{"id":6159,"date":"2025-01-09T13:00:00","date_gmt":"2025-01-09T13:00:00","guid":{"rendered":"https:\/\/ctt-group.co.uk\/private-client\/?p=6159"},"modified":"2025-01-02T11:07:10","modified_gmt":"2025-01-02T11:07:10","slug":"sudden-money-how-to-manage-new-wealth-and-mitigate-risk","status":"publish","type":"post","link":"https:\/\/ctt-group.co.uk\/private-client\/sudden-money-how-to-manage-new-wealth-and-mitigate-risk\/","title":{"rendered":"Sudden money: how to manage new wealth and mitigate risk"},"content":{"rendered":"
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Coming into a large sum of money is something most people dream of. It\u2019s only human to fantasise about what we\u2019d do if we won the lottery or suddenly inherited an unexpected fortune. But the reality for those who experience a financial windfall is often very different.<\/p>\n

Managing emotional and financial challenges of sudden money<\/strong><\/h4>\n

The emotional challenges that come with a sudden upturn in financial circumstances are often significant and complex. The assumption is it\u2019s all excitement and celebrations \u2013 which of course is often the case! But it\u2019s also perfectly normal to feel a mix of confusion, guilt, and even shame about coming into a large sum of money.<\/p>\n

It can also impact your relationships. Friends and family may feel distant; you may find there\u2019s jealousy, suspicion, or a lack trust. The social pressures that come with a financial windfall can further compound these issues.<\/p>\n

In addition to your mental and emotional wellbeing, you must also consider the practical implications of your changing finances. Unexpected tax obligations, the need to make wise investments, and the risk of fraud or exploitation are all priority concerns.<\/p>\n

All this can seem even more daunting when everyone you know is offering their own financial advice, and highly charged emotions are at play, affecting your decision making.<\/p>\n

If you\u2019re feeling the emotional and financial pressures of managing a large, unexpected inheritance or sum of money, Private Client is here to offer friendly guidance.<\/p>\n

Our team of wealth-planning experts includes Financial Advisers, Chartered Accountants, Tax Specialists, and Estate Planners. Together, we work with you to achieve a holistic approach to managing your increased finances, now and into the future.<\/p>\n

First steps <\/strong><\/h4>\n

The first important thing is to take a moment to let it all sink in. It can be tempting to make a lot of impulse purchases and splash out on luxuries when you suddenly come into money. But it\u2019s surprising how quickly your finances get eaten up when you take this approach, even when dealing with a large sum.<\/p>\n

Obtaining a high-level assessment of your current financial position with the help of a financial expert is a good first step. This covers assets, liabilities, income, and goals giving you a clear view of the bigger picture and allowing you to identify the best use of your additional funds.<\/p>\n

Short-term protection<\/strong><\/h4>\n

Whether your sudden money has come to you as a large inheritance, through the sale of a business, or perhaps even a big win, it\u2019s vitally important you protect your funds from the outset.<\/p>\n

One short-term solution is placing them into a high-interest savings account or ISA while you decide how you\u2019d like to use them. This not only ensures your money is safe, it also ensures it\u2019s working for you while you decide on a long-term plan.<\/p>\n

Working with our Private Client Advisers, we help you choose the right short-term solution for protecting your unexpected lump sum that aligns with your current financial circumstances.<\/p>\n

Long-Term Financial Planning<\/strong><\/h4>\n

When dealing with larger sums of money, long-term financial planning calls for careful strategy to ensure your money grows and is protected.<\/p>\n

Once you\u2019ve secured funds in a high-interest account or similar, the first step is to pay off any high-interest debt, such as credit cards or loans. Alongside effective debt management, creating an emergency fund that covers the next three to six months of living expenses offers security against unforeseen circumstances and gives you further peace of mind. Both these actions provide immediate financial relief and give you more space to carefully consider your investment options.<\/p>\n

Diversification of investments is the next important phase. Placing funds in a variety of assets\u2014such as stocks, bonds, and real estate\u2014reduces risk and helps ensure your wealth grows steadily over time.<\/p>\n

Approaches to diversification vary significantly and should align with your own personal feelings about risk management. For this reason, seeking one-to-one advice from a member of the CTT Private Client team offers you the chance to receive personalised guidance to create a balanced portfolio that works for you and your financial goals.<\/p>\n

Setting long-term goals, such as a retirement fund, education fees, or charitable donations provides direction for your financial decisions. It’s important to regularly review and adjust your plan to adapt to changes in your personal circumstances and economic conditions.<\/p>\n

Tax planning for large sums of money <\/strong><\/h4>\n

Coming into a sudden large sum of money can trigger several tax implications, including Income Tax, Capital Gains Tax (CGT), and Inheritance Tax (IHT).<\/p>\n

If the money generates taxable income, such as interest or dividends, Income Tax may apply. Using tax-efficient accounts like ISAs or making pension contributions can help mitigate this expense.<\/p>\n

If you sell assets, CGT may be due on profits above the annual allowance, but spreading sales across tax years or transferring assets to a spouse can reduce this.<\/p>\n

For IHT, which applies to estates over \u00a3325,000, gifting within allowances, setting up trusts, or leaving money to charity can reduce liability.<\/p>\n

CTT Private Client has specialist tax advisers who use their expertise and insight to create tailored strategies for you. This approach will help to minimise your tax obligations on your lump sum while protecting your wealth and ensuring you stay tax compliant.<\/p>\n

Wealth and Estate Planning for future generations<\/strong><\/h4>\n

Following the acquisition of a large inheritance or sum of money, it is of the utmost importance you seek guidance from an Estate Planning expert.<\/p>\n

If you are yet to make a will, coming into money is the ideal time to get your estate in order and put some planning in place. For those who have already planned their estate, a sudden windfall should prompt you to revisit your current planning and update it in line with your new financial circumstances.<\/p>\n

Trusts and other legal tools can be used to protect your wealth and assets for future generations. There are a variety of Trusts available; CTT specialises in creating its own unique Trusts, inspired by and in line with current legislation, allowing our clients to flexibly benefit from the latest tax relief opportunities.<\/p>\n

Failure to ensure the correct planning is in place can have significant consequences for your estate and its beneficiaries. At CTT Private Client, our tax and trust advisers spend time getting to know you, creating flexible, bespoke inheritance strategies that meet your current financial needs and those of future generations to ensure your wealth is passed on in the best, most tax efficient way and in accordance with your wishes.<\/p>\n

In conclusion<\/strong><\/h4>\n

Coming into a large sum of money brings unique emotional and financial challenges, but with the right guidance, these can be managed effectively to secure your financial future.<\/p>\n

CTT Private Client\u2019s bespoke services offer comprehensive support, from tax planning and investment diversification to estate and wealth management. Our team of experts includes Financial Advisers, Chartered Accountants, Tax Specialists, and Estate Planners who work closely with one another and you to build a tailored financial strategy that aligns with your goals and tolerance for risk.<\/p>\n

By offering personalised advice on short- and long-term financial planning, CTT Private Client ensures your wealth is protected, grows steadily, and is passed on to future generations in the most tax-efficient manner.<\/p>\n

Above all, our holistic approach provides peace of mind, helping you navigate \u2013 and celebrate \u2013 the complexities of managing a financial windfall with confidence and clarity. To find out more on how we can support you and your finances, contact The Private Client Team here.<\/a><\/p>\n\n\t<\/div>\n\t

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