Sudden Wealth: How You Should Manage It
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David Puckett

If you’ve come into sudden wealth, learn to effectively manage it.

Whether it’s from a grandparent or the sale of a business, inheriting a large sum of money at a young age can dramatically impact your life. You can use this newfound wealth to purchase a home, obtain an advanced college degree, or invest in the stock market. But if you’re not experienced with managing large amounts of money, you could run into trouble.

David Puckett, Senior Vice President and Wealth Advisor for Regions Private Wealth Management in Birmingham, Alabama, says a lack of experience can cause young people to make spontaneous, ill-advised decisions with their new wealth. He provides four ways to manage sudden wealth:

1. Assemble a Team of Trusted Advisors

When you come into a lot of money, don’t rely on friends and family members to help you manage your wealth. That’s a job for certified professionals. Puckett recommends hiring legal counsel, a wealth advisor and a tax professional or certified public accountant to assess your current situation and formulate a strategy that addresses issues related to your short-term priorities and long-term financial goals. These professionals can provide valuable guidance and help you avoid making mistakes with your money.

2. Perform a Cash Flow Analysis

Determine how much cash you need to live within an established budget in order to better manage your cash flow and avoid overspending. Puckett recommends retaining nine months to three years of estimated cash flow requirements in low volatility assets such as cash and/or short-term bonds.

3. Make Sure You Have the Proper Structure in Place to Hold Assets

If you decide to invest your money, think about what percentage of assets you want invested in stocks, bonds and cash equivalents. Consider how you will distribute assets across qualified and nonqualified investment accounts. Also decide how many assets you will retain in taxable forms and which ones you will place in nontaxable accounts.

4. Set up an Irrevocable Trust

An irrevocable trust is one that can’t be changed. This type of trust can be advantageous if you need help controlling spending or if you have difficulty making decisions. A trustee oversees the trust and applies a standard for distributing the assets as you have directed in the trust documents.

Learn more about Regions Wealth Management Services.

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This information is general in nature and is provided for educational purposes only. Regions makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented. Information provided and statements made by employees of Regions should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Regions encourages you to consult a professional for advice applicable to your specific situation.

*Investment, Annuities and Insurance Products

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