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Arkansas Powerball lottery winner in no rush to claim jackpot

PowerballPowerball: Arkansas Powerball lottery winner in no rush to claim jackpot

LITTLE ROCK, Ark. — Work might not be the top priority for someone who's just won the lottery, but financial experts say deciding what to do with a multimillion-dollar prize is a job in itself.

The holder of the winning ticket in Powerball's Jan. 2 jackpot drawing, a ticket sold at a Mayflower convenience store, still had not claimed the $25 million prize Tuesday, a delay Arkansas' lottery director says is understandable considering the big decisions to be made.

"Put yourself in the Powerball winner's shoes," Lottery Director Ernie Passailaigue said. "This is probably going to be a life-changing experience for you. You're probably going to look at a number of things in regards to the funds: What are you going to do with the money? How are you going to invest it? What are the tax consequences?"

One of the biggest decisions a Powerball winner has to make is whether to choose the option of collecting the full amount in annual payments over 29 years or take a lump-sum payment of $12.15 million, before taxes.

Both option have advantages and disadvantages, according to Rick Kreth, an account executive with Little Rock investment banking firm Crews & Associates.

If the lump sum is chosen, "you're going to have to hire yourself an investment adviser probably," Kreth said. "You're going to get everybody in the world calling you with great ideas to invest your money in. You're going to get every second cousin and brother-in-law that's got the best investment scheme in the world calling you and wearing you out."

Choosing a long payout takes a lot of pressure off the winner, he said.

"If you get the annuity payment, you can say, 'Hey, I'm getting the annuity payment, and that's just enough for the family and I to live the lifestyle we want. I don't have the excess money to loan you.'" Kreth said.

Annual payments on a $25 million jackpot would start at $445,752 and get bigger each year to compensate for inflation, reaching $1.39 million in the final year. Kreth said a disadvantage of that option is that the winner could easily spend the entire amount over the 30-year period.

"If you don't save some of that money every year, when that 30th year gets there, there's nothing left. If you take the lump sum payment and only live off the interest or the earnings of that lump sum payment, you'll have all the lump sum payment left at the end of 30 years," he said.

Kreth said he would be prone to taking the lump sum, but first "I would hire a good tax attorney — he might convince me otherwise."

Sarah Cotton, a partner in the Little Rock law firm Friday Eldredge & Clark, said she would recommend hiring at least three people: An investment adviser, an attorney and an accountant.

"The investment adviser is going to advise them on the kind of return (they can get), different places to put their money, those kinds of things," Cotton said. "I don't do that. I'm going to be able to do the wills, powers of attorney and different tax advising methods because I'm a tax attorney. And then the CPA will be also doing some tax advising and then preparing any returns."

The winner can expect 7 percent of the prize money to go to Arkansas and 35 percent to the federal government in income taxes, Cotton said. That would reduce a $12 million lump-sum payment to about $7 million, but "obviously it's still a life-changing event," she said.

Some winners may choose to give a portion of their winnings to charity.

"While you're looking at that federal tax you've got to pay and the state tax you've got to pay, you get to deduct in most circumstances the amount you give to charity," Cotton said. "So if you're charitably inclined, you want to do it in the year that you're taking those funds into income."

The maximum bank deposit the federal government will insure is $250,000 — until Jan. 1, 2014, when the limit will go to $100,000 — so a lottery winner is probably going to want to put the money in more than one place, according to Cole Martin, CEO of First Security Bank in Clarksville.

Martin said a financial advice team would help a lottery winner structure his finances to make sure his deposits are insured.

The team also could help the winner make wise purchases, Martin said. Among the many decisions a winner has to make is "whether they want the money go to responsible things instead of, you know, buying a new car right off the bat," he said.

"One of those (lottery winners) traded in his mobile home and got a double-wide. That's not very responsible," he said.

Arkansas News Bureau

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17 comments. Last comment 5 years ago by time*treat.
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time*treat's avatar - radar

United States
Member #13130
March 30, 2005
2171 Posts
Offline
Posted: January 18, 2010, 10:20 am - IP Logged

I so want a pair of those Powerball WinnerTM shoes. Big Grin

In neo-conned Amerika, bank robs you.
Alcohol, Tobacco, and Firearms should be the name of a convenience store, not a govnoment agency.

    Avatar

    United States
    Member #80450
    September 27, 2009
    56 Posts
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    Posted: January 18, 2010, 10:40 am - IP Logged

    After I win...I will be there the next business day to claim my money...I already know what to do.

    .

      Lucky4Life's avatar - batman14

      United States
      Member #85038
      January 7, 2010
      190 Posts
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      Posted: January 18, 2010, 11:37 am - IP Logged

      After I win...I will be there the next business day to claim my money...I already know what to do.

