Rapidly advancing from rags to riches, or riches to… far more riches, is obviously exciting. However, the improper management of this wealth can be detrimental.

You don’t have to look hard to find stories about how athletes, lottery winners, inventors, or estate beneficiaries have gone broke despite coming into enormous wealth. An inheritance or windfall should not be handled flippantly.

In order to protect yourself from greedy family members, potential lawsuits, and even yourself, it is important to be conscious about the steps you take following the receipt of a large sum of money.

Step 1 – Do Not Tell Anyone

Obviously, you can tell your spouse. It would also probably be wise to inform an accountant, attorney, or financial advisor you’re already working with (more on that later).

Beyond that, don’t tell anyone about your newfound wealth. With an inheritance, sometimes it’s clear who received what from an estate. If this is the case for your situation, do your best to downplay the wealth you came into as much as possible.

Unfortunately, your sudden wealth is going to change the relationships you have with many of your friends and family members, once they know about it.

Whether due to jealousy, neediness, or simply an in ability to relate, things will change with some of the people you are close with. At some point, you may decide it makes sense to share your wealth or provide help to people you care about.

Ultimately, this may be what ends up happening, but this is not the decision you should be making today.Instead, the very first thing you should be doing is…

Step 2 – Do Nothing

Absolutely do not quit your job or spend impulsively. Give yourself some time to adjust to the idea of having this extra money. This will not be a short process. Most experts suggest waiting several months to over a year before putting any inherited money to use.

Without proper perspective, it is not uncommon for an heir to slip into a feeling of invincibility, that suddenly any and everything is limitless. These emotions can spur destructive behavior for the freshly affluent.

Take some time to continue to live your regular life as you take the next several steps in this process.

Step 3 – Partner with Appropriate Professionals

Navigating your personal finances and affairs may have been manageable before, but the do-it-yourself approach likely isn’t prudent going forward.

If you aren’t already working with a financial advisor, accountant, or attorney, now is the time to begin those relationships.

Significant wealth will add additional complexity to your life and the consequences of making improper decisions make the fees you will pay for professionals worthwhile.

An investment advisor will help you manage, grow, and protect your wealth. By employing investments and other financial tools, a financial advisor will formulate and execute a plan for managing your money.

In many cases, they will also serve as the quarterback of your financial team, coordinating with accountants, lawyers, and other professionals.

It may have been easy to use TurboTax to file your taxes when all you had was a W-2 and maybe a mortgage interest deduction. More money typically carries more complication for tax season.

Partner with a quality accountant (don’t just walk into a retail tax return shop) to help navigate the maze of deductions and credits to ensure you get back what you’re owed and don’t fall into hot water with the IRS.

You will likely need to employ several attorneys in different specialties to carry various objectives. At the least, an estate attorney will be necessary to establish wills, trusts, and other provisions to handle your assets after your own passing.

Step 4 – Continue to Do Nothing

I know it may seem like I’m beating this point into the ground, but this is very important. There are going to be a lot of emotions tied to this money. With an inheritance, it’s likely that you may have some grief related to the descendant’s passing.

Sometimes, heirs feel unworthy or guilty over their inheritance. You may feel an urge to donate or gift your money away. While this is a noble and altruistic gesture, it may be a regrettable choice several months from now. Depression is common for the suddenly wealthy.

As I mentioned before, the opposite of this feeling is not uncommon, either. Wealth can have a profound emboldening effect. It’s very easy to spend a lot of money very quickly. Likewise, there’s a real danger of slipping into destructive behavior.

Consider seeking out networks or groups where you can discuss your attitudes and feelings about an inheritance. It may be hard for friends and family members to relate to some of your emotions.

Engaging others who are in or have been through what you are feeling may help you understand or put things into perspective.

Step 5 – Make Small Changes to Your Life

When you are ready, go ahead and begin making small changes in your life. Think about the things that make you happy and begin to allocate resources toward those goals. Take these steps slowly and deliberately.

If you aren’t working with a financial advisor to help you plan, you could be surprised that your new money may not go as far as you think. For instance, having $1,000,000 used to be a holy grail-type figure for many people.

Today, $1,000,000 may not keep you set for the rest of your life. The proper perspective on your wealth is important. We have quite a bit of experience working with people that have received and inheritance or windfall. Don’t be afraid to reach out for some help.

Are You Ready to Speak with a Financial Advisor?

Once you determine that it might be time to work with a financial advisor, it’s important to find the right advisor for you and your family. We’ve put together a guide of questions that are essential to ask an advisor before you hire them.

20 Questions to Ask a Financial Advisor

Don’t make a mistake by working with the wrong financial advisor. Ask the right questions the first time to determine if a financial advisor is right for you.