With up to $1.4 Billion at stake in Wednesday’s Powerball, those who play the lottery are busy making plans for what to do with all the money they may win. If you win it, you won’t ever have to worry about money again – right?
With good financial planning, estate planning and money management you and your loved ones could live well for many, many years. However, without smart planning, your new found fortune could be gone as quickly as it was acquired.
Here are a few steps to help you stay clear of “the curse of the lottery:”
- Safeguard the Ticket. The first thing you should do is sign the back of the ticket, make a Xerox copy of it and place it in a safe location.
- Remain anonymous if your state allows it. Lottery rules vary state by state. Depending on where you live, you may elect to stay anonymous or you might be allotted a certain amount of time before going public with your winnings. Some states even allow continued anonymity by establishing vehicles such as trusts or limited liability companies to receive the winnings. Check your state rules to assess your options. Remaining anonymous can help prevent friends, families, and strangers from contacting you or asking for unwarranted hand-outs and donations.
- Assemble a team of legal, tax and financial advisors. Find trusted lawyers, certified public accountants and financial advisors who preferably have experience with representing lottery winners or other high-net worth individuals. The advisors will be able to help you navigate risk and tax liability. For example, you will quickly be faced with the choice between taking the prize money in one lump sum or having it paid out over a certain time period. Your advisors can help you analyze the best payment plan for you and consult with you on how the lottery check(s) should be deposited.
- Review and update your estate planning documents. You likely now have significantly more assets than you did prior to winning the lottery. Review and update any estate planning documents to ensure that upon death your assets transfer according to your wishes.