Tips for Making a Windfall Last

January 15, 2021

With baby boomers aging, a massive transfer of wealth will occur over the next 25 years. It is estimated that over 60 trillion dollars will transfer to future heirs of this generation. If you become one of the lucky ones and receive an inheritance or some other type of windfall, look at these 5 tips for making sure that your windfall provides financial security for many years to come.

1. Seek Good Advice. Legal requirements and tax implications go hand-in-hand with any major windfall. You need to build a wealth team with the following 3 advisors: CPA, financial planner and estate planning attorney. Each advisor has a different, yet vital role in ensuring your money is protected and continues to grow.

2. Set Boundaries with Friends and Family. Long-lost friends and family members will approach in droves wanting handouts. Some ask simply for cash, while others ask for loans or offer you opportunities to invest in them or their businesses. While it may seem like you are being generous or helpful, any gifts, loans or investments should be carefully considered and vetted by your neutral financial advisor. Adding the advisor to the conversation adds another layer of security and may help you set boundaries to protect your relationships and your wealth.

3. Reduce Your Debt First. Have your team work with you to chart out a course to pay down (or off) your debts. This may be done all at once or via an installment plan. This should be done before any additional spending takes place.

4. Keep Working.In most cases, if you are young and able-bodied you should continue to earn an income regardless of your windfall amount. You may want to change careers and find a more satisfying income stream, but having that purpose often prevents you from overspending and provides a more overall satisfying lifestyle.

5. Consistent Review Sessions. Have a plan in place to meet with your team of advisors on a regular basis to review your goals, get updates on changes in the law and go through your financial statements. At these meetings, discuss topics such as insurance needs, retirement planning and charitable donation goals.

If you recently received a windfall, our knowledgeable and experienced estate planning attorneys at Stouffer Legal in the Greater Baltimore area would love to be a part of your team of advisors. Contact us to learn more about how we can help you manage your windfall.

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