Retirement Planning 2015
E verybody dreams of getting a huge financial windfall. Some
people anticipate a large inheritance. Others try to make it
happen with lottery tickets.
But what if you should actually receive an unexpected bucket
of cash? Who are you going to call first: a financial adviser, a
lawyer or Maserati?
All the experts agree that the first thing one should do after
receiving a windfall is nothing. Everyone has heard the stories
of lottery winners who make big splurges on a lavish lifestyle,
and soon the money is gone. The winner's
(if any) gets shot full of holes.
If cash falls on you, your emotions will take over, and you
won't think clearly. So wait at least a month -- and if possible,
wait six months -- before spending anything. It may be hard, but
it's the only way to avoid making stupid errors and ending up
full of regret.
The first person you need to talk to is an accountant. Find
out how much you need to pay in taxes and how much you'll take
away. Nothing is worse than spending money you couldn't get to
What's The Purpose?
During your waiting period, "you need to think about the
purpose of the money," said Patrick Strubbe, author of "Save Your
Retirement" and founder of Preservation Specialists, a financial
advisory in Columbia, S.C., managing more than $100 million.
"What are your biggest needs? For some, it could be paying off
debt. For others, it's creating an emergency reserve or
investing for growth
"If you're not used to this kind of wealth, you may think you
can do everything you ever dreamed about," said Sharon Klein,
managing director of Family Offices Services & Wealth
Strategies at Wilmington Trust. She says that people need to
think about long-term goals, how much to spend, what to pass on
to the children and how much (if anything) to donate to
"It's important to have a clear vision of a holistic plan of
family values and dynamics," said Klein. "If they know what they
can afford, then they can enjoy it without buyer's remorse. You
will enjoy your splurges much more if they are integrated as part
of an overall plan."
In addition to an accountant, during the quiet period you
talk to a financial adviser
and a lawyer. Ken Weber, author of "Dear Investor, What the HELL
Are You Doing?," recommends finding two or three people in each
"Make sure the financial advisers are fee-only registered
investment advisers who won't be influenced by commissions. Don't
go to someone product- or transaction-driven," said Weber, the
president of Weber Asset Management of Lake Success, N.Y., which
manages $340 million. "Get it in writing that they are a
"You want someone to be part counsel and help you formulate
what your goals are," said Jennifer Marcus, a trust and estate
attorney at Hill, Ullman & Erwin in New York. "No one size
fits all. Be wary of the attorney or adviser who tells you what
they will do without hearing what you want."
Rod Zeeb is a bit unorthodox in his approach. He's the chief
executive at the Heritage Institute, which trains professional
advisers on how to prepare families to pass on great wealth.
"Everyone gets very excited. Take a little bit and spend it,"
said Zeeb. "Get the adrenaline rush out of the way, but don't
blow the whole thing. Then sit on it for six months."
Talk With Peers
He recommends asking professional advisers to give you the
names of clients they know who have gone through a similar
experience. "You want to talk to peers," said Zeeb. "Someone who
can talk about all the family coming out of the woodwork. These
people will have the best advice."
Zeeb also suggests building a small group of people with
common sense whom you trust -- people you can run ideas by. They
can be professional advisers or trusted friends and family
members, but they need to have no emotional attachments or
conflicts of interest with the money.
Sometimes it's helpful to set up a formal structure for this
group. Then when friends, family and others ask for money, you
can say you have a group that vets all requests and actually
makes all the decisions on money allocations. They'll take you
out of the position of saying "no" to family and friends.