Receiving a significant lump sum can be exciting, but taking a little time to prepare beforehand can make all the difference.
Whether it comes from selling a business, an inheritance, a property sale or another major life event, receiving a large sum of money often brings a mix of excitement and uncertainty.
While it can be tempting to make quick decisions, taking a step back and putting a few sensible arrangements in place first can give you greater confidence and help you avoid costly mistakes.
Here are ten practical steps to consider before your lump sum arrives.
1. Keep your money safe
One of the first priorities is making sure your money is held securely. For many people, National Savings & Investments (NS&I) and UK Government short-term Gilts offer valuable peace of mind, particularly if you're temporarily holding a large amount of cash. It also avoids the complexity of spreading money across multiple banks simply to stay within deposit protection limits.
2. Consider the right NS&I accounts
A combination of NS&I Direct Saver, Income Bonds and Premium Bonds can allow a couple to hold around £6 million securely (£3 million per person), while still earning a competitive return. Opening accounts can take several days, so it's worth planning ahead.If you are receiving in excess of £3m as an individual or £6m as a couple then consider using short-term UK Gilts in addition to NS&I. (Seek professional advice if considering Gilts). A Gilt is also an ideal place to park a future January tax liability.
3. Open your account before the funds arrive
If possible, make a small initial deposit once your account has been opened. This confirms everything is working correctly and reduces the risk of any delays or errors when transferring larger sums later.
4. Think carefully about who owns the savings
If you're married or in a civil partnership, it may be worth considering whose name the savings should be held in. The right ownership structure can help improve tax efficiency, particularly where one partner pays tax at a lower rate.
5. Check how you will transfer the money
Large transfers will often need to be made by CHAPS. If you have telephone banking, you may be able to arrange this over the phone. Otherwise, you may need to book an appointment and visit a branch in person.
Each bank has its own procedures and transfer limits, so check what will be required well in advance. This will help avoid delays or unnecessary stress when the time comes to move the money. Do not leave a large sum in your current account any longer than necessary.
6. Review any mortgage or borrowing first
If you're planning to repay a mortgage or other borrowing, check whether any early repayment charges apply. In some cases, waiting until a particular date could save a significant amount in penalties.
7. Celebrate the moment
Reaching this point is often the result of years of hard work, careful planning or an important life milestone. It's perfectly reasonable to enjoy a small treat or celebrate with the people who matter most. The key is making thoughtful decisions rather than impulsive ones.
8. Don't let the tax tail wag the dog
Tax-efficient investments such as Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS) can have a place in the right circumstances. However, they aren't suitable for everyone. Higher fees, greater investment risk and limited liquidity can sometimes outweigh the tax advantages. Good financial decisions should always start with your long-term goals, not simply the tax benefits.
9. Take the opportunity to get organised
A significant financial event is often a good time to review your wider affairs. This might include updating your will, organising important documents, reviewing lasting powers of attorney or thinking about how you'd like your wealth to support your family in the future.
10. Don't feel under pressure to make big decisions
Perhaps the most important piece of advice is simply this: don't rush.
There is rarely any need to invest a large sum immediately or make major long-term financial decisions before you've had time to consider your options. Taking a little time now can help you make better decisions for years to come.
Before the funds arrive, it's often worth speaking to your financial planner to deal with any sensible short-term housekeeping, understand any tax considerations and begin building a Financial Roadmap around what matters most to you and your family.
Ready to plan your next steps?
Receiving a significant sum of money is often a once-in-a-lifetime event. The decisions you make in the weeks that follow can have a lasting impact on your future, your family and the opportunities available to you.
At Mivida, we help individuals, couples and families take a step back, understand the bigger picture and build a Financial Roadmap around what matters most to them. Whether you're preparing for a business sale, planning for retirement, preparing your legacy or simply want confidence that you're making the right decisions, we're here to help.
