Winning the Powerball or Mega Millions can change your life in an instant. But with great fortune comes great responsibility. Seventy percent of lottery winners lose all their money within five years, according to the National Endowment for Financial Education (NEFE).
If you have a winning ticket in your hands, follow these steps recommended by experts to protect and maximize your winnings.
Protect your ticket
The first thing you should do is sign the back of the ticket and keep it in a safe place, such as a safe deposit box or a bank.
Key tip: Take your time before claiming your prize. In most states, you have between 90 days and a year to collect, according to the Multi-State Lottery Association.
Important: Avoid sharing the news immediately to protect your privacy and avoid possible fraud or requests for money.
Consultation with professionals
Before making any financial move, form a team of experts that includes:
A lawyer specialized in lotteries.
An accountant with tax expertise.
A high net worth financial advisor.
Key Fact: Taxes can reduce your award by up to 40%, according to the IRS. A financial advisor will help you minimize this impact.
Decide how to receive your prize
You have two options to collect your prize:
Lump Sum: You receive a reduced amount immediately, after taxes.
Annual payments: You receive 30 annual payments (annuity) with taxes deducted from each payment.
Financial tip: The ideal option depends on your situation. If you don’t have experience managing large sums, annual payments can help you avoid spending it all too quickly.
Protect your privacy
While some states require winners to be publicly identified, in at least 16 U.S. states you can claim your prize anonymously, according to the Multi-State Lottery Association.
Why is it important?
You avoid fraud and scams.
You will reduce social pressure and requests for money.
You will protect your safety and that of your family.
Legal solution: In states where anonymity is not allowed, you can create a trust or LLC to claim the prize without exposing your identity.
Don’t spend everything right away
Winning the lottery doesn’t mean spending out of control. To avoid losing everything, consider these strategies:
Create an emergency fund with at least 5 years of expenses.
Diversify investments in real estate, bonds and safe stocks.
Consult with advisors to avoid fraud and bad investments.
Other tips
Buzzy
Pay off all your debts before making large purchases.
Be careful with taxes and plan each year.
Live a discreet life and avoid impulsive spending.
Be wary of “too good to be true” businesses or investments.
Fact: According to a Florida State University study, more than 30% of lottery winners end up bankrupt in just five years due to financial mismanagement.
Patience and planning are essential to maintaining a fortune in the long term
QuéOnnda.com
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