Using Windfall Can Invigorate Long-Term Strategy

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BERLIN – The phrase “building wealth” suggests a steady advance toward personal security. But that’s not always the way it happens. Sometimes progress comes suddenly, often unexpectedly. When assets arrive in this manner, it’s important that they be integrated thoughtfully into your overall financial strategy, says Scott Cooper, Managing Director for Merrill Lynch’s Private Banking and Investment Group.

Your first task is to consider carefully what you’d like to accomplish with your windfall. According to Cooper, your vision should be as clear and thorough as a business plan. Ask yourself whether your fundamental approach to these newfound assets will be conservative or aggressive. Clearly, the amount of the windfall will play a part in your considerations. In most cases, the amount will improve your net worth but may not necessarily allow you to quit work or embrace an entirely new lifestyle — if that’s even what you want. Maybe the money will allow you to pay off a mortgage or make major progress toward important long-term goals such as retirement, funding higher education and building a philanthropic legacy. Or perhaps you want to use the money to purchase a vacation property or invest in a business.

Whatever your inclination, you should consider including those close to you in your early deliberations. As you review your ideas with them, look for a consensus about what the family wants to achieve in transferring wealth to future generations and what the best vehicles and methods for doing so might be. You might also want to discuss a family charitable legacy, identifying areas of particular interest.

Once you’re armed with clear goals and an understanding of your long-term objectives, the next step is to see that your windfall strategy is properly executed. Your financial advisor can provide valuable help at this stage as well. And depending on the source of the income and its size, you may want to ask your financial advisor to coordinate the efforts of — or even help you find — a professional team that includes a lawyer, a tax specialist and possibly others.

(The writer is a Merrill Lynch Senior Financial Advisor and can be reached at 410-213-9084.)

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