For all lottery players out there, winning the lottery jackpot is something that dreams are made out of. But have any of you actually thought about what happens when you win the lottery? Within this guide, we go through the best ways to handle a jackpot triumph.
Winning the Lottery
Let’s start right in the thick of it. You’ve gone home with your purchased lottery ticket and found the draw to be the exact same as what’s on your ticket. Or alternatively, you get home and don’t need to check the numbers as you bought your ticket online. Yes, when purchasing a lottery ticket online, if you happen to win the lottery jackpot, you’ll receive a personal message from the lottery organizers themselves – informing you about your big win!
Now that you’ve actually partied a bit and come to terms with the fact that you’re the next big lottery winner, what would be the first thing that you would do?
All jackpot winners have got some tough questions they’d like to be answered. Is it possible to remain anonymous? Should you call family and friends? How long do you need to wait until you can claim the amount? Should I quit my job?
The best thing to do in these situations is to settle down, perhaps even sleep on it, and take it easy. There’s no need to quit your job just yet, you’ve got enough time to cash-out your winnings and you probably should only call your very close family members. If you start advertising to everyone you know that you’ve just won the lottery and become rich overnight – there is a chance that some may see that lottery tickets are far more valuable than your friendship. Keep the lottery win on a need-to-know basis.
Get in touch with the Lottery Organizers
First things first. You’ve got the winning ticket – whether it be online or a physical paper – you’ll now want to contact the lottery or lotto agent you’ve purchased the ticket from. If you bought the ticket online –fair enough. You’ve got enough proof of the transaction and the e-ticket is safely secure in your account. For players who’ve bought the ticket from a betting shop or post office – put your signature and name at the back of the ticket. This will be valid later for proving that you’re the person who bought the ticket and can prove it with your ID. If you’ve bought your ticket from one of our recommended latest online lottery site reviews, no need to worry, your ticket and proof of purchase is all validated and stored in your account.
In all cases, lottery winners can choose to remain anonymous if they please. You may have to give an interview or email so that the lottery or agency can quote you on how it felt when you found out. After all, they’ll want some publicity of winners – especially those who win massive amounts!
Some lotteries allow you to wait up to 12 months before your winning ticket expires. So, in most cases, there’s no need to rush. You will, however, need to make a decision on how you’d like to claim your winnings.
Lottery Winner Payment Options: Grand Prize or Annuity Installments
Post-jackpot winning, you’ve got a very big decision to take, typically within 60 days. You’ve got to decide if you’d like to claim the full jackpot amount in one go or if you’d opt for annuity payments.
In the first case, you pay your tax dues all in one lump payment whilst the latter would see you pay taxes on the sum yearly. Taking Powerball as an example for the annuity, you receive a sum and the rest comes over 29 yearly payments. Each annuity sum is 5% larger than the previous one. You will, though, have to pay tax on the figure for 29 years.
There is certainly no right or wrong way of doing it. The lump-payment would see you pay less on tax – giving you more cash than the annuity. However, you’d have to be very careful with handling your money and not falling into the category of jackpot winners who’ve gone bankrupt.
The annuity is a sure-fire way of guaranteeing that you will be getting paid for the next 30-odd years. It’s certainly the safer way to go around it – given that you’re playing one of the credible lotteries out there.
In a nutshell, the lump-payments will give the winner a chance to forget about long-lasting tax implications and the possibility to invest largely into stocks or estate. The annual payment will allow winners to sit back and be sure that they will get the jackpot amount over the course of 30 years at a steady pace.
Avoid Bankruptcy by Bringing in the Professionals
Whether you do end up choosing the lump-sum or going for the annual payments, one step is critical. In order to have the best post-jackpot winning experience, your duty is to hire a team of specialists.
No matter how expensive their services may be, these advisors should be hired to give you a good idea of how to spend your money. You may wish to invest in a share of a company, and they could advise you of the risks involved. The most important thing is to avoid hiring ‘yes-men’. You want your advisors to inform you about something not worth investing in.
Stick to the same Principles as before
Just because you’ve got way more cash than ever before, doesn’t mean you’ve got to spend it senselessly. In fact, with more money, you’ve got even more things to spend it on.
