Nearly one-third of Americans can expect to receive a substantial inheritance at some point during their lifetime. Unfortunately, studies have found that inherited wealth tends to dissipate within a few generations. Jill Schlesinger, senior CFP Board ambassador, has five helpful guidelines beneficiaries can follow to limit these losses. First, Schlesinger suggests avoiding mindless spending. While this type of spending often starts small, it can quickly spiral out of control. Next, do not try to manage assets alone. Financial management, especially for the inexperienced, is best accomplished with professional guidance. Third, do not act too quickly after receiving an inheritance. Selling a home or quitting a great job may not be the best option when considering the long term. Fourth, avoid becoming financially paralyzed. While some beneficiaries may be extremely intimidated with their new wealth, it is important that intelligent investment follow an inheritance. Finally, avoid helping family and friends to your own detriment. While it is wonderful to give aid to loved ones, do not overstretch yourself to the point that nothing is left for your own support and maintenance.
See Christopher Robbins, These 5 Mistakes Destroy Generational Wealth, Financial Advisor, May 23, 2017.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
