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The 5 Toughest Challenges of Inherited Wealth

02/20/2015 05:40 pm ET | Updated Apr 22, 2015

If you are ever in a position to inherit a large sum of money... or if somehow you find out you are a "beneficiary" of a trust... would you know what questions to ask or know what to do?

Although inheritors of large sums of wealth - say, $10 million or higher - are few and far between, it is actually more common than you think.

Even if you are not an inheritor yourself, you may be (or will be) within a degree or two of separation from these seemingly fortunate few. Perhaps you've pondered what your own life would be like should you be so "lucky."

Specializing as a wealth coach and counselor for heirs over the last three decades, I've seen how the challenges of unearned wealth can interfere with life's enjoyment. Inheritors face headwinds that are very different from an average person's, but just as formidable (or more so). Here are five challenges that come up often as we work with heirs:

1. Finding and Developing Passions
Imagine being blessed with above average intelligence, a curiosity about the world, and all of the time and money needed to explore it. This may sound heavenly, but the reality is that having infinite options is often stifling. Being able to do absolutely anything can lead to paralysis, and doing absolutely nothing, after a series of halfhearted attempts at various somethings. Finding and developing a passion when all doors are open requires focus, determination, and, often, guidance. Accomplishments require the ability to overcome obstacles - a skill inheritors may never have had to learn.
2. Maintaining Meaningful Friendships
The vast majority of our clients desire to live "normal" lives, blending in with the other parents at the drop-off line at the kids' school, shopping at the local grocery, and so on. While their homes and vacation destinations (and durations) may show their means, they often want to live anonymously. Removing "money" from friendships is often the first step, focusing instead on shared interests (i.e., their kids, working out, etc.). One of the most challenging moments arrives when a friend asks for a loan. As anyone would, their first inclination is to want to help - but the implications of that arrangement are far more complex for the inheritor than they are for a person of normal means. Saying "no" to a friend who may not understand this can weigh heavily on the inheritor.
3. Prenuptial and Co-Habitation Agreements
Many of our clients are in their 20's and early 30's - prime cohabitation and marrying age. What could be more romantic than a "prenup" conversation with the one you love? In the case of an heir marrying someone of "normal" means, the wealthy family may insist on an agreement, which can really put a damper on what would normally be an exciting celebration of love and trust.
4. Choosing Ethical and Efficient Charities and Causes
Philanthropy is a significant part of many of our clients' lives, whether it's through a family foundation established by their great grandparents, dedicated to supporting the arts, schools, the environment, etc. - or on an individual basis. The arrival of windfall wealth can also mean the arrival of truckloads of letters requesting assistance, and suggestions from well-intentioned friends recommending "such and such" amazing organization that needs funding. Navigating these waters can be extremely difficult, and while the family wealth may spring eternal, the inheritor still wants to know that any donation made finds its intended destination, be it impoverished children in a foreign country or a worthy local artist.
5. Finding a Therapist
A very common challenge for our clients is being able to discuss their wealth struggles with therapists, either because the therapists are so awestruck by the wealth that they are immobilized, or they show signs of having a hostile envy and can no longer be trusted. If you're an inheritor, you likely find that one or more of the above resonate with you. If you're a person of more median means, perhaps after giving some thought to each of these five challenges, the challenges of the inheritor may be a bit easier to understand. In our experience, inheritors are well aware of - and grateful for - the opportunities afforded them, and they'll certainly take the bad with the good.

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