You Just Received a Financial Windfall. Now What?

We've all heard about professional athletes who lost everything they earned in mega-million dollar contracts. This can happen to anyone who comes into "sudden money." Cary Stamp, CFP®, Forbes Best-In-State Wealth Advisor, has some smart advice to help you avoid disaster after receiving a windfall.
TRANSCRIPT:
Hi, I'm Certified Financial Planner Cary Stamp and it doesn't happen all the time, but periodically I'll get a phone call into the office and somebody will say, I just inherited a lot of money... I just sold my company... I just exercised a lot of stock options... or I just won the lottery. Don't hear that one very often, but from time to time it does happen.
The question today is what should you do and what should you be thinking about doing when you have a financial windfall. You see, when we have a sudden influx of money, things do change, and in many cases, you're going to have family members coming out of the woodwork asking you, Hey, can you help me out? Hey, I've got a great business idea. You're going to have financial advisers and people that want to sell you things approaching you and telling you that they've got great advice for you.
I'm going to walk you through a few steps today. So the first thing is, if you have an inheritance, you sell your business, exercise some stock options for you in the lottery. First thing that I suggest that you do is don't make any decisions. And I'll give a shout-out to my friend Susan Bradley, who wrote the book Sudden Money about how to manage a financial windfall.
Susan calls this the decision-free zone, which means that when you receive these funds immediately, don't say to yourself, I'm going to buy a boat, I'm going to buy a new car, I need a bigger house, I'm going to start a business, I'm going to buy rental properties. Slow down. You need to go through the process of receiving the funds, figuring out what you're going to do with them and working with your advisers before you start spending the funds. Why? Because in many cases, when you receive an inheritance or a windfall like this, if no planning is done on the front end, those funds are often gone, sometimes in just a few years.
The second thing that you do is put your team together. You want some advisors. You want a certified public accountant to help you with the tax ramifications of what just happened. You want a financial adviser that's going to tell you how to invest those funds, what products you should be thinking about and how much you can actually afford to spend of that windfall if you want to save some of it and use it for retirement expenses, use it for a legacy expense or for something else.
And lastly, you're probably going to need an attorney because your estate has likely just changed. So if you have just a basic will or no will at all, we want you to have those documents in place as well.
The last thing that I will tell you is that after you've done the planning, now is actually the time to take action. You can decide, all right, I'm going to buy that bigger house or I'm going to invest in this particular business, and I'm going to change my life somehow. But at least you've gotten some good advice, you've let it sink in, you haven't run out and spent all of the funds.
Give yourself the freedom not to make any immediate decisions. Put your team on the field and then only after that, take some action. If you have questions, we're here to help. I'm Cary Stamp, I'm a Certified Financial Planner, and this has been a Principled Wealth Moment.