Here are the steps to take after you win a
huge lottery! 9 – Pick the Lump Sum or Annuity Sometimes a little bit of self discipline
can go a long long ways. That’s especially true for people who win
the lottery. I mean, let’s say you win a crap ton of
money, like 200 million dollars….cue up the Dr. Evil laugh. But seriously, that qualifies as a life changing
event. And while it would be tempting to cash the
winning ticket for for 200 million dollars, well considerably less once the government
takes their cut. Depending on who you are, it’s wiser to
take the annuity rather than a lump sum. Why? Basically, it’s to protect yourself…….from
yourself. Why do so many lottery winners go broke? Why do so many professional athletes go broke? Basically it’s just the fact that they spend
more than they earned! The cash isn’t forever. Basically, if you can’t keep the same lifestyle
after life-changing money, well, the annuity is probably the best option to take. It sounds like it’s an easy concept, live
below your means, but it’s harder than it sounds. An annuity is basically like letting the government
hold onto your winnings for a while and invest it for you, without taxing the return on the
said investment. The annuity also continues AFTER you lie,
assuming you pass on to the afterlife within 30 years of your winnings. So it becomes a part of your estate, and once
you die, your estate can take out a lump sum so the IRS can only tax the estate once. Of course, if you have insane self-discipline
and you understand finance pretty well, then yes, taking the lump sum makes much more sense
because, let’s be for real, the numbers don’t lie. Or do what I’d do, take the lump sum, and
don’t touch the principal and live off whatever the principal makes! 8 – Hire a Team
Mo money mo problems. Biggie wasn’t lying! You definitely will want to hire a team of
professionals to help you manage that money. You’ll basically want an accountant, a fiduciary,
and an attorney. A fiduciary is obligated to give you objective
advice about how to go about managing your new fortune. They can also be the “bad guy” along with
your attorney. As Jason Kurland, an attorney who specializes
in helping lotto winners explained to Vice News, people will come out of the woodwork
to give all sorts of quote, “great investments” for you. A series of bad investments can drain your
winnings pretty quickly and it’s hard to know when to say “no.” You can simply let one person on your team
be the bad guy who decides when or when not to invest and be the one who says no. Your attorney and tax accountant will help
you set up and navigate all the legal hurdles to protect your nest egg and minimize your
taxes, because let’s face it, who wants to do that on their own with that type of
fortune when time is more valuable than money at that point? Every state has different lottery rules and
tax laws, so you’ll definitely want to talk to someone who can specifically analyze your
situation and give you the best advice possible. Hire that team, and make sure it’s not just
your uncle Ted without any qualifications! 7 – Stay Anonymous
The easiest way to save yourself from a lot of trouble after winning a giant lottery is
to stay as anonymous as possible. Don’t tell anyone that you won the lottery! First thing you’ll want to do is to set
up a trust. It’s a way to remain anonymous that way
when people look up who won x lottery, they just see the trust. I mean think about it. Let’s say you win hundreds of millions of
dollars. Then people find out. Best case scenario, a bunch of your friends
and family start hitting you up to borrow money and it’s just really annoying. Worst case scenario? Shady business people constantly hound you
for to invest in their horrific business ideas. Online scammers consistently try to cheat
you out of your money, or worse, people try to blackmail you or even threaten to harm
your family for ransom. This all sounds crazy, but it’s all happened
before. First things first, sign the back of your
ticket. As lotto attorney Jason Kurland explains to
Vice, “technically whoever hands the ticket in is declared the winner. If you sign the back of it, you secure that
it’s yours.” Okay, so there’s that. Forbes contributor Robert Pagliarini, an expert
on sudden wealth, recently wrote about something called a “Claiming Trust.” This means that as the lottery winner, you
assign the ticket to a trust, which then claims the prize and holds it for a short period
of time. You then set up what’s called a bridge trust,
which ultimately transfers the money to you. All this may sound like a lot of headache,
but this “trust within a trust” method shields winners from the public and other
people you don’t want to know. 6 – Don’t Buy Anything….for a while
Here’s where your self control and discipline will REALLY be tested. If you win the lottery, don’t make any major
purchases that you wouldn’t normally make for at least three months up to a year, and
that time period really varies from person to person. Really, it’s probably just best to do a
year. You gotta get used to the money, and let that
initial shock wear off. It’ll take awhile for everything to get
back to normal. But if all of the sudden you start living
this new fancy life, chock full of champagne, limos, and crazy expensive clothes and cars,
you’ll be setting yourself up for failure. I’m not even mentioning what the money can
do to your relationships, and how with a new flash lifestyle, people start to look at you
differently. In other words, live your normal life for
a while. Keep your day job, stay in the same house,
and don’t deviate too far from your normal spending habits. Sure, maybe you’ll splurge on a nice dinner
