10 Things To Do When You Win The Lottery
We all have big dreams about winning a big jackpot in the lottery. Aside from planning what to wear when going to pick up the big check, you will have a lot in front of you. You might have a solution to that old set of problems, but a new set is just around the corner.
While those “hundreds of millions” jackpots are occurring more frequently, the actual take home amount will be considerably less after taxes and the “lump sum” cash out. Being a real winner takes planning and strategy. Money is always better to have and not need, than to need and not have. Your life will suddenly change and hopefully for the better.
If you happen to be one of the lucky few who will experience that big windfall through the lottery, you should also know that there can be dangers associated with obtaining a huge chunk of cash, you should be careful and aware of what can happen. Winning a lot of money does not necessarily mean you are finanicialy secure.
Horror stories of lottery winners who have lost big over the years, after they made big mistakes with their winnings, are plentiful. Some have wound up in debt, some have had to return to work, some wind up even worse than before they won. Be careful in how you win, be careful in how you spend.
Here are just a few things to consider after winning a big jackpot:
1. Don’t collect right away keep quiet. Most winners take anywhere from four days to two weeks before turning in their winning ticket. Check with your state to be sure how much time you have to claim your prize. It can vary from 180 days to a year Don’t make the mistake of telling everyone or anyone outside your immediate family. Until you sit down and make a plan, get some legal advice for what you need to do or you’ll start making promises you might not be able to keep. The urge to help others out can be overwhelming. When it comes your money, loved ones and friends can count very well. Their problems can become your problems. Don’t let it. Sudden wealth can be just as stressful as sudden poverty.
2. Get an accountant, financial adviser, and lawyer before you even turn in the ticket. If you don’t already have a team like this, find people you can trust. The most important financial decision you will have to make initially is who’s going to handle your money. Get one of each, they should never be the same person. If possible get referrals from friends and relatives. If you don’t get any there, go to a major accounting firm, a major brokerage and a large law firm.
3. Carefully read all the instructions for claiming your prize on the back of the lottery ticket and on the lottery’s website. Sign your name on the back of the ticket, unless the rules or your legal team advise against it. Make several copies of the front and back of your ticket, and deposit the original in a safety deposit box in a well known bank.
4. Another huge problem that lottery winners must face when the time comes is how to claim your prize. Do you want a cash lump sum or payments. Make this decision depending on how much you’ve won and talk to your legal team first. This decision also depends on what you want to do with your money. The lump sum will equal less than the total of the payments over however many years. The lump sum if invested properly, will probably give you more at the end. The lottery sets up an annuity for you with 25 or 30 year annual payments. If you take a lump sum cash payment you can buy your own annuity along with other investments.
5. Financial advisers can inform you about trust funds, endowments, charitable
remainder trusts, family limited partnerships, estate planning, and more. If you form a Blind Trust with your attorney you can collect the money in the name of the trust and maintain your anonymity. Make plans to set up a foundation for family and close friends. There are tax complications to giving money as gifts. Have a lawyer draw up rules for getting a grant from you. Make the recipients of your gifts sign confidentiality agreements regarding the disclosure of your gift for at least five years. When you get requests for money, direct them to your lawyer and tell them it’s the only way you can be fair to everyone who has asked you.
6. Arrange for a special account at the bank after you talk to your legal team. You
should’nt just deposit millions into your regular checking account. The lottery will send you the money by a wire transfer to your account. With larger, national banks, go to their Private Banking or equivalent division for the more wealthy clients. They may have more options when it comes to banking, and have a better grasp of the disclosure and security procedures in the bank. Demand the red-carpet treatment from whatever bank you choose they’ll be happy to have your account. You may later want to deal with several banks. My theory is never put all your eggs in the same basket.
7. What should you do about your job? Again this depends on how much you’ve won and how much longer you have to work. Are you close to collecting your pension? Does your win set you for life? My approach is if the interest and dividends you can collect on your winnings is more than you can make working then quit. In the mean time take some time off, it may take a few weeks to get your money. Once your co-workers find out you have money they can make your life difficult. You might find yourself hiding out behind the vending machines. As much as you may want to keep working eventually you may have to quit just to find some peace.
8. Change your phone numbers and think about moving. Once you turn in that ticket, the lottery is required by public information law to release your name and hometown. Now that you’re rich, everyone’s going to want to find you and ask you for money. Strangers at your door, notes on your car, are just a few possibilities of what will happen. You can’t avoid the world finding you. You will be sought out by the media and your face revealed on the evening news. Tote the champagne along in the limo ride down to lottery headquarters, turn in your ticket, get your big check, and ride off into the sunset.
9. Find someone who can help save you money. Get someone to help you bargain shop. Just because you’re rich, doesn’t mean you need to overspend for the things you want. Don’t be afraid to bargain you have leverage. If you see a coupon for a new Mercedes don’t be ashamed to clip it. Never pay full price for anything. It’s ok to have a lot of money but it’s even better to keep a lot of money. Those feverish spending sprees are what makes material for the “lottery winner horror stories” we hear. Million dollar mansions require thousands of dollars in monthly maintainence, boats need storage and upkeep. Get the big picture before you buy high ticket items.
10. Learn how to read and understand your balance sheets and financial statements.
Bernie Madoff gave us all the heads up about keeping up with your money and
investments. Know where your money is going. You have to trust someone, but at the same time ask to review your statements, and get your accountant to go over your books from time to time. It won’t hurt to take a class or two to understand what it is you’re looking at.
Money certainly can create problems between people. Things will never be the same as hard as you may try. Envy and jeaously can rear it’s ugly head. Be careful about disclosing too much personal information about your finances. People you consider as friends may have an attitude and start telling you money has made you change or your family might now see you as a personal bank. This all comes wth the territory so be ready for it. To sum it all up, you want to be able to lay in your big fancy bed and have a good night’s sleep.