What should you do if you win the lottery? Take it from someone who has developed a national reputation for working with sudden wealth recipients — or as a client recently remarked, a "lottery financial adviser": There are countless financial, tax and legal strategies that you can take to make the most of your sudden money — but not so fast! Winning the lottery is a unique sudden wealth event that requires several immediate decisions. Here are six things you should do before you claim your lottery prize:
1. Sign the ticket. You want to make sure you immediately sign the winning lottery ticket. Lottery tickets are "bearer" instruments. This means that whoever holds the ticket is the winner. I would also suggest you take a photo and video of yourself with the ticket. If something unforeseen happens, these steps can go a long way to prove you are the winner.
2. Take care of yourself. This step has nothing to do with your lottery prize and everything to do with you and your health. While everybody handles these things differently, it's not uncommon to experience anxiety, paranoia or even a strange out-of-body feeling. For some, these feelings are fleeting, but for others, they can persist and make it hard to sleep, function or make logical decisions. So, first and foremost, make sure you take care of yourself. Seek professional help if necessary.
3. Decide if you want a lump-sum or an annuity. With a big lottery win, you will often have the option of taking a lump sum payout or a pay structure over time. This will be one of the most important decisions you will make. Although a great majority of lottery winners opt to receive a lump sum payment, there are definitely some advantages (and disadvantages) in taking the payout over time. You'll want your accountant and financial adviser to review both options and discuss the pros and cons of each. The big advantage for taking the money over time is that it provides you with a "do over" card. We've all heard the stories of lottery winners who have lost it all in a few short years. By getting the money over time, even if things go badly the first year, you will have many more chances to get it right. It's definitely something to think about sooner rather than later, because in some states, while you may have 180 days from the drawing to claim the prize, you may only have 60 days if you want a lump-sum check. Also, the day you claim the prize, you will need to make your decision, so you'll want to get your team assembled so they can crunch the numbers for you.
4. Assemble your team. When you win a large lottery, you'll want to make sure you have a stellar team who can help you make the best decisions. You'll want an attorney — actually, you'll undoubtedly use many attorneys (e.g., business, tax, trusts and estate), but don't worry about finding everyone on day one. Find a good attorney to guide you through the initial steps and who can introduce you to others as needed. And at a minimum, you will also want a CPA and a certified financial planner who have experience guiding clients who have received sudden money.
5. Make a publicity plan. In many states, you don't have the option of remaining anonymous if you win the lottery. As soon as you claim the prize, the whole world will know your name. Journalist and TV reporters will come from far and wide and will all want to talk to you. The best approach is to develop a public relations strategy before you claim the prize. Decide what you want to share, when you want to share it and if you will be your own spokesperson or if you want to have someone else speak on your behalf.
6. Don't lose yourself. Lottery winners often complain that their lives are turned upside down after winning and that they are thrust into a new life. It's hard to keep things exactly the same when you get a check for millions of dollars, but at the same time, you don't want to lose the aspects of your life that you now cherish. Step outside the craziness of the situation for a moment and make a list of who and what you love most in your life. Money is best when you use it to improve your life, not necessarily change it.
So, what should you do if you win the lottery? Even before you claim the prize, these six steps will help you get control of your sudden money and put you on the right financial path to make the most of your winnings and your new life.
(Robert Pagliarini is a CBS MoneyWatch columnist and the author of "The Other 8 Hours: Maximize Your Free Time to Create New Wealth & Purpose" and the national best-seller "The Six Day Financial Makeover.")
i like the 1st one = 1. Sign the ticket
the rest
They are all good ideas. You should have a plan in place. You might not need as many attorneys as he mentions, but good legal and financial advice will be needed.
I might have added changing your phone number to the list to help keep unwanted people away, as well.
so then you need to give the ticket to charity not the cash, i would just threw it in the red kettle at christmas time for the bell ringers
why they need money anyway for new bells i suppose
That is one good idea. but I could also choose one that I think is BETTER.
Step 1: sign the ticket
Step 2: understand you might get feelings of paranoia
Step 3: run and hide
Step 4: call your Dr for a supply of valium
Step 5: now you're ready to deal with the rest of it
That's so 70's.
how about a list of what Not to do might be better
Don't buy a liquor store so you can get a good price on liquor.
Good idea, and don't buy a pot farm unless you have governmental approval.
Claiming a ticket while having a out of body experience, would be a good way to hide your anonymity.
I'll burn that bridge when I get there.
