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Could you survive a $1 million windfall?

Imagine you are the Survivor and just won the million bucks surviving the wicked, wild, bug-infested location of whatever spot is home on the latest "Survivor" episode.

Would you know how to stretch the dough? Could you survive stardom?

And what would you do with all that money?

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First things first
Experts exist for just such mind-boggling events. They say that financial success is not unlike "Survivor" itself: It comes down to which alliances you form. Some you avoid, such as long-lost friends with their hands out. Other alliances, you make: with the right financial experts.

Here's what the experts recommend you should do once you know the cash is yours:

  • Don't do anything rash. Don't make any promises.
  • Get out of the house. Better yet, get out of town. The media coverage will be intense. Check into a hotel or stay for a while at the home of a friend or relative.
  • Get an unlisted phone number. If you already have an unlisted number, change it.
  • Talk to an accountant or tax attorney (or both) to figure out what your tax options are and to know how much money you will end up with after taxes.
  • Make sure your tax adviser finds out what your payment options are, and discuss those options in depth before you pick one.
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  • After you choose your payment option and you know how much you'll get after taxes, hire a financial adviser to craft an overall investment and financial plan.
  • Find that well-trained financial adviser through accredited agencies such as the Certified Financial Planner Board or the National Association of Personal Financial Advisers.

Experts are emphatic about the order in which you do these: first the tax expert, then the financial adviser.

A tax expert "can tell you how much you're keeping," says Philip M. Susswein, a trust and estate lawyer in New York City. "That's why I say talk to this person first instead of an investment analyst because the investment analyst needs to know how much you're keeping."

No immunity here
Even when they get good advice, people who get windfalls make goofs.

"The No. 1 mistake is that people think short-term," says Marcia McMillan, a certified financial planner with American Financial Advisers in Brookfield, Wis. "Ask yourself when will I really need the money: now, in retirement or sometime in between -- for example, when the kids go to college."

Another common mistake is carelessness.

"Because it's 'found money,' for some reason they care less about paying a penalty for doing it the wrong way," McMillan says, explaining that a recipient of a windfall might lose 30 percent of an investment and not really mind.

Imprudence is more a mistake of youth, says John Fahy, an accountant and lawyer in New Jersey. Adults over 40 tend to invest windfalls carefully, but "younger people often want to live large and they buy boats and big houses. When the bills come in, it becomes difficult to pay the piper."

Perhaps the hardest thing to do is to practice moderation when immoderate amounts of money come into your life. Of course you shouldn't blow all the money quickly, but neither should you feel guilty for having a little fun. So, go ahead, blow some of it.

Beware the sudden-wealth syndrome
Most of us can't imagine anything but bliss when we come into a cool million. But, believe it or not, money does not buy happiness.

"I call it the myth of the American dream -- the assumption that money can, should and does buy happiness," says Jessie O'Neill, a psychotherapist in Milwaukee who specializes in fiscal affairs and founder of The Affluenza Project.

Just the opposite can happen. Coming into a lot of money can lead to feelings of guilt, fear and isolation. It's called "sudden wealth syndrome."

"People develop a kind of survivor's guilt," O'Neill says. "They start to wonder if they deserve what they got. There's this feeling of almost being a fraud. 'Why me? I don't deserve it.' It's basically a discomfort, a guilt with the money."

You're grappling with your own feelings about the money and what you're going to do with it, you also have to deal with other people's attitudes toward money and their attitudes toward you now that you have it.

Will your friends be insulted if you offer to pay for dinner? Or will they think you're a cheapskate if you don't? It can be awkward for everyone involved. Some new-money people end up pulling away from family and friends to avoid these kinds of situations.

So, what can you do to find happiness should you be struck down with this sudden wealth syndrome?

"Find out what makes your heart sing. What motivates you? What are you called to do?" O'Neill says. "That's not an overnight thing."

"When a person comes into money, it amplifies their basic personality, their basic self," says Myra Salzer, president of The Wealth Conservancy, who gives financial advice to people with inherited wealth.

"If they tend to be curious, they can travel the world. If they're intellectual, they can go to school for the rest of their lives. If they're hypochondriacs they can be fabulous hypochondriacs.

"If they know how to enjoy life, they can certainly do that with intensity."

-- Posted: May 20, 2002

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