What To Do After Winning The Lottery

You matched all  numbers in the Buttload O’ Bucks sweepstakes, and you’re sitting there in disbelief, checking and rechecking the numbers to be sure it’s really true. You’re on Easy Street! The life of leisure awaits you!

Not so fast Diamond Jim. If you want to get your money and keep it for the long haul, you have a LOT of work to do.

“Huh?” you say, pointing at the ticket.

Absolutely, you have a lot of work to do. Realize that most people don’t have the skills or knowledge needed to manage that much money. The history of lottery winners is chock full of people who ran through the money in just a few years and ended up destitute.

There’s a clear path you need to follow to get your money and keep it for the long term, but it’s one that has to be followed carefully and above all else quietly. You need to keep the winnings secret and secure, get good advice, make a plan, cash your ticket and execute the plan, and then evaluate your long-term goals.

 

KEEP IT SECRET AND SECURE

Realize that you will become a “mark” for hucksters, investment scammers, unscrupulous friends and relatives, and anyone else who hopes to take some of your money. You need to keep things quiet and follow a plan, or else you’ll be bled dry before you even get rolling.

Practice saying “No”. You’ll need to do it a lot once you cash that ticket.

Don’t run out and cash the ticket right away if you’ve won anything more than a million dollars. If you’ve won less than that in one lump sum, I’d still be really careful, and it might be a good idea to sit on it and make a plan.

Don’t tell anyone you have a winning ticket. Not your brother, your mother, your neighbor, or your best bud. Word of something like this gets around quickly, and you’d be amazed at how fast the hands come out, looking for “a piece”. Don’t tell your kids. If your relationship with your spouse is iffy, don’t tell your spouse until you know what you want to do.

Get a safety deposit box. Put the ticket in the box. Don’t go near it again until it’s time to cash in.

If you’re working, keep your job for now especially if you have an ailing family member on your health insurance. Nothing can suck your lottery winnings dry like having an uninsured family member with health care needs.

Investigate the payout terms on the ticket. If you won a million dollars, but it’s paid out at $50,000 a year for 20 years, you are not a millionaire. If you won $1 million as a lump sum, you’re still not a millionaire after federal taxes and whatnot.

But you have a big payoff, and you need to plan.

If you won a really big payout, get an unlisted phone number and another cell number. Give the unlisted number only to really trusted people. Use the extra cell for quotes, advisor candidates, etc., and plan on canceling the number as soon as you have your payoff. This is the junk/payoff number, and the one you will list when you cash the ticket. You will cancel it later.

 

GET PROFESSIONAL ADVICE AND EDUCATE YOURSELF

Find a good financial planner or adviser. Unless you have wealthy friends, don’t ask your friends for referrals. Most states have handbooks listing qualified people, or you may know someone who inherited a good bit of money and had good help. Or look for insurance agents with a CFP (Certified Financial Planner) and a long-standing business. Visit several of them, and tell them you have a lottery winning and you need help. Downplay the amount you won if you won a million, say you only won $250,000. If you won $40 million, tell them you won $2 million.

Why the secrecy and paranoia? Because once you cash that lottery ticket, your name will be on the public record and anyone absolutely anyone will know who you are and how much you got. You need to get some ideas on your direction and what you want to do before anyone else discovers that Lady Luck picked you.

It wouldn’t hurt to see a psychiatrist, and if you’re married you need to bring your spouse along. Sudden wealth can really screw up a marriage, especially if there are underlying tensions on other fronts. You need to have a clear head and a clear atmosphere in your household for what’s about to happen. Talk freely about the lottery winnings and so forth a psychiatrist is an MD who will respect patient/client privilege and will not reveal your secret.

If you use drugs or are an alcoholic, get treatment BEFORE you turn in that ticket. Ditto for any obsessions with sex or gambling. If you’re married and fooling around on the side, break off the affair (or get a divorce, if that’s the way you’re heading). If you think your spouse is unfaithful, hire a private detective.

