What To Do When You Win The Lottery

Aug 25

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People hoping to win the lottery know that the odds are against them. There’s almost no chance of winning, especially a significant sum. Yet, millions of people buy tickets hoping that, one day, the odds are in their favor.

Winning the lottery can change your life. Every story about a lottery winner blowing through millions hides the winners who did it right.

Thoughtful planning provides the groundwork for a lifetime of financial security and freedom. Gathering the right team around you ensures your decisions are sound and sustainable.

Put down your lucky penny, and get ready for some good advice. We’re giving you a template for success when you win!

What to do before getting your winnings

Anticipating a lottery win is impossible, and the odds are astronomical against you. But once your lucky numbers prove their worth and you win those millions, take a breath. There’s plenty to do before you claim your winnings to ensure a lifetime of relaxation.

Secure your privacy

States have different laws regarding the privacy of lottery winners. Florida requires the release of names 90 days after you claim your prize. Before all your long-lost relatives and friends come crawling out of the woodwork, there’re a few ways to protect your privacy.

Many states, including Florida, allow winners to claim winnings through a corporation, trust, non-profit, partnership, or estate. The 90-day waiting period allows winners to create an entity to accept their winnings. This is the only way to protect your identity in Florida, but some states allow winners to remain anonymous.

Find a lawyer and financial advisor

Choosing a lawyer and financial advisor gives you access to professionals who can help you decide. A sudden influx of cash can cause many issues, and good advisors help you navigate unfamiliar territory.

Once you’ve found the right team, make them work together. They’ll serve as checks and balances on each other and protect your interests. Also, they’re more familiar with laws and financial instruments to make the most of your newfound wealth.

Decide whether or not you want your payout annually or in a lump sum

Most lottery winners take the lump sum payout when they win. Lump sum payments are significantly less than the winning amount because taxes are due immediately. However, once you pay the taxes, the remaining funds are yours to spend as you see fit. And for many people, this isn’t a problem.

Annuity payments spread lottery winnings out over several decades. This option ultimately provides more money and extends the income tax burden. Most states also provide for a lump sum payment if the winner dies before all funds are paid. In this case, the estate is liable for the tax burden.

Make copies of your winning ticket

Winning lottery tickets work like bearer bonds; whoever holds the ticket can claim the prize. Sign the back of it immediately after you verify your win and make copies. Secure the original somewhere safe and use the copy for all your planning needs.

What to do once you have received your winnings

With the right structures in place, you’re ready to receive your jackpot!

Set an appointment to claim your winnings

State rules vary regarding claiming winnings. In Florida, prizes of less than $1 million can easily be claimed at district lottery offices without an appointment. Winnings over $1 million must be claimed at Lottery Headquarters in Tallahassee. You can either make an appointment or walk in to claim your prize.

Make a budget and commit to it

It’s a good idea not to make any major lifestyle changes for at least six months after you collect your winnings. This gives you time to adjust to your influx of cash and make a reasonable budget. Work with a financial planner to develop the right budget to meet your goals.

Sticking to a plan can be challenging after a lottery win, but it’s the best way to safeguard your finances. Allow yourself to splurge a little bit, but invest and save as much as possible.

Also, consider setting aside an emergency fund. If you choose an annuity, you’ll have plenty of cash on hand if you need it!

Be prepared for family, friends, and others to reach out

That cousin you haven’t heard from in twenty years? They’re your new best friend!

Expect to hear from nearly everyone who’s been connected to your life if your win becomes public. While they won’t all be looking for a handout, most will want something from you.

Putting your money into a trust makes it easier to brush off these requests without causing rifts. You may lose some friends even with appropriate boundaries if they can’t take “no” for an answer.

Do not quit your current job

Keep going to work and keep your win to yourself for at least six months. Once the funds disburse or your annuity starts vesting, take your time. Even with sound financial planning, making rash decisions after an influx of cash can put your future plans at risk.

Continuing your regular employment provides ample time to make smart, measured moves.

Pay off any debts you may have

Most Americans live with significant amounts of credit card debt that they’ll spend a lifetime paying off. Winning the lottery allows you the luxury of paying all that off. According to Forbes.com, the return on paying off debt is the same as the interest rate. Credit card interest rates are astronomically high, and paying them off is a worthwhile investment.

Set up investments with the professionals you have hired

With your team of financial advisors and lawyers, set up smart investments. In the right place, your funds may generate enough interest for you to live on and protect your principal. As your initial investment grows, you’ll see larger returns than expected.

Busciglio Sheridan and Schoeb can help with any financial burden you have!

The odds of winning the lottery are tiny, but financial windfalls come from other places too. An inheritance, settlement, or even a piece of antique furniture can all provide massive cash infusions. As happy as you may be, there are plenty of financial questions to consider.

Wherever your funds come from, Busciglio Sheridan and Schoeb are poised to help. Our team are experts in financial matters and are ready to provide you with reasonable, sound advice.