An attorney can help you create a comprehensive financial plan with other professionals to help protect your new found wealth
What would you do? Quit your job? Run out and buy a new car? Stop at a bar to celebrate and buy everyone a round?
Go to an attorney’s office?
While that last option may not be your first thought, it might be a good idea. Few people will ever have to grapple the concerns of having a seven-figure bank account, and fewer still will have to deal with hundred million dollar awards, but there are other ways that you may come into a large sum money.
One way is to suffer a severe injury and obtain a large jury verdict or settlement in compensation for that injury. Some people derisively refer to someone who has been grievously injured in a car crash or by medical malpractice as “winning the lottery.” But it is highly unlikely that an ordinary healthy person would ever willingly trade places with such a “winner.” But you could be awarded a substantial amount that will need to be carefully handled.
And who knows, you could even receive a significant sum from a rich uncle. No matter how you come into a large sum, your first discussion should take place with an attorney who can help protect your interest and ensure that your money is not squandered by mismanagement and manipulation.
Advice from trustworthy source
By hiring an attorney for advice, you receive the benefit of a professional with a fiduciary duty towards you and your money. One definition of a fiduciary states, “a person with the power and obligation to act for another (often called the beneficiary) under circumstances which require total trust, good faith and honesty.” The word derives from the Latin word for trust and is often applied to trustees.
One of the difficulties for many people when handling large sums of money is their lack of experience with these amounts and the difficulty of determining whom to trust. If you earn $45,000 a year, receiving a lump sum payment of $450,000 or $4.5 million can seem overwhelming. The latter sum would take you 100 years of normal income to generate, so it can appear unimaginably large and inexhaustible.
Money brings complications
As some lottery winners have found out, even winnings as great as $315 million can be exhausted within a shockingly short time frame. Similarly, if you have a child who suffers a birth injury and receives a multimillion-dollar award, it may seem as though it will solve all of your concerns as to future care.
However, medical expenses have consistently increased well above the inflation rate for decades, and working to ensure that your child will receive adequate care for the next 50 or 60 years, and likely after you are gone, is daunting prospect. You want to work with your attorney and financial advisers to create the proper special needs trust for your child.
If you have won the money through good fortune or inheritance, the concerns are the same. You need to be cautious where you receive advice and beware of sudden “friends” or family that insists you “owe” them something or claiming their investment is a sure thing.
The importance of a comprehensive plan
The creation of a comprehensive financial and estate plan is essential. There are many complexities brought on by vast wealth and ranging from tax liabilities to bad investment advice.
You want to employ trusted advisers who use prudent and conservative strategies. Uninformed investments in real estate or restaurants are inherently dangerous and with a substantial sum, you and your advisors should be focused on conserving your wealth and enabling the transfer to your children or grandchildren.
In the case of special needs trusts, the trust should secure care for your child and for the proper management of the trust to ensure that it is not exhausted prior to their death.
With the right advice, your verdict, settlement or winnings truly can ensure your wishes are fulfilled and that you don’t become the subject of a “don’t let this happen to you” story.