Above all else LEARN LEARN LEARN. Read about insurance and annuities and investments and taxes. You don’t have to be an expert in these fields, but you want to be informed before you haul in your pot of gold. You could enroll in continuing ed classes or take seminars on money management, which would help you in many ways.

And if your life is a total mess and you have only lowlifes and problems in your world, then it’s time to get a passport. Because you need to go away for awhile.

 

MAKE A PLAN

With all this advice and research, you should have an idea of what you want to do. Here are some things to keep in mind.

1.) Health insurance. Don’t overlook this. A healthy family can get a good plan from a reliable insurer for a reasonable amount, but don’t think you can blow this off and “just pay the bill” if something happens. Get a solid plan from a solid company, but opt for a high deductible if your family is healthy. If you can get in on a group plan, all the better. If someone in your family has health concerns, be very careful to make sure they are covered.

2.) Life insurance. Look for a “single payment” plan where you drop a lump of cash to pay a policy in full. It usually costs a lot, but you never have to think about it again, and it will pay your beneficiaries in full if you dropped dead tomorrow or 50 years from now. You might feel like a rich person, but this is the best way to pass some money along if you have children.

3.) Don’t put all your eggs in one basket. Plan to split your money between investments, annuities, money markets, etc. Don’t make it too complicated, but don’t put all your trust in one person or company. If something goes bad economically, legally, whatever you don’t want to lose everything.

4.) If you’re buying a new home, plan how much you’ll spend and stick to it. Do not take out a mortgage, pay for it in full. A mortgage will cost you in points, fees, etc. and the tax break you get on interest payments will not offset the cost and the nuisance of a mortgage payment. If you are staying in your home, get a payoff quote on the mortgage and get rid of it.

5.) Don’t go shopping for a new car just yet. Milk the car or cars you have for every mile until you’re comfortable with where your money is AFTER you cashed the ticket and everything is settled.

6.) Plan what you will tell friends, acquaintances, and family about your new found wealth. Don’t lie, but be vague. Tell them you’re “managing properties” or you’ve become an “investment manager” or something like that. If you took any courses in money management, you can refer to them. Do Not Tell Them You Hit The Lottery.

7.) Expect that your plan will not be foolproof. Everything has waiting periods, processing periods, etc. You won’t be able to make it all happen in one day.

8.) If your life totally sucks and you don’t have a worthwhile person around you, plan your escape. Look at sinking your money into a lifetime annuity trust with a clause that it can’t be used as security on a loan. Then look for somewhere happier to live.

 

CASHING IN! KA-CHING!

All that cash has been burning a hole in your pocket, but until now it’s been “virtual” cash, not money in the bank. Now it’s time to turn that ticket into real money.

Find the most secure travel mode you can find. A bus, a train anything where you don’t have to drive is best. The reason: your mind will be occupied, and you don’t need a highway crash to screw you up now.

Go to the redemption office for the lottery ticket and get your bucks as quickly as possible. Bring your check book in case they want to do a direct deposit. You’ll also need your driver’s license and social security card if you have one. Bring your passport if you have one. Make this a one-shot trip with no follow-up needed.

And bring the ticket, ferchrisakes.

“Ring-ring!” go the bells. In a few days you’ll have your cash and you can execute your plan.

 

AFTERMATH

Once you’ve cashed your ticket and moved your money where you want it, you still have more painful choices and study to do. Because your careful plan only secured your cash and hopefully set you up with a solid income for life, a solid inheritance for your children, and a solid future for all, it still didn’t spell out what to do with your other financial options.

Wait until you’ve settled into your new lifestyle before starting a business or buying into one. When you do do so carefully. Don’t invest in a business because a relative owns it do your research. Don’t indulge yourself in a car collection or night-life. Take your time, and move slowly. Say “NO!” often.

You’ve got a Buttload O’ Bucks, and you are in control. You can take your time, do your research, and make your own decisions. And that’s financial freedom.