Have you ever dreamed about winning the lottery? All you have to do is pick 5 numbers from 1 to 69 in order and a sixth Powerball number from 1 to 26. It seems like you would have a pretty good chance. But you really don’t. The chances that someone will win are pretty good. The chances you will win are about one in 292 million, roughly the same odds of your name being pulled from a hat with the name of every American in it. The chances of being hit by lightning or making 3 holes in one on the same day are much better than winning the Powerball jackpot. But we are dreaming here. What if you did win a billion dollars? What should you do?
The first thing you should do is sign the back of the ticket and put it in a safety deposit box. A lottery ticket is a bearer instrument meaning whoever holds the ticket owns it and can sign it and claim the prize. Even though your first instinct is to call the state turn in your ticket and claim your prize don’t do it. In Most states you have 180 days or six months to claim your winnings. You have some work to do before you come forward.
The second thing you need to do is seriously consider how much publicity you want. In Nebraska you may be able to remain anonymous by claiming the money in the name of a trust or other entity without providing your name. Some states allow you to choose to be anonymous and claim the prize in your own name.
You probably don’t want to announce your good fortune on social media. There will be people you know and strangers that will want to make your lucky day their lucky day also. Many lottery winners are overwhelmed with requests for money. People will think that you just won millions so you won’t miss a few thousand. You will get knocks on your door, tons of mail, notes left on your car. You will be assaulted in public with requests for money and have more friends and relatives than you ever dreamed. Not to mention all those great investment opportunities you will have.
The third thing you should do is hire a team of professionals to help you. You will need an attorney, a financial advisor and an accountant. And don’t hire the attorney that helped you with your last traffic ticket and the financial advisor that you know from church and the local person that does your taxes once a year. No, you need serious advice from a good estate planning attorney, a fiduciary financial advisor and an experienced CPA. These advisors not only can help you minimize taxes and accomplish the most with your money they can also be your bad guys. When that once in a lifetime real estate deal comes along or your friends want money you can say my advisors need to sign off on anything I do talk to them, here are their cards. That will discourage 99% of the people who ask you for money from going any further.
The fourth thing you should do is create an irrevocable trust or some other vehicle to set aside a decent amount of money that you can’t spend. The amount should be big enough that you could live on the income for the rest of your life. Lastly, take some time and figure out what you really want to do now that your life has changed. Going forward without a plan is the best way to end up broke no matter how much money you have won.