Did you recently win the lottery or receive a significant personal injury settlement or lump-sum payment for your business? Going from earning an average income to possessing substantial wealth sounds fantastic, but it could also be a recipe for disaster in terms of your finances.
A sudden and substantial windfall almost immediately results in a massive shopping spree. Finally, you can acquire all the things you need and want in your life. That $4 million mansion for sale in Lake Forest could now belong to you.
Wealth preservation through estate planning
Some spending is expected after a windfall and may even be healthy to a degree. However, we have seen a sudden windfall disappear nearly as fast as it arrived for some Illinois residents.
After you have enjoyed making a few purchases, it is time to think about how to protect your financial assets for future generations. As you might expect, estate planning can help when this is your goal. However, you may benefit from legal guidance when you wish to create a plan that prevents significant tax burdens.
Your estate planning attorney can recommend wealth preservation strategies like creating one or more trusts to avoid overtaxing. Another option involves gifting your wealth to family members upon your death, which may also lower estate taxes.
The main takeaway
Consider asking for legal guidance instead of trusting yourself to manage and preserve your new wealth alone. In nearly all cases, those who believe they will not overspend after a windfall end up doing just that, leaving their bank account balances with less in them than expected.
Please, continue reviewing our website for additional information about building an estate plan that protects your valuable assets.