How Inheritance Can Tear Families Apart—or Transform Their Lives: Insights from an Estate-Planning Attorney

• Dana Blue is an estate-planning lawyer who assists families in managing their assets following the death of a loved one.
• Windfalls may provide a chance to buy a home, go back to education, or start a venture.
• They might also divide siblings and result in the loss of a family heritage or even push someone into bankruptcy.

This essay, written from a dictated interview, is based on 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 trust-focused estate planning and probate administration services.

I appreciate the chance to help families through their difficult 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, real estate, or even businesses. While some individuals might receive only a modest sum of a few thousand dollars, others may come into substantial wealth that significantly alters their lives.

Following nearly ten years as a lawyer, I've seen the multitude of approaches inheritance has changed people both beneficially and harmfully.

It has the potential to usher in increased riches, yet this could also entail greater obligations.

If you take over a business through inheritance, understanding its operations, finances, and legalities is essential. I have witnessed instances where individuals inherit their family’s enterprise without prior experience and end up ruining it within mere months because of inadequate financial oversight.

If your intention is to maintain the business within the family, it’s crucial to create a detailed succession plan outlining how the enterprise will be handed over to the following generation. This should encompass thorough training and mentorship for the upcoming leadership roles.

Amidst the pandemic, a young adult who was still in college faced an unexpected situation when their dad passed away, leaving them with his printing firm. This meant they suddenly needed to handle tasks like processing orders and payroll, paying suppliers, and grasping various aspects such as contract management, delivering services, recruiting staff, and making termination decisions. Fortunately, her late father had meticulously prepared a thorough succession strategy along with detailed written guidelines covering all operational processes. Additionally, he provided contacts for reliable experts whom she could consult for assistance.

This has the potential to alter the course of an individual's professional journey significantly.

One of the most significant uses of an inheritance I have encountered was for educational purposes. Allocating part of it towards earning a degree might prove to be an investment with substantial long-term returns.

Four years back, I encountered a client who began college but left after two years following her pregnancy. She aimed to go back and complete her degree yet found herself unable to re-enroll because of outstanding tuition fees and overdue student loans that 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 clear her existing debts and return to full-time education without taking out additional student loans.

It may lead to isolation from your family members.

inheritances have the potential to affect family relationships in various manners and might even cause divisions among relatives. There were instances when a parent included just one out of several offspring on the title of their property. Occasionally, some adult children end up being left out of the will entirely.

Should you be the sole family member or sibling to receive assets, others might view this as unjust treatment. Such perceptions could lead to distrust, estrangement, or disputes among relatives. Being aware of these possible conflicts allows families to strategize more effectively and clearly express their plans and wishes to one another.

It might lead to further disputes if there isn't a will.

The family structure experiences significant upheaval primarily when someone passes away without leaving a will. In such cases, where there isn’t a will or 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 aligning with what their late relative desired. This could result in stepchildren and long-term unmarried partners being ineligible for receiving any portion of the inheritance.

A sibling who relocated two decades back and severed ties with the family will still be entitled to their 50% share of the inheritance. Instances such as these motivate me to continue informing as wide an audience as I can about the importance of establishing your own estate plan. This ensures that the individuals in your life inherit your possessions according to your wishes rather than following the state’s distribution rules.

It may lead someone to succumb to abrupt riches disorder.

Sometimes, when someone receives an inheritance and previously had limited funds, they might experience what I call sudden wealth syndrome—this occurs when a person quickly comes into a substantial amount of money and either spends recklessly or fails to grasp how to handle or invest it properly.

Several years back, a customer utilized a $90,000 bequest from her grandma to pay for her initial home with cash However, she failed to account for the expenses related to renovating or upkeep within her budget. Besides needing urgent fixes, the property also entailed costs such as homeowner’s insurance, regular maintenance, and property taxes.

She got a swimming pool installed in her backyard but was taken aback by the high expenses for upkeep and her elevated insurance rates. Later, she purchased a used Range Rover which lost value rapidly and was eating into her inheritance due to escalating maintenance fees. 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 after getting their share of the assets, consider establishing a trust with particular stipulations or phased payouts to control the timing and manner in which they access these funds.

Connect with experts who can assist you in planning for tomorrow to prevent adverse outcomes.

When you learn that you're going to receive an inheritance, it’s wise to seek advice from estate lawyers and financial advisors. This way, you’ll be able to make knowledgeable choices regarding your inheritance, guaranteeing proper management and preservation of these assets for both yours and your family's long-term plans.

If you have kids, you could potentially utilize part of this funds to build their long-term financial legacy 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 a daunting and intense experience. Make sure to invest time in estate planning and motivate relatives to follow suit. This ensures their heritage is outlined in the most advantageous manner for those who remain behind.

Would you like to tell your inheritance tale? Send an email to Lauryn Haas at lhaas@kor.news.

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