Everyone dreams of winning the lottery or getting a large inheritance. If you were to suddenly become wealthy, do you know what you should do? You probably have some immediate needs, like buying a new car and going on a shopping spree. But you will need a long-term plan to secure your wealth for the future. A knowledgeable estate planning attorney will assist you through this challenging time.
Establish a Bank Account
Before you claim or accept a large sum of money, you should make sure you have an appropriate place to keep it. Open a bank account where you can have the funds wire transferred or deposited electronically. It is important to note that most bank accounts are FDIC-insured for up to $250,000. This includes a total of all types of accounts you hold at a single bank. You may want to open accounts at several banks in order to make certain your money is adequately insured. Keep in mind that you will only be keeping a large amount here for a short period of time – just until you decide how to invest your money.
Take Your Time
It is best to take your time when deciding how to invest and spend your newfound money. You are in no particular rush to do anything, so it is best to take your time. You will want to learn more about your options and how your choices will impact your taxes and other financial matters. There is no reason to immediately change the way you live or start making large purchases. It is also not a good idea to start giving money away to family members or friends. You will want to learn all your options before you make any decisions about your money.
Create a Spending and Saving Plan
Now it’s time to start thinking about what you want to do with the money. It is critical to consider several things, such as how much you will pay in taxes and how much money you should invest. Consider your new lifestyle, such as whether you wish to continue working, want to start a new business, or plan to retire. Depending on your preferred lifestyle, you will need to develop a plan for spending and saving. You should come up with short-term and long-term plans. It is essential that you decide how much money you can spend, how much to save, and how to prepare for liquidity needs.
Take Care of Your Immediate Needs
There are certainly some things you will likely want to do with your funds as soon as possible. You may want to pay off any substantial debt you have. You might want to purchase a car. You may plan a vacation. You will also want to think about your other regular needs, such as living expenses. It can be easy to start going through money very quickly if you are not careful, so planning at this stage is necessary. It is usually best to discuss your needs with an attorney or accountant before you make any decisions.
Estate Planning is Critical
The most important task you will need to accomplish when you suddenly come into money is to create an estate plan. Determine your liquidity needs so you can choose the type of investment that makes sense. You may be able to use several different investment vehicles. You will want to work with an estate planning attorney to learn the options for your funds. Some things to consider include trusts, LLCs or establishing a foundation to protect your wealth amid tax concerns. You will also need to amend or put a will in place that takes your new wealth into consideration.
To learn more about investments, trusts, and estate planning, contact our legal team at Moen Sheehan Meyer, Ltd. at (608) 784-8310 or online to schedule a consultation.