Have you ever wondered what to do if you win the lottery? With ever-larger jackpots becoming more the norm than the exception, people are paying closer attention to the lottery, even though the chances of winning are less than subterranean.
As in, they’re so low that underground doesn’t even begin to describe them.
Now, with that said, given someone always does win eventually — who’s to say it won’t be you one day? Hey, you never know. If lightning strikes one day and you find yourself instantly wealthy, your new goal in life will be to hold on to all of that money.
So, here’s what to do if you win the lottery.
Keep Your Mouth Shut
The first thing to do if you win the lottery is nothing at all. That’s right, don’t talk about it and do not post it on your social media feed. You’re going to be excited — thrilled actually — and your first impulse is going to be to jump and scream and tell the world.
Stop yourself, take a deep breath and get real about the rest of your life.
Change your phone number, divert all of your mail to a Post Office box and set up a blind trust through an attorney to keep your name out of the news. Some states require you to do interviews for their publicity; make sure you’ve done everything possible to make yourself difficult to contact before you do them.
People will come out of the woodwork with brilliant ideas for your money. You’ll need to be insulated from them.
Under no circumstances whatsoever should you march into your place of employment and tell your boss to take that job and shove it. The numbers could be wrong on the ticket. The date could be wrong too. And, frankly, that’s a classless thing to do.
Duplicate the Ticket and Put the Original Away
It’s the stuff from which comedy gold is derived. Somebody hits it big and loses the ticket. You’ll need copies to show the lawyer and the accountant you’re going to hire (we’ll get to that in a few more sentences), so rather than putting the original at risk, show them the duplicate.
After consulting with your attorney regarding the creation of the blind trust, follow their advice about signing the ticket and put it in a safe deposit box at a bank. In some cases, signing it right away could inhibit your ability to create the blind trust you’ll need to shield you from the public.
Wait Before Claiming the Prize
News outlets go crazy when someone hits the big one. The excitement will die down, the announcement will be much smaller and you can collect your prize in a quieter fashion if you wait a few months.
The news cycle will have gone on to something else and you will make a smaller splash. In most cases, you have anywhere from six months to a year to collect. The more time you allow to pass, the less publicity you’ll generate.
Hire a Team of Professionals
Next in the list of what to do if you win the lottery is to get a lawyer! You’ll need a lawyer, an accountant and a financial advisor to make the most of the opportunity fate has just handed you. That financial advisor should be someone versed in handling clients who have sudden outsized windfalls. You’ll need an attorney with taxation and family-planning skills so you can preserve your wealth to be passed down to subsequent generations.
Document Your Dreams
Make a list of the things you definitely want to do, now that you have the means to do whatever you want. Find out how much these things cost and assign a dollar value to them on your list. Doing this before you do anything else will help you prioritize your actions.
Hearing the phrase “500 million dollars” and your name in the same sentence can make you think you have the ability to engage in unlimited spending. That’s a false assumption. However, you can live a much, much better lifestyle than you have now — and maintain it for the rest of your days — if you plan appropriately.
Secure Your Future
Worrying about how to pay off debt will be a thing of the past — if you manage the winnings properly.
Pay off all of your debt and pay cash for everything going forward. Too many lottery winners wind up deeper in debt than they were before they won. Set up an emergency fund of 12 months of your new living expenses so you’ll have a reserve you can use to correct your trajectory if things go totally sideways.
Create college funds for your children. Set up a trust to pay off your parents’ mortgage. Buy a house for yourself with a mortgage — you’ll need the tax deduction — and set up a hefty retirement fund. Consult a tax attorney to learn how to do these things while creating tax shelters for yourself and your loved ones.
Lump-Sum vs. Annuity
This is the first big financial decision you’ll have to make. You’ll leave a substantial portion of your winnings on the table if you take the lump sum. However, you’ll still have more money than you ever had.
The FDIC only insures $250,000 in deposits at any one bank, so you’ll need to spread your money around a number of different ones. You’ll also have taxes to pay.
You could be out of luck if the lottery folds owing you the rest of your winnings. What’s more, inflation will decrease the value of your annuity as time goes on. Meanwhile, investing the lump sum could make up the difference between what you take and what you leave behind.
On the other hand, investing is risky and you could lose it all. Further, with that much money at your fingertips, the temptation to do something outlandish will be great.
Ultimately, what to do if you win the lottery comes down to doing everything you can to manage the situation and the money wisely.