Can Sudden Wealth Also Be A Curse?

Do you know what’s dangerous? Money in the hands of the untrained, uneducated, and uninformed.

Sudden Wealth

Inheritances, settlements, and lotteries bring sudden wealth. According to many studies, it is NOT a blessing. It’s a curse.

We've all dreamed about what we could do with a jackpot. Most people will buy a bigger house, a nicer car, or go on a long vacation.

Sadly, fortunes go down the drain when you have a generous heart. They evaporate when you are gullible.

Women face bigger challenges than simply lack of information. We want to please others; we are mothers and givers. It’s nearly impossible to say, “No.” We are Shel Silverstein's Giving Tree in human form. (It's a wonderful book, especially to read out loud to a child or grandchild.)

Family members and friends often present compelling reasons to ‘borrow’ money. “It’s urgent,” they say; you have no time to think. We believe it's our job to help when asked. It's our nature. It's also disastrous when it comes to financial management.

Widowed Wealth

The scenario goes like this: Mom, a new widow, receives a substantial insurance payout. In addition, she now controls the property, investments, retirement plans, and bank accounts.

She grieves.

Simultaneously everyone demands decisions.

·?????Decide what to do with insurance proceeds

·?????Send documents for title change property ownership

·?????Change beneficiaries on retirement plans

·?????Ownership of insurance policies

·?????“Mom, I need $ for X (house, car, kids’ education, pay debts)

She is frozen, like a deer in the headlights. Unsure of the best decisions.

One recent widow, Evelyn, values her family above all else. She believes her job as a mother, is to support her children to be happy. Her adult children use her as an unpaid nanny, chauffeuring grandchildren to school and activities. She concurs. When her husband passed, she was in charge of the money. Her son, one of three, lost his job, and Evelyn stepped up to pay the mortgage so he could keep the house. Most parents would, right? But the son did not get another job. Evelyn's lack of financial and psychological understanding ended up causing a family rift.

Have you ever seen documentaries about animals in Africa? The lions bring down a gazelle, for example. After that meal, the jackals move in, then vultures and smaller creatures. Soon there is just a skeleton, bleaching in the sun.

As a widow grieves, the lions, jackals, and vultures circle, waiting for a moment of weakness.

Each professional, CFP?, CPA, JD, (fiduciary) agents for real estate, insurance, and funerals?must maintain fiduciary roles. The fiduciary duty is to put clients first. Many do, but not all. How do you discern the truth amid emotions of grief?

Who are these lions, jackals, and vultures? They can be your children, extended family members, close friends, charities, financial brokers, insurance agents, funeral sellers, and professional scammers.

Do you know: $15 trillion will change hands over the next decade? (best guess) Mostly women will inherit.

Have you seen: Widowhood wreaks financial chaos?

What will happen when fortunes are headed into control by the untrained, uneducated and uninformed?

It will be a feeding frenzy.

Lottery Wealth

If 70% of lottery winners (untrained, uneducated, and uninformed about money) are broke in 3-5 years, how will the inheritor of an estate fare?

Why? Uncontrolled spending habits, greedy relatives and addictions siphon the fortune.

If you do play the lottery, decide in advance:

• Not to share with ANYONE
• Take the lump sum and hire a fiduciary
• Pay off your debts
• Buy one thing you've always wanted, just one
• Create a spending plan and stick to it

Inherited Wealth

Nearly all inherited wealth is gone by the third generation. Most of the third generation is untrained, uneducated, and uninformed. The new 'owners' face lions, jackals, and vultures. Soon the 'fortune' inherited is?devoured, and its skeleton will lie bleaching in the sun.

Good money management requires hard work, discipline, and sacrifice; traits that are very hard to teach and pass on. You can, however, learn these traits when you set your mind. You can also help your children to be educated and informed even young ones.

The Amplified Challenge

In the first place, abdication or refusing personal responsibility is rampant. I’ve heard excuses like:

·??????I don't understand numbers, and I never will

·??????All these terms are too complicated to understand

·??????Whatever you say...

In the second place, just giving money to family members to bail them out of their mess robs them of their journey. The only lesson they learn is mom or sis is an easy touch. They won't learn how to make better decisions. They won't grow.

The Solution

We used to say, "Find someone you can trust to tell you what to do." Many seem trustworthy, but underneath the fa?ade, they are lions, jackals, and vultures. We need a new saying.

If you are a professional and your clients are passing wealth to children, your work is to find ways to involve and teach the entire family. Otherwise, what is likely to happen is those same children will migrate to other advisors and fortunes risked. Have you heard the majority of widows change financial advisors within a year?

If you are in charge of wealth and expect your spouse to continue making good decisions, they must be involved in the big picture and in the details. You can protect her best via education, training, and information.

If you are not a professional and face unexpected wealth, it's time to?find someone you trust to educate and inform so that you can make good decisions for yourself.

If you need to make decisions quickly, you can hire a professional trustee to manage until you learn enough. Then, work with a financial coach until you are confident.

You have the power to change your world. When you pair your money with your values, decisions become straightforward.

Think hard. If this new fortune is in your hands to grow and you want to do all the good you can, then set your mind and learn.