Assignment Task: Windfalls can take many forms, stock or options in a successful startup, inheritance, lottery winnings, or beneficiary of a life or annuity policy. By their nature they're usually a surprise and, even when they're not, it never occurs to most people to prepare themselves for all the consequences of sudden wealth. Here are three scenarios:
1) A 25 year old administrative assistant earning $35,000 a year unexpectedly inherits $1 million from his grandmother.
2) A 50 year old executive at a tech startup finds herself with stock and options worth $5 million when the company goes public.
3) A 45 year old man living on Social Security disability benefits is the recipient of a $500,000 life insurance payout.
What are the potential issues, financial and psychological, that you might anticipate each will face? How would you advise them to manage their new wealth? Which techniques would you employ in managing behavior and ensuring they derive the greatest benefit from their windfall? What pitfalls do you anticipate?