By: Andy Mountain
Congratulations. You're 32. You've spent less than a decade working your way up the corporate ladder and you've just inherited millions of dollars.
No need to work. No more problems. Your life is finally on the right track, right?
Not necessarily. A Houston heiress and her wealth coach recently told me of a dark side to inheriting millions. To protect the woman's privacy, we will call her Susan.
After growing up in the Houston area, Susan moved to Los Angeles. Like most people in the early 1990s, she was a career-minded woman whose social circles were comprised of similar individuals. But one night in 1990, all of that changed.
Susan's grandfather passed away. Susan and her mother were the sole heirs of his milti-million dollar estate. With sudden access to more money than she could dream of. Susan no longer needed to work to support herself.
Retired at 32. Sounds like paradise to most of us.
Not for Susan.
"I was in the closet about my wealth for years," said Susan. "I didn't know who to trust...who would pre-judge me because of my situation...who I should turn to for advice."
This fear and intimidation caused Susan to pull away from her friends. Concerns about how strangers would perceive her as a result of her wealth caused her to avoid meeting new people. To make matters worse, differing opinions on how to handle financial matters strained her family relationships.
"Inheritors often feel trapped by their wealth," said Myra Salzer, founder of The Wealth Conservancy, a wealth-coaching firm that specializes in working with inheritors. "I help inheritors understand their financial situations and transform their relationships with money from being burdensome to empowering."
Can having millions be a burden?
Salzer summed up the burden of wealth for me with the story of a different woman she helped overcome issues with wealth. Her story made it clear that inheriting millions may not be the answer to everyone's prayers.
"I worked with one woman who, at 18 years old, was offered an unlimited trust with just one stipulation," said Salzer. "She was never to return home or affiliate with her family again because they were ashamed of her obesity."
This story made it clear just how easily money can be confused with love. Salzer said that it took some time, but this woman found a way to put the same aside and do something fulfilling with her wealth.
Through her work with Salzer, she developed a program that allows sick or abused children to experience love through interactions with exotic animals.
While Susan's experience is not as dramatic as being ostracized because of her weight, she spent years trying to gain comfort with her wealth.
Susan spoke about going to parties and struggling to respond to seemingly simple questions like what she did for a living. When she answered honestly, some people would assume she led a glamorous life filled with days at the spa and exotic travels. Reality was far different from their assumptions.
"I was scared stiff of losing my inheritance," said Susan. "I lived in fear that one wrong decision would cause me to lose the fortune my grandfather built. I don't have the skills to make that kind of money back."
Thayer Willis, a psychotherapist that specializes in helping inheritors work through the personal challenges that can be caused by money, says that Susan's fears are a common reaction in unprepared inheritors.
"Inheritors often worry about similar things to most people, even money," said Willis. "While most people's financial concerns may revolve around paying a mortgage or investing in a retirement plan, significant wealth exaggerates the concerns of inheritors because there is more to lose."
Willis' book, Navigating the Dark Side of Wealth: A Life Guide for Inheritors, will be published in January 2003. In it, she combines professional training with her personal experiences as an inheritor to offer an insider's view of the unique challenges that inherited wealth can create.
Getting Comfortable with Your Wealth
So what can inheritors do to minimize the negative impacts? According to both Salzer and Willis, it's never too early. They both agree that people who have a solid understanding of the estate they will inherit are often better prepared to handle, or even avoid some of the challenges wealth can introduce.
One of Salzer's clients started working with her when he was 18. Knowing that he stood to inherit millions, his mother encouraged him to work with Salzer to help him prepare for his inheritance. By the time he was 21, he had full access to the fortune, but he didn't want it.
He worked with Salzer to create a trust with various stipulations including requiring a prenuptial agreement when he gets married and spreading the distribution of his wealth over his lifetime. By understanding his relationship with money, he was able to structure his assets so that he can live the lifestyle he wants while minimizing the stress and pressures wealth can create.
According to Salzer and Willis, there is no sure-fire formula for inheritors. Everyone's situation is unique.
For Susan, living a life of denial about her wealth was the only way to go for a while. But in 1993, she attended a workshop conducted by Salzer. The four-day Interited Wealth and You workshop provided a safe place for Susan to explore and understand how her relationship with money was impacting her life.
