Who hasn’t heard a sad story of a lottery winner who falls into financial hardship within a few years of winning the jackpot? Unfortunately, similar cautionary tales can be told of people who inherit large sums of money or successful business owners who sell their company without a plan in place.
“In today’s world, money can go quickly,” warns attorney Albert Andrews, Principal with the Minneapolis, MN-based law firm Gray Plant Mooty. “Without sound financial and estate planning advice, most people will not understand the consequences of spending that money foolishly until it’s too late.”
Thirty years ago, at the age of 21, one of Andrews’ clients inherited a sizeable estate, free of trust
and with no restrictions. “At her current rate of spending, she won’t have any money left by the time she hits retirement age,” he reports.
Potentially avoid a similar situation by considering the following ideas:
Seek Advice, Take Your Time
Ask a dozen financial advisors what you should do first when you receive a sudden influx of cash and you’ll get the same answer: Seek competent advice from a trusted advisor. This advice holds true for those who have never managed large amounts of wealth before and those who are well versed in money matters.
Depending on the circumstances, competent advice may include guidance from a seasoned investment manager, counsel from a good estate planning attorney and tax help from an experienced certified public accountant. For example, the rookie ball player with the large contract may need different advice than the young man who inherits from his parents or the business owner who just sold her company.