The Do’s and Don’ts of Sudden Wealth

November 12, 2019

The considerations and thought processes that accompany sudden wealth are incredibly important to think through before acting on. The challenge is that by its very nature, sudden wealth is just that, sudden. There isn’t opportunity to plan in advance. And, while there is undoubtedly a financial element to deal with, what often becomes the biggest hurdle to overcome is handling the emotional and psychological changes and stress that can result from receiving a large windfall. Our own Suzanne Wheeler recently sat down with host Brian Leitner on our podcast Your Life, Simplified, to talk through some of the basic steps you should consider when coming into a large sum of money.

The first and most important step in this situation is to hit the pause button and breathe. Often, when you experience a windfall by selling a business, winning the lottery, receiving an inheritance or hitting it big in some other fashion, you think something needs to be done with the money quickly, or that it needs to be spent. This is rarely the case. Taking time to mentally process what has occurred may take several days or weeks, and there is generally no rush to make any kind of major decision. Instead of rushing to handle the money and the issues that may come along with it, take a few days to step back and think through your long-term goals and how these funds could make a positive impact in your life.

The second step when receiving a large windfall of money is to assemble a team of experts to assist you with not only financial matters, but your emotional needs as well. With various types of windfalls come several potential tax pitfalls as well as the need to create a cohesive investing strategy to provide support long term. While these issues are largely financial, there may also be emotional and personal pressure from friends and family who want to gain access to your newfound wealth. Or, if the windfall comes from an inheritance, you may also be coping with a sense of loss. Having a wealth advisor in these situations is helpful to determine what areas might be a good use of time and money. At the very least, a wealth advisor can help mitigate the different situations you may need to work through. They can also be an unbiased third party to offer support and encouragement in what can be a time fraught with emotional turmoil.

In assembling a team, it’s important to not only have a knowledgeable wealth advisor, but also specialists who can complement the knowledge base your advisor brings to the relationship. High net worth individuals can be subject to a variety of potential tax, liability and investment risks that, with proper planning, can often be mitigated or avoided entirely. A wealth advisor may have a team of individuals they can utilize on a regular basis to address these issues and help you navigate what can potentially be a complex maze of issues.

Coming into a large sum of money suddenly can undoubtedly be an emotional time in your life. It may be accompanied by feelings of grief, joy, guilt, or some combination of these. By far, the most important tip to remember during that time is to ensure proceeds are put to good use and employed to provide for your individual needs and goals, both in the present and over the long term. To aid in that process, a wealth advisor can be an asset in terms of managing the funds and in guiding you through emotional challenges.

Nothing in this publication is intended to constitute legal, tax, or investment advice. Consult a financial, tax or legal professional for specific information related to your own situation.

Mariner Wealth Advisors (“MWA”), is an SEC registered investment adviser with its principal place of business in the State of Kansas. Registration of an investment adviser does not imply a certain level of skill or training. MWA is in compliance with the current notice filing requirements imposed upon registered investment advisers by those states in which MWA maintains clients. MWA may only transact business in those states in which it is notice filed or qualifies for an exemption or exclusion from notice filing requirements. Any subsequent, direct communication by MWA with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For additional information about MWA, including fees and services, please contact MWA or refer to the Investment Adviser Public Disclosure website. Please read the disclosure statement carefully before you invest or send money.

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