3 Steps After You Inherit A Windfall

Posted on: 17 September 2017

Receiving a windfall such as an inheritance or settlement can improve your quality of life and financial health, but only if you manage it wisely. It can be surprisingly easy to go through a windfall much more quickly than you want to. A better approach is to be cautious and thoughtful about what you do with the money, to make it last. Here are three steps to take that will help protect your unexpected good fortune:

Meet with a Financial Planner

Before you spend any of your newfound wealth, it's crucial to meet with an experienced and trustworthy financial planner. Your financial planner will help you come up with a solid plan for the money that will help it go as far as possible and improve your overall quality of life.

Depending on your overall finances and the amount of the windfall, your financial planning team may have you pay off high-interest debt, fund an emergency savings account, and make investments for long-term wealth building. If there is enough money, your financial planner will also help you create a detailed spending budget, accounting for things like a vacation, gifts to your family, and a new car. The key is to let your financial planner advise you in prioritizing where to save, where to pay off debts, and where to invest long-term.

Hire a Tax Accountant

Depending on the type of windfall, you may or may not have to pay a hefty percentage in taxes. Meeting with an experienced tax accountant long before you spend any of your windfall will prevent unpleasant surprises from the IRS later. They will also guide you in determining ways to receive your windfall that incurs fewer tax penalties, such as taking out small withdrawals over time from a trust fund or adding the money from an inheritance to your retirement account.

Take It Slow

You don't have to figure out what to do with your money right away. You are also not obligated to mention your windfall to friends or relatives, especially if you think the news will affect your relationships in any way. Taking a calm, cautious, steady approach to your windfall will help you prevent mistakes such as over-spending, giving away too much money, or losing money by making risky financial investments.

By following these steps, you will protect your financial windfall and make the most of it both now and in the long-run.


When to Use a Financial Advisor

Hi, my name is Melinda Jacobs. My husband John and I are in our 50s, and we both still work full-time jobs. I used to be of the mind that we should put every spare penny into an interest bearing savings account. That is, until we started going to a financial adviser. Our finance consultant has showed us how to manage our money in a manner that is going to not only sustain us today but also in the future. I would like to share some of what we’ve learned about saving and managing money in today’s economy and why the days of putting money into a savings account is not really practical. I hope that what I have to share proves to be beneficial to you.