1. Squaring Away the Emotional Impact
When someone’s financial circumstances change significantly, the reactions can be vast. But for most of her clients, Salzer says it’s usually sadness, particularly after the dust settles. While they know they’re supposed to be happy, instead, they experience a sense of loss because the life they knew is essentially over.
“It sounds crazy, but they have to have time to mourn that loss,” she says. “Until they do, they can’t make wise decisions.” And just like grieving for a loved one who has passed away, it can take a month or it can take years, depending on the individual. But advisors need to be patience and empathetic.
2. Making Decisions
The big challenge with someone who suddenly inherits millions (or in some cases, billion) is that he or she can become overwhelmed with their choices. “They have so many option, they can become immobilized,” Salzer says. "This may sound heavenly, but the reality is that having infinite options is often stifling.” Salzer says it’s important to offer clients what Susan Bradley of the Sudden Money Institute calls a “decision free zone,” a period when an inheritor can learn all about their wealth (the source, the extent, etc.) before moving forward.
5. Maintaining Meaningful Friendships
Removing "money" from friendships is often the first step for individuals who suddenly inherit wealth, Salzer says. One of the most challenging moments arrives when a friend asks for a loan."
One of Salzer’s clients experienced this when, after growing up as upper-middle class in a rural town, inherited a couple hundred millions right out of high school. He moved to a larger city, bought a multi-million dollar house. But then his high school friends visited and later moved in rent-free, making the friendships awkward. “It’s not like he can charge them rent,” Salzer says, and yet, resentment can fester in these types of situations. Instead, many inheritors have to find new friends in similar economic circumstances.
6. Prenuptial and Cohabitation Agreements
It’s not the most romantic conversation, but many inheritors have to have the conversation with future spouses around a prenup. And, interestingly, many times prenup agreements are required by the terms of the trust or family office distribution processes, Salzer says. “But the fact that someone has a prenup doesn’t mean it protects them,” she says. The very first clients that Salzer had in this circumstance, the future wife negotiated hard (he had the inherited wealth) with the terms stipulating she would get half of the wealth after 10 years of marriage. Ten years later, she divorced.