Did you recently add a second comma to your bank balance? Has a recent financial event raised your net worth to the next level? That makes for an exciting time, whether it’s the result of your long-term goals (e.g., from the sale of a business), a windfall transfer of wealth, or a key promotion. You’re probably already considering how to protect and manage your wealth.
Keep in mind that this article is for informational purposes only and is not a replacement for real-life advice. Consult tax, legal, financial and accounting professionals before modifying your financial strategies as your income changes. This article was written to provide insights into a few related factors you may wish to consider.
Revisit or Create Your Estate Strategy
You may already have an estate strategy in place. However, reaching a new level of wealth may be an excellent time to revisit your approach. More wealth can mean a larger estate and more complex estate issues. For example, it may be time to consider a revocable trust. You create a revocable trust while alive and fund it with the assets you choose to transfer therein. The trustee (typically you) has full power to manage these assets. However, there are a variety of trusts available. Wondering which type of trust is best for you? Before moving forward with a trust, consider working with a professional to help understand what options are available to you.
Update or Create a Financial Plan
Many newly wealthy individuals feel like they are in a rush once they have their money. Now that the world is your oyster, you may be better off waiting for the pearl. This means getting accustomed to your new bank balance before putting the money to any practical effect. A few conversations with a financial professional regarding your ambitions may help put things into perspective and create a more strategic financial plan.
Review Your Budget
Your new wealth will create as many questions as it will opportunities. For example, if you’ve sold your business or are considering leaving your job, you will need to consider health insurance choices for yourself and your household. Other household demands may also warrant consideration, from travel costs to big one-time purchases. You will almost certainly face some unplanned expenses along the way, so be sure that your short-term budget makes an allowance for that.
Consider Your Risk Tolerance and Time Horizon When Spending
Your risk tolerance will be affected in part by your ongoing day-to-day needs. For example, if you’re considering buying a new home, money may need to be earmarked for all expenses related to that purchase. The risk takes into account not only the home itself but also your overall strategy. The time horizon determines the lengths of time considered for your various expenditures. Some unexpected expenses may happen within a few months, while others can be put off for up to a year.
Congratulations on that second comma becoming a part of your everyday life. It can mean many exciting things for you and your household, some of which you’ve prepared for and others you might not have anticipated. At Trust Point, we’re here to help you navigate this new chapter with confidence—providing answers, guidance, and expertise every step of the way. Contact us if you’d like to have a conversation.
