and it looks like he will be taking home roughly 150k. No one in our family has any experience with this amount of cash and we want to ensure he uses it wisely.

A bit on his situation. He broke his neck at work and has had 2 surgeries over 6 years to repair the fracture. He has spent his career in construction, has zero retirement, zero savings, no land and most likely horrible credit (have not checked yet, but I am assuming the worst). He cannot work full-time in the construction trade and any sort of desk job is out of the question for him (he has serious issues working inside anywhere)....he's weird! LOL

I'd like to see them get their own piece of dirt, but with their credit I'm not positive that's the best choice at this point in time.

What would you do?

PHRoG

Even if his credit is really terrible, he could probably clean it up for very little of the money he'll get from the settlement. That would be a good first step.

In the meantime, I'd have him stick it in a conservative portfolio at a brokerage, and not touch it for a while. Once his credit is clean, he can buy a place, and maybe even have a little extra in interest and dividends socked away.

Does he need the money to live off? Is he eligible for Social Security disability benefits?

Well...We are not 100% sure if he will qualify for them or not. However, what we would ultimately like to see happen would be to purchase property and then find some sort of business for him to start. He's ran many construction crews, framing, finishing, etc, etc. So I'd really like to see him get into construction if possible.

Investing in a small business usually results in failure. Just putting that out there.

Yeah...I'm aware of that too. That's why I wanted to drop it here on the forums and get some ideas. He'll either have to find a job or start a business of some sort...I don't think he could rely on SSI Disability to make a mortgage payment.

I'm assuming your father in law is 50ish years old.

"What would I do?" Accept the fact that with no retirement and no savings and only 150k that I will have to work until full retirement age, no early retirement. If I want to retire at full retirement age then I have to find a job whether it's Burger King or not. He lost 6 years of Social Security wages in his calculations. I would get an estimate of his SS benefit now.

No way I buy a house with my only cash and a only potential min wage jobs. Find a cheap place to rent and never eat out again.

From what I've read a 4% distribution is a reasonable figure to use in guessing what you can pull out of principal. That means you can only expect 6K extra income a year with that 150K. So you need to look at it as 6k not 150k.

saladdin

I would consider taking that money and speaking to a financial advisor, you don't have to go that route but it sure doesn't hurt to explore all his options.

He'll need that money to last as long as it can especially if he isn't able to go back to work yet.

I agree that would be a good first step.

I would go on vacation for a few weeks.

Oh wait, you asked "What would you do with $150,000?", but what you really mean is what should your father in law do with $150,000.

I'm sorry to hear about his situation. He's probably not one to sit around and has worked very hard all his life.

Have you asked him what he would like to do with it?

I would not be in any big hurry to do much of anything with it. Stick it in the bank and sit on it for a few months. Start talking to your bankers and other local people face to face to see what they suggest.

First off let me say this, if your FIL is going to apply for SSD/SSI whatever he need to do it now.

Trust me I know,

When I got my SSD settlement I got a large chunk of it and tucked it away and have no plans of looking at it till I am at least 50. Since You FIL does not have any real property, I think it is wise to put a lot of it away clean up his credit, then buy something later.

Also if he is planning on applying for SSI/ssdi he really should not be working in a business whether he owns it or not

Pay it as far as it would go on my debts?

Just out of curiousity, other than awaiting for this settlement to work itself out, what has he been doing for income over the last 6 years since the injury? How is their current quality of life?

That would be the first two things to ask.

I'm assuming since the accident occured 6 years ago that most of the derogatory credit should be off his reports within the next year or so (assuming the date of the injury is when his credit issues began).

Personally I would advise him to take care of any judgements currently against him as well as paying off any CURRENT creditors (auto etc.) then I would put the rest in a 13 month CD to let get a little interest (though not much in CD's now) while he works on clearing up his credit.

After the year is up and he is hopefully debt free with a clean credit report I would then determine what his income is at that time (whether it is through work, social security, etc.) and then apply for a mortgage with that in mind. Figure out what a 12 month emergency funds would need to be (if the proposed mortgage payment + utilities/living expenses = $2,500 per month) then put $30,000 a way in a money market account... I would also keep some of it in a long term CD to have available in the future but out of reach for now. The rest I would put as a down payment on the property so he has some built in equity at time of closing.

I too concur that it is a bad idea to start-up a business in the current economy. He may do well as just trying to be a "licensed and insured" general handyman in the area as it would have very little startup costs - he could probably do this with less than $1k in tools, $1k in advertising & licensing (signs on his truck and a yellow page ad should do the trick) and he can do this from his home/apartment etc....

What Troy said. Also, does he have any debt? Best to pay that off as well.

I'd buy a NEW car (not used), give some to charity (preferably my cathedrals music office!) and put the rest away in savings.