You would probably be pissed and feel like a fool if you read someone who worked for the charity signed it instead and claimed it for themselves. Maybe they would be generous and make a donation to the charity they once worked for.
That will be tonight my friend
I like #4
good luck to all playing tonight
#3 should be done long before you win,
do you want to make that kind of long term decision when your head is spinning from a big win ?
Hmm. I guess that means that you and I will have to share. Ok.
Good article ... bookmarked!
...And there are a couple of new items that I need to add to my list.
Certainly, a FREQUENT lottery player should always know what the advertized "annuity" jackpot's cash value is worth ... PLUS know what annuitized and cash value amounts are after apx. 48% Federal and State taxes are deducted. That way, if the current NET Amount isn't enough, they can wait until the jackpot grows to meet their criteria. So, everyone pull out your calculator and some paper -- find out what would be your ideal starting jackpot amount to invest in.
I don't mind sharing PTW
While #1 has it correct in that you don't want to lose your ticket & the winnings (and signing it ties the negotiable instrument solely to you), what the article conveniently forgot to include is how you sign your ticket is how you will be paid. What it should have said is, sign your ticket AFTER you've met with your team & decided in what form you'll be receiving the funds. If you're 2 people in a partnership, you both should sign it as partners of the XYZ partnership (or however the lawyers tell you to do so). Conversely, signing it as one person, and then trying to give 1/2 to the other partner because you forgot to have him/her sign it as well can incur HUGE gift tax consequences; same thing for a trust or other legal format. Simply signing it as individuals, as the article implies you should immediately do, limits you to receiving the funds as individuals. While this probably won't apply to most winners, it should have been included in the article...
4. Assemble your team.
How do you know that the people you hire won't steal or embezzle your money?
You assume they will if given the chance so you deal with them accordingly as in any business.
I have two rules when I win in the lottery. First rule is to sign the ticket and second rule is to refer to rule number one- sign the ticket.
This article has good tips. I also suggest getting an unlisted or new phone number. And, you have to figure out what to do when family, friends, and others come knocking on your door for money. Unfortunately, sudden wealth might not change you. But, it can change the people around you and not always for the better.
Keep a copy of the ticket. If you hear an individual claimed it, report to the charity and police.
Personally, I'd go thru a lawyer so that another person could verify that the ticket was intended for a charity and could intervene if anything went wrong and I could stay completely anonymous. Especially in a state where lottery claimants can stay anonymous, you'd need someone to follow up with the intended charity to make sure it was deposited into their accounts and not siphoned off by the office help or even the director.
That is sure one of my concerns!
Also, when hiring a tax attorney or trust attorney, how do you know they're not overcharging you because they know how much you now have?
don't fall for it
All, hiring an attorney is an easy matter. Get 3-4 references from reliable sources, set up a half hour appointment and say you want to talk about a small windfall that you received, and ask their hourly rate in advance. Meet with 2-4 attorneys, ask the expected # of billable hours for a trust, etc and if you hire one of them, do not authorize them to exceed a certain amount of billable $ without your approval and a justification first.
Do you go into into any contractual relationship (work on your home, etc) without asking the expected time and cost and getting an estimate? It is no different with an attorney. And if you do not think you are getting good service, take your business elsewhere.
7) Contact Richard Branson about a trip to mars. It's a good way to avoid people for awhile.
#5 only applies for larger jackpots anymore (like over $100 mil).
If someone wins the Powerball drawing this Saturday, no one will care because it's only $60 mil.
hahaha good idea
"ONLY" 60 mill? People will come for you for 1 million. ONLY 60 LOL come on man.
I agree about getting a new phone number and PO Box. Unless you have a secure dropslot for home mail delivery, I wouldn’t continue using a exterior mailbox because you risk people breaking into, snooping through and or stealing your mail.
Also, these things aren’t at the very top of the list, but they do rank up there, especially in terms of reducing identity theft and people who try to perpetrate financial fraud.
Buy a micro-cut or confetti paper shredder, rather than one that only strip cuts. Eventually people are going to discover where you live. You don’t want people rifling through your trash searching for documents with sensitive info on them. Shred your documents, rather than simply discard them.
Freeze your credit reports. You don’t want people impersonating you by opening credit accounts in your name. Freezing your reports is a useful step that helps reduce that possibility.
This is very informative article, I appreciate the steps that are given to guide the nouveau riche in handling their finances. At least now I know what to do before I claim my prize once I win a huge amount of prize. I should not be so excited so I can come up with a good decision.