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Advisers Financial Planning Portfolio Strategies

What to Do When You Get a Large Windfall

Regardless of where newfound wealth comes from, it’s important to prepare to manage it properly.

by Sam Levine | August 2026

  • Windfalls can come from inheritances, business sales or payouts, lawsuit proceeds, or employment severance
  • Sudden wealth requires thoughtful planning, reassessing strategies and disciplined decision-making
  • Critical actions include delaying major decisions, defining goals, managing debt and building a team of trusted financial professionals

You finally make it home after an exhausting day at work. Your car’s “check engine” light is flashing as if the engine is about to explode, and you fear an expensive repair. As you sit down to finally take your first calm breath of the day, you notice that there’s an envelope printed in a legal-looking font sitting atop the mail.

Thinking that is unusual, you open the envelope and find that a distant and long-forgotten aunt made you a beneficiary of a large estate. You call your local Rolls-Royce dealership, order a dark green extended-wheelbase Phantom, and start calling your friends and family to share the news. You hope no one will think you’ve changed once you buy a 10-bedroom estate in the country.

And then, unfortunately, you wake up. 

Despite most of us only being able to daydream about jumping into mountains of cash, windfalls are not as uncommon as you might think. They can come from selling a business, vested stock options, lawsuit proceeds or employment severance.

And, of course, there are inheritances. Some asset managers are calling the current times “the greatest wealth transfer in history.” Cerulli Associates estimates that $124 trillion is expected to change hands through 2048, led by baby boomers, who account for 81% of the wealth to be transferred to Generation X, millennials, Generation Z and charities. Consistent with the wealth distribution in the U.S., the transfer will likely be highly concentrated. The top 2% of households by wealth are likely to transfer over half of this wealth to heirs, many of whom are already in the high-net-worth bracket. 

Regardless of where your newfound wealth comes from, you should prepare to manage it properly. This article lays out a course of action for what to do when your net worth jumps suddenly and significantly. 

Understand How Wealth Is Defined

Wealth, of course, is relative to what you are comparing it against. There are three measures of the size of your windfall:

  • Its size relative to your current financial circumstances,
  • How the Internal Revenue Service (IRS) sees it and
  • How the wealth management industry measures it.

All of these will be relevant to your circumstances. 

Dramatic changes in your financial circumstances are life-altering and should be treated carefully. Change, even good change, can be stressful. Some people can be so stress-averse that they make rash financial decisions just to get back to a more comfortable emotional state. If you’ve received a sum that drastically changes your financial picture, give yourself time to let your emotions settle—perhaps a few months or even longer—so you can act with purpose.

The financial services industry focuses on the numbers. The term “high net worth” is bandied about often, but there’s no universal agreement in the industry on what it means. The term generally applies to those households with $1 million in liquid (meaning after liabilities) net worth. Households with $30 million and above are often classified as “ultra-high net worth.” 

Brokerage firms can categorize clients differently according to their market niche. Charles Schwab offers differentiated (sweetened) services to clients with $1 million or more in assets at the firm. Those with $1 million to $10 million are assigned to Schwab’s Private Client Services. Clients with more than $10 million get Private Wealth Services. Some investment firms that specialize in ultra-high net worth, such as J.P. Morgan Private Bank and Goldman Sachs Private Wealth Management, decline new clients with under $10 million in wealth.

Another quantifiable measure of wealth might be when the IRS begins to take an interest in the value of your estate. The One Big Beautiful Bill Act (OBBBA) of 2025 established that federal estate taxes accrue for estates over $15 million for single taxpayers and $30 million for married couples in 2026. 

Go to Ground 

Have you ever seen winning lottery numbers announced, only for the prize to be claimed months later, if the winner’s name came up at all? The odds are likely that those winners were not only lucky but also smart. They might have spent the time transferring that winning ticket to a trust that can preserve the winners’ anonymity and ensure that their new assets aren’t tied up in probate. 

Consider creating a “safe space” for you and your family to hide in while you plan your next steps. If you don’t, you could be easily tempted to make impulsive decisions, find yourself overwhelmed by poor advice from well-intentioned people, or worse. Keep mum while you process your newfound circumstances and avoid making any dramatic changes. 

It’s important to avoid making investment decisions immediately, because how you title your assets might turn out to be just as important to future generations as what you invest in. If you received cash, put the money in safe, liquid investments such as money markets, bank deposits and Treasury bills. Should Federal Deposit Insurance Corp. (FDIC) insurance be important to you, keep its deposit limits in mind, as they may require you to spread your money among several banks. 

While you’re meditating on your good fortune, come up with a process that helps you deal with business ideas and requests that come from acquaintances and family members. One idea is to promise to send their requests and ideas to a designated adviser; this removes you from sole responsibility when a proposal is declined. 

