Perhaps you’ve just looked at the numbers on your lottery card and realized that you are the winner of the 1 billion dollar prize. Or maybe you’ve just won a big settlement in a court case. Coming into a large amount of money requires a lot of responsibility. There are a lot of decisions to be made and measures that need to be taken in order to protect yourself.
Some people become so overwhelmed by the sudden change in their bank account that they don’t know what to do with their new lifestyle. The shift in financial responsibility and endless possibilities is a lot for one person to take on.
By taking these precautions you can ensure you avoid losing control over your finances and getting swept up by the stress of coming into a large amount of money.
Hire a Financial Advisor
Hiring the services of someone who is professionally trained at advising people who come into large amounts of money is a prudent choice.
By turning to a professional you ensure that you have the best possible resources for deciding how to invest your money, and what precautions to take in order to protect yourself. Perhaps you are going through a divorce leaving you in a position to have your funds potentially seized. Your financial advisor can assist you with the correct procedures for protecting yourself.
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Consider Receiving Earnings in Installments
Receiving a lump sum of a large amount of money can be an overwhelming experience. Many people make drastic lifestyle changes too suddenly and dwindle away the funds irresponsibly and erratically.
Eliminate this risk by considering receiving payments in installments. When receiving funds for any sort of court case, the funds received in various amounts are referred to as structured settlements. This may be the best option for you if you seek to keep your life fairly normalized.
Pay off Your Debts
Instead of immediately rushing out of the house and making large purchases, first, pay off the amount of outstanding debt that you currently have. Often people who already have debt who come into money make the mistake of using the money to pay for new things rather than settling the past first.
Consider debt as a ball and chain. The sooner your pay off your debt, the sooner you can live in financial freedom. Even with billions of dollars in the bank, if you have outstanding debts you are not financially free.
Educate Yourself on Tax Deductions
Unfortunately, with great amounts of money comes a great amount of taxes. Start educating yourself on the variety of tax breaks that are out there.
One of the most popular ways to reduce your owed taxes after receiving a large amount of money is to pay a large donation to charity.