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It’s a challenge many people would love to have: handling a sudden, large influx of money. But managing a windfall responsibly is critical. A study of Florida lottery winners found that more than 5% declared bankruptcy within five years of winning.

If you’ve come into a large sum of money, whether from an inheritance, gift, legal settlement or another source, consider these guidelines:

Wait. Stash the money in a bank or money market account for several months, while you identify goals and develop a plan for the funds. Waiting also helps moderate the desire to spend impulsively.

Determine the tax obligations. The government takes a cut of some windfalls, such as lottery winnings and certain legal settlements. And it can be a big one: To the extent the windfall pushes you into the top income tax bracket, you could lose 39.6% — or more — of that portion to federal income tax!

Pay off debt and boost savings. Paying down debt can provide a higher return than many other investments, especially if it’s high-interest-rate debt and the interest isn’t deductible, such as that on credit cards. Establishing or boosting your savings minimizes the need to incur future debt.

Keep working. Few windfalls are large enough to see anyone through to retirement or death. Until you have a solid handle on the amount available after taxes and debt and have identified solid financial goals, you won’t know if you can quit your job.

Form a plan. Consider where you’d like to be five, 10 or 20 years into the future. Develop a budget that will help you move toward your goals — whether that means retiring early, starting a business or something else.

Be careful when asked for money. Friends and family members may expect to share in your bounty, and charitable organizations may ask for donations. The ability to support worthwhile causes or loved ones in need is a real benefit of a windfall. At the same time, if you accede to every request, you’ll quickly deplete the funds.

Have some fun. It’s OK to splurge a little and spend a small portion — say 1% to 2% — of your windfall on something you enjoy. Just recognize that you don’t want to blow the entire amount on frivolous items that neither offer lasting satisfaction nor provide a sound foundation for the future.

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A windfall can be a blessing, but managing one wisely takes discipline, thoughtfulness and planning. Contact Jordon Rosen, CPA, AEP to provide advice that will enhance your financial security and help achieve your goals