To All Future Lottery Winners: Stop, Look and Listen!
After 21 weeks without a Powerball winner and a prize that climbed to $687.8 million, finally the drawing on October 27 generated two winners. When I heard the news, honestly, my first thought was, “I hope those winners get excellent financial advice!”
If you find yourself in the same position—hey, you never know—and even if you come into a small(er) fortune, here’s some preliminary advice.
Step 1: Stop
The first thing you should do is put on the brakes, no question. Go through an important list of precautions, including:
Do sign the back of the ticket. According to Forbes, whoever signs the ticket and presents a photo ID claims the prize. In fact, Carolyn Hapeman, a spokeswoman for the New York Lottery told Forbes that to ensure you are the winner, go ahead and sign the ticket before the drawing.
Don’t go public. Tell your spouse or partner. That’s it. Yes, much later you’ll get a chance to disclose to the chosen few but this must be after you have your financial plan in place.
Do find out if you can remain anonymous. The rules are different in every state. Unfortunately in Florida, you don’t have the option of remaining anonymous to claim the prize, so you’ll need to put together the “going public” publicity plan.
Don’t go crazy. Don’t quit your job (not yet), don’t make any major purchases (again, not yet), in fact, it’s best not to change much of your routine, yet.
Step 2: Look
By this I mean, look at all of the financial and legal issues that need to be addressed before you claim the prize. Depending on the rules you have a certain window of time to claim your prize, then another 60 days after you claim to decide if you want a lump sum or annuity. Also look for professionals who can help you. Forbes recommends that instead of signing on to a pre-assembled team, handpick your own lawyer, accountant and investment advisor, and then require them to work together.
Look for talented attorneys, those who can guide you through the decisions about business, tax, trust and estate issues. Also look for skilled CPAs/financial advisors, those who can guide you through money issues.
Be completely honest with them about your level of discipline with money management. How disciplined you are will influence the plan they put together. One of the important money questions is: lump-sum or annuity payout? There are different tax implications for each including how much will be withheld up front and over time.
Step 3: Listen
By this I mean listen to your most cautious, most disciplined inner-self. Pay off those debts before splurging. Live within a budget even though that budget just got bigger. Take steps to protect your assets before anyone knows about your windfall. Avoid listening to all of the people who will suddenly come into your life just because of your wealth.
One last thought—it wouldn’t hurt to get multiple opinions on any of the above. You won’t be limited to hiring just one person for certain advice because, after all, you’re now in a great position to afford second opinions!
Have you come into new found wealth? Trust and competency in these matters are crucial. Contact us today and we’d be happy to work with you to get through important considerations so you will have a happy, manageable new life as a multi-millionaire.
