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You've won the lottery! Now what?

Insider BuzzInsider Buzz: You've won the lottery! Now what?

Believe it or not, jackpot winners face both a pile of cash and a mountain of problematic decisions. Here's a practical to-do list. Keep it handy for the next time you strike it rich.

Hitting the jackpot may be a fantasy, but what's the harm in dreaming? Here's some realistic advice on what to do if those numbers prove to be magic.

It's after 11 p.m. on Saturday night, a night like any other Saturday night. You're ready for bed and yelling at the dog to get out of the garbage. With little enthusiasm or hope, you tune in to the drawing of the state's lottery numbers on TV. A quick glance at the numbers tells you that you wasted yet another ... wait a minute! The numbers on your ticket match. You just won the lottery!

First items on a new millionaire's to do list: Scream, jump up and down a lot and hug whoever is at home with you -- even that stinky dog.

Once you catch your breath ... ask yourself, "Now what?"

Contained euphoria

You're probably pretty anxious to get your hands on all that dough. Whoa there, moneybags. Temper that euphoria. Your life is about to change in a dramatic way. Most winners take anywhere from four days to two weeks before turning in their winning ticket, says Florida Lottery spokesman Roger Sockman, of Tallahassee, Fla., because they are busy getting some vital legal advice.

"Don't collect right away," advises Michael Garrison of Garrison Asset Management in West Chatham, Mass. "Get your support system in place."

"I'd sure see the accountant before turning in that ticket about what, tax-wise, is the best thing to do," agrees Christine Hartigan, CFP, a vice president at U.S. Bancorp Piper Jaffray in Kansas City, Mo.

Therefore, here's your second new millionaire's to-do list:


  • Keep that ticket safe. Sockman says people do funny things with their tickets, such as keeping it in a baggie in the freezer, in a sock under the mattress, in a money-belt around their waist day and night, or most practical of all, in a safe deposit box.

  • Think about your job. A winning ticket is a grand thing, but it doesn't really count until you've got the cash. For now, consider just taking a little sick time or vacation, without explaining why, if possible. You're going to be very busy becoming a millionaire. You probably will quit dventually. Sockman says most winners do, even though at their original interview about a quarter claim they'll keep working. He explains, "They can't imagine how much money they've won. It's a life-changing dvent."

  • Find people you can trust. "The most important financial decision to make initially is who's going to be accountant, financial adviser and lawyer," says Hartigan. "And I don't think they should be the same person." If you don't have all of these people in your Rolodex currently -- and how many of us do? -- "talk to other people who use these kinds of services. Referral is the best way," Hartigan suggests. If none of your friends or family can recommend a particular professional, Hartigan recommends going to a major accounting firm, a major brokerage and a large law firm. "Ask what they'll do for you." Garrison agrees with Hartigan's advice and adds, "References are mandatory."

  • Decide on a lump sum or payments. This decision depends on what you want to do with your money and advice from your team of advisers. The lump sum will equal less than the total of the payments over however many years. "With the lump sum invested properly, you'll probably have more at the end," says Hartigan. "If you're a person who really can't control your spending, annual might be better." In Florida, the recent trend shows 75% of winners take the lump sum, says Sockman.

  • Arrange for a special account at the bank. You can't just deposit millions into your plain ol' checking account. And they don't really give you a paper check with a lot of zeroes. They give you the money by a wire transfer to your pre-arranged special account, says Sockman.

  • Change your phone number. Now that you're richer than your wildest dreams, everyone's going to want to reach out and touch you, and that will be a nightmare. So get a new unlisted telephone number.

Ticket to ride

OK, breathing has returned to normal, pulse is steady, and your financial affairs are ready. Go get that money.

Any ticket worth more than $50,000 has to be turned in to lottery headquarters, according to Sockman. Amounts may vary with other lotteries. You're about to become filthy rich, so splurge if you want to and arrive at lottery headquarters by limo, helicopter or elephant, if you are so inclined.

But don't take too much time. There's always a deadline. The Florida lottery gives winners 180 days (that's less than six months) to hand over the ticket, says Sockman. Other lotteries have different deadlines, and they take them seriously.

Once you're at the lottery headquarters, you can be sure they'll be checking that ticket over carefully to make sure it's legitimate. Sockman says no one's tried to turn in a bogus ticket in Florida since the early days of the game, but they still play it safe.

Even though it didn't buy a ticket, the government will be also a big winner. The Tax Man cometh before you even get your money, immediately making you 28% poorer. And if you're the kind of scoundrel who owes something called state-owned-debt, such as back taxes or child support, the lottery folks take that off the top as well. You've paid your debt to society and you're still a millionaire, so enjoy.

