How to Handle a Financial Windfall

by brendon on June 29, 2017

Sounds like a dream come true, right? Coming into a significant amount of money can be a huge blessing, but few people realize it can also be stressful, confusing and overwhelming — IF you don’t know how to manage your windfall, that is.

The proper management depends on the type and amount of windfall you receive. For instance, handling a $500,000 inheritance has different tax implications and legal procedures than, say, winning a $65 million Powerball.
The approach you take to managing a large windfall will have many variables, but generally speaking, every approach should include these action steps:

1. Consider a new investment strategy. With more money, it is wise to reevaluate your current investment strategy and see what you can add, increase or change altogether. Doing so will help ensure not only that you are saving the right amount, but also allow you to gain even more on what you have acquired.
2. Define a spend-save-give approach. As soon as possible, determine how much you want to set aside for spending immediately versus saving for the future or putting to philanthropic use.
3. Revisit your estate plan. A windfall means a significant change to your assets, which necessitates a careful review of your wills, trusts, and other estate planning documentation to reflect your new financial situation.
4. Seek professional advice. Attorneys will help with all legal procedures and estate planning needs. A CPA can help with tax questions. And, of course, I am here to help you determine your new investment strategy and your approach to spending, saving and giving. Having neutral, knowledgably input is key to ensuring success in managing your windfall.
5. Expect stress. Receiving a financial windfall can be emotionally overwhelming. Many decisions will need to be made and many tasks will need to be taken care of in short order. Additionally, people in your life may pressure you to use your money in a certain way. All of this can create conflict. Consider how private or public you will want to be about your financial windfall (if you have the choice). You also may seek outside or professional help to manage the emotional side of a financial windfall.
If you anticipate a receiving a financial windfall or have recently received one, let’s chat. As your financial coach, I can help you formulate a management approach that best fits your needs and lifestyle.

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