Unless you’re Jeff Bezos or Warren Buffet, the thought of winning lottery has likely crossed your mind at some point. And why wouldn’t it? Thinking of all the outrageously fun things you could buy and insanely glamorous trips you could take – there are plenty of options to daydream about.
Even though your odds of winning the jackpot are low, it’s fun to fantasize how you would spend a ridiculous amount of money. But have you considered how you would manage the money for the rest of your life?
If you do make it big, here are some things to consider:
- Determine how you want to receive your winnings. For example, you can choose a lump sum payment or be paid with an annual annuity – but be aware of the tax requirements and financial implications of each option.
- Hold off on claiming your ticket until you get a team of pros in place. The group could include a financial advisor, legal expert and a tax accountant.
- Learn to say “no.” People may come out of the woodwork with investment opportunities and personal needs, asking for financial help. Make sure you do your due diligence before agreeing to any of them.
- Think beyond any initial extravagant purchases and indulgences. Set some long-term financial and life goals for what you want to do with the winnings.
- Review your estate plan. Make sure your newly-acquired assets will be transferred to those you intended in the most efficient way and tax-favorable manner as possible.
These are just some of the ways you can avoid any legal, financial or personal pitfalls previous winners have encountered when they failed to adequately plan for their post-lottery futures.
