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When Susan Middleton's mother passed away earlier this year, she left her daughter a $280,000 inheritance. After enduring the loss of a loved one and spending several stressful months as an executor of her mom's estate, you might think Ms. Middleton would finally be in a position to enjoy the money her mom passed along.

Instead, she feels paralyzed by fear.

"I just find it overwhelming. I have never had money before," said the 64-year-old cashier. With no investing experience, minimal savings and a husband on disability, she's terrified of doing something she'll regret.

Ms. Middleton's case illustrates what happens when someone with no financial experience is suddenly handed a cheque for a large sum of cash. While it's common for people to fantasize about inheriting money, in reality it can compound an already stressful situation.

Scenarios like this are increasingly common now that a growing number of baby boomers - not all of whom are financially literate - are in a position to inherit money from their parents.

"Basic demographics would say that there's going to be more wealth transferred in this forthcoming generation than at any time in recorded history, so to the extent that it's a problem it's going to be more of a problem going forward," said John DeGoey, a certified financial planner and investment adviser with Burgeonvest Bick Securities in Toronto.

What should you do if you inherit a chunk of cash and have no idea where to turn? Today, in the first of a two-part series, we ask Mr. DeGoey and Derek Moran, president of Smarter Financial Planning in Kelowna, B.C., to provide some general advice. Tomorrow, we'll publish their specific recommendations for Ms. Middleton (whose name we have changed to protect her privacy).

According to Mr. Moran, a good first step is to put the money in a dedicated account, separate from the person's everyday funds. Setting the money aside will reduce the temptation to make an impulsive purchase on a fancy new car or other expensive toy.

"Often, especially with money they did not earn, people will just be careless and whittle it away," said Mr. Moran, a fee-only registered financial planner who sells no financial products. Parking the money in a safe place will also reduce the urge to hand the cash to the first investment adviser who comes along but may not have the person's best interests at heart.

Before buying a single stock, bond or mutual fund, the person should consider eliminating or reducing debts, particularly credit cards and other high-interest, non-deductible loans, he said. It's also prudent to review whether it makes sense to contribute to a registered retirement savings plan, registered education savings plan or tax-free savings accounts.

When it's finally time to explore investment options, he strongly recommends using an investment counsel firm that charges a flat fee as a percentage of assets, rather than a traditional investment adviser who works on commission. Investment counsels, which range from small boutiques to large bank-owned firms, have the "highest level of competence, the lowest level of fees, and few if any conflicts of interest," he said.

For Mr. DeGoey's part, he agrees that thorough research is critical before making any decisions about what to do with the cash. "The first step is to decide whether you want to invest at all," he said. Some people's tolerance for risk is so low that they can't stomach watching their account drop by even a few thousand dollars, so plunking the cash into guaranteed investment certificates may be preferable.

A good financial planner or adviser can help people get a handle on their risk tolerance, as well as their goals and the safest way to reach them. He recommends choosing two or three candidates and arranging a free one-hour consultation with each of them. Both he and Mr. Moran recommend using a fee-only financial planner for the initial meetings, if possible, to minimize potential conflicts of interest inherent with planners that also sell investment products.

Questions to ask include:

* Do I even need to invest this money? Or can I reach my goals by leaving it in ultra-safe GICs?

* If I were to invest this money with you, what kind of an asset mix would you recommend and how much would you recommend I be allowed to draw on in an annual income?

* How much do you get paid, and how do you get paid?

"If she's done three free one-hour meetings, she can then go back to the [planner]she's most comfortable with and sign a letter of engagement. The letter of engagement will spell out what is to be done and how much is to be charged for doing it," Mr. DeGoey said.

Tomorrow, we'll hear more about Ms. Middleton's story, and get Mr. Moran's and Mr. DeGoey's specific recommendations.



BOOMING INHERITANCES

By the numbers

$70 billion: Estimated value of Canadian inheritances in 2010



$550 billion: Estimated value of Canadian inheritances for the 10 years ending in 2010



$4.3 trillion: Projected value of financial assets held by Canadians in 2014



9.4 million: Number of Canadian baby boomers born between 1946 and 1964



Source: Manulife Investments