How To Manage A Cash Windfall

How To Manage A Cash Windfall

Many of us fantasize about winning a big lottery jackpot. Let’s say that actually happened? What would you do with the money? How would you manage it?

While winning the lottery is a real long shot, cash windfalls are not that uncommon. People inherit money or receive a life insurance payout when someone dies, they sell businesses or professional practices, they win a judgment in a lawsuit, receive a sizable divorce settlement.

Take a step back: There is no rule saying that you have to do something with the money right away. In fact many financial advisers would counsel you take some time and do some financial planning. This is especially true in the case of a large and possibly unexpected windfall. Don’t succumb to pressure from family, friends, or pushy financial sales types. It’s your money and your life.

Hire help: Depending upon the size and the nature of the windfall you will want to assemble a team of experts that might include a financial adviser, a tax professional, and perhaps an attorney for any estate planning issues created by the windfall. If the windfall was an expected one, such as a large retirement plan rollover or proceeds from the sale of a business, you quite likely have been working with a financial adviser or tax professional or both already.

Deal with the emotional issues: Windfalls such as an inheritance or a divorce settlement will likely also come with some emotional issues. The death of a loved one is always tough to deal with. Divorce may entail anger, sadness, and a feeling of being alone. In the case of a widow or divorcee, this might be the first time that you’ve had to deal with your finances on your own. It’s important to let yourself deal with these issues and not to make hasty financial decisions based upon these emotions.

Posted by Richard Craig 1/29/15

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