4 kinds of unexpected windfalls and what you might do with them
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You might go through life never expecting to get some kind of extraordinary cash payout. If you’re already financially well off, you won’t ever need one. However, most people don’t fall into this category.
If you’re not wealthy, and you suddenly get a significant chunk of money that you didn’t expect, it can turn your world upside down. You might have distant relatives coming out of the woodwork with their hands out.
In this article, we’ll talk about a few unexpected windfalls and what you might do with them. Perhaps you’ll never find yourself in a situation where you get an unanticipated payout of this nature, but it’s helpful to think about what you could do if it ever happens.
A payout from a personal injury lawsuit
Maybe a person or company harms you or makes you ill. If you feel certain their action or inaction caused your injury or sickness, you can sue them. That’s a personal injury lawsuit, and the law considers it a civil action.
Receiving a personal injury lawsuit payout could happen if you and your lawyer can prove your case in court. You might also get a sizeable settlement offer before the lawsuit gets to a jury’s verdict. That will often happen if you have a lot of evidence that proves the defendant’s guilt, and their lawyer tells them they should settle.
When you receive this money, whether it comes via a jury’s verdict or a settlement offer that you accept, it should make you happy. After all, this person or company harmed you, and now, you’ve successfully sought justice and compensation.
However, you will need to pay your lawyer, so some of the money will go to that. A personal injury lawyer usually gets 25%-40% of your settlement through a contingency payment agreement.
Also, you will probably need that money if you have medical bills piling up or you have missed work while you recovered after the injury or illness that sidelined you for a while. It is not like you can use that money to buy a boat or go to Disneyland unless you received more than enough to cover the medical bills and the cash you lost from missing work.
If the person or company that harmed you caused permanent damage, you should also consider saving the money left over after paying your lawyer, paying off outstanding medical bills, etc. You will probably need that cash in the future, especially if what happened derailed your career and you can no longer work at the same job that you once could.
An unexpected inheritance from a relative
You might also get an unexpected inheritance from a relative. If a relative dies, then you will probably know if you have any money coming your way from it. For instance, if a parent dies, and you’re on good terms with them, then you shouldn’t feel too surprised if they left you something. Maybe you even talked about it with them in advance.
There’s also the rare situation where a distant relative dies and leaves you something, and you didn’t expect it at all. Those scenarios happen more often in movies or books, but it’s not impossible.
Whether you expected the money you’re receiving through your inheritance or not, you might do something responsible with it, like pay off the mortgage on your home or pay off your student loans. You could also do something frivolous with it, like go on a big blowout vacation or buy something impractical, like a sports car. You should think about your financial situation carefully before making a decision.
If you do not have any outstanding debts and you already have a nest egg in the bank, then you might spend the money a little more recklessly. If you have debts, repairs to your house that you need to do, or something similar, you should probably put the money toward those things instead.
Winning the lottery
If you win the lottery, then that is the very definition of an unexpected windfall. If you win millions, then your life will change instantly. You will have to give the government a large chunk of that in taxes. You should wait and see how much you net after you’ve paid taxes on it and the lottery sends you a check.
If you won millions, you should take some time to talk to your family members about what you might do with that money. Maybe you’ll move to another state or into a larger house. You might buy fancy cars or other trappings of wealth that you can now afford.
If you’re more sensible, you might simply invest the money for the future. You never know what expenses might arise in the coming years.
To some degree, what you’ll do with that money will depend on what you prioritize most in life. Maybe, if you want to do something nice for yourself and your family, you will travel to international destinations and stay at fancy hotels, making some happy memories together. Many people will think that sounds quite pleasant.
A payout from a life insurance policy
A payout from a life insurance policy certainly represents an unexpected cash windfall. However, much like getting money from a personal injury lawsuit, you will likely pay a high price to get that cash.
If you get money from a life insurance policy, that probably means someone close to you died. Maybe your spouse died, for instance.
If so, you will likely grieve their absence even as you figure out what to do with the money. Much like any other windfall, you can do something frivolous with it, but you might also feel that you should save it for the future, especially if the person who died was one of the family’s main breadwinners or its sole earner.
In all these situations, you should consider your options carefully before deciding on the best course of action.
