Whether you win a jackpot, make a successful investment that pays back huge, or inherit money from a relative, coming into a large amount of cash can be overwhelming. What you do in the first months after a financial windfall can make a big difference, so it is important to be smart. Take the following steps if your bank account grows rapidly overnight:
Avoid Frivolous Spending
While it can be very tempting to start spending your new found wealth, it is a much better idea to put the money aside until you can get advice from professionals about how to deal with your money. It is okay to set up an emergency fund and pay down some debt, but avoid going out and buying an expensive new car or other luxury items. It is also a good idea to keep quiet about the money you have received and not bring attention to it.
Consult an Experienced Accountant
Coming into a large amount of money can have major tax implications, so it is important to consult an accountant as soon as possible. An experienced accountant will be able to advise you on setting up accounts and making sure that you pay the proper taxes on the money in order to avoid penalties from the Internal Revenue Service. Depending on the amount of money that you have come into, you may want to work with both an accountant and a tax attorney.
Work with an Estate Attorney
If you have just been bumped up a few tax brackets, it is important to do what is needed to help protect your new money. Establishing a trust is a good way to keep your money safe for many years. You may also want to have your attorney draw up new documents that outline who the beneficiaries of the trust are in the event that you die.
Hire a Private Wealth Management Firm
If you want your new money to grow, it is important to invest it wisely. Most people are not experienced in investing large amounts of money, so it is in your best interest look at different private wealth managements to work on your behalf. This type of firm is staffed by financial experts who can assist you in financial planning and also make investments for you and manage your portfolio. Private wealth management firms only work with individuals, so you can rest assured that they will understand how to help you grow your personal wealth.