"As Baby Boomers begin to realize their inheritances, we're about to see the greatest transfer of wealth in American history."
-- Tom Clapp, Chief Investment Officer First Investment Advisors

(Source: First Union Corporation press release March 12, 2001)

Frank stared at the check for a long time. It was made out to him and it was for more money than he had ever hoped to see at one time. Still, his first reaction was to send it back to the insurance company; he didn't want it. His second reaction was to buy Wendy a big diamond ring for their twenty-fifth anniversary. Instead, he put the check in his sock drawer and didn't say a word about the money to anyone for a month. (This and other stories in this article came from interviews over several years.)

What would you do if a check showed up one day for $100,000? You might want to give that question some serious thought. Over the next 20 years, report Emily Card and Adam Miller, authors of Managing Your Inheritance (Time Books, 1997), millions of Americans stand to receive, on average, between $90,000 and $130,000 each. You could be among that group. No, it's not the lottery or the ability to pick hot stocks on Wall Street. It's your inheritance, a gift from your parents or grandparents.

Today's super seniors, age 75 plus, are the richest generation in history. Not bad for a group that survived the Great Depression, won World War II and then went on to build the United States into the most affluent country on earth. Along the way, they amassed between $8 trillion and $11 trillion of their own...and they're planning to pass much of it on to the next generations.

The problem
Many people are unprepared to receive this money. Part of it has to do with contemporary attitudes towards money. Most of us today, unlike the generation that grew up in the 1930s and 40s, are more inclined to spend than save. "Unlike their frugal parents," say Card and Miller, "boomers have exhibited the lowest savings rate in recent history." They've also "amassed the highest debt in history."

Plus, it's difficult to remain objective over one's inheritance. Since the money is directly related to the death of a loved one, there's often a conflicting mixture of guilt and elation. "On one hand, I experienced a euphoric rush," said one man. "Suddenly, I could pay off bills, put a little aside, get off the financial treadmill. On the other, my mother had to die for me to receive the money."

The consequences can be disastrous, whether the amount is a few thousand dollars or several million. When it comes to "windfall" money, points out entrepreneur Robert T. Kiyosaki, author of Rich Dad Poor Dad (Warner Books, 1998), many people "don't know what to do with it." He stresses that the money is often mismanaged or spent without planning. As a result, it's not uncommon for an entire inheritance to vanish within a year or two.

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