Navigating the ramifications of sudden wealth

Like any major life change, receiving a financial windfall can be complicated and confusing.

Whether through a legal judgment, divorce, business sale, inheritance, retirement package or stock options, when your net worth increases dramatically, you are likely to be in unfamiliar territory. Your boundaries have changed, but what are they? Your options have changed, but how do you assess what is possible? What new information and skills do you need to make smart decisions going forward?

According to the Sudden Money Institute, recipients of sudden wealth face three stages of management: preparation, decision-making and implementation.

You’ll want to assemble a team you trust, possibly including an attorney, an accountant and a financial advisor. This is the time to do as much groundwork as possible. Our personalized, realistic planning approach can help you think through your new options.

We believe testing out the various scenarios you may be wondering about helps you define your new financial boundaries and understand what is possible and what is not. This work may help you avoid a major pitfall – overspending that can then limit future potential. The failure to plan and understand new boundaries is the reason about 70% of lottery winners ultimately end up filing for bankruptcy. While winning a lottery is perhaps an extreme example, the failure to plan leads too many recipients of sudden wealth to make poor decisions that do not ultimately serve their long-term goals.

You may go through a period in which you try different paths. Your financial plan can serve as an anchor as you navigate unfamiliar waters. Your plan, and our ability to test any new scenario you come up with, serves as guidance that helps in decision-making and implementation.

Should you need a more sophisticated approach to estate planning or tax planning, working with your attorney and tax advisor, we can help explain the purpose and function of strategies that may be unfamiliar. We can show you how various options can affect your financial plan, which can again be very helpful in your decision-making process.

Using your financial plan and our Financial DNA tool, we can help you put a new investment portfolio in place – one that we design based on your financial goals while being mindful of your emotional reaction to market volatility. We can show you potential ways to achieve goals of protecting and supporting family members, or charitable organizations that may not have been possible before.

Over time, as you settle into your new life, our team will help you adjust course with confidence so you can live on your own terms.