Now that you understand that the first step in managing your windfall is a visit with a financial planner, what are some of the other things you need to do to ensure the longevity of your lottery winnings?
Here are six further steps I would recommend for a lottery winner or anyone else coming into sudden wealth:
With the help of a financial planner, take stock of your values. How do you want to live your life? For some, suddenly having money doesn't make them want to change much of anything. Others aspire to new things and experiences. What's important is to find what's important to you — and not just materially.
With a certified public accountant, address what will be pressing income-tax issues. Take advantage of available tax opportunities, which may include starting a business (something some people aspire to when they hit it big).
Contact an attorney to establish appropriate trust vehicles to assure that assets are protected from estate taxes.
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As part of an estate plan that you craft with an attorney, think about family members or organizations you want to benefit now or in the future. Establish target plans for how, and how much, you want to share your wealth.
In the case of charities you'd like to benefit, charitable lead or charitable remainder trusts may be considered to create tax benefits today while also benefiting the organization. A charitable lead trust donates a portion of the trust's income to charities today, leaving the remainder to your specific beneficiaries. A charitable remainder trust provides you income throughout your lifetime, leaving the remainder to a charity upon your death.
In collaboration with your financial planner, align your investment portfolio with your goals and objectives. With your ability to create an ongoing stream of income benefits to yourself and others, you'll want to assure that you have a diversified portfolio that is well-managed, with strict accountability to the things that matter to you. Always keep in mind your ability to truly make a difference in the world by being a good steward of your own resources.
It all sounds like a great deal of work, and it is. That's why you need a financial professional. Lean on your planner to guide you in your financial decisions. Doing so will free you up — and allow you to take that fabulous vacation with peace of mind