Sudden Wealth

Background

Ryan and Alexis met in college. Ryan was studying project management and Alexis was a counseling major. Shortly after graduation they got married, Ryan took a job at a manufacturing company and Alexis went on to receive her master’s in clinical mental health counseling. Afterwards, she began working and they bought their first home. 

Ryan had student loans, but Alexis’ grandpa, who owned a mid-sized engineering firm, paid for all of his grandkids’ college, so she graduated debt-free.

They each had part of their paycheck’s withheld for their employer retirement plans, but didn’t invest much beyond that. They liked the idea of real estate investing, but weren’t totally sure how to start or if that was a good fit for their situation.

About 4 years later, they found out they were pregnant with their first child. Soon after that, Alexis’ grandfather passed away and they found out he left them a portion of his estate, currently worth $4 million.

The Problem

Alexis knew her grandfather was wealthy, but didn’t expect to get an inheritance… at least not yet. She figured it’d all be passed down to her parents’ generation and she may get something decades from now but had never counted on it.

As a couple, the Collins hadn’t even thought about managing that much money. They both earned decent incomes for their age, but weren’t “wealthy.” They wanted to make sure they were responsible and didn’t spend it (they had heard statistics about lottery winners and inheritors going broke and wanted to avoid that), but they didn’t know what to do with it all. 

They also couldn’t help but feel a little bit guilty. One day they were just like all their friends, and the next they had a multi-million-dollar net worth and hadn’t done anything to earn it. Was that wrong? They knew it wasn’t morally wrong but it still felt unfair.

They also had some disagreements about whether or not to spend some of the money, how much to spend, and what to spend it on. They had never really argued about money before but now they felt more tension between them then they ever had.

All of this caused Ryan and Alexis to “freeze.” It seemed impossible to feel confident choosing what to do with the money, so they just left it in a savings account.

The Solution

Ryan and Alexis scheduled a free Discovery Call with Peak Financial Management to see if a CKA© could help them navigate their newfound wealth. They wanted someone to help them understand not only the financial implications of their situation but also the spiritual and relational ones.

After going through a free consultation, they hired a CKA© to guide them. 

Their CKA© discussed foundational biblical principles of finance with them and helped them process some of the emotional challenges that came with the sudden inheritance. They prayed together and their CKA© reminded them that God owns everything and they were just stewards of God’s resources. As a result, God was ultimately the one who gave them the money, which meant He knew they could handle it wisely. 

With the help of their CKA©, the Collins clarified their values, prioritized their goals, and made a plan for the money. 

First, they opened a donor advised fund (DAF) which would allow them to give to their church and other charities anonymously. They used their DAF to give a tithe (10%) of the inheritance to their local church and then they set up a giving fund to make impact investments and charitable grants to causes they were passionate about such as Bible translation.

Next, they created an estate plan that reflected their new financial and family situation.

Then, they paid off their debt including Ryan’s student loans and their home mortgage.

After that, they diversified the rest of the money and invested a portion in a rental house and a portion in a faith-based investment strategy in the stock market.

Finally, after praying, talking to one another, and discussing with their CKA©, they decided not to make any major changes to their lifestyle spending other than enjoying the extra cash that was freed up by not having a mortgage payment. 

The Results

Ryan and Alexis are now parents to a beautiful daughter named Amelia and are expecting their second! Because they paid off their mortgage, they had enough margin for Alexis to quit her job and be a stay-at-home mom without having to spend the money from the inheritance.

They found that they enjoy real estate investing and the opportunity to bless their tenants. As a result, they saved up and paid cash for two more rental homes. Their net worth has increased steadily and their generosity has increased exponentially. The most fun they have with money is giving it away and they continue to contribute to their donor advised fund.

They feel confident making decisions because they have a simple plan and guidance from an advisor they trust. They no longer struggle with feelings of guilt because they have a stewardship mindset – understanding that God owns everything and they are simply managing His money for His glory.

*Disclaimer: All scenarios are entirely hypothetical and the individuals/families described are not real clients of Peak Financial Management. Nothing in these case studies should be construed as a guarantee of results/outcomes of, or satisfaction with services provided by Peak Financial Management.