Lottery wins & windfalls, It could be you! and what if it is?

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Published on
10th January 2022

Receiving a large windfall whether that’s from the sale of a business, an inheritance or six numbers on Saturday night is something that many people dream of, but the reality doesn’t always live up to expectations when it happens!

The circumstances surrounding your windfall create different scenarios, but far from being a happy event for some, coming into a large amount of money can prove a massive emotional shock, it can even result in a recognised psychological condition called ‘Sudden Wealth Syndrome’.  The symptoms of this syndrome will vary from person to person, but can include feeling isolated from friends and family, guilty about your good fortune, uncertain about the future, or afraid of losing your new-found financial stability.

Sale of assets – Whilst the timing of asset disposal might be uncertain until closer to the event, it is probably expected. In addition, those who are lucky enough to own multi-million-pound assets often already enjoy a certain lifestyle, so, whilst your bank balance might change, your ability to enjoy the finer things in life may not alter substantially. The advance notice and likelihood of existing relationships with Accountants, Lawyers and Financial Planners means careful preparations can be made to minimise tax and smooth the transition to your new circumstances.

Challenges still exist though; as you may no longer be receiving an income from the asset, how will your substantial bank balance translate into paying the bills, will the lump sum last long enough that you can retire, are you too young to retire, how will you fill your time? All these are “problems” most people would envy, but if you haven’t started thinking about them, you should start!

Inheritances/ Divorce Settlements/ Compensation – Quite apart from the emotions associated with the stressful events leading up to receiving a large payment, your needs will vary depending on the exact circumstances you find yourself in. They may not change dramatically, or your life could be turned upside down. Either way, careful planning at the earliest opportunity will help take away some of the worries you might have. Finding an Accountant/ Lawyer/ Financial Planner to help you shouldn’t be too difficult, especially if the sums involved are substantial, but you might find getting support from people who have the right experience and motivations more difficult, so don’t be afraid to get a second opinion.

Winnings – We have all heard “it won’t change me”; it might not, but don’t be fooled into thinking it won’t change your life and not always for the better. Of course, this depends on the position you were in prior to the Full House or Quadruple Rollover, but if you live in a modest home and have a modest job, arriving at work in a Bentley or parking it in the driveway will almost certainly trigger some of the symptoms of ‘Sudden Wealth Syndrome’. Deciding to avoid such extravagances will lead to different symptoms. Even if you don’t spend any money and just leave it untouched in your bank account, at the very minimum, your tax position is likely to alter – it will change something.

No matter how disciplined you are and how grounded you remain, the process of adapting to one’s new financial status can lead to worries about where you put the money, tax, the merits of sharing your wealth, excessive spending or risky investments…. being a millionaire isn’t as easy as it sounds!

Having worked with several Lottery winners and seen both good and bad outcomes, my advice would be do nothing and say nothing for a few days or even weeks to allow yourself time to think about what you would like to do (this might be different to the bucket list you drew up when it was just a dream) and adjust to the idea of being rich. The marketing team from the company the money came from will be keen to publicise your good fortune, but I would avoid this initially as it limits some of your choices. If you change your mind later and there are some reasons why you might do that, fine, but once it’s done the publicity can’t be undone, so don’t get carried away.

Within a few days of the money landing in your nominated bank account, the branch manager will be on the phone offering to help – I would explain that you are currently thinking about your plans and would appreciate some space to do that along with their discretion. You might never feel absolutely ready to tackle the next steps, but you need to do it eventually, so sit down with a suitably qualified Financial Planner to discuss not only how to invest the money, but what guidance they can offer in respect of the wider implications of your new financial position.

In summary

  • Take a deep breath and don’t act in haste
  • Be discrete and if you can, avoid publicity until you are sure that’s what you want
  • Carefully consider what you would like to do with your newfound wealth
  • Get professional advice from someone who is appropriately qualified, but just as importantly, understands how this is going to change your life, whether you like it or not!

Mark Frier – Financial Planning Director 

Email : mfrier@ge-wm.co.uk

Tel : 07483 068120

Click here to view Mark’s details