What should you do if you’re the sudden beneficiary of a large amount of money? Maybe you’ve been left a gift or inheritance from family. Perhaps you’ve sold your business. Or you’ve received a settlement. What should your next move be? Here are five important steps you’ll want to take to address the financial—and emotional—impact of receiving a big infusion of money.
What should you do if you’re the sudden beneficiary of a large amount of money? Maybe you’ve been left a gift or inheritance from family. Perhaps you’ve sold your business. Or you’ve received a settlement. What should your next move be? Here are five important steps you’ll want to take to address the financial—and emotional—impact of receiving a big infusion of money.
1. Set your priorities
There’s no need to rush into any decisions about how you’ll use your windfall. But you may want to prioritize these practical considerations while you give yourself some time to think about everything else:
- Remember, the sudden increase in income will affect your taxes.
- You may need to update your will—or draft one.
- Contact your financial advisor to ensure your funds are secure and to start planning.
- Think through what’s titled in your name and who controls your assets.
2. Take note of challenges and opportunities
Of course, a financial windfall can mean a real change in your circumstances—one that will prompt you to give serious consideration to how the money will be used and the steps you should take to protect it. Tax efficiency, having a plan and keeping the needs of your own family in mind are some of the things you’ll want to prioritize.
You’ll also have new opportunities to support the causes that matter to you, perhaps in ways that you couldn’t before. Explore what excites you. You may want to return to something that has been a passion for you in the past, such as supporting organizations that work with kids, or take up a new cause such as sustainability. Take stock of your situation with a trusted personal advisor or life coach.
3. Assemble the right team around you
It’s important to have the right people around you for support, guidance and, most importantly, expertise. Whether they are family, friends or professionals, the most essential questions to ask yourself are: do they have the right qualifications and do you trust their advice?
Do your due diligence and get the right support from lawyers, accountants and financial professionals. Your new financial situation may not be best served by the professionals who helped you in the first chapter of wealth-building. Don’t be shy about asking questions and requiring references. Once you’ve put together your team of trusted advisors, then you can lean on them to help you make decisions about where your money should go.
4. Protect your privacy
With a significant infusion of wealth may come newfound visibility. This can be used for good, but when, how and what information you share is critical. And the reality of the world we live in is that you must be even more vigilant with cyber and physical security after a major wealth event. One important step? Adjust your privacy settings and scrub social media for any identifying data such as home addresses or collectible items.
Ironically, home security cameras, listening and personal assistant devices (like Siri, Alexa and Google Assistant) and even medical records may be accessed for ill intent. Should you consider extortion insurance and using non-disclosure agreements (NDAs) for household staff or other close parties? Perhaps. No two situations are alike but don’t rule out the potential need. This will help keep you and your family safe and signal to the external world that you are in control.
5. Engage with your family.
When it comes to your family, a wealth event can create opportunities or cause some thorny complications. And considering the challenges of family dynamics—blended families, long-standing disagreements, children with special needs and the like—how that money gets used can become a source of conflict.
While it would be overly simplistic to suggest that it will solve everything, a family meeting may be a good way to start the conversation. Such meetings should focus on purposeful communication that’s specific to what the money might mean for everyone involved. You may want to encourage engaged participation, education or decision-making around important matters. Families that thrive with an infusion of wealth set a tone of intentional communication by transparently and authentically involving the entire family.
A sudden infusion of wealth can have a dramatic impact on your family, but with a bit of foresight and careful planning, you can manage it successfully.
Want to know more? Read the white paper by Shawna Hamilton and Elizabeth Cribbs, Senior Strategists, UBS Family Advisory and Philanthropic Services, Five key considerations for a financial windfall
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