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Received a Large Windfall of Cash? Here’s What to Do Next

If you’ve been paying attention to the news in WA recently, you’ll likely have come across the story of 55 members of a lottery syndicate who scored themselves around $1.4 million each. It’s a story that has brought some welcome good news to the headlines, and especially in the leadup to Christmas we suspect it is a particularly timely windfall for these lucky punters. However, after the celebrations have cooled off, some decisions will need to be made, as they do whenever anyone suddenly comes into a large amount of money whether it be an inheritance, sale of an asset or a lucky lotto win! If you ever find yourself in such a situation, or you have recently received a large windfall of cash, here’s what you should consider doing next.

Make a Plan

Write down a list of your current needs and wants and prioritise them. It is important to give consideration to your immediate needs and not get carried away spending your wealth on objects that provide little to no value to you.

Think about the longer term. What can your financial position achieve for you? Do you want to build on your wealth? Do you want to leave a legacy? Do you have philanthropic ambitions? Have you considered how you might use your time now that your financial future is secured?

Seek Professional Financial Advice

Securing and growing your newfound wealth in the over the short-, medium-, and long-term is critical, however the knowledge to execute the strategies to achieve this are out of most peoples’ wheelhouse. It cannot be understated how important it is to speak with a professional to not only ensure that you make the most of your cash, but also to put in place a plan that works towards your financial goals and aspirations. A professional financial adviser will work with you to establish your goals and aspirations, and then create a roadmap to help you get there.

“Advice” from friends and family may be well-intentioned, however acting on it can have quite dire outcomes. Not only will a professional be able to tailor advice to your unique circumstances but help educate you on various strategies to put you in control of your wealth. You will also reap the benefits of an ongoing advice relationship that adapts to whatever comes along down the track, and lays the foundation for not just maintaining your wealth, but building on it for yourself and your family.

Seek Professional Tax Advice

Many lottery winners, particularly those who win a significant amount as we saw recently, look to place investments, put some aside for family, and perhaps even contribute to charity with their windfall. What often comes with this, however, are additional tax obligations that may leave a dent in your wealth if not structured effectively. This is where careful tax planning comes into play – whether it be the establishment of trusts, putting money into superannuation, or a combination of different structures, there can be tremendous value in ensuring the maximum amount of money goes where you want it to go. Tax planning should be undertaken as part of your overall financial plan.

What Now?

Once the excitement of your windfall has subsided, it’s time to switch into decision-making mode. The Wealth team at McKinley Plowman have vast experience in helping clients grow and manage their wealth, and importantly have specific experience in assisting those who have recently received a significant amount of money make smart decisions with it. They work alongside our Tax team to engage in effective holistic planning that also maximises tax outcomes. Don’t hesitate to get in touch with us today on 08 9301 2200 (Joondalup); 08 9361 3300 (Victoria Park); or via our website.

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

written by:

Will Lyons

Will has 15 years industry experience working in both consultant and technical positions. Prior to becoming a qualified Financial Planner in Australia, Will worked as a pensions consultant in the UK gaining Advanced Diploma qualifications whilst working there. He has also attained an Advanced Diploma in Financial Planning and has completed the FASEA Financial Adviser Exam and Ethics qualification.

At McKinley Plowman, Will has progressed over the years from our UK Pensions Division all the way through to senior Financial Adviser and now Associate Director within the Wealth team – amassing invaluable experience and knowledge along the way.

Will is a keen cyclist and occasional triathlete that loves going out and socialising with friends.

Will is an Authorised Representative of Fortnum Private Wealth Ltd.