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Planning for a Windfall

August 7, 2023

Posted in Inheritance

The unpredictability of life leads to many twists and turns. In some cases that means finding yourself on the receiving end of a large sum of money. This can come in many forms such as a cash gift from a family member or even an inheritance from a loved one who has passed. While the money itself is rarely a problem, it can lead to more complex planning. Let’s explore the steps following a windfall.

The first step is to take a deep breath and give yourself time to make decisions. Resist the urge to spend quickly. Rarely is acting fast necessary. An essential step one must take is to acknowledge the emotions or personal changes that will inevitably come with this windfall. With those considerations in mind, your financial plan can be updated or created. We must give equal importance to the technical and personal sides of money, as illustrated in this graphic:

Technical

The technical side is where your financial planner can be your guide. Building strategies around taxes, cash flow, estate planning and more is what we’re trained for. Lean on your financial planner to help inform you of new opportunities and how your financial picture has shifted.

Personal
While the technical side is important, the personal side is what will drive your ultimate decisions. The range of emotions people experience when receiving money extends from joy to guilt to resentment and much more. It’s important to take time to unpack how this new situation makes you feel. Once identified, you will likely find yourself on the path toward deciding how to incorporate the windfall in alignment with all your personal goals.   

Bringing them Together

If you’re having a hard time understanding how you feel, try to identify whether you find yourself relating to the descriptors of “Flow” or “Struggle.” If you find yourself more closely aligning to the struggle side, you are more likely to react vs respond when making decisions. Give yourself grace and time before making reactionary decisions. Allowing the technical side to support the personal side is how you can set yourself up for long-term success.  

If you are on the receiving end of a financial windfall, contact your Johnson Bixby financial planner for guidance with both the technical and personal side – helping you feel confident and at ease with your situation moving forward.

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