{"id":12099,"date":"2021-12-01T10:27:09","date_gmt":"2021-12-01T16:27:09","guid":{"rendered":"https:\/\/johnsonwim.com\/?p=12099"},"modified":"2021-12-01T10:27:09","modified_gmt":"2021-12-01T16:27:09","slug":"how-to-manage-sudden-wealth","status":"publish","type":"post","link":"https:\/\/johnsonwim.com\/how-to-manage-sudden-wealth","title":{"rendered":"How to Manage Sudden Wealth"},"content":{"rendered":"\n

Have you experienced a sudden windfall? We\u2019re here to help you navigate the complexities of sudden wealth. Ultimately, you\u2019ll want to rely on a team of professionals to help advise you.<\/strong><\/p>\n\n\n\n

There\u2019s gradual money and there\u2019s money that comes suddenly. Most of us are used to gradual money\u2014earning an income and building a nest egg over time. It\u2019s a slow and steady process, but as our net worth increases over the years, we adapt and slowly become financially educated.<\/p>\n\n\n\n

So what exactly is sudden wealth? Sudden wealth means getting more money than you\u2019re used to being responsible for and getting it all at once. There\u2019s no minimum dollar amount to qualify as sudden wealth. The distinguishing factor is that the amount has to be large enough to take you out of your financial comfort zone. Here are a couple ways on how to manage sudden wealth.<\/p>\n\n\n\n

Where does sudden wealth come from?<\/h4>\n\n\n\n

Sudden wealth can come from anywhere, it could have resulted from luck or hard work. It may have been years in the making or it may have happened in an instant. Typically, money that comes suddenly originates from a lawsuit, divorce, sale of a business, inheritance, lottery winnings, sport\/entertainment contracts, retirement packages, or stock options.<\/p>\n\n\n\n

Regardless of where the money comes from, you\u2019re the same person you were the day before you received it, but you are quickly thrown into a new and sometimes, an uncomfortable situation. While sudden wealth sounds like a great thing, it can cause anxiety, indecision, and fear in those who don\u2019t adapt or develop a strategy. Here’s a couple strategies you can try implementing if you find yourself in a sudden wealth situation.<\/p>\n\n\n\n

1. Build your sudden wealth financial team<\/h4>\n\n\n\n

The first step you\u2019ll want to take is to create a financial team composed of people who have knowledge and experience with sudden wealth. They can help you navigate the numerous tax, financial, and legal issues that arise. There may be time-sensitive opportunities to deal with immediately so this is the first step you’ll want to take that can help you save or defer taxes.<\/p>\n\n\n\n

For an essential team, you will want to have an experienced wealth advisor, estate attorney and a financial advisor, or a full-service fiduciary <\/a>to cover all your bases. Your financial team needs to have only your interests in mind.<\/p>\n\n\n\n

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. An experienced fiduciary <\/a>may have a team of individuals they can use to address these issues. 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. Having a full-service fiduciary in these situations is helpful to determine what areas might be a good use of time and money. At the very least, a fiduciary may help mitigate the different situations you may need to work through.<\/p>\n\n\n\n

2. Create a sudden wealth wish list<\/h4>\n\n\n\n

After you create the list, categorize every item as a \u201cWould Like\u201d or an \u201cIf Possible.\u201d Would Like items are things that are important to you such as buying a new home and paying for your children\u2019s education. If they\u2019re not already on your list, I would add \u201cpay off debt\u201d and \u201csave for retirement\u201d to this list. Possible items include everything else: travel, gifts to family members, and quitting your job. Once you\u2019ve brainstormed everything you want to own and do, rank those items in terms of importance. Here\u2019s how your list should start:<\/p>\n\n\n\n