Whether you consider playing the lottery as “a tax on stupid,” as many have said, or a chance at a dream, as so many others believe, Billshark thought you should know that there’s more to being a smart winner than simply spending the money.
If you play at all, you’ve probably heard the cautionary tales about lottery winners who ended up broke a few years later, and decided, “That won’t happen to me.” How do you know that? The rich rarely if ever play the lottery because they don’t need the money. That leaves the rest of us who don’t have the economic background and financial infrastructure in place to protect those millions—or even billions these days.
Handling any lottery windfall successfully requires as much planning and work as a full-time job, at least initially. Long-lost relatives and even strangers will surface demanding a piece of your new-found wealth. And of course, the government—federal, and often state and local—will get a cut before you even see a dime.
So here are seven ways to protect your lucky windfall.
1. Zip your lip
The temptation will be to shout your good fortune from the nearest rooftop. Don’t. Don’t tell anyone, with the possible exception of your spouse, or a trustworthy family member. You need time to get your ducks in a row before the hordes descend on you. This also means the state lottery office where you bought your ticket, and the local and national press, who will be clamoring to learn the details of the lucky winner.
2. Do nothing at first
Don’t quit your job. Don’t rush out on a spending spree. It can often take months of paperwork to receive your winnings, and that’s after you notify lottery officials that you are the winner. If you’ve won the lottery, you have at least 180 days and in many states up to a year to claim your winnings. Use this time to prepare as detailed below.
3. Don’t even sign the ticket
Everyone, even the ticket itself, tells you to sign it immediately. This is because a winning ticket is a bearer bond; that is, whoever signs the ticket and presents it with proper ID is the legal winner.
But if you sign the ticket, in most states your name will be released as the winner when you claim your fortune. Forty-four states insist that winners’ names be made public, as proof that the game is legit. If you sign your name, however, you will not be able to claim it later under a blind trust or LLC. Instead, get to your bank as fast as you can and put it into a safe deposit box. (Earlier this year, one woman who signed her name then later decided to remain anonymous had to sue the state of New York to keep her name private. She won, but don’t bank on her luck.)
Do photocopy it, and take photographs and a video of you holding the ticket. That’s no guarantee, but it could help you establish ownership down the line if need be.
5. Assemble a financial team
You will need at minimum a financial attorney, an accountant, and a Certified Financial Planner. They can help you decide whether to take the lump sum or annuity, how to protect your money from all those who have their hands out, and how to invest it for maximum return once you have it. You can also designate one of them as the “bad cop” when you are besieged with requests and even outright demands for financial aid. “Talk to my accountant” is the best way to avoid hurt feelings, especially if you’re the type who has trouble saying no or who wants to help the whole world.
6. Decide how to spend it
With the help of your financial team, decide how you’re going to spend your new-found wealth. You’ll want to plan solidly for your future before you rush out to buy the island and the boat or private plane you’ll need to get there. You’ll also want to gift relatives, friends, and charities, but these all have tax implications for you and for them, so don’t make any promises to anyone without the advice of your financial advisors.
7. Make yourself scarce
If you regularly post on social media, dial it back little by little, keep your posts light and chatty, and give no hint whatsoever about your good fortune until you finally disappear altogether. Change your phone number to an unlisted one, and change your address to a P.O. Box. Make it hard for the grabbers to find you.
A few last words from Billshark:
- Don’t play if you can’t afford it. The odds of winning the MegaMillions jackpot are one in 303 million; for Powerball, one in 292 million. If you think of playing the lottery as an inexpensive form of entertainment and don’t mind losing consistently, go ahead.
- If you do play, be sure to check your ticket at a ticket reader at an authorized outlet: Just because you didn’t win the jackpot doesn’t mean you didn’t win one of the lesser prizes. Many people toss their tickets when they see they didn’t win the big one, never knowing they won a smaller amount.
- If you’re going to play, pop for the extra buck for the PowerPlay or the Megaplier. How would you feel to win a million dollars only to realize for a dollar more it could have been $2 million?
And if you’re after free money, let Billshark take a hard look at your bills. We can find you hundreds or even thousands of dollars, and you don’t even have to buy a lottery ticket!