Receiving an inheritance is great. But it can be overwhelming, especially if it’s a large amount of money. This leaves inheritors with the challenge of having to transition over a short period of time, which can sometimes result in irresponsible decisions. “A majority of high-net-worth individuals and families are advised well in advance to prepare heirs for their inheritance. But, circumstances often do not allow everyone to follow through. In some cases, heirs are either too young to grasp the context of the conversation or simply get overwhelmed when reality sets in,” says Eric Enslin, CEO of FNB Private Wealth and RMB Private Bank.
Here are tips on how to effectively manage a new inheritance:
1. Don’t make hasty decisions. When you inherit substantial wealth, you often go through an emotional and psychological phase. As a result, avoid putting yourself under pressure to make important decisions immediately. Rather take your time, come to terms with reality and gradually manage the transition.
2. Watch your spending. Spoil yourself within reason. But, be careful not to fall into the trap of spending recklessly. This can easily become a bad habit when overlooked.
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3. Don’t just quit your job.If your inheritance does not require you to be hands on, it may be ideal to carry on working in order to manage your daily living expenses. You can pay for luxuries and hobbies, such as travelling overseas once or twice a year, instead of tapping into your inheritance all the time.
4. Consult reputable wealth advisers.These advisers offer a range of solutions that you will need throughout your wealth journey. These range from preserving wealth, managing tax, investments as well as retirement and estate planning, among others.
