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Q & A: Inheriting 101- Part 1

Sometimes people ask how clients find me. There are some typical ways, like finding my work and my books on the internet, hearing a presentation I have given, or even occasionally by word of mouth from a friend. There are also some rare and unusual approaches, which most people might not realize. Once in a while, a “journalist” contacts me with a host of questions. During my interactions with him or her, I find that this really is more of a personal exploration for the person. What follows is an interview I gave, which, as far as I know, was never published. I believe the “journalist” in this instance was in the earliest stages of a personal quest.

What do I bring to my clients that my colleagues don’t bring? Simply, I bring depth and breadth of experience growing up as an inheritor. I didn't learn all of what I know this way, but it was the foundation. Part 2 of this exploration will reach you in my Spring 2018 Navigator.

Basic Inheriting Questions Answered: Part 1

1. What is a wealth counselor and what role do you think psychology and counseling can play in understanding and helping those who inherit money?

One of our society's firmest convictions is that wealth guarantees happiness, that having enough money ransoms us from all of life's travails, exempts us from its heartaches, struggles, trials and tribulations. It is difficult, in fact, for many to imagine having both wealth and problems. Inheritors, however, discover that struggle and adversity are part and parcel of living, and the rich experience their full share of life's conflicts, stresses, issues and dysfunctions -- special challenges, in fact, created and exacerbated by their wealth. For many, the sobering reality sooner or later is that money may, indeed, be at the root of their deepest pain and greatest frustrations -- that being rich can be detrimental to one's mental, psychological and spiritual health. Handling financial wealth well is not the "Easy Street" outsiders imagine. It requires hard work, focus and discipline, but the rewards can be tremendously exciting and fulfilling. Relationships and work are particularly tough areas in everyone's life, but with certain surprising twists thrown in for inheritors. Coping well with these unexpected challenges relies on the solid development of empathy, trust, self-esteem and communication skills. All of us have a vision of how our lives could be lived, but each of us needs help in bringing our dreams to vibrant reality -- the sort of counsel, instruction, inspiration and support a wealth counselor can provide. Wealth counseling, then, is the charting of a safe, successful passage through the shoals of financial well-being toward a meaningful, productive and truly rewarding life. We can call it navigating the dark side of wealth on a journey to inner growth, emotional maturity and spiritual fulfillment.

2. Have you seen people who have inherited money have emotional difficulties with their inheritance? What have you seen them go through?

The majority of my clients are people who have inherited money and have emotional difficulties with their inheritance. In twenty-seven years, I have seen clients go through just about every imaginable challenge. Some contact me because they are struggling with their identity, trying to figure out who they really are, just like a lot of people who haven’t inherited money. However, where there is inherited wealth, there may be certain specific issues. For example, there may be pressure from the family to be who they want you to be, and money can be used as leverage. There may be a family identity so strong and so steeped in certain principles and values that it can be difficult even to see life in any other way. The motivation to stick out the tough times in a chosen field may be lacking, since quitting presents no financial consequences, and as a result, you never enjoy that sweet success in life: expertise and competence. Another subtle challenge is the lack of pressure to figure all of this out. Yes, there is that internal discomfort, but no inherent need to get on with some kind of career, to pay the bills. It is an odd combination of ease and dis-ease. The search for identity is just one challenge. There are also the many challenges of relationships. For instance, in family relationships, sibling rivalries can get very intense when there are big bucks at stake. Financial wealth amplifies everything. And in dating, who will love me for me -- and not the money? There are the challenges of parenting, the struggles to not give the kids too much too soon; the tendency in many families to elevate the financial capital far above the human, intellectual, social and spiritual capital; and name a few. Let’s also not forget the challenges of relationships with professional advisors. Who can you trust to act in your best interest and not overcharge you? There is so much more. These examples highlight just some of the common challenges.

3. Do you suggest that clients who inherit money take time to grieve before deciding what to do with the funds?

When there is an inheritance, it is important to take some time, usually a year, before making any decisions. I generally tell clients to park the funds in some kinds of conservative, relatively safe investments for that first year. The purpose of this year might be for grieving, and it might be for educating yourself about managing your new, wealthier situation -- or both. There are far fewer problems associated with taking time and going slowly than with rushing ahead. The key is to take a year for whatever it is that you need to do before deciding what you want to do with the funds.

4. Have you seen clients mismanage inherited money?

Yes, of course! I have seen every variation of clients mismanaging inherited money. At best, people learn, just like in everything else. Sometimes the lessons of mismanaging money are so painful, they ultimately create strength.

Why do you think that is?

Clients mismanage inherited money usually because of poor preparation, which could have started as poor financial education growing up (see The Navigator, Fall 2017) and then poor preparation and poor advice as adults. It is also a function of personality. I have seen some inheritors who seem to be “naturally” inclined to keep track and be responsible and others who seem to be “naturally” careless. This may or may not be related to education. One of the challenges for parents is that different offspring will usually handle finances differently, even when provided the same financial education opportunities. So, for parents and offspring alike, the first step is financial education, and all of the subsequent steps are putting this education into practice. Advisors can provide good services for this where discipline is lacking.

Sometimes I check two guest posts I made on a few years ago. It is fascinating to see the numbers of views each has received. The first, “Why Family Wealth is a Curse” has received, as of this moment, 53,178 views. The counterpart column, “Why Family Wealth is a Blessing” has received 6,657 views. The overwhelming interest in the negative is reflected in these numbers. My passion is to reach as many family members as possible with the message that you can make the wealth in your family a blessing. It does not have to be a curse. The work to accomplish this is hard, and it is entirely possible.

In Part 2, our first question will be “Why is it important for those who inherit money to consult advisors?” Between now and then, make it your goal to tune up your own financial literacy and/or that of your children.

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