Receiving sudden wealth can come from many different sources. From winning the lottery to inheriting money from a distant relative, a sudden windfall can bring as many challenges as it does opportunities. Many people who come into sudden wealth aren’t sure how to manage it, which can lead to that money running out much faster than you might expect.
A major challenge of suddenly acquiring a large amount of money is the urge to spend a lot of it on big purchases. Buying a house, getting a new car, or even taking your dream vacation might sound like great ideas, but diving headlong into purchases without a plan can be detrimental. In most cases, it’s best to give yourself two to three months to wait and process the amount of money you have. Then, you can make rational decisions about how to spend your money with your financial goals in mind.
Another major challenge of a sudden windfall is the amount of family and friends who might ask you for favors. Maybe your newfound wealth is public knowledge, or maybe you told a few select people (who also told a few select people). You may find that long-lost relatives or acquaintances you met once start asking you for loans or gifts. Generally, it’s not a good idea to give people money unless you have a financial plan in place and are sure you can spare it.
Receiving sudden wealth can be overwhelming, and it’s essential to have an estate plan established to protect your assets and your legacy. If you need assistance managing your money, our attorneys are here to help. Contact our law office today at 510-901-5375.
Who Should I Include on a Financial Team?
One of the best ways to safeguard your newfound wealth is to create a financial team of individuals to help you manage it. Look for a professional financial advisor and tax advisor to help you meet your financial goals while also paying taxes as required. Always choose a professional certified by the Certified Financial Planner (CFP) Board and a tax advisor affiliated with the American Institute of Certified Public Accountants (AICPA).
You should also consult a team of estate planning attorneys to help you manage your estate and pass it on to your beneficiaries after you pass. Financial planning is excellent for meeting your short-term goals, but estate planning focuses on managing your wealth so your children and future generations can benefit, too. If you have received a sudden windfall and want to learn about protecting your money for your children to inherit, contact our team today for more information.
How Do I Determine My Financial Goals?
When you have a large sum of money, it’s essential to create financial goals to avoid overspending. Your goals will help guide your financial decisions and let you allocate funds to the most important areas of your life.
If you are having difficulty deciding on your financial goals, there are some questions you can ask yourself below:
Where do I want to be in ten years?
What causes do I want to support?
What job would I like to have?
What goals do I have for my family?
What does my perfect day look like?
What have I always wanted to do but didn’t have the money for?
If money were no object, what would I be doing?
Answering these questions will help get you closer to your financial goals. Once you understand your goals, you can work with a financial planner and our estate planning attorneys to allocate your wealth and protect it long-term.
What Estate Planning Tools are Available for Large Amounts of Wealth?
If you’ve never had a large amount of money before, now might be the first time you are thinking about estate planning. Estate planning is a group of legal documents that dictates what will happen to your assets after you pass away. Some estate planning documents may be better suited to your financial situation than others. Our team can review your finances and help you create an estate plan that’s right for you.
Below are some of the most common estate planning tools you can use to protect your newfound assets:
A last will and testament dictates how you would like your assets distributed after death. You can also use a will to name a legal guardian for minor children, name an executor of your estate, and specify any organizations you would like to donate to.
A trust holds certain assets, like bank accounts or property, which are then managed by a third party. A trust can provide ongoing income to a spouse, child, or parent while also avoiding the probate process. There are many different types of trusts to choose from that could benefit your estate.
Powers of Attorney
A power of attorney gives an individual of your choosing the power to make financial or medical decisions on your behalf. In most cases, power of attorney is used if you are incapacitated due to illness or injury.
Can an Estate Planning Attorney Help Me?
Having a large sum of money fall into your lap out of nowhere is exciting, but it can also be overwhelming. While you may be enjoying this newfound wealth now, safeguarding your assets for the future is the best way to provide your family with financial security for years to come. Working with an estate planning lawyer on our team will help give you the peace of mind you need to ensure your family is taken care of in the event of your death or incapacitation. The Singh Law Firm can help you create an estate plan that’s right for you. Call us today at 510-901-5375 for a free consultation.