So you didn’t win last week’s lottery. That doesn’t mean, however, that you won’t ever get lucky. Every week, some Kiwis receive large inheritances or relationship property settlements or find themselves with large amounts of cash after selling a farm or a business. Suddenly having a large amount of money doesn’t mean, however, that all your worries are over; your worries are just different from the ones you had before. Large sums of money create fear and uncertainty that stem from a number of different factors: lack of knowledge about the options that are available for spending it or investing it; not knowing how to choose the best option; not knowing who to trust for advice, and worry about losing the money through taking risks. For some people, these fears and worries are so overpowering that the money either never leaves the bank or it all gets spent.

The first thing to do when you suddenly get a large sum of money is to pay off your debts. It’s great to be able to spend some too, but most of what you have left should be put to one side in the bank for a while. When money has come unexpectedly, emotions go into turmoil and that’s not a good time to be making decisions. You could also review your insurance policies, as you may find that your need for insurance has diminished with your changed financial situation.

Spend several months thinking not about what you could do with the money, but about what the important things are to you in life. Money is what enables us to get what we want out of life, whether that is helping our children, helping the community, having interesting and enjoyable experiences, living in a comfortable environment, or enjoying your retirement. Once you have established what is important about money to you, you can then allocate part of your fortune to each of the items on your list. Inevitably, you will need to prioritise, as you will soon find that even a large sum may not be enough!

Remember that money only has value when you spend it, and you can’t take it with you at the end of life. A key decision you need to make is, who is going to spend your money? Will it be you, your family, or someone else such as a charity? The next question is, when is your money going to be spent? This will help you decide how it should be invested.

There are pitfalls to be aware of that could lead to unexpected consequences. Any gift you make to someone who is in a relationship (for example, a son or daughter) can become relationship property, so that if the relationship ends, it may be divided between the two partners.

You may wish to consider making charitable donations, in which case you can be eligible for tax rebates. Rather than making one-off donations, you could consider setting up a charitable fund that makes grants in perpetuity by working with a Community Foundation in your local area. Community Foundations also provide advice on reputable organisations to make donations to. It pays to be alert to scam charities looking for money.

When it comes to investing, issues to consider are:

• how to invest so as to not pay more tax than you need to
• how to get a reasonable return without taking on too much risk.
• how to make sure money is available to you when you want to spend it
• how to ensure you spend money at the right rate – not so quickly that you run out prematurely and not so slowly that spend too little during your lifetime

For a large sum, it is best to get professional investment advice around establishing a well diversified portfolio that considers your short, medium and long term goals.

Be wary of people who approach you wanting funding for new business ventures as they are likely to carry a high degree of risk. You may also be a target for people wanting gifts of money or loans.

When a large sum is involved, it is very important to make sure you have an up to date will. This will help prevent any complications and arguments when it comes time to wind up your estate.

Having a team of professional advisers to work with – including an investment adviser, a lawyer and an accountant – should help you make good decisions to protect your wealth.