Chances are 1 in almost 175,000,000 for winning the Powerball, which is about 15 times less likely than being bit by a shark and about 60,000 times less likely than being struck by lightning in your lifetime. Nor is playing the lottery a sound financial plan. Most of us, however, have probably taken a moment to daydream about what we'd do with a spare $100 million. In reality, if you did get very, very lucky, financial experts (and former winners) have some advice for what to do when you win the lottery.
Before Turning in the Winning Ticket
Secure your ticket. Make several copies of both sides to show your new lawyer and/or accountant (see below), and then lock the actual ticket away in a bank safe deposit box or a secure personal safe. Once you have a team of advisors in place, have them look over the rules and contract before you sign the original ticket — in some cases, signing your ticket might prevent you from creating a blind trust later.
Take a deep breath and take your time. You have a set amount of time to turn in your ticket, so don't run off to the lottery office first thing the next morning. Let yourself calm down, and then set to work carefully forming your team and plans before you contact the lottery officials.
Protect your privacy. As tempting as it may be to shout it from the rooftops and throw a huge "I won the lottery!" party, keep it as much to yourself as possible, especially before turning in your ticket. Some lotteries will require you to make your name public, give interviews, or show up at a press conference. If so, be sure to change your phone number and set up a new P.O. box beforehand to avoid being inundated with requests. You may also consider forming a blind trust through your attorney to anonymously receive the money, keeping your name out of the spotlight.
Put together a crack team. You're going to need a lawyer, accountant, and financial advisor who have experience with large financial windfalls — finding them should be one of your first steps before you claim your money.
Make a general plan. Before you start forming specific financial plans with your advisors, step back and think big-picture about what you want from this money. Write down your personal, financial, lifestyle, family, and charity goals, and return to that plan later to help keep things on the right track for the long run.
Lump sum or annuities? One of the first decisions you and your team will have to make is whether to take your winnings in one lump sum (usually around 60% of the total value) or have it paid out to you annually over a period of time. Long-term investments take financial wisdom and restraint, but with careful planning, you may be able to grow your lump-sum winnings larger than the future annuity payments would have been. However, if you need some structural help to keep from overspending too quickly, an annual payout is a solid, responsible way to make sure you'll continue to have income through most of your adult life.
Plan for beyond. Sadly, winning the lottery is unlikely to also make you immortal. Work with your team right away to sort out your estate planning, including your will, so your family is taken care of if something happens to you.
Once You Have Your Money
Bank it. Don't show up at the cashier counter with a check for millions — talk to the bank's upper management or private banking department ahead of time to discuss the best options for holding large amounts of money. Remember, the government only insures individual bank accounts up to $250,000, so think about spreading your wealth around multiple accounts and banks.
Set a budget. Silly, right? You have all the money you'd ever need — why do you need a budget? Actually, it's not silly at all. Sit down with your advisors and take a hard look at how much you really have after federal, state, and local taxes; what new annual expenses you'll have (for things like property taxes and upkeep and paying your financial team); and how much you want to give to charity. Think about future higher-education expenses for your family and how much you'll need in your golden years. Then set strict monthly and annual budgets for what's leftover and stick to them.
Form a charity and giving plan. As soon as people find out you've hit it big, you're going to have to deal with a lot of financial requests from friends, family, and charities. Talk to your team about gifting taxation structures and how much you can give each year while still maintaining the lifestyle you desire. You may also consider forming an official charity foundation.
Maintain Your Perspective and Sense of Self
Don't quit your day job. Certainly not until you have your lottery money in hand, but even then consider sticking with some sort of part-time work or at least a passionate hobby. Depending on how important work is to your sense of self, you may want to try a new career or go back to school to study something you've always been interested in.
Keep a healthy mind and body. We all know money can't buy happiness — in fact, some folks say winning the lottery and dealing with the money and requests for help and loans ruined their lives with stress. Eat right, exercise, talk to close family and friends, and seek professional counseling if handling your new wealth is causing too much emotional strain.
Finally, The Motley Fool investment site has some wise advice for what to do when you win the lottery: "The best way to survive winning the lottery is to live the type of life — psychologically — in which you don't need to win the lottery."
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