Why do you think there are so many former lottery jackpot winners who’ve got bankrupt or have financial problems and even suicidal thoughts? Well, contrary to what many may believe, without financial discipline, it’s more dangerous when you’ve got more loot.
What happens when you win a lottery is ultimately up to you. But with an increased spending power, comes a greater deal of responsibility. If you abandon the basic principles on maintaining your financial aspect of life prior to the life-altering win, you most definitely would be in trouble. Hire the professionals, take their advice on any large-scale purchase or investment and always remember – there is a point when the cash runs out.
Build-up an Emergency Fund
This one goes without saying but how brilliant would it be to set up an emergency fund with a bank. This option would be a wise choice to keep on the side.
For winners who have chosen to take the lump-sum, you’d do well to store a portion of your cash. For annual payment choosers, putting in some wads of cash every year could be something to look forward to in the future.
This emergency fund could also potentially be a future retirement fund. Keeping a portion of your prize money on the side would only benefit you in the long run. Especially if you purchase a few items you’re not too proud about.
Leave the Heir to the Throne with an Inheritance
One of the most important things to think about is the inheritance of your wealth. It’s no use if – God forbid – something happens to you and all your capital is claimed by the government or some charities. You’ve got to think about number 1!
This is why it is fundamental to get an estate plan ready. If you’re out of the picture, who will the properties, wealth and investments go to?
You’ve got to get your closest family members or friends on your list. Make sure that you’ve covered all the inheritance taxations so that your estate safely passes to the rightful heir. This is best done by talking to the right people ensuring you’ve got all the ends of your side in place.
If you’ve got your mortgage to pay off, student loans or any other sort of bank financial obligations, pay them off whilst you still can. It would certainly free up yourself from having debts in the future – no matter what happens. Thus, one of the first steps you ought to take to be free of any financial responsibilities is clearing off your debt.
Some debts may still be useful – especially if they’re attached to a low interest rate. Those are the ones you may want to keep around for a bit longer. It is best to consult with an accountant the best ways to go forward on these tasks.
Help Change the Lives of the Less Fortunate
One of the greatest gifts you could give as a lottery jackpot winner is providing for those around you. It is always important to remember where you’ve come from.
Choosing a charity would be a great way to put your fortune to some fantastic use. Remember, you got lucky and became rich overnight. Hence, you’ve also got the financial power to help others.
Another positive is that when providing for a qualified charity large sums of cash, you are given a pass on your yearly taxations. This is a great way to reduce the cost of your annual taxes and at least you’re offering your capital for a good cause.
A sad yet beautiful story of this occurred in 2008 when Paul and Sue Rosenau won a $181.2 million Powerball. On the day of the jackpot win, their granddaughter had unfortunately passed at a very young age to a rare incurable illness called ‘Krabbe disease’.
The couple had invested a large portion of their winnings towards their founded charity for rare diseases for youngsters called, ‘The Legacy of Angels’. This was a move to raise awareness and help fund promising research into treatments and cures. It has been estimated that around 100,000 newborns are taken yearly due to the disease. Thus, it’s always important to make smart decisions with your winnings and giving back to charities is certainly a way to go about it.
Learn how to say ‘No’
Perhaps this is the most important rule of them all. Knowing how to say ‘no’ is an essential in keeping your money in-tact. If you win a jackpot and word gets out, you can expect everybody you’ve ever met – especially all those Facebook acquaintances – to want something from you.
Whether it be asking to help pay for a car, start a new business or any other wise or foolish request, you’ve got to put your foot down. If you do not want to throw cash at anybody who asks you something, you’ve got to grow a firm hand and deny requests. This may be one of the most difficult tasks you’ll face after winning a lottery. However, it is the small price you’ve got to pay after capturing such a massive win. You may also lose touch with some ‘friends’ after you cannot give them their financial requests.
We hope that this guide brings you some clarity on what happens when you win a lottery. We would not blame you once you win the lottery to go absolutely mad for a night. But be sure that once you settle down, the true fun begins. And of course, the responsibilities of handling all that cash!
Depending on which lottery you decide to go forwards with – whether it be Powerball, Mega Millions or EuroMillions – you can rest assured that winning a lottery does not necessarily mean that you can spend relentlessly. You’ve got to respect the money and the best way to go about it would be to hire some professionals. You can find the best online lottery sites right here at the convenience of a click away.