      +1

        HaveABall's avatar - rocket

        United States
        Member #72448
        March 18, 2009
        984 Posts
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        Posted: January 18, 2010, 11:37 am - IP Logged

        Oh, great, "luvrh" ... now we're all thinking about stripping again!

        Having millions of dollars in my financial accounts means more, consistent fun for me.Lovies

          HaveABall's avatar - rocket

          United States
          Member #72448
          March 18, 2009
          984 Posts
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          Posted: January 18, 2010, 12:21 pm - IP Logged

          US FlagFirst, request an emergency 2-week vacation from work once you've won the jackpot.

          Second, make a 3 hour joint appointment to meet with a well seasoned tax attorney and financial advisor (be sure it's a joint meeting) -- that way in your "bouncing off the clouds state" if you miss something the tax attorney can be your backup.  Inform these hired advisors of your favorite charities (or new ones if you haven't helped any recently) debts, vehicle, education, guardianship, and housing situation (happiness level), and brainstorm a 'roadmap'.  If you have a family, possibly also creating a family trust.  Spend the next week or two filling out all of their legal form informations, trusts, funeral plans, wedding plans, trusts, etc.

          Upon receiving the funds into your checking account, why not:

          - Spend two days at your computer electronically paying off ALL of your debts;

          - Spend a few hours typing a respectful resignation notice for your employer and express mail to your supervisor (Now someone who NEEDS the salary is allowed to be hired quickly; there are probably several qualified and you'll rapidly ceased a stranger's suffering);

          - Enjoy a weekend at a lovely hotel.  Go swimming in the hotel's pool, order a bottle of their best champaign for delivery to their whirlpool, enjoy your pleasurable soak;

          - Spend a couple days educating yourself, on-line, for a brand new car, van, limousine, SUV, and/or truck.  Go test drive a few of your favorites to decide on one; buy it 'loaded' without going overboard on price haggling;

          - Donate your undesired clothing, linens, and furnature to the St. Vincent DePaul Society (or your choice);

          - Begin researching housing and various climates that would comfort and give you/family the most joy.  Rent a nice house.  That way it's easy to move in a year or two if you forgot/missed something in your research.

          - Don't tell anyone that you won a lottery, are unemployed, or that you are wealthy.  You're immediate family's knowledge of your glee should suffice, and they need to understand that their knowledge of this is confidential between the two of you.

          Having millions of dollars in my financial accounts means more, consistent fun for me.Lovies

            Grovel's avatar - f800e6a39fbfea795d1dcbb09f2244
            Little Rock, AR
            United States
            Member #68365
            December 19, 2008
            232 Posts
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            Posted: January 18, 2010, 2:24 pm - IP Logged

            I don't see the point of putting your money into different accounts just to make sure it's insured. As long as you put it into a major bank, you can always count on the goverment to bail them out if they run into trouble.

              time*treat's avatar - radar

              United States
              Member #13130
              March 30, 2005
              2171 Posts
              Offline
              Posted: January 18, 2010, 7:15 pm - IP Logged

              I don't see the point of putting your money into different accounts just to make sure it's insured. As long as you put it into a major bank, you can always count on the goverment to bail them out if they run into trouble.

              The bank's money is separate from the customers' money. Their bailing out doesn't include you. Dead

              Look at what happened to the funds of people who had over $100,000 at IndyMac; it was considered a major bank.

              In neo-conned Amerika, bank robs you.
              Alcohol, Tobacco, and Firearms should be the name of a convenience store, not a govnoment agency.

                LadyMylena's avatar - avatar6 1.jpg
                Kansas
                United States
                Member #83963
                December 19, 2009
                347 Posts
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                Posted: January 18, 2010, 9:47 pm - IP Logged

                I so want a pair of those Powerball WinnerTM shoes. Big Grin

                Me, too.

                I assure you, there would be no hesitation...I would be there the very next business day to claim it, I don't want any advisors, as I trust myself the most. I will claim it anonymous, lump sum and direct deposit. Then I will spend a couple of days, paying off every debt I have (it wouldn't take long), go buy the house I want, buy both of my oldest daughters a new car, pay all my utility bills in advance...and withdraw the rest and shove it somewhere that the sun doesn't shine, and nobody knows where it is. Then I will visit a lawyer, make a will, and upon my death, the recipients will know where to find the remainder that we haven't used. Wink

                Luck is  ** believing  ** you're lucky.” ~Tennessee Williams

                Money is neither my god nor my devil. It is a form of energy that tends to make us more of who we already are, whether it's greedy or loving.  ~ Dan Millman


                  LadyMylena's avatar - avatar6 1.jpg
                  Kansas
                  United States
                  Member #83963
                  December 19, 2009
                  347 Posts
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                  Posted: January 18, 2010, 10:18 pm - IP Logged

                  Oops, I might also add that some of that is going to help others, and the remainder after that, will be in the will. I don't need ALL that money, and neither does my family (they will already be taken care of). If it's a really BIG jackpot, we couldn't use all of that in our lifetime. lol  So, a good portion will be given to the needy.

