If you are ever in a position of inheriting a large sum of money, would you know what questions to ask or what to do? Although inheritors of wealth are few and far between, it is actually more common than you think. These people face the great challenges of inherited wealth.
InvestmentNews states that, “over the next 30 years, an epic $30 trillion will be passed down from baby boomers to Generation X to millennials.” Even if you are not an inheritor yourself, you may be within a degree or two of separation from these seemingly fortunate few.
Did you that some heirs actually argue that inherited wealth brings as much worries as it does joy? Specializing as a wealth coach for heirs over the last three decades, I’ve seen how the challenges of unearned wealth can interfere with life’s enjoyment. Inheritors face headwinds that are very different from an average person’s, but just as formidable (or more so).
Here are five challenges of inherited wealth:
1. Finding and Developing Passions
Imagine being blessed with above average intelligence, a curiosity about the world, and all of the time and money needed to explore it. This may sound heavenly, but the reality is that having infinite options is often stifling. Being able to do absolutely anything can lead to paralysis, and doing absolutely nothing.
Finding and developing a passion when all doors are open requires focus, determination, and guidance. Accomplishments require the ability to overcome obstacles – a skill many inheritors never learn.
2. Maintaining Meaningful Friendships
The vast majority of our clients desire to live “normal” lives. They want to blend in with other normal people. They want to drop-off their kids at school, go shopping at the local grocery, and so on. While their homes and vacation destinations may show their means, they often want to live anonymously and with genuine people.
Therefore, removing “money” from friendships is often the first step they stake. They want to focus instead on shared interests. One of the most challenging moments arrives when a friend asks for a loan. As anyone would, their first inclination is to want to help, but the implications of that arrangement are far more complex for the inheritor than they are for a person of normal means.
3. Prenuptial and Co-Habitation Agreements
Many of our clients are in their 20’s and early 30’s – prime cohabitation and marrying age. What could be more romantic than a “prenup” conversation with the one you love? In the case of an heir marrying someone of “normal” means, the wealthy family may insist on an agreement, which can really put a damper on what would normally be an exciting celebration of love and trust.
However, a prenup can be extremely beneficial in discovering how you and your partner deal with a tricky situation. The Washington Post wrote, “Settling on the terms of a prenuptial agreement takes uncomfortable discussions and ultimately a greater transparency between mates. These difficult talks about money can uncover things that could be disastrous if put off until several years into the marriage.”
4. Choosing Ethical and Efficient Charities and Causes
“Research has shown that being grateful can have a multitude of positive effects on our overall health and well-being,”states Everyday Power Blog’s Cara Maksimow.
Philanthropy is a significant part of many of our clients’ lives. whether it’s through a family foundation established by their great grandparents or on an individual basis. The arrival of windfall wealth can also mean the arrival of truckloads of letters requesting assistance, and suggestions from friends with good intentions.
Navigating these waters can be extremely difficult, and while the family wealth may spring eternal, the inheritor still wants to know that any donation made finds its intended destination.
5. Finding a Therapist
You might think that being wealthy comes with no challenges. That’s a common misconception. A very common challenge for our clients is being able to discuss their wealth struggles with therapists. That is either because the therapists are so awestruck by the wealth that they are immobilized, or they show signs of having a hostile envy and can no longer be trusted.
If you’re an inheritor, you likely find that one or more of the above resonate with you. If you’re a person of more median means, perhaps after giving some thought to each of these five challenges, the challenges of the inheritor may be a bit easier to understand.
When it comes down to the wire, will you be able to reach out for assistance? There are plenty of resources all around and I hope to be of one to inheritors that are trying to navigate this new lifestyle.
I’ll leave you with this quote from Ellie Hadsall, “Nobody has all the answers. Happy people are willing to seek assistance from others when they reach a tight spot.”