What To Do After Winning The Lottery – Winners Checklist

What To Do After Winning The Lottery - Winners Checklist - MoneyExaminers

Boy, that was a close one. You almost stopped at that South Carolina convenience store (isn’t it always a convenience store?) and purchased the $1,537,000,000,000 winning lottery ticket.

Imagine the chaos in your life if that had happened before you read Money Examiners’ checklist of essentials. The mind boggles. Well, we aren’t about to let such a danger into your life again.

This site features ads and affiliate content Disclosure Advertise with us

We’ve all imagined winning, and we’ve all bought lottery tickets. Someone won this week, and someone will win again.

What if it’s you?

Millions of people seem to lose their minds, all at once, several times a year.  When word gets out that “Powerball” is up to a jackpot of more than $100-million everyone from the bridge club blue hairs to the hardened gambler line-up at the local convenience store to take their swing.

Americans spent $65.5 billion on lottery tickets in the last fiscal year, up almost 10% from the year before. Lottery ticket sales have increased every year since the first state lottery in 1965 – even during the Great Recession when the sale of most other items declined.

And, Big jackpots are going to be more frequent. Powerball and MegaBucks surveyed their customers to find out what changes they would like to see made.

Overwhelmingly, the answer came back, “More million dollar winners, instead of gigantic jackpots for just one person.”  The two major lottery companies acquiesced…and people stopped playing. Incredibly enough, people don’t just a million dollars. They want millions more.

What To Do After Winning The Lottery – Winners Checklist

If you find your self with the winning ticket, here’s what to do before and after you claim your money.

Here is what needs to come next. We’ll break it down into bite-sized pieces.

Before You Claim Your Lottery Winning Money

Secure your ticket

Make more than one copy of the winning ticket, and show it to your lawyer. (Trust us. You are about to retain a lawyer.) Then lock it away.

Take a cleansing breath or twenty

Depending on the state in which you live you have about 30 days to make your claim. Use the time to form your financial team.

Delay your “I WON” party until after you secure the money.

Some states require you to go public. If so, change your contact numbers and get a new post office box, so your home isn’t crushed with requests. If you are lucky enough to live in a state that will allow anonymity do that!

Form a team

That’s a lawyer, financial advisor, and an accountant with experience in windfalls.

Go off by yourself with writing implements

List your lifestyle, financial, charity, and family goals. Put the paper in a place where you can easily find it. That’s your playbook to which you will return again and again.

Decide on a lump sum or annuity payments

There are two schools of thought, but Money Examiners believes an annuity is the best way to go. It is inevitable that you will make mistakes. With an annuity, you get to start over a year from now.

With a large lottery payout you might do better taking the lump sum upfront because no matter how you take the money, you will be taxed at the highest tax rate.

On the other hand, if you won a smaller lottery prize like 58 winners did who hit five numbers in the recent drawing for a million dollars each, you might want to spread it out over a number of years to keep out of that tax bracket.

Not many people will win the lottery payout, but if you do, then you have to consider how you would take the payment.

If you were to retire from your job, the decision would probably be the same for your pension plan – do you take the pension payments as an annuity for the remainder of your life or in a lump sum?

In either case, the decision will probably be the same. It depends on a number of factors, which include:

  • The life expectancy of the winner
  • The payout size
  • The winner’s financial circumstances
  • The lottery or pension tax bracket
  • The person’s tolerance to risk
  • The investment intelligence

One Massachusetts woman won the lottery and took the lump sum. The lottery prize was $294 million and before taxes were applied, she received about $168 million.

If she had chosen to take the yearly payments, she would have received about $11.3 million for a period of 26 years – calculated 26 x $11.3 million totals a little over $293.8 million, which is close to the actual lottery prize amount.

Taxes On Lottery Winnings

If you choose to be paid over time, both Powerball and MegaBucks increase the payout to keep up with inflation and the cost of living.

That means that, not only are the tax ramifications better, the actual prize is bigger.  Lotteries want you to take the payments in an annuity.  That’s why they sweeten the pot.  The money that they are not paying you as soon as you win is gaining interest.  How much interest?  Enough to pay another winner another $30 million dollars in the next decade.

Taking the lump sum will subject you to taxes in one year and it will put you in a higher federal tax bracket. The Massachusetts winner paid the government approximately $65 million in taxes, leaving her with a total of $103 million.

Keeping your winnings secret

Have you ever wondered why the big winner’s face is splashed all over the evening news?  Won’t that attract moochers, charlatans, and writers all looking for a handout?

As it turns out, most of the time that’s the way it has to be. Only five states let you win in secret: Delaware, Kansas, Maryland, North Dakota and Ohio. The rest have laws requiring the lottery to announce the winners and their cities of residence to anyone who asks.

Most states let you decide whether you want to have your photo distributed or host a press conference, but you are encouraged to do one or the other as a publicity quid pro quo.

Draft a last will and testament

This is very important! Families fall completely apart when the inheritance isn’t spelled out in detail.

After You Claim Your Money

Find several places to park it, because your banker is the only person in favor of you showing up at the teller window with a check for a billion bucks. Remember that the government insures deposits to just $250,000.

Plan your initial lottery disbursements

When they find out that you’re rich, friends, acquaintances, and charities are going to hit you up.

But, they will be nothing compared to family members! Let your team of advisors help with gift structures. Better yet, consider forming a charity foundation with the help of your financial advisor.

Yes, you’re rich, but the happiest people are the ones who give most of their wealth away.

Quit your job, but continue to work

If you don’t want to stay in your current job long-term, consider some alternatives. Use some of your lottery winnings to start a business.

Do you have a hobby about which you are passionate? Consider a new career running the business you always wanted to.

Managing your money

When someone wins the lottery, there are a lot of variables. Some people who don’t have money management skills could squander a big lump sum payment.

By opting to receive payments annually, poor money management will be confined to just the annual payout, possibly learning from the mistake before the second year’s payout arrives.

Investing your money

If you have no investment skills, then you could hire a financial professional to make investments for you and manage your investment portfolio. If you take the lump sum and don’t invest some of it, you run the risk of losing everything.


One of the main risks of yearly payments is that they are fixed. As a consequence, inflation will reduce the value and your buying power. Financial advisors suggest that you should partially invest in stocks, real estate or a commercial annuity whether you take the lump sum or the annual payments.

Finally, stay healthy

Your newfound wealth will have less to do with overall happiness than you think. Eat fruits, vegetables, and fiber. Go for a walk every day. See a counselor if your new situation is causing emotional strain.

Okay, okay, tell me how to win

Besides the obvious things like,“Don’t pick consecutive numbers longer than two numbers in a string” and “Don’t pick last week’s numbers” there is only one piece of advice.

It’s completely unscientific but the numbers do not lie. An inordinate number of jackpot winners purchased their tickets from one of the convenience stores in New Jersey between the hours of 3:00 and 5:00 p.m.

Studies have found that your odds are much better if you play when the jackpot is $30 million dollars or less.  Lottery players stay away in droves when the jackpot is small.

Apparently, they couldn’t use $11.8 million dollars (the average all at once after tax payout on $30-million.  Buy your ticket when others aren’t, buy a yacht when others can’t.

Now, go buy that lottery ticket, because you’re ready. Good luck, both before, and after, you win.

Pin This:

What To Do After Winning The Lottery - Winners Checklist - MoneyExaminers

Related Posts