Working with Inherited Wealth Clients, Part 1

Working with Inherited Wealth Clients: A Guide for Professional Advisors (WWIWC) is the shortest of the seven booklets from The Inheritance Project, but it is definitely not the least of them. This wise booklet is based on the author’s own experience, as well as on interviews with heirs conducted by Kiersted, Barbara Blouin, and Katherine Gibson—the trio who at the time founded The Inheritance Project. The contents of WWIWC are clear and pragmatic; the target audience is professional advisors who have inheritors among their clientele.

WWIWC looks at the subject from two perspectives: One, what makes so many inheritors challenging clients? Two: How can advisors examine, and then see through, their own biases about inherited wealth, so that they can be helpful to their clients whose wealth is not earned.

There are many reasons why so many inheritors are challenging clients, and I include myself among these often woefully ignorant individuals. When I was twenty-one, my father created an irrevocable trust for me in the hope that a gold digger (and one such man did find me) wouldn’t be able to relieve me of my inheritance. In the seventh year of my marriage my husband left me with virtually no warning. I was devastated and came to the confused conclusion that my wealth was at the root of my marriage problems. I needed to fix the problem, I decided, though I didn’t know how. I had never even spoken with my trust officer, let alone met him. I worked myself up to the intimidating task of phoning him and saying, “I want to give away my inheritance.” Charles, the trust officer, who turned out to be a kindly man, must have been flummoxed. But he gathered himself together and said, “I’m sorry, Barbara, but you can’t give away your inheritance.” “Why can’t I?” “Because it is an irrevocable trust.” “What’s an irrevocable trust?” Then Charles patiently explained to me that I could never give away my trust; that was what “irrevocable” meant.

After that I came to my senses, more or less. This small true story illustrates the kind of ignorance inheritors so often struggle with. In my case, my father hadn’t even bothered to tell me what kind of trust he had created. He just said, “Barbie, the trust company will send you some papers. Please sign them and send them back.” I obeyed; I never read what I was signing.

Kiersted recommends: “Advisors need to know that many heirs experience a kind of low-level pain about their money, which is compounded by the social taboo against talking about wealth.” They frequently feel inadequate. Many also “experience guilt over possessing wealth that they have not earned.”

WWIWC describes a first meeting between an eighteen-year-old and her trust officer, who informed her that her parents were turning over the assets in the trust to her. “I was mostly interested in spending it,” Kiersted says. Meetings with Jack, the trust officer, were intensely intimidating. Margaret tried to pretend she knew what he was telling her, but she didn’t have a clue. “He’d drone on mercilessly. Once in a while I’d try to tune into what he was saying, but I would invariably fade out before the end of the sentence. Capital gains, preferred stock versus common stock, triple-A bond ratings, market share—I was completely lost.”

“Sometimes I’d actually prepare a question beforehand, in the hope of recovering some credibility in his eyes. ‘What is my stock-to-bond ratio?’ was one of my standbys. Unfortunately, after I’d tried the same question at several meetings, he finally blinked and said, ‘That is what I just explained to you, dear.’”

“No matter what their age, many heirs feel intimidated by their wealth and by the advisors who are supposed to help them deal with it.”

However, communication difficulties between heirs and their financial advisors come from both directions. In part two of this subject (coming next week, if I am able), I will offer Kiersted’s sage advice for advisors.