Write Down Your Goals and Constraints 

Mark your calendar for a few brainstorming sessions. When brainstorming, don’t assign priorities or numbers; just list what you think might be desirable—whether that’s retiring earlier, traveling more, supporting a charity or funding your grandchildren’s educations.

As you list your dreams and priorities, it’s natural if some are unrealistic or even conflict with others. It’s also natural for family members to have very different ideas. Rather than argue, write down all ideas and plan to negotiate later. After considering all possibilities, you may decide that you are content as things stand and remain a steward for your wealth. That’s perfectly reasonable. You can always revisit your list later. 

Regardless of your brainstormed ideas, one high-priority step should be paying off any loans with interest rates that are higher than what you can reasonably expect to make from investing or appreciation. Focus on your personal debt and any loans you are a cosigner on. Helping with the debt of relatives and friends is best handled after you have a well-thought-out plan in place for managing your newfound wealth.

Once you have a working list of priorities, it’s time to consider what types of advisers may best assist you. 

Assemble Your Wealth Team 

The amount of wealth you have and your willingness to engage in details will dictate who you seek to hire.

The median value of AAII members’ investment portfolios was $2.0 million in 2025. Approximately one-third of AAII members work with a financial adviser. Of those, the majority work with a fee-only adviser. Many AAII members also work with accountants and estate attorneys.

Who you will need to work with depends on the size of the windfall, your tax exposure, your estate plans and the complexity of your portfolio. Those with net worth of $5 million or less might find that all they need are an accountant and an estate attorney. The latter is particularly important to determine whether wills need to be updated and if trust documents should be created or revised. You will also need to review your insurance coverage, as your net worth could make you a tempting target for lawsuits and your current insurance may not cover the assets you acquired or will acquire—including real estate, fine jewelry, collectibles, etc. 

As liquid net worth climbs to $10 million and above, it may make sense to consider hiring a money management firm that specializes in high-net-worth clients. Those who have more than enough assets to fund their needs and important priorities often jump from what financial planners refer to as the “accumulation phase,” where the focus is on building wealth, to the “preservation phase,” which focuses on preserving purchasing power after inflation, managing volatility and minimizing the impact of taxes. If that also applies to you, then it’s likely that your target asset allocation should shift along with your needs. 

Another key advantage management firms offer is their familiarity with the emotional issues and family dynamics that often go hand in hand with vast wealth. They will also assist you in managing the increased tax liabilities by suggesting tax-minimization strategies. 

A note about wealth managers: Almost everyone offering a financial product is prone to calling themselves a wealth adviser. Consider only hiring professionals who have extensive experience, clean disciplinary records and a current certification such as Certified Financial Planner (CFP), Certified Public Accountant/Personal Financial Specialist (CPA-PFS) or Chartered Financial Analyst (CFA). These designations are highly relevant to managing wealth and very challenging to obtain, and the accrediting bodies stringently enforce their codes of ethics.

Accreditation and experience are important for all the certifications covered in this article, but personal fit also matters. You should interview candidates thoroughly. Ask enough questions to ensure you fully understand an adviser’s processes and are certain they not only listen to your needs, desires and concerns but also thoughtfully respond to them. 

The cost of accessing all this expertise may seem high. Individual investors accustomed to zero-cost commissions might be tempted to continue self-managing their portfolios, but there can be complexities with higher wealth that justify working with one or more professionals. The savings from tax-aware investing strategies alone could significantly offset the fees paid, not to mention the value of one good idea or recommendation from a professional.

Common Certifications of Wealth Advisers

All three of these credentials are relevant to wealth management, are challenging to obtain, and have robust ethics programs and enforcement. Although there is significant overlap between the designations, each emphasizes a different aspect of wealth planning.

Certified Financial Planner (CFP)

To be awarded the CFP designation, an adviser must have a bachelor’s degree, pass several approved courses (including a capstone course), pass a 170-question exam and accrue 4,000 to 6,000 hours of relevant experience. Candidates also need to clear a background check and agree to follow CFP Board’s Code of Ethics and Standards of Conduct.

Certified Public Accountant/Personal Financial Specialist (CPA-PFS)

The personal financial specialist certification can be earned by certified public accountants who maintain membership in the American Institute of Certified Public Accountants (AICPA), complete 75 hours of education, pass the PFS exam and have at least two years of full-time experience in personal financial planning. There is also a continuing education requirement.

Chartered Financial Analyst (CFA)

Considered one of the most challenging certifications in the financial services industry, the CFA designation requires a bachelor’s degree and passing scores on three sequential exams, along with required skill modules. Candidates often spend 300 hours preparing for each exam, and the pass rate is frequently in the 30% to 50% range, depending on the level. Candidates must also provide professional references and agree to follow the CFA Institute’s Code of Ethics and Standards of Professional Conduct.