a bit more often, but for the most part, the more you maintain your usual routine, the
better off you’ll be in the long run. 5 – Pay Off Debts
If you have any debts, the first spending you should do with the money is to start paying
off all your debts if you have any. Credit Card bills, student loans, etc. Yep, even paying off your mortgage is smart,
unless your interest rate is ridiculously low and it’s lower than the return you’d
earn in some other investment. That’s another discussion really. According to Forbes writer Deborah L Jacobs,
paying off your debt is really the best investment a person can possibly make, and that’s something
I’d have to agree with. She said quote, “When you’ve paid down
a dollar of debt, that’s a dollar you no longer owe. When you invest a dollar, you can’t be sure
whether it will grow or shrink.” True! 4 – Make and Live on a Budget
Generally speaking, making a budget and abiding by it is a good practice to live by no matter
how much money you have. But when you suddenly win a whole bunch of
money, it can be easy to think that the money can just last forever, and not worry about
a budget at all. The truth is, no matter how much money you
have, you’ll always have to manage it, and you’ll always need to be smart with your
finances. By the way, you can totally spend some money
on yourself and friends after the initial waiting period is over. It’s okay to take a vacation, buy a new
car, enjoy a fancy dinner now and again. The key is to figure out how you can make
the money last a lifetime, maybe more, and basically, let the money work for you. Even with millions of dollars, it’s really
easy to light it on fire and blow through a few million in a very short time. Setting, weekly, monthly and yearly boundaries
will help you avoid the pitfalls of spending too lavishly and burning through all of the
money. Like I said earlier, the safest bet is to
not touch the principal for spending. Just think, you’ve made it this far without
spending crazy amounts of money, so why not keep that going and save your newly acquired
fortune? 3 – Make the right picks
We’ve always been taught to invest our money. Let our money work for us. Let’s not forget, Warren Buffett made 99%
of his money AFTER he turned 50, because of the magic of compound interest on the hundreds
of millions he already made. However, you’ll want to avoid BAD investments. Now what exactly constitutes a bad investment? Hmmm, well if your friends suddenly start
coming up with new business ideas after you win the lottery, chances are, it’s a really
bad investment. In fact, most new businesses fail. You gotta invest your money and let your nest
egg grow, but you don’t need to swing for the fences. Just like baseball, focus on solid contact
and you’ll hit a lot of singles and doubles with some home runs mixed in. Matthew Goff, a Houston based financial advisor,
told Market Watch that lottery winners should divest their fortunes after they set up an
annuity and pay their taxes. He recommends putting most of the money in
a short term corporate bonds. This alone can generate millions of dollars
every year. There’s also a short term municipal bond,
that according to Goff, offers tax free incentives and can generate additional hundreds of thousands
of dollars every year. Now I could go on and on with different ways
of investing the money, but the right investment depends on the investment goals of the individual. You just gotta make sure you have someone
who’s qualified helping you make the right decisions so you can reach your financial
goals. 2 – No New Friends/Practice Saying No
If you happen to win the lottery one day, you’ll notice a very odd trend. You’ll suddenly have a lot of people who
wanna be friends with you all of a sudden. Now, it very well may be the case that they’re
drawn to your winning personality. However, more often than not, these people
are after your money. Just don’t be their friends. CNBC reported in 2017 that lottery winners
are far more likely to file for bankruptcy within three to five years than everyone else. One reason is that not only do new quote “friends”
appear, but existing friends and family members tend to ask for money pretty often as well. And while it can be difficult to say “no”
you’re gonna have to get used at it. Remember that attorney Jason Kurland? Like he said…let someone on your team be
the bearer of bad news. If you’re having a hard time saying no,
simply defer all of those decisions to that person and let them be the ones to turn your
friends down. After all, if someone only likes you for your
money, are they really your friends? And if you go broke you can’t help anyone…including
yourself. 1 – Set up Asset Protection Strategies
Even though I just went over practice saying no, sometimes you’ll wanna say yes, but
just know that the times you do say yes, you’ll probably never see the money again, and just
be okay with that. Once you figure out who the most important
people to you are, and who you actually wanna help, you’ll want to set up some sort of
long term asset protections plan. We’ve already discussed annuities and blind
trusts. But you may also wanna reconsider your will,
to ensure that whoever you picked to help will be able to get some of your money once
you pass on to the great beyond. If you don’t even trust yourself, you can
set up something called an irrevocable trust, which turns control of the money over to the
trust, which shields you from outside influences. A great example of this would be an asset
protection trust, which you regain control of years later. This insulates your money from creditors and
regulations that could adversely affect your money. Here’s what’s next!