Unusual Situation has me worried!

[45NO46]

I managed to broker a deal that seems to be going through. I stand to receive a VERY large sum as a finder's fee/cut/whatever it's called. We're talking in the $2million plus range in one chunk.

I want to buy our dream house outright with most of it, but don't understand how that will affect (if at all) my tax situation.

My CPA says to call him after I have the $$, but I need to make a plan now, or at least an outline of a plan for when the money comes in. I don't want to be fishing for answers AFTER the money arrives, in case there are time-sensitive deadlines for what I can do with the money.

Any help will be greatly appreciated.

[herdjohnson]

Have you thought about donating to the HerdJohnson Foundation? It's a very worthwhile organization.

[kork13]

Why not just talk to your CPA now? You know how much you're going to be getting, so he can help you now or later with no real difference. With a windfall in the $2M range, you really do need to figure out the taxes involved before you go figuring out how you're going to spend it. You're likely going to need to set aside a significant portion of it just to pay taxes on the amount.

As a warning, if he (or any "friend" he brings in to meet with you) tries to start selling ANYTHING to you, walk out immediately, and cut off your business with him. They're not looking out for you, they're just interested in lining their pockets with sales fees and the sort.

Also keep in mind that whatever you get (a "dream home" especially) may have additional continuing costs over time. Make sure you account for those.

Otherwise, you need to take a look at your overall situation. Do you have sufficient funds set aside for retirement? Do you have any debts or obligations? Have you provided for your family's present and future needs? Do you have a good level of liquid savings for unexpected expenses?

Alot of people aren't good at managing large amounts of money that they receive suddenly... look at lottery winners who blow everything and find themselves in poverty. My best advice: Don't do anything with it AT ALL for the first 6-12 months after receiving it, and use that time to figure out the smartest ways to use it. I guarantee there are absolutely zero "time-sensitive deadlines" for using the money.

[snafu]

Hope all goes as you expect. I recall reading that 70% of people with sudden windfalls are broke within 3 yrs. The general advice is:

1. pay taxes on the windfall.
2. Use 1 percent of the windfall to buy family stuff desired.
3. Pay off creditors. Don't buy house, vacation property, yachts etc.
4. Put the money in savings accounts aware of insured limits.
5. Don't make major decisions for 3 years, give yourself time to get over the euphoria. Make lists and prioritize.
6. Use a good tax accountant.
7. S-l-o-w-l-y make well thought out investments and know the risk factor.

[97guns]

i would keep at least 25% for taxes, you probably should look into paying estimated tax because if they dont withhold and you dont pay estimate they will penalize you.

[maat55]

Plan for about 40%+(plus your state tax)in taxes. Remember that dream homes come with insurance, taxes, upkeep and utilities.

Do not buy any house withing 6 months. Take the time to realize your longterm overhead and reasonable expectation of reliable income.

Take the time to find a fee based financial advisor.

[PMMM]

Worried would be the last word I would ever use but......

If you use most of it buying a dream house I hope you have a pretty high annual regular income because that 1.5 million dollar home will require lots of money to maintain and keep up. Never mind the monthly utility bill. LOL

I would talk to a trusted advisor and maybe dial your plans back a bit. A one time windfall is excellent short term cash flow but not long term net worth. You need to find a way to leverage that windfall into more wealth.