Sudden Wealth Management: The First 90 Days

A business sale, large inheritance, IPO payout, or real estate windfall that lands you at $5M+ of investable assets is one of the most financially consequential moments of your life — and one of the most dangerous. Not because the money is bad, but because the decisions made in the first 90 days are largely irreversible, several carry hard tax deadlines, and the advisory infrastructure most people have (a wirehouse broker, a tax preparer) is not built for this complexity. This guide covers what to do, what not to do, and why getting a fee-only HNW advisor involved immediately — before making a single investment decision — is the highest-return move you can make.

Why the source of the windfall matters for tax planning

Each source of sudden wealth has a different tax profile. Getting the basics wrong in the first weeks can cost more than a decade of investment fees.

Business or asset sale

A stock sale typically qualifies for long-term capital gains treatment: 20% federal + 3.8% NIIT = 23.8% federal on gain for HNW sellers.¹ An asset sale allocates proceeds across asset categories — equipment (ordinary income via depreciation recapture), inventory (ordinary income), goodwill (capital gain) — and the blended rate is almost always higher. Key planning decisions happen before or at closing:

• Installment sale election (IRC §453). Selling on installment terms — receiving payments over multiple years — spreads the tax liability across those years by default. If you want to recognize all gain in the year of sale (for example, to pair with a large charitable deduction), you must affirmatively elect out under §453(d) no later than the original return due date, including extensions. Missing this window locks in installment treatment. Note: installment obligations over $5M face value at year-end trigger a §453A interest charge on the deferred tax amount.²
• QSBS exclusion eligibility. If the company was a domestic C-corporation with gross assets under $75M at the time of your investment, shares held for at least 3 years may qualify for the §1202 QSBS exclusion — up to $15M of gain excluded under OBBBA 2025 rules (tiered 50/75/100% at 3/4/5-year holding).³ California does not conform; plan accordingly.
• Pre-close charitable strategy. Donating appreciated shares to a donor-advised fund or CRUT before the sale closes avoids capital gains tax on the donated shares entirely. Post-close donations receive the after-tax cash value only. Timing matters.

Inheritance

Inherited assets receive a stepped-up tax basis to fair market value at the decedent's date of death under IRC §1014.⁴ A concentrated position that was a low-basis nightmare for the decedent has zero embedded capital gain for you. This is one of the largest tax benefits in the U.S. code — and one frequently squandered by heirs who sell assets immediately without understanding the step-up.

Inherited IRAs are a different story. Under SECURE 2.0 and T.D. 10001 (July 2024), most non-spouse beneficiaries must distribute inherited IRA assets within 10 years — and must take annual RMDs in years 1-9 if the decedent had passed their required beginning date.⁵ A $3M inherited IRA on top of your existing income can generate significant IRMAA surcharges and push ordinary income into the 37% bracket. Modeling the drawdown schedule early matters.

Equity compensation / IPO / tender offer

IPO or tender offer proceeds from ISOs trigger AMT in the exercise year based on the spread between exercise price and FMV; NQSOs create ordinary income at exercise. Large RSU vesting events have 22% federal withholding — which almost always under-withholds for executives in the 37% bracket. The gap between 22% withheld and 37% owed accumulates quietly until April. For a $3M RSU event at 37%, the gap is $450,000 in underwithholding. Plan estimated payments accordingly.

Real estate windfall

Sale of appreciated investment real estate triggers LTCG at 23.8% federal plus up to 25% unrecaptured §1250 depreciation recapture on the portion attributable to prior depreciation deductions. A §1031 exchange into like-kind property defers all tax — but the 45-day identification and 180-day closing windows are strict. Delaware Statutory Trusts (DSTs) are frequently used as passive 1031 replacements when you want to exit active management. See our real estate tax planning guide for the full mechanics.

Legal settlement

Tax treatment of settlement proceeds depends on what the payment is compensating for. Physical injury damages are generally excludable under §104(a)(2). Lost wages, punitive damages, and interest are ordinary income. Investment losses may generate capital gain or loss. Settlements frequently involve mixed character — understanding the allocation before accepting a lump sum (rather than itemized amounts) can matter significantly.

The 90-day rule: what not to do first

Research on sudden wealth consistently shows that the period of highest risk is the first 12-18 months. Family requests for money, investment pitches, lifestyle expansion decisions, and advisory relationships all converge before you have the information or structure to evaluate them properly. The family asking for $500K, the friend with an "opportunity," and the wirehouse advisor offering to "manage the relationship" all appear in rapid succession. Having a fee-only advisor with no product-sales incentive already in place before these conversations start is structurally different from trying to evaluate each one on the fly.

