It’s a nice problem to have, isn’t it? Perhaps you’ve unexpectedly received a rather large inheritance, or your Premium Bond numbers have come up? Maybe you’ve finally won the Lottery, EuroMillions or hit the jackpot in other legal ways? It’s a life-changing event, that’s for sure. And while it’s nice to suddenly have no more money worries ever, what will you actually do with the money?

Take a look at the papers and you’ll find scare stories of past lotterywinners who lost the lot because they didn’t know how to handle their sudden wealth. Even if you’re suddenly a multi-millionaire today, be warned that the money can and will run out if you don’t get proper financial advice and spend your new found millions wisely.

So, before you give into temptation to check out the luxury beachside villas on Marbella’s Golden Mile, take a deep breath and do the sensible thing. Here’s how.

1. Pay off all your debts

It should go without saying that before you spend any money, it’s good practice to settle your debts and get rid of those monthly payments. Whether it’s the mortgage that you can suddenly pay off with a single cheque, or the car finance, student loan, credit card debt or home purchases, you’ll feel as if a huge weight has lifted off your shoulders when you clear the lot.

At this point, you may extend your generosity to other family members too. Can you settle your parents’ mortgage or help a brother’s family or a grown-up child with money troubles? Now is the time to show your commitment to your nearest and dearest.

2. Find a good Independent Financial Adviser (IFA)

Having paid off your debts, you’ll still be left with a life-changing amount of cash sitting in your bank account. This is the right time to get professional advice from a reputable IFA, investment planner or wealth manager who is regulated by the FCA (Financial Conduct Authority).

Initially, you’ll be guided through a detailed questionnaire to establish your overall financial position, your financial risk profile and your investment preferences and goals. With that in mind, a suitable wealth maximising strategy can be put in place for the long term. Make sure your financial adviser is not tied to one company; s/he should be free to recommend whatever products are available in the marketplace.

3. Make a Will

Can you imagine what a tragedy it would be if you were run over by a bus tomorrow, not having made a Will? UK intestacy rules are notoriously unclear, so it’s anyone’s guess at this point who would end up with your inheritance. What’s more, Inheritance Tax (IHT) is payable at a flat rate of 40% once the estate is worth more than £325,000. That alone should be motivation enough to see a solicitor and make a Will!

An experienced Trusts, Wills and Probate Solicitor will guide you through your inheritance tax planning to maximise your assets and make sure they will go to your chosen beneficiaries. A properly drawn up Will is the ultimate peace of mind that your windfall won’t end up in the wrong hands as and when you pass away.

Lottery win - spend it wisely

4. Set aside some ‘treat money’

Finally, it’s time to enjoy some of your winnings! There’s no reason to feel in awe of the money and feel that it all has to go into shares and trust funds. Money is the ultimate enabler, meaning you can now do things you had never thought possible.

Celebrate your good fortune by setting aside a goodly amount for personal extravagances. As a general rule, and depending on your overall net worth, about 5-10% of your wealth should be more than enough to fulfill any lifelong ambitions.

If you’ve always wanted to own a yacht or a Lamborghini, go on, indulge yourself. There’s nothing to stop you from taking the whole family on a once-in-a-lifetime trip around the world (in First Class!), book in for some cosmetic surgery or treat yourself to some original artwork or designer jewellery.

5. Invest in property

Every sensible investor will tell you that bricks and mortar are one of the best assets you can own. The benefits of being a property owner are twofold: If the UK property market over the last 25 years is anything to go by, the value of your asset is going to go up. Meanwhile, unless you live in it yourself, you can rent out the property and get an income stream from your investment.

If you don’t already own your own home, now is the right time to buy. Choose a home that you can see yourself living in – it doesn’t have to be a glitzy penthouse or a rambling country mansion if you wouldn’t feel comfortable living there.

Nor does it have to be a UK property. Plenty of wealthy individuals of any age choose to retire in other parts of the world, so whether you join the expat community in Florida or buy that villa on the Costa del Sol, the world is your oyster.

Finally, consider investment property. Purchasing one or several buy-to-let properties will allow you to take advantage of the growing demand for rental property, while any professional building, financial or administrative skills you may have can be put to excellent use in your property portfolio. In fact, becoming a BTL landlord could open up a whole new career path for you.

6. Give money away

Once you’re happy with the long-term investment strategy put together under the guidance of your IFA, you may feel that there’s room left for generosity.

Gifting money is actually a tax-efficient way to make sure your loved ones are looked after. Provided you live for 7 years after you make a lump sum gift, there is no tax to pay. Gift to husbands and wives are entirely free from IHT, as are any donations to charity.

Gifting and inheritance is a long and complicated topic and you are strongly advised to seek specialist legal help before making any big decisions.

Mike James is a featured author and business writer, specialising in HR, Marketing and Cybersecurity. Published on numerous online authorities and print magazines, Mike is currently focusing on HR and management.