What To Do When You Win The Lottery

What To Do When You Win The Lottery

What To Do When You Win The Lottery

The Mega Millions jackpot is now worth a record breaking $1.6 billion. It is the largest prize of any lottery jackpot in U.S. history and comes with a cash option of just $904 million.

At the time of writing this article, Americans are well into the great ticket rush. All vying the overnight chance to become one of the richest people on the planet. Despite the terrible odds of winning the Mega Millions jackpot – approximately one in 302.6 million – someone could match all 6 numbers needed to win tonight.

As a former financial adviser at Merrill Lynch Wealth Management, I would have never advised anyone to play this game in the first place. In reality, the lottery is a yearly $70 billion plus tax that prays on the desperation of the least fortunate in our society. However, despite the money management ability of the winner, they now have the chance to live handsomely and create multi-generational wealth for their heirs.

Congratulations, you’re the winner.

As the winner, you may be under the impression that you will never have to worry about money again. That is actually the opposite of what is about to happen. Now, the only thing you will worry about is money.

There are clear recommendations, rules, and traps to avoid as the winner. I will go over the basics in this article.

Take a Deep Breath

First, do not sign the ticket yet. More on this in the Get Good Advice section.

It is recommended to take a long deep breath. Keep completely anonymous for as long as possible – speaking to no one – for the first couple of weeks at minimum. There has been an incredibly sensationalized media presence about this lottery jackpot because of its historic size. However, that media cycle will eventually fade. The rules vary from state to state on how long you have to claim the jackpot. In Oklahoma, the winner must make claim within 180 days. Some states will allow claims up to a year out. The longer you wait, the less media you may attract.

Can You Stay Anonymous?

Until you claim – yes – but there are only 8 states that allow jackpot winners to stay permanently anonymous. The states that allow you to stay anonymous are Delaware, Georgia, Kansas, Maryland, North Dakota, Ohio, South Carolina and Texas.

Get Good Advice

After winning a jackpot of this size, the best investment you will make is getting great advice from experts.

As a new billionaire, you will want to assemble a top-notch team of experts who will be able to guide your wealth management and help you create that multi-generational wealth that I mentioned earlier.

The team should consist of a financial, legal, tax and insurance element. A top-notch adviser in each field should suffice. They will be able to manage your investments, tax planning, insurance and estate planning, among many other important aspects of wealth management.

To secure your winning ticket, make copies of both sides to show your new lawyer and accountant. Keep the actual ticket in a bank safe deposit box or hire a private security firm. You will not want to sign the ticket until your new team of advisers have had the chance to review the rules and contract from the lottery. In some cases, signing your ticket could prevent you from creating blind trust later.

Advisers are there to advise. At the end, you are in charge of your money. Never outsource writing your own checks. Always – ALWAYS – sign your own checks!

Cash Payment or Annuity Payments

Nearly always, the winner of the jackpot chooses the cash payment. However, is that a smart decision?

The general financial principal is that the dollar today is worth more than the dollar tomorrow. Taking a lump sum payment will allow you to investment the cash proceeds and earn a financial return.

However, you are probably aware that many previous jackpot winners have taken the lump sum and spent the entire fortune to be found in financial ruin only a few years later.

Taking a practical look at the situation, do you have the ability to put together a solid team of experts and will power to stick to a plan? What is your money management track record? If the answers are “probably not” and “bad” then you would be wise to take the annuity payments.

The annuity payments will be spread out over 30 years. This strategy would prevent you from spending the new-found fortune all in one place and guarantee you make over $25 million every year. There are also tax benefits involved with this option. Please consult your tax adviser for more details.

My Biggest Piece of Advice

Use your status as a newly minted billionaire to do good in the world and pursue your dreams. While buying trains, planes, and automobiles with the money may sound fun, it also adds complexity and stress.

Take things one day at a time and don’t make rash decisions.

Austin Patton

Austin Patton

Thank you for reading! I'm a travel and tourism content creator, digital marketing guru, and author of the book How to Travel the World and Experience Life Changing Destinations. Let me know in the comments your thoughts on this post.

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