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7 money afflictions from inherited wealth

7 money afflictions from inherited wealth
7 money afflictions from inherited wealth © Photobank gallery/Shutterstock.com

Many people dream of inheriting a windfall, convinced it will light up the path to Easy Street. In fact, if you talk to inheritors and wealth counselors, they'll say an inheritance often causes more trouble than it solves.

"Money is a magnifier and can enhance problems as well as good instincts," says Vic Preisser, a founding director of Institute for Preparing Heirs. Unprepared or uneducated heirs are susceptible to all sorts of afflictions, including profligate spending, loss of identity and guilt over receiving money they didn't earn. "I see a high similarity (among inheritors) to professional athletes and lottery winners," says Preisser. "In a year to 18 months, everything falls apart -- marriage, finances -- and if there is a drug problem it becomes worse."

For inheritor Barbara Blouin, receiving a windfall she was unprepared to handle skewed her sense of identity, with the result that "I was in hiding most of my life," she says. "I think there's a strong bias against people with inherited wealth. You hear terms like 'trust fund babies' or 'trust fund bums.'"

Her solution was to write a series of books and found an organization, The Inheritance Project, to help others in similar situations.

Read on for advice on treating seven common money afflictions that arise from inherited wealth.

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Coming in to a lump sum of money might seem like a dream come true, but many people struggle with what to do with the money, squandering or mismanaging it until it's all gone or worse.

There are many missteps someone who is suddenly wealthy can take, commonly made by breakout sports stars as well as those who acquired the money through an inheritance.

One common mistake is dedicating your win-fall toward emulating the lives of celebrities. It's tempting to spend your money trying to obtain happiness only to end up cash-poor. Maintaining that lifestyle is a costly endeavor, so it's important to set humble financial goals for your money.

One expert suggests creating a bliss list, a list of all the ways your life would be better if money were no object, then prioritize the list based on what you can afford with your newfound money. It's important if you're not used to having money to seek professional help.

 

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