Who hasn't stared at the ceiling at one in the morning wondering what they would do with an $87 million lottery win? Don't we all fantasize about winning such a huge amount and how we would spend it? But, it's not simply lotteries that generate such big numbers. Consider inheritances.

A 1999 Boston College study has pegged wealth transfers through inheritance between the years 1998 and 2055 at anywhere from $41 trillion to nearly $140 trillion. In fact, a study done a decade ago by Cornell University says that between 1990 and 2040, there will be 115 million bequests amounting to some $10.4 trillion in inheritances.

So, what does this all mean? It tells us that the present generation will become heirs to parents' estates and this can include everything from homes to automobiles to businesses. And, it could mean a lot of money.

Of course, when you begin to realize a windfall of sorts, lots of things may take place in the your emotional state. You spend endless hours on a train, on a beach, looking at the ceiling, trying to figure out how you will divide these millions and millions of dollars. Most people play that game. "First of all, I will go out and get that Sebring convertible, then I will buy a new house on the water, and I will need a boat to go along with it, and I have to give money to my children, and make arrangements for trusts for my grandchildren, and oh, that eight-carat diamond ring, that's a definite."

Ask any financial planner worth his or her salt and a smile will quickly cross the face. Most will admit that when clients experience this kind of windfall, they often enter the fray with feelings of elation coupled with guilt coupled with downright confusion. There is no question that an overspending spree is fantasized and some actually embark on that road from the moment they feel the check in their hands. And some don’t stop until every last dime is gone.

Keep in mind that emotions play an enormous role in how people handle windfalls. To many, it's guilt so that the money is viewed differently as if it doesn't really belong to the them. As a result, these people simply freeze. They don't know what to do.

Then too, in the book, Why Smart People Make Big Money Mistakes, authors Gary Belsky and Thomas Gilovich point out that "The more choices a person has, the more likely he is to do nothing."

According to bank surveys, trillions of inheritance dollars simply sit in bank savings accounts because the heir is totally iced-up about what to do. In an Internet chat board I saw recently, there was a discussion about four daughters of parents who were killed in an automobile accident. What to do with the estate is still being thrashed out years later. However, that is separate from simply exploring all the options.

Deena Katz, a widely known successful financial planner in Coral Gables, Florida, cautions heirs not to run too quickly, to take a step back and to take a breath. She advises that the first thing someone who is coming into a lot of money is to do…is nothing. Don't promise anybody anything, don’t set up trusts, and don't automatically give money away. "The money won't burn a hole in your pocket if essentially you elect to do nothing with it for a few months. To choose to do nothing is a course of action, too."

Of course, what is absolutely crucial here is to seek out financial advice from solid financial planners before anything is done with the check. Simply deciding where to put the money first before spending it in any way is a large enough issue.

So, I have cautioned my own family. Should I happen to come into any large sums of money, I have promised them nothing. There will be no immediate payment of everybody's mortgages or instant bequeaths of cars and diamonds. Instead, I will get in touch with my own financial planner and review what I have, what I want to do, where, and when…all the time clutching the check in my perspiring hands.

Ah, I can dream, can't I?

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access