After her father died in 2021, Susan Camp and her brother cleaned out their house and inadvertently threw away $5,000 in cash that she had wrapped in aluminum foil and hidden in the freezer. (Fortunately, she recovered it later).
And he was surprised, but not surprised, to also discover $6,000 in a box that once contained a bottle of cologne. “Dad traveled and he always wanted cash,” she said.
Adrienne Volpe’s grandmother kept the extra money in her library.
“My grandmother had pressed thousands of dollars in individual bills into books,” Volpe said. “We thought we were going to find fall leaves” among the pages, she said. They had to open all the books in the house to find the cash she had hidden: it turned out to be around $10,000, in denominations as small as $20.
It may not be under the mattress, but for people who stumble upon a small fortune After an elderly relative dies or moves into a nursing home, discovering that unexpected wealth (technically part of a person’s estate) can bring complications and even conflict.
Members of older generations often perceive that keeping cash, gold or other valuables at home is safer than keeping them in a bank, experts say. “I think this is more common among baby boomers and older,” said Mark Criner III, senior fiduciary strategist at Baird Trust in Scottsdale, Arizona. “When you get to that generation, there was a real distrust of financial institutions.” he said, referring to people old enough to remember the Great Depression and the bank failures of the 1930s.
Criner said if family members noticed this behavior, communication was important. “When that is recognized, it is important to start the dialogue,” she said.
What can go wrong?
While throwing cash away is a very real risk when keeping money at home, it’s far from the only one, advisers say. Valuables kept in the home can be stolen, destroyed by a disaster such as a fire, or surreptitiously appropriated by a family member.
“Things tend to disappear from the home, especially when there is family drama or a dispute,” said Alvina Lo, chief wealth strategist at Wilmington Trust, a subsidiary of M&T Bank.
This potential for tension among survivors can arise even if misappropriation does not occur, experts say.
“Often, even if there is a well-intentioned adult child who lives nearby and they are active, a lot of skepticism can arise between siblings,” said Abbey Flaum, director and family wealth strategist at Homrich Berg, a wealth management firm. in Atlanta.
People who keep cash at home miss out on the considerable wealth generation that could take place over decades if that money were invested.
“The interest loss probably would have been twice as much, just by having it in the bank all these years instead of having it in the back of a closet,” said Patrick Simasko, a real estate attorney in Mount Clemens, Michigan, who recalled finding about half a million dollars in cash and gold in the home of an elderly client who had hired him to execute his estate.
There are also potential obstacles when it comes to distributing those assets.
“It’s just complicated, it’s not official and it can lead to accounting nightmares,” Criner said.
Since the cash has no ownership records, “from a property rights perspective, it’s not very clear who it belongs to,” Lo said.
Without a paper trail establishing ownership or a detailed will, determining inheritances can be difficult. “I’ve seen it when there are second marriages, where this can be a problem,” Lo said, particularly because hidden valuables are unlikely to be accounted for in a will or estate plan.
Experts also say these unaccounted for valuables can cause a headache for wealthy families, particularly those whose estates are near the threshold for federal estate tax or state estate or inheritance taxes.
“If it’s over the limit, those assets could elevate the estate to a taxable estate,” said Neil Carbone, a trusts and estates attorney and partner at the Farrell Fritz law firm. (For 2024, the federal estate tax exemption is about $13.6 million, meaning estates valued below that level are not subject to tax; some states have estate taxes or inheritance taxes with lower thresholds).
Carbone said he advises clients who inherit valuable but illiquid items, such as works of art, to have them appraised. Establishing the value of the item at the time the owner died and the heir assumed ownership can be important, especially if the item in question became considerably more valuable over the years.
The Internal Revenue Service has several ways to track potentially taxable wealth, Carbone said. Auditors may evaluate a homeowner’s insurance policy to look for clauses that insure valuable items, review previous gift tax returns to establish a paper trail of ownership, or track purchases of precious metals.
The other challenge when inheriting non-cash valuables is finding a buyer. “It’s the same whether you invest in baseball cards or Hummel figurines or stamps,” Simasko said. “If you’re investing in a non-traditional type of investment (not stocks, bonds or mutual funds) you have to find a buyer for them.” This process can take considerable time if the items are especially esoteric, Simasko added, recalling a client whose wealth was tied primarily to a collection of antique guitars.
Triggers of cash theft
Wealth management and estate planning professionals say they see cash hoarding trends most frequently among people with ties to the Great Depression. But memory-robbing medical conditions, such as dementia and Alzheimer’s, can trigger a reversion to decades-old behaviors, such as cash hoarding. They can also cause paranoia, which can lead people to hide valuables and try to prevent family members from interceding in their financial affairs on their behalf.
“People who are experiencing this mental decline become the least trusting of the people closest to them and in the best position to defend them,” Criner said.
“It can be really difficult. We’ve done a lot of planning for clients who could tell that mom or dad was starting to fade a little bit,” Ms. Flaum said. She said she recommended that clients in this situation obtain financial power of attorney and consider establishing a revocable trust, a financial instrument where assets can be held as people age and that allows beneficiaries to avoid probate after death.
“A revocable trust is a very good way to plan for asset management in the event of incapacity,” he said. “Provisions may be incorporated for how inability to manage those trust assets may be determined.”
Hiding wealth at home has also tended to persist over the years among certain groups of people.
“In particular, minority communities were very distrustful of or lacking access to financial institutions, which led to the proverbial money under the mattress,” Criner said.
“This is due to the lack of access of minorities to these institutions for decades, and even when there was access, there were many abuses,” he said. “They were not always treated fairly or honestly.”
These memories linger, Criner said, adding that as a black man, he has heard these attitudes expressed even within his own family. “That feeling of distrust passes from one generation to another. “I heard my dad talk about it, I heard my grandfather talk about it,” he said.
Ms. Lo of the Wilmington Trust said she has had similar personal experiences. “A lot of it is also very cultural,” she said. “I’m Asian American and this happens all the time in my community.”
Over time, experts predict that the number of people keeping cash at home will decline as the collective memory of the Great Depression fades and the use of digital banking continues to rise.
“People tend to make more and more electronic payments for things,” Carbone said.
While this is good news from a financial planning perspective, people who have seen this dynamic play out say it would also spare survivors the painful emotions these discoveries can cause.
Finding, for example, hundred-dollar bills hidden among items that would normally be donated or discarded is stressful for surviving loved ones because it requires a much longer and more thorough process to remove personal effects from a home. “The families are grieving and it’s very difficult for them,” said Ms. Volpe, a real estate broker in Hyde Park, New York.
Despite a decades-long career in real estate, Ms. Volpe said she did not expect to discover this scenario within her own family. She credited her mother for deducing that more money had been hidden in her grandmother’s books than she realized.
“Thank God my mother thinks like that,” he said, admitting, “I would have thrown all those books in the trash.”