- Dana Blue is an estate-planning lawyer who assists families in managing assets following the death of a beloved family member.
- inheritances may provide a chance to buy a home, go back to school, or start a business.
- They can also drive wedges between siblings and result in the loss of a family heritage or even push someone into bankruptcy.
This essay, presented in an interview format, is derived from a discussion with Dana Blue , a 44-year-old lawyer specializing in estate planning, probate, and real estate based in Philadelphia. This interview has been condensed for brevity and clarity.
When I launched my legal career in 2017, I drafted simple wills For free. Since then, I have broadened my practice to provide estate planning services centered around trusts as well as probate administration.
I appreciate having the chance to assist families during their sorrowful moments, yet combining grief, finances, and familial relationships can create an extremely unstable mixture at times.
I collaborate closely with heirs or beneficiaries to guide them through the probate process. After distributing the assets, my clients frequently end up with funds, properties, or even businesses. While some individuals receive only a modest sum of a few thousand dollars, others may come into considerable wealth that significantly alters their lives.
Following nearly ten years as a lawyer, I've seen the numerous ways inheritance has changed people , in both positive and negative ways.
It has the potential to usher in increased riches, though it could also entail greater duties.
If you take over a business through inheritance, understanding its operations, finances, and legalities is essential. There have been instances where individuals inherited their family’s company without prior knowledge and led it into bankruptcy within mere months because of inadequate financial oversight.
If your intention is to maintain the company as a family-run entity, crafting a detailed succession strategy that outlines the transfer of the enterprise to the subsequent generation becomes crucial. This should encompass grooming and coaching upcoming leadership roles within the family.
Amidst the pandemic, a young adult who was a client experienced the loss of their father, which also meant inheriting his printing firm. This unexpected turn required them to handle tasks such as processing orders, managing payroll, settling vendor payments, and grasping various aspects like contract details, service provision, recruitment, and employee termination. Fortunately, their late father had prepared an extensive succession strategy along with detailed written guidelines for running the company’s operations. Additionally, he provided contacts for reliable consultants they could seek assistance from during this challenging period.
This could alter the course of an individual's life, particularly their professional path.
A highly effective way individuals have utilized their inheritance has been for educational purposes. Allocating part of it towards earning a degree might prove to be an investment with substantial long-term returns.
Around four years back, I encountered a client who began college but left after two years because she got pregnant. She wished to go back and complete her degree yet was unable to rejoin as she had outstanding tuition fees and overdue student loans which were beyond her financial means to settle.
When she received an inheritance Thanks to the compensation from her grandfather's wrongful death lawsuit, she managed to settle her debts and return to full-time education without taking on additional student loans.
It can isolate you from family members
Inheritances have the potential to affect family relationships in various manners and sometimes lead to rifts among relatives. There have been instances when a parent included just one out of several offspring onto the title of a property. Occasionally, some adult children might not be mentioned at all within the last testament.
If you’re the sole family member or sibling to receive an inheritance, others might view this as unjust. Such perceptions could lead to distrust, division, or conflict among relatives. Being aware of these possible problems enables families to strategize more effectively and clearly express their plans and wishes to one another.
It could lead to further disputes if there isn’t a will.
The family structure experiences significant upheaval primarily when someone passes away without leaving behind a will. In such cases where there isn’t a will or a trust established, the distribution of the deceased’s possessions falls under the jurisdiction of your state’s intestacy regulations.
During the probate process, family members might experience a sense of losing control since asset distribution has to follow state regulations rather than adhering to what their late relative may have preferred. As a result, stepchildren and long-term unmarried companions could be ineligible for receiving any portion of the inheritance.
A sibling who relocated two decades back and ceased all contact with the family will nonetheless be entitled to their 50% share of the inheritance. Instances such as these motivate me to continue informing as wide an audience as feasible that crafting your own estate plan is crucial, ensuring that those significant to you inherit your possessions according to your wishes rather than following the state’s distribution rules.
It may lead someone to experience sudden wealth syndrome.
Sometimes, when someone receives an inheritance and previously had limited funds, they might experience what I call sudden wealth syndrome—this occurs when a large amount of money comes quickly, leading to impulsive spending or a lack of knowledge about managing or investing it.
Several years back, a customer utilized a $90,000 bequest from her grandma to pay for her first home entirely in cash However, she failed to account for the expenses related to renovating or upkeep within her income limits. Besides needing urgent repair work, the property also entailed costs such as homeowner’s insurance, regular maintenance, and property taxes.
She got a swimming pool installed in her backyard, only to be stunned by the high maintenance expenses and skyrocketing insurance rates. Later, she purchased a used Range Rover which rapidly lost value and began eating into her inheritance due to escalating repair bills. Eventually, she started contemplating filing for bankruptcy since she was basically relying on credit cards to sustain her lifestyle after receiving an inheritance.
When crafting your estate plan and aware that a relative may develop sudden wealth syndrome upon getting their inheritance, consider establishing a trust with particular stipulations or phased payouts to control the timing and manner of distribution.
Connect with experts who can assist you in mapping out your future to prevent adverse outcomes.
When you learn that you're going to receive an inheritance, seeking advice from estate lawyers and financial advisors can be beneficial. This way, you can make well-informed choices regarding your inheritance, guaranteeing proper management and preservation of these assets for yourself and your loved ones down the line.
If you have kids, you could potentially utilize part of this funding to secure their long-term financial stability by investing in options such as a 529 college savings plan , financing a trust, or buying life insurance policies.
Getting an inheritance may feel like an overwhelmingly intimidating experience. Make sure to invest time in estate planning and urge your relatives to follow suit. This ensures that their heritage is outlined in the most advantageous manner for those they will leave behind.
Would you like to share your inheritance tale? Send an email to Lauryn Haas at lhaas@Pawonation.com.
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