Whenever wealth is transitioned from one generation to the next in Woodland Hills, concerns about how a beneficiary will handle his or her inheritance are ever present. This is especially true when dealing with teen and young adult heirs. Immediately, two fears may arise in the minds of those caring for these youths: First, will he or she go nuts with this newfound wealth and completely blow through it, or will he or she allow a lack of experience in such matters lead him or her to trust in people with ulterior motives.
The key to overcoming such fears may just be having a money management mentor that can help a newly-inherited young adult understand what’s available to him or her in terms of investment opportunities, liquidation options, and tax implications. The first challenge for such a mentor is helping provide the youth with a current snapshot of his or her financial profile. However, it should be remembered that he or she will not get much value out of complex financial documents. Thus, vital information such as this needs to be condensed and presented in high-level formats that can provide a baseline understanding for him or her.
Once he or she begins to grasp the amount of resources at his or disposal, the next step is finding the right people to manage them. Again, here is where having a trusted mentor may come in handy in screening potential financial advisors, accountants, and attorneys. Ideally, such a mentor would be one to whom a recently inherited youth has easy access, like a family member. Yet if that’s not a possibility, an estate planning attorney may be the next best thing.
Source: The Wall Street Journal “Helping a Teenager Navigate a Giant Inheritance” Munk, Cheryl Winokur, Nov.27, 20125