Ch-ch-ch-changes

Once you turn in that ticket, the lottery is required by public information law to release your name and hometown. In other words, you can't avoid the world finding out about you. You might think about holding a press conference to get the media attention over with all at once. And besides, you might be the type that wants to crow to the world, "Look at me, I'm a millionaire!" Admittedly, this will save you time from having to call all those ex-lovers to gloat.

On the other hand, perhaps the less well-known your face is to the public, the better. In a short while, you're going to have more friends and relatives than you ever knew.

All of the changes to your life will not necessarily be good. Garrison mentions a study of lottery winners that shows a majority of these new millionaires end up overextended with a high rate of divorce. He knows these troubles secondhand from a $1.5 million lottery-winning client. "More than once, he said he wished he hadn't won," says Garrison.

"All kinds of things come to the surface," he adds. "Money does not solve all problems."

Cents & insensibility

And what problems to have: Taxes, greedy relatives and friends, expensive decisions, and, possibly worst of all, yourself.

Finding a way to spend millions may seem insurmountable, but it's really not that difficult. Many folks -- lottery winners and insta-rock stars alike -- have succeeded in finding solutions to this particular "problem." And just think, then you'd have to get a job again, and that would be awfully embarrassing.

"Great wealth brought on all of the sudden to somebody unprepared is going to bring trouble," says Paul G. Schervish, director of the Social Welfare Research Institute at Boston College. He lists examples of spiritual trouble to marital trouble to friends, neighbors and charities coming after you.

"Wealth changes the terrain within which you are playing," he continues. "People with swift fortunes are most vulnerable to not knowing what to do with it." The money will be thrust upon you and so will a multitude of requests and decisions. Schervish advises slowing things down. Financial counselors can help a newly minted millionaire take things slowly.

Hartigan explains that good financial and legal advisers can:


  • Provide a buffer to all the requests and wild ideas you'll be hearing for the rest of your life

  • Protect you from yourself by advising you ways to manage the millions

  • Help you turn your new money into even more money

"Understand thoroughly what you want to accomplish," advises Garrison. "It's not just a matter of money management. It's also counseling and helping people deal with all this wealth on psychological and practical matters."

You'll probably want to help out your family and those who were friends before you were rich. You might be interested in leaving a legacy by helping your favorite cause in a major way. Of course, you'd like to secure your own future as a luxury-loving, well-manicured, hundred-dollar-bill-burning type of guy or gal. Financial advisers can inform you and guide you into trust funds, endowments, charitable remainder trusts, family limited partnership and more.

And you'll probably want to have something at the end to leave to your heirs -- 'cause then you get to play all kinds of mind games writing up your will different ways. Unlike us paycheck-to-paycheck schlubs, you'll need to start thinking long term -- looking ahead to your death. It's a grim subject for a new millionaire like you, but an important one. Now's the time to be doing what you can to contain the estate tax that could eat up most of your heirs' inheritance.

"Taxes are important to consider. But don't let the tax tail wag the investment dog," explains Garrison. He says you also want to be aware of your tolerance to risk, your level of knowledge and goals. He recommends a comprehensive approach or "you could have a current planning strategy in conflict with long-term estate planning." Thinking ahead to curtailing future estate tax can also help you curb your present income tax.

Ah, with all your sound planning, you're finally settling into the good life. You've paid off your parents' mortgage. Bought yourself a nice Porsche. Done your tax planning. Established an endowment to save dyslexic whales. Now you are enjoying an expensive facial at an exclusive Caribbean resort.

Erk! Facial? Your bleary eyes open to discover that stinky dog licking pizza sauce off your cheek. The news station has moved on to sports. Your losing lottery ticket is floating in a bowl of melted ice cream. It was all a dream.

Bankrate.com

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18 comments. Last comment 10 years ago by CASH Only.
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twisted's avatar - underground
New Jersey
United States
Member #2376
September 25, 2003
582 Posts
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Posted: October 7, 2004, 9:23 am - IP Logged

Nice Read.  I'll keep this handy.


