Coming into money can be both a blessing and a curse. Whether the client is a rookie professional athlete who just signed a multiyear, multi-million dollar contract; a young entertainer with a hit show and endorsements; the beneficiary of a trust that has terminated; a lottery winner; or the winner of a large verdict or settlement in a personal injury or divorce case, special attention from a team of professional advisors can avoid negative consequences from the windfall.

What's more, implementing a Sudden (or Substantial) Wealth Accumulation and Transmission Trust (SWATT) can mean the difference between the client enjoying lifelong comfort or ending up worse off financially than before the sudden wealth.

Concerns

Taxes: The influx of wealth may be taxable itself and when the proceeds are invested there will likely be taxable income and gains. Mostly newly wealthy clients will be unfamiliar with their new tax requirements and may be faced with substantial federal and (perhaps multiple) state income taxes. The client may also now confront human resources issues under labor laws, and state and local payroll tax and insurance filings.

Requests from friends and family: Newly wealthy individuals often discover that they can't say no to requests for financial assistance from family and friends, which can create cash flow problems and even generate gift tax obligations. A client who decides to make generous loans instead of gifts face issues regarding documentation and taxation of interest.