|Aid for newly rich, and trust officers who help them (March 3, 2011)|
Handling inheritance for the good
March 3, 2011
Living Richly: Seizing the Potential of Inherited Wealth, By Myra Salzer, The Wealth Conservancy, 175 pp.
Reviewed by William J. Taylor, vice-president and senior trust officer, F & M Bank, Galesburg, Ill. Mr. Taylor is a Certified Financial Planner.
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As a trust officer, I have seen what the sudden and sometimes unexpected inheritance of great wealth does to a person. It can become one of the best things—or one of the worst things—that can happen to them.
In her book Living Richly: Seizing the Potential of Inherited Wealth, Myra Salzer has provided a resource to help the new inheritor realize that steps can and should be taken to become a person who not only grasps the opportunity that has come, but also one who grows from the experience.
That’s not easy. Indeed, she states early on that: “Seventy percent of wealth transitions fail.”
She’s right. I have seen happen more than once while managing a trust department. There are many reasons for the failures. Fortunately, the book focuses on creating successes.
Challenges of sudden new wealth
In the first chapter, we are introduced to three real-life inheritors. While each inheritor’s story is different, their situations of becoming aware of and coping with their fortunes are carried through the book. Since the book is written for inheritors, seeing true life examples are a dynamic and helpful method of presenting the issues faced. Inheritors enter into a drastic change in lifestyle and have many questions and concerns. This chapter initiates the thought process of handling the wealth.
The new wealth can raise questions of self worth, both for the good and not so good. The author challenges the inheritor to embrace the wealth into every part of their lives. A key point is the recommendation that inheritors seek help.
This can be a challenge itself. Some inheritors find it difficult to seek professional help. The inheritor may feel unsure whom to trust, and may question the motive of anyone who helps. It is imperative that relationships be formed by professionals in the wealth management field with anyone who will inherit as the new inheritor will need to depend on others. Those of us in wealth management should be in the forefront of availability.
A team of professionals is recommended and defined. As a manager of a bank trust department, I was very pleased to see the emphasis on seeking out a wealth coach who is also a fiduciary and that trustees are fiduciaries. There is nothing more disturbing than to see new inheritors placing their confidence and fortunes in the hands of inexperienced advisors or those seeking only to profit from the newfound fortune of another. The author recommends seeking the best possible help and even provides examples of questions to ask.
Balancing now and later
Salzer encourages inheritors to research the source of their wealth, if it is not known. This is part of the process of an inheritor learning to accept their new situation. This is a good suggestion as family pride and the desire to maintain as well as enjoy the wealth hopefully becomes a goal. It is unfortunate to see wealth wasted by the inheritor when it is viewed purely a deserved gift. These are the inheritances that are quickly wasted without any thought of preservation.
Inheritors are also encouraged to think long term. This is another piece of sound advice. Key terms dealing with wealth management and investments are explained. There are general descriptions of investment tools, philosophies, and strategies. Modern portfolio theory, asset allocation, volatility, and risk are described briefly and in very general terms. I thought this was an excellent addition, as inheritors previously unfamiliar with these terms can discuss their needs with some knowledge. Understanding these principles is another step in wealth preservation. Hopefully the reader will not consider this book as the complete source of this important information.
Where’s the money and where should it be?
It was good to see the inheritors being challenged. Once they have secured their fortune by inheritance, the inheritor needs to think long-term in investments but also in what happens to future generations. Causes and charities that are dear to the inheritor may now be of greater interest and rightly so.
The inheritor is encouraged to learn the particulars of their wealth. How is it currently held? Are the assets being managed to the best tax advantage? Are some assets not respected by the inheritor and should be changed to something more in line with the inheritor’s views? Were the assets managed poorly before and now need a different focus?
These questions do not always have easy answers. The inheritor is also challenged to become the leader in caring for the wealth, but to delegate those tasks they don’t enjoy or which they lack experience in. Salzer herself is founder and president of The Wealth Conservancy Inc., a wealth management firm that specializes in wealth coaching, philanthropic consulting, and estate planning.
Personal stories emphasize successes
As I wrote, the case studies help make the book’s point. With such a radical change in life’s circumstances, changes need to happen at the speed which is best suited for each inheritor. One of the inheritors in the real-life examples, for example, experienced a loss of friendships when the news of the inheritance becomes known and at times family relations are strained.
By the end of the book, we know that the examples provided were not part of the 70% that fail. Each is heading in a vastly different direction and is embracing their wealth. They have worked to understand what is expected and what is in their best interest. Professional help is being used and their future is mapped out in front of them.
A tool for trust bankers and their clients
The book is not a book of details. It is a broad resource for inheritors to see that help is available and to provide ideas to consider. Many inheritors do not know where to turn and can be overwhelmed by many of the decisions that need to be made. I recently met a new inheritor and showed her my marked up Living Richly. I recommended she pick up a copy and she seemed thrilled to have the resource. I am hopeful I can be of benefit to her and her family as her new wealth is passed to her.
This book can be an important ally during a very confusing yet exhilarating time. It is a short book at 175 pages and an easy read. The final pages are contain further resources which list include additional books, films, articles, and software that may benefit the inheritor.
Like this? You can also read other ABA BJ book reviews here.
[This article was posted on March 3, 2011, on the website of ABA Banking Journal, www.ababj.com, and is copyright 2011 by the American Bankers Association.]
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