    United States
    Member #379
    June 5, 2002
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    Posted: October 7, 2004, 9:40 am - IP Logged

    As you know, CA, NY, and TX require the cash/annuity choice when you PLAY, instead of after you win.

      rock_nc's avatar - Lottery-017.jpg
      small town USA
      United States
      Member #2481
      October 8, 2003
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      Posted: October 7, 2004, 11:12 am - IP Logged

      well, this is some good advice,guess i will print it out to keep, til i win,if ever,i win..[rock]

        urbossmanpimpin's avatar - batman49
        Dallas, Texas
        United States
        Member #7272
        September 28, 2004
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        Posted: October 7, 2004, 12:11 pm - IP Logged

        this is definitly a keep

          whodeani's avatar - lightening

          United States
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          October 9, 2003
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          Posted: October 7, 2004, 12:52 pm - IP Logged

          It is nice to see Todd pull this article off the shelf and blow the dust off of it when Mega Millions or Powerball gets up there. Lot of good info in this story.

            fja's avatar - gnome1

            United States
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            January 19, 2002
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            Posted: October 7, 2004, 1:45 pm - IP Logged

            still have the instructions sitting in the hard drive....I also added "taking some financial classes"  to make sure you understand what your advisors are telling you....

            "Everybody has to believe in something...I believe I'll have another beer!"   = W.C.Fields                      

              Avatar
              Portland
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              September 27, 2004
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              Posted: October 7, 2004, 3:39 pm - IP Logged

              Thank you for the helpfull

                dvdiva's avatar - 8ball

                United States
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                September 17, 2003
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                Posted: October 7, 2004, 8:09 pm - IP Logged

                Seems like they missed some things - first thing is to get a multimillion dollar coverage on your car insurance and to get rid of any liabilities you might have. Second is to get a will asap. You never know when bad things happen.

                  hypersoniq's avatar - xls
                  Pennsylvania
                  United States
                  Member #1340
                  April 6, 2003
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                  Posted: October 7, 2004, 8:40 pm - IP Logged

                  don't forget to protect your assets in multiple personal property trusts just like real estate tycoons do... that way you won't expose your entire fortune to frivelous lawsuits (which may or may not find their way to you once you are instantly wealthy)

                  a properly constructed trust plan in place can take the place of a will and as an added bonus it avoids probate court.

                  Playing more than one ticket per game is betting against yourself.


                    United States
                    Member #379
                    June 5, 2002
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                    Posted: October 8, 2004, 9:39 am - IP Logged

                    Why the car insurance?

                      rabbitfoot's avatar - 8ball

                      United States
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                      August 25, 2002
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                      Posted: October 8, 2004, 9:55 am - IP Logged

                      Everything I and my wife owns is already in trusts.  Don't wait until you think you need a trust.  You need one now!

                      And, our costs was only $700 to have a lawyer do it. After that, you can amend your trust(s) by simply attaching a written statement to it.  As far as bank accounts go, just take your trust(s) papers to the bank and tell them you want to retitle your account(s) into your trust(s). 

                      I play to dream and dream of winning a major jackpot!

                        rabbitfoot's avatar - 8ball

                        United States
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                        Posted: October 8, 2004, 10:04 am - IP Logged

                        Car insurance:

                        How would you handle the cost of an accident that involved a $500,000 trailer-trailer and the death of the driver and/or others?  I carry a "Personal Libility Policy" also known as a "Umbrella Policy (UMB)" that pays up to an additional two million dollars should it happen to me and I am sued. This extra protection cost me less then $200. 

                        I play to dream and dream of winning a major jackpot!

                          Avatar
                          New Member

                          United States
                          Member #7131
                          September 22, 2004
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                          Posted: October 9, 2004, 3:56 am - IP Logged
                          Quote: Originally posted by rabbitfoot on October 08, 2004



                          Everything I and my wife owns is already in trusts.  Don't wait until you think you need a trust.  You need one now!

                           





                          How long does it take to establish a trust?

                          I also remember reading on one of the lottery sites that some winner claimed their winnings under the name of their trust and not their own. How does this fly with the law that requires your name to go public in the case of a winning? Does anyone know?

                            hypersoniq's avatar - xls
                            Pennsylvania
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                            April 6, 2003
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                            Posted: October 9, 2004, 4:38 am - IP Logged

                            Thanks rabbitfoot for the info!

                            Blissfactor, it takes about 5 minutes at your nearest notary office, the time and expense are in having the lawyer prepare one for you. Using  a trust to claim a prize is legal and a quick trip to the powerball winners page will show this has been done before successfully. You (as grantor in the trust) will be identified to the lottery commission by certain identifiers including social security number... they will still publish hometown and state and amount won, so lay low until you move. As long as the taxman knows who you are, all is good. taxes are associated with your social security number on the 1099G form you will get from the lottery (where they withhold 27%, you then are responsible for paying an additional 8% because top tax bracket right now is 35% on all earnings over $311,000... you must pony up the 8% that tax year using estimated tax payments (and the associated forms).

                            If I ever do win (like tonight's PB ;-)  ) I will document each step in the process, learning as I go, and then share the findings here on the LP.

                            Playing more than one ticket per game is betting against yourself.