Decide Whether to Consider Novel Investment Options

Ultra-high-net-worth investors can access alternative investments that retail investors often can’t, and their asset allocation will often vary dramatically from the stock/bond/cash continuum most of us are accustomed to.

Ultra-high-net-worth investors may get access to hedge funds, private equity, initial public offerings (IPOs), real estate and other assets. Some investors are members of exclusive investment clubs that coinvest alongside institutional investors, including venture capital firms. 

Though some of these may deliver astonishing potential returns in exchange for possibly tying up your money for years, many others will fail to beat index funds, particularly after costs are factored in. Hedge funds may restrict withdrawals at the worst possible times, and private equity may have a very limited market to sell into (if there’s any market at all).

Only a small portion of alternative investment types can actually deliver eye-popping performance. Decades ago, Jim Simons, a math professor at Stony Brook University, came up with a novel investing strategy with astonishing potential returns and invited other university faculty to invest with him. Simons’ firm was Renaissance Technologies, and its flagship Medallion Fund went on to realize a reported average 39% net return after fees over 30 years. A certain professor at Stony Brook University and father of this article’s author turned down Simons’ invitation, which is why this author still works for a living.

Regardless of how attractive alternative investments might initially appear, investors should understand that they are very different from the stock, fixed income and cash investments we’re accustomed to. Wealthy investors can buy into these offerings because they have enough liquidity to meet their needs and they have the portfolios to make large investments. Alternatives often have unique structures and higher costs, so it’s critical that you understand what you might be investing in and when you can get your money out. 

If your adviser recommends one of these types of investments, read through the offering documentation completely, get second and even third opinions as necessary, and only invest when you are confident that you know what you are buying. 

If You Have Wealth to Pass Along

If your means far exceed your ends and you are considering gifting cash or assets, it is never too early to plan. Here are some ideas to consider.

Maximize gifting now. Individuals may give up to $19,000 to others in 2026 without having to pay gift taxes. Married couples can double that amount by each giving $19,000 to the same person. (Be sure to keep documentation of these gifts.) There is no limit on gifts to spouses, tuition payments or gifts for medical expenses, as long as they are paid directly to the provider(s).

Gift strategically, taking into account your tax bracket and the recipient’s tax bracket. For example, individuals in high tax brackets may want to give income-producing assets to a recipient in a lower tax bracket.

Avoid probate by titling assets properly and using trusts when appropriate. Probate leaves final disposition of your estate to a judge who may not be aware of your intentions or is compelled to override them. It can also be lengthy and costly. Titling accounts with “transfer upon death” or “joint with right of survivorship” avoids probate, as can properly drawn trusts. If considering placing assets in a trust, the documents should be drawn up by a qualified attorney.

Highly appreciated assets can be challenging. Asset values can be “stepped up” in cost basis at death, otherwise the cost basis will transfer with ownership, meaning that the recipient could have a large taxable gain.

Communicate your intentions to recipients well in advance to minimize misunderstandings and to assist them in their financial planning.

Reassess What Worked Before

Many investors have done quite well without a wealth management team, private banking services or a hefty allocation to alternative investments. It’s reasonable to think that nothing might need to change following a large windfall. But high- and ultra-high-net-worth households have higher tax exposure both in their lifetimes and possibly for the generations that follow them. In addition, family members and scammers will come out of the woodwork seeking a piece of your suddenly increased wealth. At the same time, the windfall can open financial opportunities that aren’t accessible to everyday investors.

As easy as it might be to keep doing whatever worked before but just with more money, if you have had a sudden wealth infusion, it’s a good idea to take time to reassess what you need and who you should work with. Meeting with an estate attorney and a tax professional is a good step. It’s also worth talking to an adviser accustomed to working with high-net-worth individuals to determine what options are available to you, including tax-aware strategies.

Most importantly, take your time before making financial decisions that are costly or difficult to undo. 

Discussion

JOHN L from NJ posted 18 days ago:

I find it disturbing that so many finance articles like this one advise hiring a wealth team. Rather than providing tax or investment information the suddenly or slowly becoming wealthy can use to improve their already great situation.


SAM L from USA posted 16 days ago:

@John L, thank you for your post. There is a wealth of information available on AAII.com for all sorts of investors, as I'm sure you're aware. I share your passion for making as much information available at low cost to as many investors as possible (that's why I'm here). Yes, I advised hiring a wealth team in my article. John, have you ever heard of the Dunning-Kruger effect? It states that the less someone knows about a topic, the more confident they are in their competency and the more someone knows, the less certain they are. I earned a master's degree in financial planning. Ten courses on topics like estate planning, tax minimization, asset allocation, behavioral finance, etc. It was a thorough but generalist curriculum that primarily taught me that the people doing it day in and day out will be far more sophisticated and creative than any advice I could provide in an article or even a book. Good advice might cost thousands but it can save millions for some people.


