“When Jessie O’Neill was 28, her mother died unexpectedly, leaving her with a windfall of more than $2 million and absolutely no clue how to handle it.”
Her inheritance triggered every parent’s nightmare:
“It took her three years of booze, cocaine and wild living in Miami before she got a grip and found advisers she could trust to do the financial work that was beyond her ken. By then, her marriage was history.”
Take a peek inside the world of a child who inherits more money than she is prepared to handle in an article published today on the web. How to Leave Your Kids a Healthy Inheritance does a great job of acknowledging the plight of inheritors, whose problems are rarely taken seriously. After all, wouldn’t we all want to have a couple of million dollars free and clear? But for many kids it’s a curse in the disguise of a blessing.
“Your relationships change so drastically,” O’Neill says. “You go from whatever normal life you had to people wanting to hang around you for all the wrong reasons. Relatives want to borrow money. If you have not been prepared, you just don’t handle any of those situations well, and you make poor choices.”
As the article highlights, you can plan to protect and guide your children when you are not there to help them. The first step is to realize just how much money your kids are likely to receive upon your death. Almost all clients we’ve worked with have underestimated the money that will go to their kids; often because they fail to consider life insurance death benefits from private policies and employer-provided policies.
Multi-million dollar inheritances are not just for Rockefellers. To an 18 year old, even $300,000 may seem like enough wealth to retire immediately: “no need for college!” (Many people don’t realize that the plan created by the State of California (the “Do Nothing” plan that you have now if you haven’t taken steps to create something better) turns all of your money over to your kids at age 18.)
Note for Firm Clients Only: If you wish to hold a Family Meeting with your kids (these work best when the kids are at least 18; we don’t want to scare younger kids with their parents’ mortality) to discuss how their estate plan protects them, please call Linda Pohlman at the office to schedule a meeting at (805) 778-0600.
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