Maintaining Privacy Is Just the Start After Winning Lottery
Winning the lottery or coming into a huge amount of money can change your life in many ways.
Not all of them for the better.
As too many lottery winners have found, becoming a sudden millionaire has many downsides. Nearly 70% of lottery winners end up broke within seven years, according to the author of a book about the dark side of lottery millions.
Winners have been killed for their money, frivolously spent all of it, and have given it to unscrupulous friends and family.
The simple solution is to not play the lottery at all. But where’s the fun in that?
Instead, here are some things to do after winning the lottery that could limit some of the problems of becoming an instant millionaire.
Keep it Private
One of the best things to do is remain anonymous when collecting the winnings, experts advise.
Trying to keep your lottery winnings private may be hard to do, especially if you want to rub it in your boss’s face or share the news of your good fortune with friends and family. You’ve posted what you had for lunch on social media, why not this?
Staying anonymous can give you time to decide what to do with your newfound wealth. It can also help keep opportunists away from your door looking for handouts.
Some lotteries require that the winner's names be made public, and that interviews to the press must be given and a press conference attended. Deal with this ahead of time by changing your phone number and setting up a new P.O. Box for your address.
You may also want to hire an attorney to set up a blind trust so that you can receive the money anonymously.
Privacy can also keep you safe. Too many lottery winners have been killed or tricked out of their money. Some news headlines have called winning the lottery a “curse.”
A $30 million Florida lottery winner named Abraham Shakespeare was found buried in a makeshift grave under a concrete slab less than three years after winning the lottery in 2009. A woman who befriended him and offered to help manage his winnings murdered him. She was sentenced to life in prison.
Maintaining your privacy as a lottery winner doesn’t guarantee your safety, but it’s a good start.
Lump Sum vs Annuities
Getting all of your lottery winnings at once can be exciting. You’re officially a millionaire and your bank account shows it.
Taking your winnings in a lump sum usually equates to 60% of the total value. So a $100 million lottery win would end up being $60 million in your hands. That money could be invested immediately and grow to more than $100 million in time.
The other option is to be paid all of your winnings annually over time, like an annuity. This gives you less money to invest upfront, but it keeps a steady amount of money coming to you each year and can help stop overspending.
You may say that having more money won’t change you, but it will likely change how you think about it.
Unless you’re already a millionaire, winning a big fortune will change your life.
If the opposite happened and you lost your job, you’d rethink how you’re spending money. You’d prioritize your expenses and allocate your money to what’s most needed first.
The same goes for becoming a millionaire.
You’d look at your expenses and determine where your money is most needed immediately. Your view of money would change.
For example, if your children are a few years from going to college and you never thought you could afford it, now is the time to set that money aside. The same goes for repairing a car or making needed renovations to a house.
A lawyer and accountant can help you figure out how much in federal, state and local taxes you’ll have to pay now that you’re a millionaire. Budgeting for charity may also be a part of your financial plan, as can setting up an estate plan.
Seek Help From Trained Professionals
Becoming suddenly wealthy puts you in a new world. You may now get to hang out with other millionaires and discuss how to keep your money safe.
Their advice could be helpful, but a better path is to research and hire professionals who can help you with money decisions.
These include a lawyer, an accountant to do your taxes, a wealth management expert to help you invest and grow your money, and possibly a registered financial advisor make smart money decisions.
Registered financial advisors are required by law to not withhold material information from you, such as conflicts of interest or how much commission they’ll get if you buy a financial product from them.
Instead of hiring someone who is paid by commission, and might push one product more because it earns them more money than it does you, look for fee-only advisors. They can be paid a one-time fee or a percentage of whatever you earn off investments they recommend, such as a 1% fee.