What Should You Do If You Win The Lottery?
By Steve Paul
Planning is important before you start spending all that lotto cash. The following are a list of to-do's:
Get an unlisted phone number:
You have no idea how many friends and relatives you have until you come into a lot of money. You are also going to become the target for every con artist that can read a newspaper.
Take a leave of absence from your job:
You have a lot of planning to do and many weighty decisions to make. This is best done without distractions. Also, be aware that after a big lotto win, many companies consider you as someone that is in the situation to quit without notice and that coworkers may often see you with jealousy or become angry if you decline to lend them money.
Get a good tax lawyer:
You need a company that can advise you on how best to minimize your tax liability. These guys are expensive, but if you pay them $5000.00 to reduce your tax burden by $20,000.00, you are 15k ahead.
Also a big issue, depending on your States laws, is the formation of a Trust Fund. Trust Funds in many States can help shelter your money and set limitations that could keep you from going broke.
Get a trustworthy investment counselor:
During the first 90 days after your win you are probably not going to be ready to start investing but you do need to start a relationship with an investment advisor that can guide you in some of the day to day decisions you are going to be making. These guys are expensive but will more than pay for themselves by providing sound investment advice.
A big thing here is to hire an investment counselor that is more interested in your welfare than in large commissions. Find one that works on a straight fee and not on commission.
Pay off your debts:
We all owe someone for something and most of us build our lives around those monthly payments. Treat yourself to waking up in the morning knowing that you are finally out of debt. The exception is very large debts such as a large mortgage loan. Paying of large debts should be done only after consulting with your investment counselor.
Have a little fun:
Set aside 10% of your 'after tax' money to take a trip or go on a spending spree. Buy that car that you always wanted, get your sister that new refrigerator she needs, buy your brother a seadoo . A trip on a cruise line is always a great way to unwind and take a time out.
The important rule here is to indulge yourself, without going nuts and always keeping it reasonable. Decisions on buying a new home or that $400,000 Ferrari should be made after the next step.
Wait and see what you have really won:
The majority of winners are surprised to find that, after the dust settles, their 1 million dollar win is actually more like 650 thousand dollars.
After you have met with your tax lawyer, your investment counselor, and paid off your debts, you should take a hard look at what you really have to work with.
That done, you are now ready to plan out your new life. Sit down with your investment counselor and build a strategy that best accomplishes your new goals.
Donate:
If the lady luck has smiled upon you, think about giving a bit to charity or your church. Not only will you feel good but, as your tax lawyer will tell you, there are actually some financial advantages.
Effective planning before you spend that lottery windfall will enable you to continue reaping monetary benefits long after the win itself. Take time to do this planning and you'll thank yourself over and over later.
Happy Winning!