While this may sound absurd to a cash-free generation, some still take comfort in having stashes of paper money at home. We know one daughter whose mother kept rolls of bills in the freezer and another whose father kept a shoebox of $100 bills in the attic. If the person is known to be a bit eccentric, it may be amusing. However, it is only until the family realizes the difficulties this behavior may present.
For heirs finding these stashes while cleaning out the family home—or mistakenly tossing them—hidden cash inheritances can present a number of problems. A recent article from The New York Times, “When the Money Is Under the Mattress. Or in the Freezer. Or a Shoebox,” explains how this old-school savings plan can go sideways.
Large sums of money thrown in the trash are just one risk. If others learn about the cash stash, having so much cash on hand could lead to the home being broken into. If there’s a fire or flood, the money could be destroyed.
There are more risks: if siblings dispute their parents’ estate plan, a more aggressive person might take the money without telling anyone. If an adult child is the main caretaker while others live far away, there will always be some suspicion. Did they take some cash before sharing the rest with their siblings?
Placing substantial amounts of cash into a savings account can take advantage of the power of compounding interest, which is especially valuable over decades. The only thing cash hidden in a closet will gather is dust.
A cache of cash creates accounting and tax problems as well. There’s no ownership record for cash, so it’s impossible to determine who it belongs to. This can be especially problematic for families whose estates are close to the threshold of the federal or state estate or inheritance taxes. How do you account for $500,000 in cash and gold bars hidden in the home? This happened to an estate planning attorney interviewed for the article.
Cash hoarding can be a result of dementia and Alzheimer’s disease, which can cause paranoia. This makes people feel they need to hide valuables and cash to protect them.
Estate planning attorneys often recommend establishing trusts and taking other steps as soon as possible when adult children notice their parents' diminished capacity. A Power of Attorney and revocable trust could allow the child to manage the parents' finances.
On a practical level, preparing an estate plan and conducting a thorough inventory of all assets, including cash and valuables in the home, makes life easier for heirs. Focusing on finding hidden treasures while grieving the loss of a family member creates a complication for the family and may tarnish a legacy.
Reference: The New York Times (June 8, 2024) “When the Money Is Under the Mattress. Or in the Freezer. Or a Shoebox.”
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