What would you do if you won the lottery? Many of us at one time or another have daydreamed about what we would do with a big sum of money. For most of us, the daydream usually doesn’t last long. Reality comes knocking, and we’re off to wipe a toddler’s runny nose, paint the deck, or show up at work.
Attending a training session last week at the Sudden Money Institute, however, reminded me that receiving a large sum of money can be a reality more often than we might imagine. Very little sudden wealth comes from picking winning lottery numbers. Much more comes from an inheritance, life insurance, marriage, divorce, winning a lawsuit, selling a business, or a large professional contract (not only for actors, writers, or athletes, but also for consultants or business owners).
Receiving an unexpected sum of money from these events typically has a life-changing impact. For the unprepared, which describes most recipients, the impact can be unpleasant or even destructive. While this is an opportunity for having enough money to support your dreams, goals, and values, it is also an opportunity to bring an inordinate amount of pain and suffering into your life. Statistics show the average person who receives a large sum of money blows through it in five to seven years.
The changes affecting someone who receives a windfall are better described as a “transition,” according to Susan Bradley, author of Sudden Money. “A transition is a time of change – “what was” no longer exists and “what will be” has not yet taken shape,” she says.
By definition, a transition is a temporary state. It is a time of overwhelming emotions, opportunity, and options. It requires conscious and thoughtful planning if the opportunity is to be seized and capitalized upon, rather than squandered. Susan suggests there are three phases to any successful transition around receiving sudden money: Planning and Preparation, Implementation and Spending, and Stewardship.
In the planning stage, some of the areas people need to consider are how the money will affect their personal finances, insurance needs, legal issues, estate planning, health, relationships, self-discovery, and place of residence.
Transitioning from a life with limited resources to having access to a large sum of money needs very specialized planning. There are far more questions that must be answered than just, “What would you do with a large sum of money?”
Here is just a sampling of some of the questions to consider: 
• Might you quit work, go back to college, or do volunteer work?
• How much of the money will you spend and how much will be saved?
• How might each expenditure affect your future cash flow and relationships?
• To whom will you turn for help with the financial, legal, and emotional issues you will encounter?
• What new asset protection strategies will you need, i.e. insurance, wills, trusts, corporations?
• How will your relationships change with family and friends? Which will need more attention?
• Will your housing change, and how will that change affect your finances, lifestyle, and relationships?
• What changes will you make to your health care?
If you are or expect to be the recipient of a large sum of money, I would highly recommend you obtain Susan’s book, Sudden Money, and employ the help of a financial planner specializing in this area. A list of those planners can be found at http://suddenmoney.com.
Preparing for such an eventuality is far more than daydreaming. Neither, in the case of an inheritance, is it uncaring or morbid. It is a way to ensure that the dream doesn’t become a nightmare when it really happens.
