Finances & Debt

Hit the Jackpot? 5 Ways to Manage Your Lottery Winnings

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Unless you’re Warren Buffet – or currently stranded on a deserted island – the thought of winning the lottery like the multi-state Powerball® jackpot (currently estimated at a meager $205 million!) has certainly crossed your mind at one time or another. And why not? With the thought of all the outrageously fun things you could buy and insanely glamorous trips you could take, it’s enough to make anyone delirious!

Even though the odds are 1 in 292,201,338 for this weekend’s jackpot, it’s fun to fantasize how you would spend this ridiculous amount of money; but have you considered how you would manage your lottery winnings for the rest of your life? Here are some suggestions just in case you hit it big:

  • Determine how you want to receive your lottery winnings. For example, you can choose a lump sum payment or be paid with an annual annuity – but be aware of the tax requirements and financial implications of each option.

  • Hold off on claiming your ticket until you get a team of experts in place, including a financial planner, legal advisor and a tax expert.

  • Learn to say “No.” People will come at you from all different angles, investment opportunities and personal needs asking for your financial help. Make sure you do your due diligence before agreeing to any of them.

  • Think beyond any initial extravagant purchases and indulgences. Set some long-term financial and life goals on what you want to do with the winnings.

  • Review your estate plan. Make sure your newly-acquired assets will be transferred to those you intended in the most efficient way and tax-favorable manner as possible.

These are just some of the ways you can avoid any legal, financial or personal pitfall previous lottery winners have encountered when they failed to adequately plan for their post-lottery futures.

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