So You Won the Lottery….
Winning the lottery is no small feat. More than anything, it is a time of potential and nearly overwhelming excitement. However, nothing is more crucial in the moments following this big win than staying calm. While certainly easier said than done, the only thing more valuable in this moment than your winning ticket is a clear, calm head.
First things first, make sure to double check the winning numbers. Do they match your ticket exactly? If so, take the steps necessary to secure your ticket. Take pictures of the winning ticket and numbers, but avoid making photocopies, and do not immediately sign the ticket. While both seem like tempting safeguards, they can just as easily cause further headaches, as a photocopier could potentially damage your prized ticket. Similarly, signing your ticket locks you into a particular avenue with regards to how the winning money is distributed. While you may wish to put the prize money into a corporation or other entity, signing the ticket as an individual guarantees that the money is awarded to you, the individual, rather than an account or other avenue of your choice.
Confirmation of the winning process is another crucial step, and fortunately can be resolved through a simple phone call to the respective state lottery office. Depending on your location, the deadline to cash a ticket could be as little as 90 days, or as long as an entire year. In the state of Florida, the deadline is 180 days.
Unfortunately, the state of Florida does not afford the winner anonymity. 90 days after collecting your winnings, information regarding the winner of the lottery is made available to the public. While the information may be there for those willing to look for it, do not jump to post about it on social media or brag to others. The National Endowment for Financial Education posits that, statistically, 70% of large money lottery winners (typically $1 million or more) have lost most of their resources within 7 years. By not opening yourself up to those who might be willing to prey on your abundant resources, you can mitigate the risk of becoming a part of that 70%. Another method for safeguarding your winnings is to understand how greed might affect you and those around you, and learn how to say “no”, both to yourself and others. While greed might drive you to buy a needlessly expensive car or drive others to ask you for money, a strong sense of when to say “no” will keep you and others in check and help keep your winnings safe.
A team approach is best when dealing with your newfound winnings. Some crucial members of your team will include professionals such as lawyers (including estate planning, business and real estate attorneys), financial advisors, insurance professionals, bankers, and CPAs. While you may be more inclined to name your beneficiaries before anything else, it is important that your team is assembled beforehand. Following this, it is best to put together a list of beneficiaries, including charities, family members, and close friends.
As far as the planning itself is concerned, ask yourself, are you or any of your potential beneficiaries dealing with legal matters that might complicate the dispersion of funds? Examples include divorces, lawsuits, bankruptcies, and liens. Are you currently in any kind of debt? What assets do you currently have? Do you have any estate planning in place? Will there be any federal or state taxes due? Are there benefits to cashing the ticket in the current calendar year or the next? All these questions are important to ask yourself when planning your next steps.
Finally, consider long term planning, such as what your goals are for your money. Creating a spending plan and an investment plan go a long way towards making the most of your winnings. Similarly, update your estate planning documents as soon as possible, as well as any liability insurance you may have. Returning once again to the topic of privacy, consider changing your phone number and email address, to deter those trying to get in contact with you solely for their own benefit. This notion extends to social media as well, and it would be advisable to close all social media, or at least make yourself less easy to find on social media. Next, try to give back to your community, and look into creating a private foundation for charitable giving. Finally, do your best to wait 6 months after your win before making any large purchases, as the publicity of your win will likely die down by then, and grant you more privacy in your purchases.
All in all, winning the lottery is an exhilarating, if not incredibly unlikely, moment. Should you be fortunate enough to beat the 1 in 300,000,000 odds, a clear head, as well as short and long-term planning, will allow you to take full advantage of a life-changing opportunity, turning a stroke of good luck into wealth likely to last the rest of your life.
