Let’s assume that you have the winning lottery ticket. With the current jackpot hovering at $500 million that would be a life-changing event.
After you recover from the shock, you realize that with all that sudden wealth brings some major financial decisions.
So let’s get you prepared.
There are three main components to your decision process:
- Legal guidance
- Tax guidance
- Money management or investment guidance
For each component there should be a qualified professional to offer guidance. For example, you will need an estate planning attorney to review the ownership of your assets and advise you on what asset protection measures should be taken, such as trust agreements. An attorney can also review the state laws pertaining to community property.
For tax guidance, a CPA (certified public accountant) will be needed since you will likely have a tremendous tax burden that will need to be managed and minimized if possible. And this should include a decision on how to receive the winnings and what tax strategies may be available, perhaps even allocating some of the money to charities.
Money management and investment guidance should include a CFA, certified financial planner, who will review your entire financial situation, looking at your debt, risk exposures, current assets, insurance and goals for your new money. Plus there will be the need to guide you on where to invest the money and to monitor your goals over the future.
This approach should really be a team effort with each area represented and integrated into the best overall plan for your future.
Frequently, lottery winners are not equipped to handle this financial windfall because they do not have a proper support team in place.
But you will be ready. So good luck.
And even if you don’t win the big jackpot, the basic lessons of financial planning still apply.
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