She found herself amidst other inheritors who understood her fears and identified with her struggle to develop a healthy relationship with money.
"Attending Myra's workshop was one of the first times I didn't feel alone in my battle with my wealth," said Susan.
Since 1989, Salzer has hosted the workshop with Thayer Willis and Walter Kingsbery, a tax attorney who specializes in the legal aspects of wealth.
To date, the ultra-exclusive and confidential workshop has helped more than 160 inheritors like Susan find a safe environment to explore the impacts of their wealth.
The most recent Inherited Wealth and You workshop occurred in Atlanta this November. Emphasizing Salzer's focus on personal attention, more than 80 percent of the four-day workshop is customized to the personal needs of the attendees.
As part of the screening process, every workshop applicant completes a questionnaire to help identify the relationship they have with their wealth. Applicants also spend one to two hours on the phone with Salzer prior to the workshop. From these interviews, Salzer crafts an agenda designed to meet the needs of every individual in attendance.
While a great deal of serious and important issues are dealt with, there is a very refreshing, social and interactive nature to the workshop. In fact, some workshop participants have attended multiple times because of the freeing experience of spending a weekend with individuals in their same, extremely unique situation.
"Gaining comfort and confidence with wealth is like a new awakening for many inheritors," said Willis. "The workshop proves to be a safe place for them to get answers to questions they were too embarrassed to ask in a less protective environment."
Attending the Inherited Wealth and You workshop helped Susan gain more self-confidence. She began to feel more empowered by her wealth and less intimidated by it. With knowledge and increased financial confidence in hand, Susan took a more active role in managing her financial situation.
"I had a very aggressive investment strategy in the 1990s," said Susan. "My own intuition guided me to reconsider my overall financial plan."
Rather than creating a buffer, Salzer says that significant wealth often amplifies the anxieties and emotional struggles of financial losses.
Five Stages of Financial Relationships
Salzer has identified the five stages that most inheritors experience in their relationships with money. Through increased confidence and control, inheritors feel a stronger sense of authority over these relationships. The five stages range from Innocence to Integrated Authority.
During the Innocence stage, inheritors have little or no control over their wealth, as a trustee or family member often controls it. In this state people are still happy with their situation.
During the Denial stage, individuals often feel that no harm can come to them if they do not take any action. A trustee or family member often still manages the wealth, giving the inheritor little-to-no control or awareness of the financial details.
The third stage, Ignorant Acceptance, is marked by an awareness of their situation, but still a lack of control. While the inheritor is learning how to spend their money more wisely, their finances are still controlled by a spouse, family member or trustee.
Learning/Growing is the fourth phase that Salzer identified. During this phase, individuals are beginning to learn how to take control of their situation. They are likely asking many more questions of the individuals controlling their money or beginning to make some decisions with the help of a financial planner.
Salzer says that one of the biggest hurdles that individuals in this phase face is the misconception that sophisticated investors have to have complex portfolios.
"One thing I tell all of my clients is that they need to understand the details of their estate," said Salzer. "Some of the most effective financial plans are extremely simple."
The final stage is Integrated Authority. Inheritors in this situation are keenly aware of their relationship with wealth and are able to use it as a tool to lead a more fulfilling life. These individuals are often managing their wealth on their own or working closely with an investment manager or family office to manage it.
Inheritors Still Work
Regardless of the stage they are in, many inheritors continue to work in one fashion or another. In fact, many people go so far as to structure their assets in a manner that requires them to work.
She says that the real goal of her wealth coaching practice is to help people structure their assets so that they are able to live the lifestyle they want today while still protecting their estate for future generations.
"There is a pride and confidence that results from a hard day's work," said Salzer. "For many of my clients, their inheritance isn't viewed as a reason to not work as much as a reason to work on something you love doing."
This is true for Susan as well. Her inheritance has enabled her to work on projects close to her heart.
In the mid-1990s, she helped provide promotional support for an organic farm in California. Today, she continues her work on projects she loves by volunteering at a local arts organization.
Susan sums up her advice for everyone who dreams of discovering that long lost relative has left them a fortune by saying the most important thing to do is know yourself.
"The same challenges you encounter today will continue tomorrow, whether you are wealthy or not."
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