So, you’re convinced you’re going to win the Powerball jackpot tonight, right? Before you start blowing that $485 million jackpot on champagne wishes and caviar dreams. you would do well to take some solid advice.
Take The Annuity Or The Lump Sum?
The first decision you’ll have to make is how you want to receive that sweet, sweet cash (or more likely, an electronic transfer to your bank, but there’s no need to quibble) is; do you want the money in a lump sum or an annuity?
According to Business Insider, multi-million-dollar state lotteries, like tonight’s Powerball jackpot, are generally paid out in annuities: that is, 1/30th of the advertised jackpot paid out each year over 30 years.
So when you win the Powerball tonight, expect $16.17 million (give or take), before taxes, every year for 30 years.
Or, you can take the lump sum; that is, a one-time payment of half of the advertised jackpot. So in tonight’s Powerball jackpot’s case, a one-time payment of $242.5 million, before taxes.
There are tax considerations that will come into play regarding which route you take, but really, unless you’re already a part of the One Percent, they’re all but meaningless when it comes to this kind of money, as accountant Clarence Kehoe puts it.
“Given the significant size of this lottery prize, the recipient will be in the maximum income tax bracket on their receipts no matter if they take a lump sum or take an annuity over 30 years.”
Your humble Inquisitr writer will be taking the lump sum, by the way.
As soon as word gets out that you’re suddenly, ridiculously loaded, everybody is going to want in on that action. Relatives, long-lost friends, down-on-their-luck neighbors, charities, and all manner of “investment opportunities” (read: scams) are going to come your way.
You can avoid much of this by staying anonymous.
The problem, of course, is that most state lotteries require winners to reveal themselves and have their pictures used for publicity, according to Forbes.
But, there’s a way around that trap. You should have a lawyer set up what’s called a Blind Trust. Name yourself as the Executor of that trust, then donate the winning ticket to the trust. You will have access to the money, and you’ll be anonymous!
Lay Low And Hire A Financial Advisor
Most day-to-day working stiffs are simply not prepared to handle a sudden influx of wealth, says Forbes. For this reason, writer Deborah L. Jacobs recommends not making any sudden lifestyle changes – such as quitting your job or buying a new house – until you’ve had six months to take it all in and figure out your next move.
That next move should be hiring a team; a financial adviser, a lawyer, and an investment professional, and seeing to it that they work together. That way, you’ll be able to avoid the bad investments, the scams, and the other pitfalls that have plagued so many lottery winners in the past.
“In effect, the team you put together will function as your board of directors… Once you’ve decided on a plan, they can provide checks and balances on each other. You can ask one of them to serve as quarterback, coordinating the group effort. That person can also play the “bad guy,” declining requests from people or organizations for gifts that you don’t want to make.”
That may mean that you have to decline honest (or not-so-honest) requests from friends and family members for money. Helping out people you love is commendable; going broke while throwing out wads of cash to everyone with a sob story is not.
Carefully Evaluate The Lifestyle You Want To Live
$485 million (or $242.5 million if you take the lump sum) is an obscene amount of money to most readers of this post. It means driving a new Ferrari, jet-setting back and forth to San Tropez, sitting at the High Roller tables in Vegas, and shopping for groceries exclusively at Whole Foods.
But is all of that really necessary?
There’s a line between a comfortable lifestyle of no debt, not having to work, being able to travel, being able to support your favorite charities, being able to indulge your hobbies and living a lavish lifestyle full of gambling, mountains of drugs, plastic surgery, and eventually winding up more broke than you were before you won the lottery.
In other words, just because you can do something doesn’t necessarily mean that you should and blowing your lottery winnings on lavish spending may feel great at the moment, but at the end of the day, it may not be worth it.
As an anonymous lottery winner tells Reader’s Digest,“After we won the lottery, we bought an eight-bedroom, seven-bath, 10,000-square-foot mansion because we could, and it sounded amazing. Well, now we’re selling the eight-bedroom, seven-bath mansion because it’s impractical for a family of four.”
The bottom line, then, is this; winning tonight’s Powerball jackpot may change your life, but that doesn’t mean it has to ruin your life.
What are you going to do if you win the Powerball jackpot tonight? Share your thoughts in the Comments below.
[Image courtesy of: Getty Images/Spencer Platt]