Urgent tax decisions — with real deadlines

Not everything can wait 90 days. These decisions have hard windows:

Assembling your advisory team in the first 30 days

A windfall that leaves you at $5M+ requires a different advisory team than the one that got you there. Fee-only HNW advisors are the quarterback — they coordinate the specialists and ensure the pieces are internally consistent:

• Fee-only wealth advisor (hire first). Coordinates the full picture. No product sales, no AUM kickbacks. Provides investment strategy, tax-location planning, estate coordination, and a written investment policy statement (IPS) before any allocation decisions are made.
• CPA / tax advisor (first 30 days). Models the tax liability from the windfall event, determines estimated payment requirements, identifies pre-year-end tax planning windows, and coordinates with your wealth advisor on timing decisions. This is different from a tax preparer; you need a CPA with HNW planning experience.
• Estate attorney (first 60 days). Updates or drafts your will, trusts, powers of attorney, and healthcare directives to reflect your new asset level. Reviews beneficiary designations. Identifies new estate planning opportunities (GRATs, SLATs, dynasty trusts) appropriate at your wealth level. See the estate planning guide for HNW structures.
• Insurance specialist (first 90 days). Reviews umbrella coverage — a $2M umbrella policy is inadequate at $10M of net worth. Evaluates whether PPLI (private placement life insurance) makes sense as an alternative investment wrapper. See the asset protection guide for layered strategy.

The windfall allocation framework

A disciplined allocation framework prevents the most expensive errors: over-concentrating in a new investment before the tax picture is clear, or putting the entire windfall at risk before the liquidity reserve is established.

Tier 1 — Tax reserve (calculate first, set aside immediately)

Before allocating anything else, model the full tax liability from the windfall event. For a $10M business sale at 23.8% federal LTCG + state tax (say 9.9% in Oregon = 33.7% effective), the tax reserve is $3.37M. Do not invest this capital — it is not yours. Keep it in Treasury bills or insured money market until estimated payments are due.

Tier 2 — Liquidity reserve (12–24 months of expenses in cash/short-term)

After the tax reserve, establish a 12-24 month liquidity reserve in short-duration Treasuries or high-yield savings. This covers known near-term expenses (home purchase, business investment, family obligations) and serves as a buffer against being forced to liquidate long-term investments at inopportune times. At $10M after-tax, this is typically $200K–$500K depending on lifestyle.

Tier 3 — Long-term investment portfolio (the core)

The remaining capital builds the permanent portfolio. This is where asset location, direct indexing, alternative investments, and the overall investment policy statement apply. At $5M+, consider:

• Direct indexing in the taxable account for ongoing tax-loss harvesting alpha (~1-1.5%/yr). See the TLH calculator.
• Asset location — bonds and REITs in tax-deferred; growth equities in taxable or Roth; highest-expected-return assets in Roth. See the asset location optimizer.
• Alternatives allocation — at $5M+, private credit, PE, and real assets are accessible via qualified purchaser ($5M invested) or accredited investor ($1M net worth) thresholds. Typically 15-25% of a HNW portfolio. See the alternatives guide.

Tier 4 — Charitable and estate planning allocation

Year-of-event charitable giving is the highest-value timing. Donating appreciated shares — or cash in the year of a large income event — allows deductions against peak ordinary income rates. A donor-advised fund lets you make the deduction now and distribute grants over years. See the DAF guide and CRT guide.

Estate planning updates after a windfall

If your estate documents were written when you had less than $1M of assets, they almost certainly don't reflect your current situation. Critical updates:

• Beneficiary designations. IRAs, 401(k)s, life insurance, and annuities pass outside the will by contract. Review every account. These override your will and trust entirely.
• Revocable living trust. If you don't have one, create it. At $5M+, probate avoidance, privacy, and multi-state property coordination matter.
• Powers of attorney and healthcare directives. These become more important as the complexity of your estate grows.
• Annual gifting program. At $19,000 per recipient per year (2026), a couple with two children and four grandchildren can transfer $228,000/year gift-tax-free with zero exemption usage.⁷ Start the clock immediately.
• 529 superfunding. Fund $95,000 per beneficiary ($190,000 for couples) out of your estate in a single year using the 5-year election — removing that amount from your gross estate immediately.⁷
• Larger transfer strategies. With $15M permanent estate/gift/GST exemption under OBBBA, families with $5M–$30M can transfer assets to irrevocable trusts (GRATs, SLATs, IDGTs) using exemption now rather than allowing further appreciation to occur in the taxable estate. See the irrevocable trust guide.

Common mistakes that destroy sudden wealth

These errors appear in the first 1-3 years and are difficult to reverse:

