For the growing number of Americans who will be passing on substantial assets to future generations, it is essential to consider the effect that wealth will have on children and grandchildren. While it is no surprise to most people that wealth can create as many problems as it can solve, an alarming percentage of high net-worth parents make little or no preparation for safeguarding the emotional health of their families as they amass their money, raise their children and develop their estate plans.

In our work of interviewing inheritors, we hear repeatedly about a variety of personal dilemmas which often accompany inheritances and may even cripple beneficiaries. Although there is no simple vaccine against these problems, most can be tempered by conscientious parenting and wise estate planning. In the best case scenario, it is possible for an inheritance to become an unqualified blessing - an empowering, productive, and life-enhancing gift from one generation to the next. Yet for this to happen, wealthy families and their professional advisors need to pay careful attention to the emotional pitfalls that so frequently surround inherited wealth.

In our society, self-made men and women are admired, but their descendants - those supposedly lucky inheritors of fortunes are, in reality, twice damned. Not only are they assumed to have problem-free lives (making it unacceptable for them to complain about their lot), but they frequently arouse envy and suspicion (after all, aren't riches the source of all evil?). Caught in this tangle of cultural projections, heirs often feel uncomfortable with what they have been given, particularly when to speak openly about their windfall is considered uncouth or boastful.

To varying degrees, many heirs are plagued by guilt and low self-esteem. Without experiencing the necessity of work, which develops confidence and creates a sense of purpose, they can all too easily drift, rudderless, through their lives. As a result, many inheritors feel painfully disconnected from the grist of life. They slip around in unbalanced friendships, unhappy marriages and unfocused work. Worst of all, they feel unable to make use of their abundant resources; instead of being a blessing their money feels like a burden.

There are many ways that parents can misuse money vis-a-vis their children. Although such mistakes are generally unintentional, their psychological effects can be far-reaching. Perhaps the most common error is to discourage children, either directly or indirectly, from talking about their family's wealth. For children, this silence leads to an immature though understandable logic: " I'm not allowed to talk about money, so it must be a bad thing." And for a young mind, it is but a short step to an even more harmful conclusion: "If money is bad, and I have it, I must be bad too." From there is born the deeply-felt shame that plagues so many heirs.

Many wealthy parents assume that if they do not discuss being rich, their children will not develop a sense of entitlement. But as it turns out, ignorance creates anything but bliss for young heirs. If they receive no training in how to make sense of their finances, and no emotional preparation for inheriting wealth, heirs wind up disoriented and disempowered. In their efforts not to create spoiled brats, affluent parents all too often end up with children who can neither manage their wealth nor navigate their lives.

In other families, money substitutes for love. This is especially true when parents are too busy accumulating their fortunes to spend much time with their children. Feeling guilty, they shower their kids with presents, lessons, nannies and camps. But children know the difference; at some level, they sense that they are being "bought off." As a result, they become suspicious and confused adults, unable to disentangle money from love. They worry that they are valued for their net worth, and they find it difficult to develop intimate relationships.

Some parents use money as a means of manipulation. In extreme cases, they try to manage their children's behavior and loyalties through outright threats and bribes. One heir, whose mother only half-jokingly told him she would cut off his inheritance if he didn't care for her in her old age, succinctly describes his experience: "In our family, money was affection and weapons." Such negative control is a sure recipe for resentment, if not overt rebellion, in heirs.

Other parents use their wealth to protect children from the hard knocks of life. Their intentions may be loving, but the consequence is that heirs do not develop the resiliency, stamina, and wisdom that stem inevitably from "character-building experiences." If parents use their financial resources to insulate children from challenging situations or, worse, to help them escape the consequences of negative behavior, they do them a great disservice.

However, when parents nurture confidence and self-esteem in their children, they set in place the cornerstones of healthy egos. When they use their wealth responsibly, generously and without guilt, they show their children how to make the best possible use of an inheritance. But the most important lesson affluent parents can teach - through their actions even more than their words - is that wealth is but an empty possession if one doesn't have love, friendship and a meaningful way of giving to the world.

When wealthy parents can clearly recognize the potential of an inheritance to send their children astray, they are in a better position to troubleshoot emotional misfortunes. They can initiate frank discussions about what it means to be wealthy, and they can bring their personal concerns to the table when they sit down with advisors to devise their estate plans. In short, they can ask themselves, with all the consciousness required, how best to create a positive emotional legacy to accompany the impressive financial legacy they will be leaving.

Katherine Gibson is co-founder of The Inheritance Project, a small group of heirs who research and consult on the emotional effects of inherited wealth. To order their book, The Legacy of Inherited Wealth: Interviews with Heirs, please call 540.953.3977.

GUIDE TO A SUCCESSFUL TRANSFER OF WEALTH

DO:

1. Teach your children the discipline and satisfaction of financial responsibility through allowances, basic budgeting, and bank accounts. 2. Set aside a fund for family giving. Include your children in philanthropic decisions whenever possible. Show them that giving can be joyful, not rote or burdensome. 3. Consider more flexible and/or incentive-creating alternatives to traditional generation-skipping trusts for your descendants. 4. Remember that your financial decisions will have emotional consequences for your family. Consider getting help from a wealth counselor or family therapist when planning your estate.

DON'T:

1. Don't discourage your children from asking questions or expressing concern about your family's wealth. Allow for open communication about money and its significance. 2. Don't try to substitute money - or the things it can buy - for parental attention, affection, and involvement in your children's lives. 3. Don't deprive your children of character-building experiences. If they are not allowed to stumble, struggle and fail occasionally, they will suffer from the low self-esteem that plagues many heirs. 4. Don't keep secrets from young adults about the money that will be coming to them. Financial and emotional preparation is crucial to the psychological health of heirs.