When you win the Lottery, you will have everyone lying to you. Some will come telling you what investments to venture in. some will tell you to buy a beach house and live there. Others will be there in need of financial assistance. The worst-case scenario is if you have been bad at managing your money. You may end up squandering your investment. Now, assuming that you have won that lottery, this article is meant for you. To help you retain your newly acquired financial freedom forever. Below is what you will need to do once you win that lottery.
- Remain Anonymous
When people know that you have won a large amount of money, you will never know peace. You will start dealing with handout requests from charities, long-lost friends, and even people you never knew existed including financial experts vying for your business. Depending on the rules in your state, you can avoid them by remaining anonymous.
Some states have it that winners must be named publicly. However, if your state permits anonymity, go for it. Winners are given enough time ranging from 180 days to a year to claim the prize. Take this time to view your state’s regulations so that you know where you stand.
- Do Not Change Your Lifestyle or Tell Anyone Yet
The moment you know you have won, keep the information to yourself. Do not tell anyone, not even your boss, or close relatives. You could maybe disclose it to your spouse if you are sure they can keep it a secret. You do not want to an encounter with kidnappers who will hold you for ransom, or a session with some of these scammy wealthy managers who will try to milk you dry. Just remain quiet until you have figured out what to do with the money and even set up precautionary measures to keep you protected.
Now if you are going to be quiet about it, then you have to maintain a low profile. Do not change your lifestyle yet or all at once. Today you are a schoolteacher, and tomorrow you are wearing a fur coat and driving a car worth $250,000. Do not do that. At least for the first six months, maintain your normal lifestyle. Do take extravagant trips, buy a new home in the upmarket, or engage in a super-luxury lifestyle. If possible, do not quit your job yet. This way, people will not figure out your newly acquired wealth status, and you will have bought enough time to plan what you are going to do with the money.
- Hire Some Legal and Financial Advisors
If you did not have a lawyer, now you must have one. You need a team of legal and financial advisors to help you manage your money. You have never dealt with such a huge amount of money before, and you probably do not know so much to do with taxes and trusts. It does not matter how much it is going to cost you to get a good lawyer. Just pay for it. You can afford it. You are going to need their services for the long term.
- Lump Sum or Annuity Payments
When you win the lottery, you can either choose to be paid in all the money at once or in 30-year annuity payments. If you take the lump sum, you will be required to tax for the entire amount all at once. However, with annuity payments, you pay tax when you receive the portion for each year. If you do not have discipline or control when it comes to spending, it would be advisable to take annuity payments.
However, you can still take the lump sum but do not spend it. Pay yourself an annuity from it and invest the rest to work for you. If you can manage the money and invest wisely, take the lump sum and over time, you will end up with more money than your initial payment. Still, you have enough time from the time you win to the time you collect your prize. Consult with your expert team of financial advisors and weigh your options. Choose one that will work best in your favor.
- Pay off Your Debts
You have a large sum at your disposal in the bank. The least you ‘could do right now is clear off all your debts. One dollar paid in debt is one dollar you do not owe anyone. When you pay all debts, then you know all returns on investment are solely yours. Moreover, you walk free-spirited and free from debts.
- Invest Cautiously
You have heard cases of people who won billions only to go bankrupt a few years later. /it all boils down to their investment choices. Let your financial advisors draw an investment portfolio.’ Do not venture lit something you know nothing about or anything that sounds too good to be true.
- Watch Your Spending and Live Within a Budget
Again, we have all seen millionaires who go bankrupt. The lottery prize is such a big sum of money, but you need to exercise discipline in how you spend it. One good practice is spending only the income, and not the capital. This way you will never run out of your principal money. Additionally, spend within your budget. Of course, your lifestyle may have to change, but always have a budget and stick to it.
- Protect Your Assets
When people realize that you have a lot of money, they will be looking for reasons to sue you and get a share of it. Talk of ex-spouses, greedy partners, or even disgruntled spouses. It is advisable to have your assets protected, and make it impossible for any creditor to lay their hands on your assets. There are several ways to do this. You could use state law exemptions to create barriers through family limited partnerships, trusts, or even limited liability companies. You can rely on the above asset protection strategies either separately or in conjunction with each other.
- Plan Charitable Gifts
When you do charity work or fund a qualified charity organization, you get a deduction for the tax you are entitled to pay annually. Once you win the lottery, you have so much money at your disposal, and relatively high taxes to pay. You could reduce it significantly by donating to charity organizations. You will be helping someone out there who genuinely needs your help.
- Review Your Estate Plan
When you win the lottery, you acquire sudden wealth, probably not close to anything you have had before. With the help of your financial advisors and tax experts, you will need to plan for estate tax. Avoid cases where the government confiscates property due to failure to file tax returns.
Winning a lottery can throw one off-balance. You are going to be dealing with so much money in your life. Your status and lifestyle are certainly going to change. If you are careful, the money is going to serve you and your money for a lifetime. You can also lose it within a few years if you are careless. With the above information on what to do when you win the lottery, you are now equipped and ready for the lottery any time.
