What Should You Do When You Win $1.5 Billion
The Powerball jackpot has soared to a record-setting high in the early weeks of 2016, and daily lottery ticket sales are surpassing weekly averages of $1.2 million in South Carolina. If you find yourself the lucky winner out of an estimated 292 million players, here are some pointers on what to do next:
Stay Anonymous
South Carolina is one of six states (Delaware, Kansas, Maryland, North Dakota and Ohio) that allows lottery winners to remain anonymous after they win. This is the way to go — for now.
Friends, family, and associates will come from far and wide to ask for a piece of your winnings, and you need time to prepare. Keeping the news to yourself will also make it easier for you to receive unbiased financial advice.
Hire a Team Of Financial Professionals
Find an accountant, lawyer and investment advisor immediately, if not sooner! Make sure you all work together to help you navigate your newfound wealth. This is an important tip. Spend some time researching the prospective professionals before signing on as a client.
How Will You Collect Your Winnings? Lump Sum vs Annuity Payments.
Here’s what most people don’t know: you’ll receive the advertised $1.3 billion only if you opt to receive 29 annual payments of $44.8 million. Your total winnings will decrease to $806 million (before taxes) if you choose to receive the money all at once. This is a decision that should be made with the help of your financial advising team.
Pay Off All Of Your Debts
Mortgages, credit cards, student loans, and other debts have interest that will continue to grow the longer you wait to pay them off. Talking to the companies that hold your debt into a lump-sum payoff will save you money.
Make A Solid Investment Plan
Your advising team should create a portfolio that can handle your level of risk. If you’ve been interested in stocks, bonds, real estate, or other investments, this is the time to get some guidance and more information before shelling out a lot of your winnings.
Create A List Of Gift Recipients
Charitable donations to tax deductible organizations will help you when filing time rolls around. Giving to your relatives? Not so much. With new tax laws, any giving past $5.45 million to someone other than a spouse could result in a 40% federal estate tax. So before you start handing out millions like Oprah’s favorite things, talk to an estate planner. (It wouldn’t hurt to add one to your team.)
Budget Your Spending Money
Finally, while many people want to upgrade their home, car, or other possessions, it’s best to have a cap on your spending. To be sure about your big purchases, try leasing instead of buying a new car or renting instead of buying a home in your dream neighborhood
Originally published at www.know-money.org.
