As a lottery winner, you’ve probably concocted many ways to spend the money: stunning beach houses, world-class vacations, new cars, and not-so-sexy expenses like paying off debt. But it’s likely that you haven’t drafted your fantasy financial team—and that could be a big mistake.
Lottery winners must take the time to find trustworthy advisors to help protect their assets and help them make the most of their windfall. These professionals include tax attorneys, trust and estate lawyers, and accountants.
In addition to helping them navigate the tax code, these professionals can help lottery winners set up a structure that will best meet their needs and provide for their loved ones. Depending on the state, winnings may be subject to income, property, or capital gains taxes, as well as local and state withholding rates.
Some states allow lottery winners to claim their prize anonymously. However, this doesn’t prevent the winner from being contacted by scammers or others looking to steal their winnings. For example, Craigory Burch won a Georgia jackpot and two months after his win, he was killed in his home by seven masked men. In another case, Abraham Shakespeare won a $30 million jackpot and after two years, Dorice “Dee Dee” Moore became his financial adviser and stole his money until he was buried under a concrete slab in his backyard.
To avoid these problems, lottery winners should consider changing their phone number and avoiding socializing with friends and family until they have set up a trusted team of advisers. They also need to keep in mind that if they do choose to go public, they will have to pay federal and state taxes as well as local withholding taxes.