Pioneers and nationally recognized leaders in estate planning.

650.493.8070 local

800.244.9424 toll-free

Handling a Large Inheritance Can Be More Difficult than It May Seem

As they plan their estates, many people consider themselves fortunate if they are able to leave substantial inheritances to their children — and the children will be grateful to receive it. However, large inheritances bring certain responsibilities that can be overwhelming to some heirs, especially because they arrive during a grieving process.

Those who inherit a large sum and have not previously handled such amounts may be unsure of how to manage the money. The details can easily become overwhelming. Many heirs make the mistake of promising gifts or loans to friends and family before they sort out their own financial plans. Others make substantial investments too quickly, without analyzing the positive and negative aspects of different investment strategies. Still others make significant purchases; this is something we refer to as "The Lamborghini Effect."

New heirs must remember to slow down. Before making any investments or promises with new wealth, it is wise to consult with a financial adviser and to begin to learn about money management. Keep in mind that it can take years to adapt to new responsibilities and make long-term decisions about one's investments. Most importantly, protective estate planning documents must be put in place to ensure ongoing management and capture protections.

As solid decisions about investments are made with the help of a financial adviser, an estate planning attorney go further and assist an heir with plans to provide for his or her own legacy.

This topic — the impact of inherited wealth — is discussed in the second edition of Michael Gilfix's book:  Beat Estate Tax Forever (2014).  The book is available from the offices of Gilfix and La Poll.