re: Advise on Large sum payout

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I figure he has to live on this so having the cash covers emergency fund, etc.

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I'd hesitate to keep that much liquid cash on hand, unless the owner is well-disciplined. So many people would fritter away their cash reserves (whether quickly or over several years). If he truly can't work anymore and this is his lifetime nest egg, it needs to be illiquid as possible for his own protection. If he can live on $50K/year, that means he can save a portion of it and build up an "outside" cash reserve over the next 2-3 years. No major purchases should be paid out of the principal, and he should still be saving X percent of that annual income paid out of his investments.

Ask your "friend" if he's getting a lump sum, or a structured settlement...is his takeaway $1 mil, or does he still have to pay the PI/Jones Act attorney's 30%? Does he have mooching relatives and a tendency to spend to inflate his self-worth? Is he happy with a 10-year old car/truck or does he feel the need to run out and get a new one every 3-4 years? Regardless of who does his financial planning, he needs to be honest about his own ability to live on a budget. $2 mil won't go very far if he starts chipping away at it on day 1.