When an average person becomes wealthy in a very short period of time, knowing how to handle their new-found fortune requires good legal and financial help.
The overnight success of an amateur novelist who is suddenly flush with a huge amount of cash can leave the person ecstatic and overwhelmed at the same time. According to The Wall Street Journal in “How to Help the Suddenly Wealthy,” people who have are not accustomed to dealing with large sums of money may find themselves confused and anxious. What should they do with the money? How can they protect themselves from old habits or predatory family members? The first step should be to speak with an estate planning attorney.
Many of these overnight success stories have an instant and significant need for planning. One of the first things that an experienced estate planning attorney will do is discuss the person’s goals. Once this is known, a sound strategy for wealth management can be crafted.
Many folks who are used to living from paycheck to paycheck don’t think about important defensive planning strategies such as purchasing life insurance, disability insurance, or estate planning. Many haven’t started saving for retirement or for their children’s college education.
It can be overwhelming for a person to receive a sudden large infusion of cash. Many want to allocate their funds wisely, but frequently don’t know where to start. With the help of an experienced attorney, they can prioritize what’s most important to them and apply thoughtful tactics to achieve those goals.
This kind of sudden wealth requires a completely different way of thinking about money and how they perceive the source of their success. If they are suddenly at the helm of a multi-million dollar company, they need to shift gears into a CEO mindset. They also need to understand that a one-time occurrence may not happen again, and they need to protect their sudden wealth so that it does not dissipate.
Reference: The Wall Street Journal (November 3, 2016) “How to Help the Suddenly Wealthy”