Here’s something to look forward to: Whether you’re still working or are retired, a financial wind-
fall may happen sometime in your life.
Typically, windfalls occur through an inheritance, a lawsuit settlement or even a lucky lottery ticket. You may consider your retirement accounts — which likely have grown to a nice sum over your working years — as another financial windfall to spend as soon as you retire. The problem with that plan is those pre-tax accounts have never been taxed.
Figuring out how to manage a financial windfall sounds like a good problem. Or is it? The fact is, these funds can quickly disappear without a proactive plan. We’ve all heard stories of lottery winners going broke within years, or having taxes consume a large portion of the winnings.
PLAN FIRST, SPEND LATER
Before spending newfound money too quickly, it is a good idea to build a windfall team, which should include financial, tax, insurance and legal advisers to assist you in developing a lifelong plan for you and those you care about. This will ensure the wind- fall is protected from losses caused by wrong decisions, taxes, stock market losses or legal issues.
Next, enjoy the money knowing that your windfall is working for you and the people you love and care about.
Here’s an example: A young woman in her 40s wanted to make her deceased grandmother’s wishes for her inheritance a reality. She invested wisely, purchased a permanent life insurance policy, contributed to her 401k and consulted with an attorney to complete her will, durable power of health and living will.
Unfortunately, this woman died of cancer three years later. Her younger sister inherited the estate, and she has pledged to keep this gift growing just as her sister had planned. She got her legal documents in order, and she made plans for her retirement, insurance and investments.
Whether you receive a windfall from an inheritance, a 401k, a lottery or some other way, be proactive. Get advice and build your team of money management professionals to help meet lifelong dreams and goals. Feel secure knowing your wishes can happen your way.