                  Luck is  ** believing  ** you're lucky.” ~Tennessee Williams

                  Money is neither my god nor my devil. It is a form of energy that tends to make us more of who we already are, whether it's greedy or loving.  ~ Dan Millman


                    rdgrnr's avatar - walt
                    -Ridge Runner- Oracle of the Appalachians
                    Way back up in them dadgum hills, son!
                    United States
                    Member #73904
                    April 28, 2009
                    14903 Posts
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                    Posted: January 19, 2010, 1:11 am - IP Logged

                    I don't know what the statistics are but I can tell you that whatever demographic buys the most tickets will win the most jackpots.

                    Do you find that unfair?


                                                                 
                                         
                                                             

                     

                     

                     

                     

                                                                                                                       

                    "The only thing necessary for evil to triumph is for good men to do nothing"

                                                                                                                --Edmund Burke

                     

                     

                      ThatScaryChick's avatar - AbnSTiA

                      United States
                      Member #56506
                      November 21, 2007
                      4657 Posts
                      Offline
                      Posted: January 19, 2010, 2:31 am - IP Logged

                      C'mon. What does it matter what the skin color of the winner is? If you had read some of the past news stories that have been posted here, you would know that there have been quite a few black people that have won. Some examples within the last few months: This guy, or this guy. Oh and watch out...here is a guy who is young and black!

                      And I'm not going to even get into the whole "old" people winning more debate. People of many different ages win. People of different colors win. The drawing and the winning ticket, don't care what you look like, ok? Can't people be happy for someone winning without resorting to bringing color or age into it?

                      "No one remembers the person who almost climbed the mountain, only the person who eventually gets to the top."

                        rdgrnr's avatar - walt
                        -Ridge Runner- Oracle of the Appalachians
                        Way back up in them dadgum hills, son!
                        United States
                        Member #73904
                        April 28, 2009
                        14903 Posts
                        Offline
                        Posted: January 19, 2010, 3:59 am - IP Logged

                        C'mon. What does it matter what the skin color of the winner is? If you had read some of the past news stories that have been posted here, you would know that there have been quite a few black people that have won. Some examples within the last few months: This guy, or this guy. Oh and watch out...here is a guy who is young and black!

                        And I'm not going to even get into the whole "old" people winning more debate. People of many different ages win. People of different colors win. The drawing and the winning ticket, don't care what you look like, ok? Can't people be happy for someone winning without resorting to bringing color or age into it?

                        Yeah, what she said.  I Agree!

                        I can't articulate when I been slammin' Jack all night.

                        Spread the love, not the hate.


                                                                     
                                             
                                                                 

                         

                         

                         

                         

                                                                                                                           

                        "The only thing necessary for evil to triumph is for good men to do nothing"

                                                                                                                    --Edmund Burke

                         

                         

                          time*treat's avatar - radar

                          United States
                          Member #13130
                          March 30, 2005
                          2171 Posts
                          Offline
                          Posted: January 19, 2010, 10:13 am - IP Logged

                          C'mon. What does it matter what the skin color of the winner is? If you had read some of the past news stories that have been posted here, you would know that there have been quite a few black people that have won. Some examples within the last few months: This guy, or this guy. Oh and watch out...here is a guy who is young and black!

                          And I'm not going to even get into the whole "old" people winning more debate. People of many different ages win. People of different colors win. The drawing and the winning ticket, don't care what you look like, ok? Can't people be happy for someone winning without resorting to bringing color or age into it?

                          I Agree! The tickets don't care. The banks in a 20 mile radius don't care. Car and home salesmen don't care.

                          When you got the big bucks, no one cares WHAT you look like. Didn't you see 'Flavor of Love'Hat?

                          Green laugh

                          In neo-conned Amerika, bank robs you.
                          Alcohol, Tobacco, and Firearms should be the name of a convenience store, not a govnoment agency.

                            dpoly1's avatar - driver
                            PA
                            United States
                            Member #66141
                            October 16, 2008
                            1449 Posts
                            Offline
                            Posted: January 19, 2010, 2:05 pm - IP Logged

                            How very minority racist of you!?!?!?!?! Crying

                            I bet weenz rednecks have scanners at each machine to make sure we win !


                            As for comments that are germaine to this thread ........

                            I already have a plan - since I have been playing since the begining of the PA Lottery - there has been ample time to figure out what I need to do if I would win.