The Balancing Act: Weathering the Burden of Sudden Wealth

You’ve thought about it.

It’s not often these days that someone is blind-sided by a large inheritance. The stories of surprise visits from lawyers revealing a huge inheritance from a rich uncle whom the beneficiary never knew he/she had are more rooted in Hollywood than reality. Often, we know in advance (or have a pretty good idea) if a gift of wealth is in our future. Because of this, there may be many things we put into the “if/when” category.

Reality check.

When one actually receives an inheritance, they may begin to realize that all the different plans they made may not fit. Sentences like “We’ll pay off the house”, “We’ll take a trip around the world”, or even “We’ll retire” are easy to end with “when we receive our inheritance”. But how much of that is really possible? You may find that not everything you’ve casually “planned” to do will be possible. So here comes the tricky part.

More Money, More Problems.

The time comes. Your inheritance is in your hands. Suddenly what in the past may have felt like it would be a huge relief can begin to feel like a huge burden. Now you must make plans. Now you must take your head out of the “someday” clouds and start carefully considering the situation you’re in. While you may be able to do some of the things you’ve planned, which ones? And in what order? And what is the best way to go about it? And what sort of tax encumbrances might you encounter?

Sudden wealth brings up many questions.

Believe it or not, you’re not alone – and there are actually many financial professionals out there who specialize in the needs of those who have received “sudden wealth”.  It’s a very unique situation that requires careful consideration of all options. There are many things to consider – your current needs, your future needs, and even your OWN estate plan.

Start by being patient. 

It’s not in your best interest to run out on day one and start spending. You’ll need to make a plan (preferably with a trusted financial professional) to make the most of your new wealth. But before any of that, take some time. Many of the major decisions can wait, and whether or not you were close to your benefactor, you’ll likely need time to grieve your loss.

Rushing major decisions is almost never advisable, and you might be surprised by how much clarity some time to think can yield. 

When you’re ready.

Once you have a more firm, realistic idea of what your needs and goals are, it’s time to meet with a professional who can help you navigate the myriad of options available to you, point out potential pitfalls and assist you in developing a custom plan for the allocation of your inheritance. If possible, seek the guidance of a financial professional (or professionals) experienced in assisting those who have received sudden wealth.