Leo’s parents passed after a car accident when he was 18 years old. Leo really did not have a lot of life experience managing money. However, his parents had a $1,000,000 life insurance policy that he was the beneficiary of. Leo took a lot of trips (first class of course), bought gifts for his friends, bought a sports car, etc. At the end of two years Leo had a used sports car, no education, and the start of a large debt load.
If you think that sounds out of the ordinary, the average for a lawsuit settlement is 2.5 years until spent. This is regardless of the size of the settlement. Why should an inheritance be any different?
The answer is to put the money into a trust that guides how the money is to be spent until a person matures and has more experience in managing money. One of the author’s favorites is to pay children an allowance and for education until they reach a more mature age.