Are You Financially Ready for Change?

April showers bring May flowers and so my theme for this April is change.  I’m certainly ready for the change from winter to spring, but are my clients and friends ready for other changes that life hands them?  Am I ready?  Probably not.  So, here is my stream of consciousness list of questions to think about as a way to prepare.   My answers are personal to me and shouldn’t be taken as real advice.


Today, the change I’m thinking about inheritance or other windfall of wealth.  What if you sold your business to Facebook?  Or won the billion dollar winter Powerball that had many of us saying, “If I won, I would…”


Q:  Who would I tell?

A:  Most likely I’d tell my husband, but definitely not my kids.  Probably very few others as well, since I would be afraid of long lost relatives, scammers, and others with their hands out.  Also, people might treat me differently because of my sudden dazzling wealth.  Nope, no press conference with the giant cardboard check for me!


Q:  Would I continue to work?

A:  Of course!  Work is fun and gives purpose and structure to my life.  I’d just take frequent beach vacations and bring more people along for the ride.


Q:  Who would manage my money for me?

A:  Everyone says financial advisers should hire someone else to manage their money.  I don’t do that (yet), but if $300million landed in my lap, I’d likely spread the responsibility of investing it amongst a few friends in the business.


Q:  How would I use the money to make the world a better place?

A:  Ah, this is fun to think about.  Would I endow a scholarship at my alma mater?  Provide funding for weekend backpack programs to feed hungry kids in our schools?  Support families recovering from addiction or abuse?  Donate to arts programs in my community? Yes!  The more technical questions would be what vehicles to use to maximize the impacts of the financial gifts.  Such nice problems to have!


Changing the subject to something slightly more realistic, what about inheriting money or goods from family members?  Well, there are the above questions and a few more come to mind.


Q:  Do I know where the assets are kept of family members whose estates I may have to help settle?

A:  Kind of, I think.


Q:  Am I prepared to let go of sentimental objects in order to avoid family infighting?

A:  I think so, but it would be good to remind myself that stuff is just stuff and not worth losing a family member over.  And probably it’s better to do that now than when I’m in the middle of it.


Q:  Would I keep the money separate from marital assets or combine it into the usual household accounts?

A:  Although I trust my husband, I would want both of us to keep inherited assets separate from marital assets as a protection for our kids.


Example:  Jane and Joe have two children.  Jane inherits $100,000 from a relative.  Jane invests the money in their joint account.  Jane dies 10 years later with the money now worth $175,000.  Six months later, Joe remarries a lovely woman named Hester.  Hester has two children.  Prior to the honeymoon, Joe and Hester combine their assets.  Jane’s inheritance is now Joe and Hester’s.


On the honeymoon, Joe dies in a bizarre jellyfish attack.  Hester retitles all of the joint assets into her name.  Later that year, Hester dies without having updated her will to include her two stepchildren with Joe.  Hester’s two children inherit Jane’s money.  Jane’s kids get nothing.  There is no bad guy in this scenario, just bad planning.


So, you see, while we all dream of coming into sudden wealth, there are lots of things to be worked out.   Make sure your daydreaming includes meetings with an estate planning attorney, CPA, and financial planner!



If these topics sound like they would be of interest to your employees, sales conference, or professional organization, contact me at 303-324-0014 or for more information.

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