All right, great: you just won a big lawsuit or snagged a decent settlement, and you’re content to be swimming in a sea of cash for the rest of your life. But with great money comes great responsibility, and you’ll need help determining how to organize your affairs, both in life and in death. If you received enough cash, then it’s important to know that you could be looking at a sizable estate tax from your good friend Uncle Sam. Either way, you’ll want to speak with an estate planning lawyer and a financial advisor to determine the best next steps for you and your family.
Here are just a few things to think about, including actions you can take right now in order to prepare yourself for what happens when you receive an influx of wealth.
Estate planning after winning a lawsuit can be a headache, but it doesn’t have to be any worse than it already is. First and most importantly, discuss with your lawyer the gross worth of your assets. If you hold real estate, then have the total worth of those properties on hand. If you don’t know, then have the properties appraised as soon as possible. This will help your trusted advisors calculate the base tax on your estate. The benefit in doing this as soon as possible is that there are ways of avoiding some of the tax burden. The benefit is nicely complemented by the fact that it’ll relieve your beneficiaries of some financial burden and the added pressures of trying to negotiate your estate’s affairs on their own.
If you’ve got the money to do so, then eliminate your debt immediately. Hire a financial advisor to help you determine the best course in distributing your assets through investment. Now that you’ve got a bit of wealth, you’ll want to accumulate more. A lot of people who receive settlement cash or lottery winnings have a difficult time adjusting to the new wealth, and don’t control their spending. Be careful, and take some time adjusting to the new numbers in your bank account.
Don’t forget that any donations you make to charity organizations can be deducted from your taxes. If you’re a supporter of a cause, then feel free to give some of the new cash away.
If you have children of your own, or would like to support the children of other friends or loved ones, then consider opening trusts in the names of potential beneficiaries. Investing in someone else’s future can be rewarding, and knowing that your kids won’t be in debt if they decide to get into higher education is a fulfilling exchange.
Your estate planning lawyer will also help you draw up a will, or amend one that you already have. You’ll know exactly where your assets will end up when you pass away, and exactly how the transition will take place. This knowledge will relieve a burden you never knew existed.
After you’re done putting the finishing touches on concrete plans for your future, it’s time to have fun. Start traveling to the places you’ve always wanted to see, and doing the things you’ve always want to do. Take some time off of work–but don’t quit until normal retirement age, because you’ll live longer. Spend some time with family. You know yourself, and you should do what’s best for you.