Let’s say you just came into some money. A lot of it. Now what?
Where are windfalls born?
While we often associate windfalls with winning the lottery, the more realistic scenarios come from an inheritance, legal settlements, or business dealings.
First things first: Take it slow
The only people you should share this information with are people you trust with your life (spouse, immediate family) and a professional who can help you manage the money. Don’t post anything on social media or share it in passing with people you don’t completely trust. You might feel like it’s no big deal to spread the word, but to everyone else, you’re now a walking money bag.
We can’t stress this point enough: You should hire people who know exactly how to deal with large sums of money. If you already have a lawyer, accountant, financial advisor, or insurance agent, you’re already a step ahead of the game. Call them, and get your plan rolling.
If you don’t, make assembling a team your top priority. Payment for services should be retainer-based, an hourly fee, or in the case of financial professionals, a percentage of the assets they will be in charge of managing. If you have no idea where to start, turn to the family you trust for recommendations.
Get a strategy
Here are a bunch of questions that only you can answer:
- What do you want this money to do for you?
- What are your biggest worries?
- Are there any large purchases you really want to make?
- How should you deal with your debts?
- Do you have enough to retire, or is that not even an option?
- Do you have an emergency fund that can only be used if you have no other option?
- How can you use the money to help others, if that’s one of your goals?
Get your paperwork in order
Do you have a will? Have you named a power of attorney? Perhaps you put these off because you thought you didn’t have anything valuable enough to protect. Well, once you come across money everything changes. Less than 60% of Baby Boomers have a will, which would change if people realized how easy and affordable one is to create.
If you get a windfall, you’ll have no valid excuses to avoid this planning cornerstone.
Don’t go changing…
It’s easy to say that you’ll remain the same down-to-earth person regardless of what you have in the bank. But there’s a good chance the people around you might change. This is why you need budgets, responsible parameters, and a cool head so this money lasts you the rest of your life.
What’s the most responsible thing you’d do if you received a cash windfall? (OK, just for fun, what’s the most irresponsible thing too?) Let us know in the comments below.
This article is provided by Everplans — a life and legacy planning company dedicated to transforming the way people get their families organized. For more information, visit: everplans.com
Neither Transamerica nor its agents or representatives may provide tax, investment, or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors and financial professional regarding their particular situation and the concepts presented herein.
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