Second Generation Millionaires: Inheritors
Some of our clients have become second-generation millionaires through inheritance. Of those, some knew a sizeable inheritance was coming their way, while others have been taken aback with the amount of money they’ve acquired. What they all have in common is a degree of overwhelm with the decisions they must make, the amount of work it takes in many cases to sort through the assets they’re now responsible for, and the layers of rules that they haven’t had to deal with before.
For some of these clients, we already had a relationship established with them. The inheritance became a new chapter in their lives that we could reset goals with. We already knew them, their individual financial circumstances and in some cases, had worked with their parents whom they’d inherited from. Others became new clients because of their newly acquired wealth. In all cases, we were able to provide value with our knowledge and experience: they expected that. The other side of the value coin is that as their advisors, we can work through their new financial plan and decision making without the emotions that these new millionaires are now experiencing. It is common for inheritors to feel a level of fear that they don’t want to mess something up, as well as a new level of responsibility that they now have, appreciating that this money in many cases represents the lifetime work and legacy of their parents. Inheritors often “compartmentalize” their money, where they feel different about and therefore act different with their inherited money than they do with their own money.
A meaningful approach I often recommend to my clients who have inherited wealth is to take at least an annual distribution, whether they are required to or not, and time it around a special day like a birthday or Christmas. Consider this an annual gift from their mother or father, or whomever chose YOU to be the beneficiary of their wealth. By anchoring the financial distribution to a day of personal significance, we infuse the plan with emotional resonance, transforming a monetary transaction into a personal experience of remembrance, gratitude, and lasting connection.
Second generation millionaires have a valuable learning opportunity and for multi-generational clients, we’ve patterned some of their financial plan to repeat the experience they’ve just been gifted, meaning, we incorporate some of the same strategies into their plan as we did with their parent’s plan, so that their children may benefit just as they did, creating a potential third generation of millionaires. The process opens new doors for families of second-generation millionaires, who are inheritors.
LouAnn Schulfer of Schulfer & Associates, LLC Wealth Management can be reached at (715) 343-9600 or louann.schulfer@lpl.com TheWealthInformationLady.com SchulferAndAssociates.com
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
