What changes does Inheritance or New Wealth Bring?

New wealth doesn't just change the number of commas on your bank statement. It creates a ripple effect that will change and possibly complicate, your entire financial picture.

While it is a good problem to have, sudden wealth can change the entire framework of your financial and legal situation. Each decision (or purchase) you make could cause you to consider changing your plans for:

• Personal finance - income, expenses, investments, budgets
• Insurance home - and car loans, life insurance
• Housing - new home, holiday house, financing, insurance, taxes
• Legal - will, estate plan, creating a trust
• Gifts - donations, sharing with family and friends

Let's use an example to illustrate the point. Say you've dreamed of owning a holiday house on the coast. You and your financial adviser decide the purchase is well within your means and fits nicely within your overall financial goals. You find and buy the perfect house. Great!

But it's not that simple, or at least, handled properly, it shouldn't be that simple.

Your new home creates new tax implications, have you determined the best way to structure the purchase to take advantage? Or say you decide to pay cash for the house, should you own the house as an individual or should it be placed in a trust? And who will inherit the property when you pass away? If the house is part of a collection of assets you'll leave equally to your four children, it may need to be sold so the proceeds can be distributed according to the terms of your will.

First determine what changes need to be made to your current financial situation. Then, as you make purchases, investments, and long-term plans for your new lifestyle, you can easily adapt your financial framework to accommodate those changes.