JOHN L from NJ posted 16 days ago:

Sam L - AAII's mission is to "assist individuals in becoming effective managers of their own assets through programs of education, information and research". Telling AAII members to hire a wealth team when they receive a windfall doesn't help us become effective managers of our assets.


ROBERT A from NC posted 15 days ago:

I wish I could win the Powerball lottery so I could ignore most of the advice in this article. I'd agree that a good estate planner is essential for anyone of significant wealth. The rest of Sam's team would likely be a drag on my returns, especially if they are highly "educated" and have lots of letters behind their names. Unfortunately, many people are so ignorant of basic financial concepts (because they lack the time, interest, or capacity) that they end up keeping the "pros" in business. I THINK John L's point (John, please correct me if I'm wrong) is that the AAII journal is supposed to be for those of us who DO have the time, interest, and capacity to manage our own money.


SAM L from USA posted 15 days ago:

@John L and @Robert A, Good managers know when to delegate. I find it difficult to respond to vaguely worded and unsupported assertions about letters after names. I suggest you try out sample questions for the CFA and CFP exams and share with me how those bodies of knowledge endanger investors' returns.


JOHN L from NJ posted 15 days ago:

Sam L - We are looking for information on how to better manage our assets. If the best advice you can provide is to tell us to get a wealth manager, you are no help at all. One of the most serious obstacles to building retirement wealth is expensive financial "professionals". That is why I believe Robert A says that outside of a good estate planner the rest of your recommended team would be a drag on his returns. Neither of us care about credentials or CFA and CFP exam questions.


ROBERT A from NC posted 14 days ago:

Sam, the “bodies of knowledge” required to earn the CFP or CFA designations are dandy if your goal in life is to pass a written test. As Warren Buffett put it, “The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.” “To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these.” I regard conventional academic wisdom in the investing realm as steeped in irrelevant complexity, and as such, it is a drain on returns. That's just my humble opinion based on a lifetime of involvement with investing, on my own work inside financial services and related fields, and most importantly, on the real-world knowledge I've gained in the process of growing my own wealth.


SAM L from USA posted 14 days ago:

I encourage all investors to challenge their own beliefs periodically so they don't succumb to cognitive biases. One of my upcoming journal articles will discuss overconfidence, conservatism, and the hindsight bias. The two of you might find those biases intriguing.


JOHN L from NJ posted 14 days ago:

We found these cognitive biases intriguing when they were first uncovered and discussed by Richard Thaler "Misbehaving", Daniel Kahneman "Thinking Fast and Slow", James Montier "The little book of Behavioral Investing", and others. Perhaps you should look at the average age and tenure of AAII members to better understand your audience. And then consider your own level of metacognition. Proud of your 10 finance courses and credentials. But unable to provide any expert financial advice other than "hire a wealth team".


SAM L from USA posted 13 days ago:

@John, I like to think I'm pretty good at judging audience age and tenure. I can estimate peoples' ages by their belief systems. I'm glad you're familiar with cognitive biases and found them intriguing. Tell me, did reading about those biases ever lead you to re-examine your beliefs? I was inviting you to do so before and you refused.


JOHN L from NJ posted 13 days ago:

Sam L - You think you are good because your level of metacognition does not give you the ability to judge your own capabilities. I like all other humans suffer from cognitive biases. My beliefs are always open to change based on new information. You want me to believe that there are experts who have special investing and tax knowledge that is invaluable but provide no proof. Your article does not provide any reason to change my beliefs. And worse your assertion that individuals need a wealth team to manage their assets contradicts the mission of the AAII. If you are correct; the AAII has no reason to exist and we should cancel our memberships.


SAM L from USA posted 12 days ago:

Hi @John L, (1) When did I make any assertions about my ability (or yours, for that matter), other than to say that my courses made me even more appreciative of the knowledge of the professionals who are out there in the trenches? (2) I offered evidence by recommending that you check out the CFA or CFP curriculums and test questions and you refused. I regret I can't do much more than that. If you want to credibly respond to how useful or relevant they are, take the courses and criticize them once you have passed the exams. (3) Given that a significant portion of our membership hires professionals, I find it difficult to accept that my article fails to serve members. That said, I will raise your concern about it not fitting with the mission of AAII with the senior executive that approved the topic and edited the article. (4) I did not say that "individuals need a wealth team to manage their assets." I was speaking to a narrow slice of the population. (5) I view your stated position that there are no experts who have special investing and tax knowledge as highly vulnerable to the most casual further examination, but I will leave that there and hope you find value in other articles. I do appreciate a spirited discussion.


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