Mature Life Features

Cecil Scaglione, Editor

Stress Is Part of Inheritance

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By Cecil Scaglione

Mature Life Features

Most people have some idea what they’d do with a financial windfall.

Take a cruise around the world, pay off the mortgage, or move to another part of the world. But then what? It isn’t easy becoming wealthy overnight.

It was estimated during the ’90s that current retirees will pass on some $10 trillion dollars to their baby-boomer heirs.

Many of the people inheriting this money have little concept of the challenges they face.

The first, of course, is what to do with the money. Do you put that $10,000, $100,000 or $1 million into the stock market or real estate? Do you sell the company or farm you inherited? Do you keep all the stocks, bonds, and mutual funds in the portfolio that suddenly becomes your property?

Most financial planners offer this piece of advice: don’t do anything for a while.

That’s more difficult than it sounds. An Oppenheimer Funds survey revealed that 40 percent of baby boomers who had already received at least a $50,000 inheritance made a financial decision in less than a week after getting the money.

Inheriting a family business or apartment building will require more immediate attention than a stock portfolio. But that’s no reason to make any rash decisions.

Whatever the form of the inheritance, you should focus on what you want to do with the money. Do you invest it for retirement income, pay debts, or make charitable donations, for example?

Establishing goals will help you manage the money better.

While the financial side requires patience and some effort to educate yourself on the best avenues to follow, the emotional side of inheriting is the more difficult challenge.

The inheritance may be intertwined with the death of a loved one and, as a result, associated with grief.

Guilt is another major emotional component of an inheritance, financial planners point out, linked to the feeling that the heir is uncomfortable with not having earned the money. Or he or she might not have been fond of the benefactor.

There’s also a feeling of isolation tied to inheriting money as the recipients often worry, with good reason, about friends and family badgering them for loans or gifts.

It’s the emotional stress that causes some folks to get rid of their inheritance as quickly as possible, by disclaiming it or giving it away or just spending it as fast as they can.

On the other hand, people who have taken time to plan what to do with an inheritance have been known to sit on their wealth and continue living in their current lifestyles with the comfortable assurance that their financial future is secure.

 

 

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Written by Cecil Scaglione

August 16, 2011 at 8:32 pm

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