Receiving an unexpected inheritance
Whilst we may know we are likely to receive an inheritance, what we actually receive can come as a surprise. This client story reinforces the importance of discussing your legacy with your children.
The clients
Gavin and Stacey recently came to see me after Gavin’s father passed away and they found themselves the recipients of his estate. Gavin and Stacey had very limited investment knowledge and had never managed any form of investment assets other than their own home and their cash at bank. Understandably the prospect of managing a significant sum of capital in the form of multiple properties, shares, cash, and business was overwhelming – in addition to dealing with the passing of a loved one.
Understanding financial goals and the important of legacy
Gavin and Stacey had no idea where to start or what to do, but we started with gaining an understanding of what was important to them in terms of the inheritance they’d received and also explored their own financial goals.
We discovered some clear intentions:
- First and foremost Gavin and Stacey wanted to preserve the legacy of Gavin’s father – this legacy should live on beyond them and assist future generations,
- They wanted to be able to provide a good financial future, not only for themselves, but also for their children and their future generations,
- Gavin & Stacey wanted to implement strategies that would allow them to grow the capital base they’d inherited to ensure the capital is preserved for future generations.
Once we’d established these goals we were able to put together an advice plan to achieve this. However a sentiment that consistently emerged was Gavin and Stacey’s desire to have had conversations about the inheritance and legacy while Gavin’s father was still alive.
Consider having conversations about your legacy while you’re still alive
“I just wish Dad had brought me into this discussion whilst he was still alive”.
This was an interesting comment Gavin made, and it made me curious to explore what he meant by this.
Gavin was happy to expand on his thinking in that:
- Gavin acknowledged that he has never been exposed to investments, and would have loved the opportunity for his father to share his learnings.
- While Gavin’s father had worked hard and accumulated these assets to pass onto him, Gavin never understood his father’s investment philosophies and key investment principles. Understanding this would have helped Gavin to navigate future decisions about preserving and growing his father’s legacy.
- Going from a bank account of a modest size to receiving an inheritance of multiple millions of dollars, Gavin would have liked to have had some prior understanding or training around financial and investment related matters.
The commons reasons we don’t have these conversations
I found this really interesting as in speaking to a number of retired clients they often elect not to bring their adult children into the conversation around inheritance on the basis that it’s either:
- All too hard; or
- They are afraid that the children will make poor choices when they receive the funds, so prefer not to worry about talking to them about this.
Gavin and Stacey had needed to make some urgent initial decisions, and while we were able to assist and guide them through this process, they would have loved input from Gavin’s father to help shape their choices.
I’m happy to say that Gavin and Stacey are now settling into their new found financial freedom and wealth strategy and are comfortable with their position overall. Though their children are still young, when old enough, they plan to involve them in their financial planning strategies to help educate them and to create the right behaviours from an early age.
You can read more about what happens when you receive an inheritance in our article on inheritances, or explore how to discuss your legacy with your children.
If you have any questions or would like to make an appointment, please contact the Propel Financial Advice team.
