Coming into a significant sum of money, whether through an inheritance, legal settlement, or other payout, can feel like both a blessing and a burden. For many, new wealth can open doors to opportunities they never imagined. But it also brings up important questions: What should I do with it? How do I protect it? Where do I even start?
It’s normal to feel overwhelmed. There is no one-size-fits-all solution for what to do when you receive a substantial sum of money. But there are thoughtful steps you can consider to help preserve it for your long-term goals and the people you care about.
Pause and Assess Before You Spend
When someone receives a large sum unexpectedly, it’s tempting to start making big decisions right away. Maybe it feels urgent to pay off a mortgage, make a big purchase, or help family members financially. But sometimes, moving too quickly can lead to choices you might not feel good about later.
For many people, the first helpful step is to pause. Taking a step back can give you time to think clearly and consider your options. Some people choose to park the money in a safe, liquid account while they develop a thoughtful plan. This simple pause can help you avoid decisions driven by emotion.
Build a Trusted Advisory Team
Managing new wealth often raises questions that span multiple areas, including investments, taxes, legal structures, and family conversations. Many people find it helpful to have a team of professionals who can look at the big picture together.
This team could include a financial professional to help guide you through planning and investment decisions, a tax professional to help you understand any potential tax implications, and an estate attorney who can help you consider trusts, wills, or other legal arrangements.
If you’re considering professional investment guidance, you might want to look for an experienced investment management advisor who understands how to align your new wealth with your broader goals. From thoughtful portfolio design to coordinated tax considerations, the right advisor can help you see how your money supports the life you want.
Understand the Tax Implications
Taxes can have a big impact on what you keep. The tax implications can vary widely depending on how you receive the money, whether it’s an inherited retirement account, real estate, stocks, or a legal settlement.
Some useful questions to explore with a tax professional might include:
- Are you responsible for estate or inheritance taxes?
- Are there capital gains to consider if you plan to sell assets?
- Should you plan to set aside some money for taxes before you spend?
Knowing these answers upfront can help prevent surprises and help you stay organized.
Align the Money with Your Big-Picture Plan
Receiving a large sum often changes your financial situation. That means it might be time to revisit your overall plan. For example:
- Should you pay off certain debts?
- How does this affect your retirement timeline?
- Do you want to use some funds for education or family support?
- Could this change how you think about charitable giving?
Everyone’s priorities are different. Some people use this moment to develop a more detailed plan or to update an older one. If you already have investments or retirement accounts, it may be helpful to see how this new money could work with what you already have in place. Working with a qualified investment management advisor can help you connect the dots so your assets work together over time.
Protect the Principal from Risks
Protecting what you receive isn’t just about how you invest it. It can also mean shielding it from risks that could reduce its value over time. Some people explore legal tools such as trusts or family limited liability companies (LLCs). These may help with estate planning, asset protection, or passing wealth to future generations.
Insurance can provide an additional layer of protection. For example, an umbrella policy may provide extra coverage beyond standard homeowners or auto policies. Your situation may be unique, so it’s worth consulting legal and insurance professionals to help decide what makes sense for you.
Invest With Discipline
If you choose to invest part of your new funds, it’s often helpful to move carefully. A thoughtful approach may include:
- Understanding your comfort level with risk.
- Keeping enough cash accessible for emergencies or near-term goals.
- Building a diversified portfolio that aligns with your timeline and objectives.
Many people lean on professional investment management services to help them stay on track when markets shift. For some, having clear guidance can make it easier to stick with a plan, even when headlines create uncertainty.
Work With a Fiduciary Who Puts You First
Coming into new wealth can feel like both a reward and a responsibility. While there’s no perfect way to handle a large inheritance or settlement, thoughtful planning and trusted support can make the process feel more manageable.
For those seeking professional guidance, trusted investment management advisors can help you develop a strategy that aligns with what matters most to you. Clients who choose to work with Virtue Asset Management under an advisory relationship gain access to our investment management services, which are designed to align with your broader goals and life stage.
Every situation is unique. Taking the time to pause, plan, and gather the right people around you may help new wealth last for generations to come.
Investing involves risk, including the possible loss of principal and fluctuation of value. Past performance is no guarantee of future results.
This is not intended to be relied upon as forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.
Additional information about Virtue Asset Management is available in its current disclosure documents, Form ADV, Form ADV Part 2A Brochure, and Client Relationship Summary report which are accessible online via the SEC’s Investment Adviser Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using SEC #801-123564.Virtue Asset Management is neither an attorney nor an accountant, and no portion of this content should be interpreted as legal, accounting or tax advice.