When it comes to your portfolio, family loyalty can be bad for your wealth.

Consider the case of Wendy, a single woman nearing retirement who received an unexpected windfall upon her father's death, $200,000 worth of stock in a paper products company. Within just a few years, Wendy, who asked that we not divulge her full name, saw her shares rise in value to $600,000. This one investment was by far her largest asset and her best hope for financial security in retirement.

Wendy knew she should liquidate much of the stock and diversify her portfolio, but wouldn't even consider it. In fact, if an emergency ever prompted her to sell a few shares, she would faithfully repurchase shares until she reached the number that her father left her.

"I don't want to lose a penny he gave me," she explained. "I just don't feel worthy. This was a gift. I didn't do anything here."

Wendy was in the thrall of the "heirloom effect" -- whereby inheritors of stocks, real estate and even cash find that these assets take on profound meanings associated with the benefactors. Holding on is a way of keeping a departed loved one close.

Although Wendy's case might seem unusual, it's more common than long-lost heirs of Howard Hughes, as I explain in my new book

The Wise Inheritor: A Guide to Managing, Investing and Enjoying Your Inheritance

(Broadway Books).

During my research, financial advisers often lamented that beneficiaries treat inherited securities as if they were urns to be stored on a shelf and never disturbed. One complained that getting clients to sell heirloom stocks was "almost like cutting an umbilical cord."

Even otherwise rational investors can get caught up in these emotions, myself included.

I had been working for several years as a financial writer in San Diego when my mother passed away, leaving me a block of

Exxon

(XOM) - Get Report

stock worth $130,000. The stock, handed down by my grandmother, dwarfed my IRA and 401(k) holdings.

I knew that diversifying into other investments was much less risky than clinging to my shares like a hoard of family china. The money would be safer spread among several well-diversified mutual funds or index funds.

After all, the worst that can happen to the overall stock market is that it will plunge by as much as 30% in one year. But the worst than can happen to one stock, even a blue-chip, is that it can drop by more than 30%, sometimes to zero. In the past 30 years, such stalwarts as

IBM

(IBM) - Get Report

,

Coca-Cola

(KO) - Get Report

and

McDonald's

(MCD) - Get Report

have all plummeted more than 50% from their peaks. Some, such as

Polaroid

and

Woolworth

, never revived.

Despite this useful knowledge, I found my emotions trumping my best rational intentions. The thought of selling any of my Exxon mother lode was actually frightening. Its relative mass in my portfolio gave me a feeling of safety and protection, as if my family were still watching over me. And I felt a certain loyalty to the stock -- look how it had performed for my family and me for four decades!

Obviously, I had some emotional hurdles to overcome before pushing the sell button. But mine were small compared with those of other inheritors I interviewed. Some were told never to sell the stock of the company where Dad had worked and others were given specific final wishes, such as "never sell a drug stock" or "whatever you do, don't get rid of

American Express

(AXP) - Get Report

."

Even heirs given no specific orders regarding investments often cling to the status quo -- especially if the benefactor was savvy in financial matters. One inheritor told me sadly she could never match her late father's abilities and wouldn't believe that his portfolio of high-tech stocks had gone down with the market -- she thought it was somehow her fault.

Another kept her dead father's stock portfolio intact, thinking he would disapprove if she liquidated it. So she borrowed on margin to get cash. Finally she stopped this expensive habit and sold the stocks, after an adviser pointed out that her father would have disapproved of the margin borrowing most of all.

Sometimes it takes just such a new perspective to persuade an inheritor to let loose of an heirloom asset. I know that what finally got me to sell about two-thirds of my Exxon stock in two installments over five years was the "worst-case scenario" described above. How would I feel if some unforeseen event caused the company's stock to plunge dramatically and I hadn't preserved a good chunk of that $130,000?

Or conversely, if I had $130,000 in cash, would I go out and buy that much Exxon stock with it?

Also, times change. While drug companies, for example, might have a good run in one decade, there's no guarantee they won't be crippled by government reform or outrun by scientific discovery.

If you've inherited assets, you need to ask yourself: Would you leave your heirs with an investment legacy that ties their hands? Isn't it likely that your benefactors want you to do what's best for you?

Ann Perry, author of "The Wise Inheritor," has been a personal finance columnist for more than a decade at The San Diego Union-Tribune. She also has served as a columnist for Knight-Ridder newspapers and as a contributing editor for Women's Financial Network online. Much of her inheritance came from her grandmother, who popularized the first mass-marketed Go Fish game in the 1950s.