What To Do When You Win The Lottery
Everyone dreams about hitting it big with the lottery–including millionaires.
The only time I ever bought a lottery ticket was when a multi-millionaire dragged me to a gas station after a lunch meeting. He always bought tickets when the jackpot hit over $20 Million.
Lo and behold, the Mega Million Lottery jackpot for this week is the biggest in US history. Right now, it’s sitting at $540 Million. Winning this lottery will certainly change someone’s life and, more than likely, not for the better.
It’s tempting to think that a unexpected sum of money will bring happiness–but I know from experience that the reverse is often true. I’ve met several lottery winners in my career, but sadly none of them had any of their winnings left.
Two of the winners won the lottery three times and four times respectively, (Yes, three and four times!) and both are still working to support themselves. Even with the prior experience of winning, they still repeated the same mistakes: spending too much, spending too soon, and overestimating how far a few millions will stretch.
For the man who won the lottery four times, the smallest pot was the last one. After losing everything from the first three wins, he chose annual payments and is currently working as a bus driver to supplement his income.
At least he kept his marriage intact.
Get ready though, it’s not about the first day–its about the next 59. You have 60 days to make some key decisions and choose between the lump sum or annual payment.
1. Sign the ticket. Make a copy and put it into a safety deposit box. Don’t tell anyone yet.
Day 2 through ???:
2. Check your estate planning. Do you have a will? Do you have a trust? If you don’t have both of those. Stay in the house and make phone calls until it’s set up. If you die in the State of California without a living trust, your estate will be subject to probate.
This means that you will pay income tax, estate tax, and probate costs. The majority of that nice lottery jackpot will basically go to the government.
3. Evaluate your current advisers: Lawyer, CPA, and financial adviser. Do they have the capability to handle your situation? Will they be honest about their lack of ability? Choose wisely or you will lose another big chunk in taxes to Uncle Sam.
Still don’t tell anyone that you’ve won.
4. Get a good insurance agent and get started on protecting your jackpot from estate taxes. Again, get a good one.
5. After you’ve taken care of your trust and will, take the rest of the week off with your family. Go somewhere remote and luxurious for a retreat. Spend time to relax and talk with each other about love, dreams, hopes and expectations.
If you need more time, take it. This retreat should be difficult because you need to dig deep and talk about tough things. Talk about resentment and hurt feelings. This is the gift that money will give you. The opportunity to take time out and connect with the important people in your life.
This step is the most important one. It’s the make or break part of your life. You need to make sure that winning the lottery will not ruin your family.
6. Now you can tell people, and collect your money.
The last advice I have is to hold off buying anything big for two years. This includes a massive house. You need to understand the cash flow from your jackpot first before you commit to anything.
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