“Leo,” the centimillionaire guest for one of our Mastermind Sessions, shared with members his strategy for handling big paydays.  He said that throughout his career, whenever he received a big chunk of income, the first thing he did was carve out an amount sufficient to cover the income taxes he would have to pay on it and put the money in a special bank account.

The result, of course, was invisible, because the potential problem (having to cough up an unexpected number of dollars at tax time) never became an actual problem.  Leo explained that he would then set aside 90 percent of the remaining money to expand his ever-increasing financial cushion.  And with the remaining 10 percent, he indulged himself and his family with whatever luxuries their hearts desired.

I don’t believe I’ve ever known anyone who planned his financial life so carefully and followed through in such a disciplined manner.  Leo did, in fact, hit a string of crises in the mid-eighties that might have put most wealthy people under.  But thanks to his taxes-first, cushion-second, luxuries-third approach to allocating income, he was able to weather each and every storm.

Today, Leo lives in a $35 million oceanfront mansion in Bermuda.  Prior to moving to Bermuda full-time, he sold his home in Aspen for a cool $19.75 million, which The Wall Street Journal reported to be the biggest residential real estate sale in the history of Colorado.

Which brings me to a longtime friend of mine whom I had always placed in the same category as Leo.  Jack was the epitome of success — a go-go entrepreneur, always on the move, always making deals, always enthusiastic and positive.  Like Leo, he owned two magnificent homes, not to mention a fishing lodge in Panama.

Just as important, Jack was a superb human being — kind, honest, and gracious to a fault.  He was one of those lucky people who possess a natural quality that makes everyone instantly like and trust them.

Back in the early eighties, Jack and I were involved in a cellular-telephone deal together, and as one of the financial requirements for filing cellular-licensing applications, he was required to submit his personal financial statement.  It was an impressive $32 million — a very liquid $32 million — the equivalent of about $100 million today.

As the years passed, I moved abroad and got caught up in other matters, which resulted in my losing contact with Jack.  However, I did think about him from time to time, and wondered how his life was going.  But those “I’ll have to give him a call sometime” thoughts never manifested themselves into reality.

I vividly recall saying to my wife on one occasion, when Jack’s name happened to come up in a conversation, “Knowing what a magic touch Jack has, I wouldn’t be surprised if he’s tripled his net worth by now.”  Just the thought made me feel happy for him, because it couldn’t have happened to a nicer guy.

Recently, I received an e-mail from Jack’s youngest son saying that his father had recently passed away.  And what he told me about his father’s last years nearly took my breath away.

Jack, the epitome of vitality, affluence, and well-being, died penniless in a nursing home.  About seven years after my last contact with him, the IRS presented him with a huge tax bill that forced him to sell most of what he owned at the time, including his two palatial homes in Florida and Wisconsin.

Dementia had begun to set in, followed by a stroke, then confinement to a wheelchair.  The last several years of his life, Jack couldn’t speak at all and had to be fed and cared for by a nurse.

I was touched beyond words when his son told me about the last time he saw his father alive.  Family members had warned him that Jack was so far gone that he wouldn’t even recognize his own son.  But they were wrong.  Though he couldn’t speak, tears rolled down Jack’s cheeks when his son entered the room.

It is impossible for me to focus on a mental picture of Jack confined to a wheelchair, unable to speak, his brain stilled by dementia — and penniless, to boot.  But the way I will always remember him is as a warm, vibrant, prosperous human being.

I don’t know the details of Jack’s IRS problems, but sometimes the unforeseen circumstances Fate places in our path are just too much to handle.  In this regard, Jack’s sad ending reminds me of the words of Baltasar Gracian, the 17^th century Jesuit priest who cautioned, “Place your winnings under cover when they are sufficient or large. … Fortune soon tires of carrying anyone long on her shoulders.”

The words on Forrest Gump’s T-shirt put it more bluntly:  “S___ happens.”  And it happens so frequently that a rational person has no choice but to recognize it as an integral part of life.

What’s especially irritating about it is that no matter how smart you are, no matter how successful you may be, and no matter how carefully you plan your financial affairs, sooner or later there will likely be unforeseen circumstances that will register 8.4 at your epicenter.

All anyone can do to prepare for a seismic life shock of such a magnitude is to never forget that Fate sits on the other side of the Table of Life, plotting her next move.  Make your financial moves very carefully, and never underestimate the unforeseen circumstances that she surely has in store for you.

Overconfidence is a dangerous card to play.  And arrogance is as close as one can come to playing a fatal card.  It’s a good idea to operate your life on the assumption that unforeseen obstacles are lurking in the shadows, just around the next bend.  No matter how well things are going for you, always keep in mind that that fickle trickster known as Fortune refuses to carry anyone on her shoulders indefinitely.