M any people act impetuously when they receive a large sum of cash -- inheritance, lump-sum pension, work-related bonus, legal settlement or prize. Through lavish spending and poorly planned investments, they squander their money.

Here’s how to make the most of your windfall...

Don’t rush. Park the cash in short-term investments, such as US Treasury and agency securities, that can be changed easily. Don’t make any unchangeable long-term decisions, such as setting up irrevocable trusts, at least in the first two years.

Get good advice. Instead of listening to friends and relatives, find a professional adviser, such as a CPA or a financial planner. Even if you consider yourself financially savvy, expert advice will prevent you from making poor choices.

Examine your needs and objectives. If you earn $100,000 a year or more and plan to work for a long time, you can afford to diversify with stocks and other relatively risky investments with growth potential.

If you are at or near retirement and need steady income, a substantial investment in low-risk vehicles, such as bonds and high-dividend stocks -- such as utilities and Real Estate Investment Trusts (REITs) -- might be better.

If you decide to invest mostly in stocks, buy a specific amount each month for a fixed period to lessen the shock of market fluctuations.

Remember taxes. Think about where you live. Is giving 8% of your lump sum to your state worth the pleasure of living there? Consider moving to a state with no income tax, such as Florida or Texas. Establish residency before receiving the windfall.

If the windfall is about $700,000, speak with a knowledgeable estate attorney on how to minimize estate taxes -- which can be as high as 55%.

Consider your charitable giving. If you are already in the habit of giving money to charity every year, you can make five years’ worth of planned contributions at once. This could maximize tax savings if you are in a high-income bracket -- for example, in the year you receive the windfall.

Fidelity Investments, Charles Schwab and other investment firms offer “donor-advised” charitable gift mutual funds. They allow you to invest your planned contributions and recommend the distribution among charities. Some even allow you to provide years of income to beneficiaries before the charity is paid.