[USER]

Hello! A client of mine is soon to receive a divorce settlement of ~1.2 million in a tax-free lump sum within 60 days.

She’s in her mid 30s, living in Southern CA with two kids under 8 that she has primary custody of.

She’ll be receiving monthly support that should be enough to cover her monthly expenses for at least the next 6 yrs on top of the lump sum.

One thought she had was to buy a house outright and go back to school, but I was wondering what else you all might recommend she do?

Seems like she might be very close to not needing to work anymore with the right choices being made.

Looking forward to your suggestions and thanks in advance!

[Megan]

Would she buy where she wants to be long term?
I’d be more likely to rent. She won’t have to be in charge of the maintenance/costs and can focus on college.

Once she’s done she can live where evere

[Dawn]

Honestly, I would let sit for a year part bonds and stocks before doing anything

[Christina]

I would not buy a property. What can she afford to buy and maintain in socal? $1.2M doesn’t go far at all in any decent location.

What happens after 6 years? What if the ex doesn’t pay or is habitually late on support payments?

I’d rent, go back to school for something that will put her back on the workforce so she can support herself financially into retirement.

I don’t think this divorce settlement is enough for her to retire now

[Sarah]

As with all windfalls and major life transitions, the common wisdom is to lock the money away in a HYSA or something similar for a year while adjusting to the new life and figuring out next steps.

SoCal is a very HCOL area…that $1.2 mil won’t go very far there.

IMO, she should definitely go back to college to pursue a fulfilling career. Having marketable skills is important.

What would she do for income after running out of the 6 years of support, while her kids are still growing up?

[Damon]

Move where the money will go further. I’d suggest not to immediately buy a home, first figure out her long term plan.

[Author]

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