• Overpromising to family before the tax bill is known. Committing $500K to a sibling's business before calculating your $3M tax liability creates a liquidity problem that looks impossible to explain later. The tax reserve comes first, always.
• Lifestyle expansion before the portfolio is built. Buying a second home with $3M of the $10M after-tax proceeds means 30% of the windfall is now in an illiquid, non-income-producing asset before the investment structure is in place. There is no wrong answer on the house — but buy it after the portfolio framework is established, not before.
• Concentration in the same asset type that generated the windfall. A business seller who immediately puts the proceeds into private equity in their former industry, or a tech executive who keeps 80% in tech equities, hasn't diversified — they've replicated their original risk. Diversification is most valuable immediately post-event.
• Taking investment meetings before the IPS is written. An investment policy statement (IPS) defines your allocation targets, risk tolerance, time horizon, and constraints before you see any investment pitch. Without it, every pitch gets evaluated on its own merits — which is how concentration and poor fit happen. Your fee-only advisor writes this document before any allocation decisions are made.
• Ignoring estimated taxes until April. A $10M sale in June creates a $2.38M federal tax liability. Missing the June 15 and September 15 estimated payment deadlines while the money sits in a checking account earns IRS penalties on top of state penalties — and the safe harbor requires 90% of current-year tax OR 110% of your prior-year liability if your 2025 AGI was over $150K.
• Choosing an advisor based on relationship rather than competence. The wirehouse broker who managed a $200K IRA and the insurance agent who sold you term life insurance are not equipped for $10M+ planning complexity. Credentials (CFP, CFA, CPWA, PFS), HNW specialization, and fee-only structure all matter more than familiarity at this asset level. See our advisor selection guide.

First steps by windfall type — interactive guide

Select your primary windfall source to see source-specific immediate actions:

The role of a fee-only HNW advisor at this moment

The difference between a wirehouse broker and a fee-only HNW advisor is structural. A wirehouse broker earns commissions or trails on products placed in your account — the business model creates an incentive to place you in products with higher payouts. A fee-only advisor earns only the advisory fee. At $10M of incoming capital, the product-placement incentive at a wirehouse can represent tens of thousands of dollars annually. The fee-only advisor's incentive is entirely aligned with your long-term outcome: they keep you as a client only if you stay wealthy.

At $5M+ of investable assets, HNW-focused fee-only advisors typically charge 0.5-0.8% AUM — less than half the 1.1-1.3% wirehouse rate, with direct indexing, coordinated tax planning, and estate coordination included rather than sold separately.

The moment a windfall lands is the highest-value time to establish this relationship. The tax planning window is open. The asset allocation decisions haven't been made. The estate documents need updating. Getting the right advisor in place before making any of these decisions is worth more than the advisory fee for the lifetime of the relationship.

1. IRS Tax Topic 409 — Capital Gains and Losses — IRS.gov. Long-term capital gains rate 20% applies to gains for taxpayers in the highest income brackets; 3.8% NIIT applies to net investment income above $250,000 MFJ threshold under IRC §1411. Combined 23.8% for HNW sellers. 2026 LTCG 20% bracket threshold: $613,700 MFJ per IRS Rev. Proc. 2025-32.
2. 26 U.S. Code § 453 — Installment Method — Cornell LII. Installment method applies by default to qualifying sales with at least one payment received after the year of sale. §453(d): election out must be made no later than the due date (including extensions) of the return for the year of sale. §453A: interest charge applies to installment obligations with FMV exceeding $5M outstanding at year-end, at the applicable federal rate.
3. 26 U.S. Code § 1202 — Partial Exclusion for Gain from Certain Small Business Stock — Cornell LII. OBBBA (July 2025) amended §1202 to raise the exclusion to $15M per issuer with tiered rates: 50% exclusion at 3 years, 75% at 4 years, 100% at 5 years. Original investment must be in qualifying C-corp with gross assets under $75M at acquisition.
4. 26 U.S. Code § 1014 — Basis of Property Acquired from a Decedent — Cornell LII. Property acquired from a decedent receives basis equal to fair market value at date of death (or alternate valuation date if elected). This step-up eliminates all pre-death unrealized appreciation for capital gain purposes.
5. IRS Required Minimum Distributions FAQs — IRS.gov. T.D. 10001 (July 2024) finalized inherited IRA rules: non-spouse beneficiaries subject to 10-year rule must take annual RMDs in years 1-9 if the original account owner died after their required beginning date. Failure to take results in 25% excise tax under §4974.
6. Estimated Tax Frequently Asked Questions — IRS.gov. Safe harbor rule under IRC §6654: no underpayment penalty if taxpayer pays the lesser of (a) 90% of current-year tax liability, or (b) 100% of prior-year tax liability — increased to 110% if prior-year AGI exceeded $150,000 ($75,000 MFJ separately).
7. IRS Rev. Proc. 2025-32 — 2026 Tax Inflation Adjustments — IRS.gov. 2026 annual gift exclusion: $19,000 per recipient per year. 529 superfunding election: 5-year accelerated gift (5 × $19,000 = $95,000 per beneficiary single / $190,000 MFJ) under §529(c)(2)(B). Contributions treated as completed gifts removed from gross estate.

Tax values reflect 2026 rules verified against IRS Rev. Proc. 2025-32, T.D. 10001, OBBBA (July 2025), and SECURE 2.0. IRC §1014 step-up, §453 installment rules, §6654 safe harbor, and §1202 QSBS exclusion are statutory provisions. Consult a qualified CPA, estate attorney, and fee-only wealth advisor before acting on any of the strategies described on this page.