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'I've been left a significant amount of money as part of an inheritance and I don't know where to start. Do you have any advice?' Claire, Reading

If you suddenly find yourself with a large pot of money, either from an inheritance, as in this case, or a lottery win, you’re bound to have a long list of questions – once the shock has subsided.

We asked Karena Woodall, a consultant at financial advice firm Mattioli Woods, for her top tips.

What should I do first?

The first thing you need to do doesn’t involve lawyers, tax advisers or financial advisers.  The first thing you should do actually stems from common sense … do nothing.

Stop and think.  Take a step back and think about how this windfall will affect you and your family, not just now but for the foreseeable future.

Should I act quickly?

Take the time to make sure you don’t make emotive decisions (especially in the event of a windfall as the result of a loved one passing away).  And don’t make decisions because you think it’s the right thing to do.  If it is the right thing to do, it will still be right in a few months’ time.  Especially in cases of death benefits, people’s outlooks can change dramatically in 12 months.

Don’t rush to give up your job.  Don’t make promises.  While gifting money is a lovely gesture, make sure this is what you really want and can really afford.  Decisions to gift money made in the heat of the moment may be difficult to back away from once you have considered the options available to you.

Should I tell people about my windfall?

Generally, official people aware of your inheritance or win are governed by confidentiality agreements.  Making a decision to go public with your windfall might open the floodgates to new friends and con artists.

Should I manage my windfall myself?

Once you have taken the time to think, then you need to become practical.  Don’t make the mistake of thinking you know better.  Get a team of people working on your financial and legal affairs, which will include accountants, solicitors, tax advisers and financial advisers.  Make it a team that you chose that works together in your best interests. Ultimately, you can then blame them if people ask you for money, by saying, ‘I will need to check with my advisers!’

Do I need a plan?

Even for large windfalls you need a plan, a budget to ensure that this windfall works for you.  Get rid of your debt.  In this scenario there is not really any good debt.  Then at least if you blow the lot, you are at least debt free.

Understand that there will be tax liabilities in the future, but get a team in to help you manage and control this.  Understand that there is not a one-size-fits-all approach.  Your windfall will work for you and help you, provided you remain careful, prudent and take advice when needed.

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