With the odds of winning the jackpot being 1 in 292 million, it’s not likely that most people will need to worry about what to do with a jackpot win. However, it is possible that you will inherit a significant amount of money (or an asset or investment) during your lifetime. Before dreaming of a new sports car or the lifestyles of the rich and famous, consider these strategies to help manage your windfall:

1 – Share your news with as few people as possible.

As many lottery winners have found, speaking openly about a large inflow of money may bring unwanted attention from salespeople, scammers, relatives, and friends. Within families, those who didn’t inherit money may contest the inheritance of those who did. If you do share your news with a trusted loved one, ask them to keep it to themselves.

2 – Don’t rush to spend the money.

Many people make emotional decisions after coming into a large sum. They may hear from family members or friends requesting loans or gifts; they may also get the itch to spend a little – or a lot – on themselves. If you are inheriting money from a loved one who passed away, you may also be grieving. Wait to make any spending decisions until you’ve had an opportunity to process the situation. Depending on your benefactor’s estate plan, you may inherit funds, but may not receive them right away. Don’t be tempted to spend what you don’t have.

3 – Ask yourself how having the money fits in with your financial and life goals.

If your “ideal future” includes starting a business, retiring early, or making a significant gift to a favorite charity, you may now be in a position to act sooner than you originally planned. If you’re like most people, however, you may have multiple goals, including short-term ones like taking a vacation and longer-term objectives like paying off your mortgage or putting a grandchild through college. Spend some time prioritizing your goals to understand how you might balance your long-term and short-term desires with the things you really need.

4 – Consider the tax implications.

Just as the recent Mega Millions winner (or winners, if they pooled their funds to buy the ticket) needs to decide how to manage the tax burden that comes with winning a large prize, you will need to make some tax-related decisions if you inherit a large amount of money. Your tax bracket, who you inherited the money from, and the amount are among the many factors that could affect how much and when you’ll owe taxes. Consult a tax professional immediately to learn how you can keep more of what you inherit and plan for the future.

5 – Get advice from a professional.

In addition to getting advice on tax planning, you may also have questions on how to invest your inheritance. You will likely also need to update your estate plan if you inherit a large amount of money. If you already work with a financial advisor, enlist that person’s help and ask for recommendations. Some firms, like Savant, have teams of tax and estate planning professionals who work in tandem with advisors to help provide clients with a holistic experience and appropriate resources if needed.

Coming into money (or an asset worth a significant sum) can be beneficial, but it can quickly become a burden if handled improperly. If you receive a large cash inheritance, park it somewhere safe – like a federally insured bank account – and seek help from a fiduciary financial professional right away. Doing so can help give you much-needed time to process your emotions, consider your goals, and create a plan to manage your inheritance wisely.

About Savant Wealth Management

Savant Wealth Management is a leading independent, nationally recognized, fee-only firm serving clients for over 30 years. As a trusted advisor, Savant Wealth Management offers investment management, financial planning, retirement plan and family office services to financially established individuals and institutions. Savant also offers corporate accounting, tax preparation, payroll and consulting through its affiliate, Savant Tax & Consulting.

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