A sudden financial windfall can be a life altering event.
You may come to a sudden financial windfall through a lottery winning, divorce, by an inheritance or even as a gift. Whatever the reason and as good as it sounds, it comes with its share of problems and won’t always be easy to manage.
A sudden change in your financial situation can mean a change in your income position, assets and even your lifestyle. Be sure to reach out for professional guidance to manage this change so that you are able to maximise a great opportunity to build financial security for your future.
Things to consider
Understand your situation. Financial windfall can come in different forms and it is important to understand the nature of your own individual situation. You need to be aware of considerations such as tax, legal matters and procedures that apply to your financial windfall.
Plan for your future. It may be a little difficult to see anything beyond the short term with a significant financial gain but it’s important that you do. Before you spend your newly acquired wealth, be aware and make allowances for any legal, tax and other expenses associated with it. Speak to a financial professional to gain advice on how to best use your wealth to strike a balance between achieving short term and long term goals. Don’t lose site of the long term goals as once you’ve spent this wealth, you are likely to be back where you started. Spend wisely and work with a professional to achieve the best outcome.
Consider your investment strategies. Your short term goals may address some immediate needs whilst your long term goals may be linked to your retirement planning and other matters with less urgency. It’s important to identify the investment strategies based on the timeline and horizon for the investment. Different investment vehicles hold varied levels of volatility which determines the liquidity of the investment. There may also be tax and legal considerations to address with different types of investments. Reach out and ask for guidance around these matters from a qualified professional such as a financial planner.
Consider the effect on estate planning. A financial windfall or inheritance will most definitely change your position with any estate planning strategies you may have in place. Review and update your wills, beneficiaries and trusts to make sure they continue to remain effective with the addition of the new found wealth.
Ask to be referred to professionals. It’s important that you have a professional to assist you consider tax, legal and other financial matters. Speak to your financial planner about being referred to any other necessary professionals such as a Solicitor and an Accountant. It’s important that all these professionals work together on your situation so that it is handled as smoothly and efficiently as possible with a single outcome in mind; to help you.
Some helpful resources
Moneysmart is an Australian Government initiative to help Australians increase their financial knowledge and better manage their money.
The Australian Tax Office website provides a great deal of information under Individuals that may assist with any questions you have around taxation of your recently acquired wealth.
Sudden Money is a manual for individual and families who have come to experience a sudden financial gain and how to deal with the emotional roller coaster that comes with it. Sudden Money: Managing a Financial Windfall by Susan Bradley and Mary Martin
Call us on 03 9374 1133 for an appointment to discuss how we can work towards your financial and lifestyle needs during this important stage in your life.