By: Myra Salzer
Heirs of windfall wealth have a lot on their plates – from endless meetings with lawyers and attorneys to dealing with familial turmoil and estate settlement. The burden of inheritance can weigh heavily on those who don’t yet have a wealth coach on their team. At The Wealth Conservancy, our goal is to empower inheritors to take control of their windfall wealth. Below are three common mistakes our experienced coaches help inheritors navigate:
#1 – Feeling Guilty or Greedy
If the benefactor of your trust is still alive, it’s helpful to have the conversation about your inheritance today. Yes, money can be a delicate topic, but opening the door to a difficult conversation can provide both you and your benefactor with a sense of relief and clarity over your circumstances when the benefactor is no longer around to answer any of your questions. You, the inheritor, may start the conversation gently by letting your benefactor know you might not be able to think clearly while surprised or grieving. The more you know in advance about your inheritance, the more rationally and responsibly you will be able to manage your financial transition.
If this opening does make room for dialog, you might ask if you could meet your benefactor’s advisors and work with a wealth coach so when you inherit, you will already be familiar and partially integrated with your new circumstances.
#2 – Being Afraid to Ask Questions
No matter what the circumstances (a relative died, a trust terminated, or a business sold), inheriting may be a first-time event for you. Feel empowered to ask lots of questions, including ones you think you know the answers to. Doing so will help you organize your transition with minimal estate tax and income tax consequences. There may be opportunities to give to your favorite philanthropic organizations. There may be decisions you can make to integrate the inheritance into your existing financial plan. Certain attorneys, accountants, and financial advisors may be more interested in getting the job done than in making sure the transition is made with your best interest in mind. It’s important to choose your team wisely. Remember, the people you hire are paid to answer your questions. Ask as many and as often as you wish. If you don’t know what questions to ask, your TWC wealth coach is here to help.
#3 – Ignoring the Impact
Does this new inheritance mean you now have a taxable estate? A larger tax liability? The ability to sustain a higher quality of life, start a new foundation, or give more to the causes that are dear to you? Should you establish a trust for your spouse or children? Should you keep this inheritance a secret?
Inheriting windfall wealth can dramatically alter the course of your life, and the lives of those nearest and dearest to you. While some of life’s problems can be ignored or tabled for later, the consequences of ignoring the impact of your inheritance can be financially devastating. If you need help navigating the potential impact of an inheritance or planning how to align your new financial picture with your values, The Wealth Conservancy’s wealth coaches have the tools you need to honor your worth while protecting your wealth.