$10.4 trillion may be headed
your way. So start planning.

Baby boomers stand ready (or not) for a record inheritance.

In this article:

Discussing inheritances with parents

Where to keep your important papers

Cartoon of two stodgy men
"I was a late bloomer - I didn't inherit my money until my 50s."

aby boomers are beginning to step into the largest inheritance ever, some $10.4 trillion in total. On average, they're expected to receive around $90,000 apiece, with the top 10 percent of inheritors taking in a cool half-million each. But unfortunately, experts say, boomers are largely unprepared. In many cases, parents - who've put a lot of effort into setting aside a bequest - haven't given the actual transfer of wealth a great deal of thought either.

That can be a costly mistake. Inheritances can be frittered away by mismanagement, lost to estate taxes or drained by court battles. That's why Dan Rottenberg, author of the new The Inheritor's Handbook: A Definitive Guide for Beneficiaries (Bloomberg, $23.95), argues for planning ahead to make sure inheritances flow smoothly from one generation to the next.

Step 1 is a death-and-money conversation with your parents (see box, above right). Once you actually receive an inheritance, the challenge is managing it. Here are a few tips, with help from Rottenberg and estate planning lawyer Michael Alexander, author of How to Inherit Money: A Guide to Making Good Financial Decisions After Losing Someone You Love (Career Press, $15):

Do nothing. Not forever, of course, but for the first six months to a year, stash any money you receive in a safe haven - such as a money-market or certificate-of-deposit account - and do little else. Keep going to work. Keep spending in check. Why? There's a temptation to splurge to avoid the reality that you've lost a loved one. If you're able to first go through the grieving process, you have a much better chance of making good financial decisions later.

Look at your debts first. Before investing or spending any money you receive, consider whether it makes more sense to use it to pay down existing credit card or other debt. If your credit card is racking up interest at 18 percent, for example, and you think you'd earn only 8-10 percent by investing the money, you are better off paying off your cards. But if you have a bottom-of-the-barrel interest rate on your credit card - say, 7 percent - or if you'll use the bequest to pay down your 7 percent mortgage, you may do better by investing.

Hire help. For bequests of $20,000 or more, it's wise to have a financial adviser to make sure you make the best use of it. If you receive more than $250,000, you need an entire team: a lawyer, a financial planner, a broker, an insurance agent and an accountant. Conduct interviews to find the right people. Ask for a 15- to 20-minute information appointment and then ask each person you talk to what he or she would do in this situation. One key issue: Do you feel comfortable or intimidated? You may be tempted to use your parents' advisers, but you need people who will treat you like an adult, not brush aside your questions because they still think of you as an 8-year-old.

Find a support group. Receiving a large inheritance can make you feel elation, confusion, guilt - and other conflicting emotions. Talking with others in the same situation can help. Call the Impact Project (1-800-255-4903), a group that offers guidance on how to handle a major inheritance or give some of the money away. The Inheritance Project (540-953-3977), a similar group, specializes in people for whom paid work is not a must.

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