Well, yes, you should call someone, but be very selective. Tell only those people you know and absolutely trust. Obviously, your spouse should be first on your list, but despite your obvious elation, keep your circle of confidants close. I had one client who didn’t tell his adult children he won the lottery for weeks.
Your next call should be to someone who can help you navigate the complexities of lottery collection and protection of your newly discovered wealth. Whether you won $300,000 or $30 million, if you’re not used to dealing with wealth on a daily basis, getting help early on is essential.
When I’ve been called, I immediately meet with the winning family and together we plan a strategy for wealth protection. I essentially act as a financial quarterback. What pitfalls are out there? Do you have any outstanding debts or judgments? Do you owe back taxes? Are you being sued?
Next April when you file with the IRS, the award won today will really affect your tax return. You’re probably going to be in the highest tax bracket, currently 39.6%! The Lottery officials will withhold a good bit of your winnings for federal taxes, but it is never enough to fully compensate the IRS for your windfall when you file next year. Are there ways to defray that? We’ll meet with an accountant to determine the best way to minimize your tax liability.
Should you take the money as individuals, or would it be to your benefit to establish a trust or corporation for organized management and centralized growth as well as liability insulation? All of these are questions that need to be resolved before ever claiming your prize.
That’s right – all of this should be done before you ever redeem your winning ticket in Tallahassee. This is why most winners wait a good amount of time before turning in their ticket, because once that is done, a press release will go out disclosing your identity and city of residence. You cannot collect your winnings anonymously. This is why doing your homework beforehand can be enormously helpful.
All lottery winning tickets in the amount of $250,000 and up must be presented in person at the Tallahassee Lottery Headquarters. As part of my retainer, I accompany my clients to HQ since this too, can be tricky. Lottery Headquarters officials will ask many questions of clients regarding placement of funds and if unprepared many clients simply will not know how to answer.
Once everything is in place and the winnings have been collected, then the real work starts. What do you want to do with your wealth? We’ll meet with a team of financial advisors to assess the best way to allow you to spend some money, set up your estate needs for future generations, and preserve enough money for you to grow and benefit you in the future, whether retirement is 10 years away, or 10 minutes away.
So, as my recent lottery winner said to me when we were finished setting everything up: “I never knew having money could be this much work!” Don’t try to do it alone. And hire someone who knows what he or she is doing. Good luck and congratulations!
Image credit: mikekiev / 123RF Stock Photo