It could be a bequest from a loved one, a larger-than-usual tax return or the payout from one of the natural gas leases many in our area are signing. Wherever it comes from, unexpected money can present a host of opportunities — or difficult choices, especially in today’s climate of economic uncertainty.


 It could be a bequest from a loved one, a larger-than-usual tax return or the payout from one of the natural gas leases many in our area are signing. Wherever it comes from, unexpected money can present a host of opportunities — or difficult choices, especially in today’s climate of economic uncertainty.


“In times like this, you need to follow the classic pattern of maximum diversification,” says Rick Leet, a certified financial planner. “You absolutely cannot have all your eggs in the same basket. And you also need to change your strategy based on how quickly you want to see income from the money. The sooner you need it, the less aggressive you can be.”


If this sounds like a lot to take in, it is. Leet and a host of other financial professionals say the vast majority of people who receive a windfall of money do not consult the appropriate professionals — and that costly mistakes can result.


“Oftentimes mistakes people make with their money can be undone,” he says, “but it’s hard to know if the undoing process will end up being more costly than the mistake itself.”


According to Leet, even before receiving the money, there are three professionals to whom everyone needs to speak: an accountant, an attorney, and a financial planner. While an accountant can advice the recipient on matters of taxation and investment, and the attorney on how to manage the estate, it is the financial planner who looks at long-term strategies and makes sure all parties are on the same page.


“We’re kind of like coaches, we tell you who you need on your team and make sure everyone’s playing the same game...we help you decide what your goals are for your money, what it means to you.”


Accountant Frederick Eck, says that while many people think of speaking to an accountant when deciding what to do with their money, some forget an elementary rule of wealth.


“Some people get so excited when they see dollar signs, think they’re going to pay off a mortgage or something, and if they don’t set aside enough money for taxes come April they’re going to have a wake-up call,” he said. “All these lease payouts, for example, are taxed as ordinary income in the year you receive it, even if the lease is spread over five years.”


An accountant can suggest tax paying and itemizing strategies to come with an unexpected tax burden, such as paying federal income tax in December or trying to negotiate a staggered payout on a lease.


Stephen Burlein, a local attorney who offers estate planning services, agrees that an accountant is essential.


“If I were advising a client, I’d tell them to set up a meeting with an accountant if possible even before receiving their money. You could be looking at putting yourself into a higher tax bracket, and in some cases even capital gains tax,” he said. “After that, we go over estate planning, which can encompass everything from trust preparation and powers of attorney, to will writing and gifting.”


Gifting the money seemed to be on the minds of many Honesdale residents to whom we putt he question. While none first thought of visiting an attorney, financial advisor, or estate planner, many stated they would give the money away.


“I think my first priority would be to make sure my family was taken care of,” said Susan Knickerbocker of Honesdale. “After that I’d give a lot of it away to charity.”


John Carmody, on the other hand, had more musical aspirations for his theoretical windfall.


“I’d buy a vintage Gibson Les Paul,” he said.