Fong Law Group

Would You Be Generous, If a Windfall Came Your Way?

“A majority of Americans would be in a sharing mood, if they were to have a big fortune fall into their lap, according to a new survey.”

A majority of Americans say that if they hit it big, they would be likely to be generous, reports Financial Advisor in the article “In U.S., Instant Wealth Spawns Philanthropy Boom.” When asked what their first move would be, if they suddenly found themselves with a lot of money, slightly more than half said they would share the wealth with family, friends, and charities.

When asked what they’d do after sharing, one thousand people who took part in a survey from BMO Wealth Management in Chicago knew exactly what they’d do:

A total of 51% said they’d pay off their debts after sharing the wealth. After that, they’d invest in the stock market, buy a business or purchase some real estate (49%). They also said they would keep their financial goals basically the same (43%).

A total of 22% said they’d buy big ticket items, and only 18% said they would splurge and go on a wild spending spree.

Their main concern for their estate and legacy would be helping others, learning how to create a legacy with their windfall and avoiding family conflict over the money.

More than a third of those surveyed (36%) said that a big concern would be to have some help with investment and retirement planning. That was followed by concerns of how this new money would impact their retirement plans, and equally concerning, how they would know who to trust now that they were in a position of wealth. They also said they would have to decide whether to work and wondered if the new wealth would cause any stress.

Anyone who receives a large amount of money with no prior notice, faces a challenge with their new-found wealth. People who win large amounts in the lottery, for instance, are often ill equipped to manage the money. They need help getting their money managed, so that the cash does not overwhelm them—or evaporate.

Today’s new-found wealth doesn’t just come from lottery winnings. With the transfer of wealth between the Boomer generation to their children surpassing the amount of money transferred from the “Greatest Generation” to the Boomers, estimated at $12 trillion, the next few years will see a huge transfer of wealth from one generation to another. Being prepared for that wealth and managing it well, requires advance planning and financial education.

Reference: Financial Advisor (Dec. 10, 2018) “In U.S., Instant Wealth Spawns Philanthropy Boom”

Be Cautious If You Receive an Inheritance 如果您要繼承遺產，請小心! (中英對照)

“My favorite aunt passed away last year, and I inherited $2,500,000 after her probate. The check came last week. It has been a nightmare! I am a pharmacist and know a lot about medicines but very little about managing money.”

The arrival of an enormous sum can be overwhelming to those who are not accustomed to handing money, even though it sounds like a problem we’d all love to have. The truth is, as discussed in “Take your time, plan wisely when you inherit” from Edmonds Beacon, when something like this happens it can be unnerving, like winning a huge lottery jackpot.

Because the will in this situation went through probate, the heir and the amount of money is public knowledge. The tension begins when people you don’t know—and some that you do—start calling with propositions. Sales calls come from shady operators, unknown and known financial advisors and long-lost cousins. The first thing you need is the financial and legal equivalent of a 10-foot-tall fence, complete with sentries.

Most big lottery winners are flat broke, several years after their big wins. Without the right help, it’s easy to go through this kind of money. Don’t rush and don’t be rushed into anything.

If you have children or grandchildren, they could benefit from this inheritance. Start by meeting with an experienced estate planning attorney. Your attorney will talk with you about the many tools, including trusts, that can be used to safeguard the inheritance for coming generations. You’ll also want to make sure your estate plan is up to date and that it includes having powers of attorney for financial and health matters.

You’ll also need a professional tax advisor, which is likely to be a CPA, and a financial advisor. Take your time in researching and checking references for these individuals and their firms. They should be working with your estate planning attorney as part of an integrated team. Having three advisors sounds like a lot. However, it actually works well: all three have knowledge in their fields and can serve as checks and balances on your behalf.

Draw up a roadmap for your life and action plan. Now that you don’t have to work for a living, do you want to continue working for other reasons, like satisfaction or service? Have you always dreamed of traveling? Is there a cause that matters to you?

And, don’t forget to deal with the tax side of this situation. Will there be earnings from the investments you make with the inheritance, and what will your tax liability be now? Should you pay off your existing mortgage or buy a new home?

If you are a recipient of Medicaid or SSI (Social Security Supplement Income), receiving an inheritance can immediately disqualify you for these important government benefits.  If you are a disabled person, being a beneficiary of an inheritance can also mean your government benefits will be terminated.  You will need to meet with an estate planning attorney to find out ways on how to preserve your government benefits. 

A sizable inheritance can be a blessing or a curse. Protect yourself and your inheritance by proceeding slowly, being skeptical of all the new well-wishers in your life and by making smart decisions.

Reference: Edmond’s Beacon (Oct. 10, 2018) “Take your time, plan wisely when you inherit”

“我最喜愛的姨媽去年去世了，遺囑認證後我繼承了2,500,000美元。支票上週來了。這是一場噩夢！我是一名藥劑師，對藥物瞭若指掌，但對理財卻一竅不通。“

對於那些不習慣理財的人來說，巨額資金的到來可會是不堪負荷的，儘管這聽起來像是我們夢寐以求的。事實是，正如“Take your time, plan wisely when you inherit” Edmonds Beacon所討論的那樣，當這樣的事情發生時，它可能令人不安，就像贏得巨額彩票一樣。

因為在這種情況下的遺囑需通過遺囑認證，繼承人和金額成了公開資料。當你不認識的人 - 以及一些你認識的人 - 開始有目的地致電給你時，你便會開始緊張起來。銷售電話來自不知名的經營者，未知的和認識的財務顧問以及久違的表親。你需要做的第一件事是建造一個財務和法律上的十尺圍牆並且有哨兵看守的。

大多數彩票得獎者都是在他們贏了的數年後才破產。沒有得到正確的幫助，這種錢很容易便會失掉了。不要焦急，不要匆匆忙忙做任何事。

如果你有子女或孫兒，他們可以從這種繼承中受益。首先要與經驗豐富的資產規劃律師會面。您的律師將與您討論該用什麼來保護你下一代的遺產，包括信託。您還需要確保您的資產計劃是最新的，並包括財務和醫療授權書。

您還需要一名專業的稅務顧問，可能是註冊會計師和財務顧問。花點時間研究和檢查這些個人及其公司的資料。他們應該與您的資產規劃律師合作，作為整個團隊的一部分。有三個顧問聽起來很多。然而，實際上這樣運作很好：這三個人都在他們的領域上有專業知識，可以相互監督。

為您的生活和行動計劃制定路線圖。既然您不必為生活而工作，您是否希望繼續工作以滿足其他原因，例如滿足感或服務？你一直夢想著旅行嗎？有什麼事情對你很重要？

並且，不要忘記處理這種情況的稅務。您繼承的資產會產生收益，您現在的納稅義務是什麼？您是否應該還清現有的貸款或購買新房？

如果您正接受醫療補助或SSI（社會安全生活補助金），收到遺產後這些重要的政府福利可能會立即被取消。 如果您是傷殘人士，作為遺產的受益人您的政府福利也有可能被終止。 您需要與資產規劃律師會面，以了解如何保障您的政府福利。

相當大的繼承可以是祝福或詛咒。從長計議，對生活中所有新的祝福者持懷疑態度並做出明智的決定來保護自己和你的資產。

參考: Edmond’s Beacon (Oct. 10, 2018) “Take your time, plan wisely when you inherit”