What to do when you win the lottery
I don’t know about you, but when the lottery jackpot gets a bit crazy, like the recent $60 million prize, my mind starts to wonder what I would do if I should be so lucky to get such a windfall.
I started to ask myself, if I were to win a large sum of money from the lottery, what would I do first? Who do you share this news with? How is this money deposited into your bank account? Before you get ideas about walking into work can telling you boss to stick it, here are a few idea on how to handle a lottery windfall.
The 6 steps to take if/when your local / state lottery pick your numbers
1- Sign the ticket and put it in a safe place. Let me say it again; sign the ticket and put it in a safe place.
2- Shhhh…keep you mouth shut. I know that this is the time that you would like to tell everyone that you are super rich, but this is the time to close your mouth and tell the one person you trust. It has been suggested that people keep quiet for 6 months, especially if the jackpot is substantial.
3- Get professional advice from a lawyer and a financial planner. Now is the time to get an attorney and a financial advisor. Why a lawyer? This person can help you with taxes, trusts and the financial planner to help you navigate this new financial life that you have.
4- Decide how you would like to get the funds. Depending on where you live ie, in the USA, You have the choice between taking the prize money all at once or having it in paid in installments over a number of years in the form of an annuity. With a lump sum payment, you must immediately pay tax on the entire amount. With an annuity, you are taxed only as you receive the payments.
So how to you decide? If you are a person who has trouble controlling herself consider receiving the money as an annuity. But before you select this option, be sure to compare the effective yield of the annuity with what you could earn by taking the money as a lump sum, paying the taxes and investing the proceeds.
If you live in Canada, the proceeds from lotteries are 100% tax free so you can get the lump sum.
5- Do not make any drastic changes. Remember the movie with Robert Di Niro and Al Pacino called Heat? When Di Niro and his bank robbing crew made a score, Di Niro told the crew to stay cool and not draw any attention to themselves. Fast forward to the next scene, Di Niro and he crew are out for dinner and the crew showed up with their wives who were dripping in new fur coats and jewelry. Please, take Di Niro’s advise and stay cool.
SO if you are so lucky to win a large sum of money, for the next 3-6 months do not change anything ie: no new extravagant cars, crazy trips, gigantic diamonds, etc…
If you decided to quit your job, be sure to have your response ready, when people as you where you are going you can simply say, I am taking some personal time off.
6- Payoff your debts. So bye-bye to your debts, take some of the funds and immediately go and pay them off. With this out of the way you can 100% focus on investing your new cash and planning the next phase of your life.
So what would YOU do if/when you won the lottery, share your thoughts below.