With the Powerball jackpot approaching $1 billion and the Mega Millions prize up to $720 million, Americans are dreaming big. But the fact is, winning the lottery can be a huge financial headache. Many winners end up losing it all — or worse, they become worse off than when they won. This isn’t an uncommon tale, and it has nothing to do with the luck of the draw. The real problem is how winners handle the sudden windfall.
When you win the lottery, it’s tempting to run out and start buying luxury cars and a new house. But you have to remember that the money isn’t yours to spend freely – it’s someone else’s and has to be handled responsibly. That’s why you need to surround yourself with a team of experts to help guide your decisions.
Depending on the state you live in, you have a limited amount of time to turn in your ticket. This window usually ranges from 180 to 365 days, according to AARP. So, after you’ve screamed for joy and danced in a shower of Champagne, take some time to cool down and work out your plans before you contact lottery officials.
Experts recommend that you keep your winnings a secret until you have carefully formed a team and hammered out a wealth management plan. This includes deciding how to receive your prize – lump sum or annuity payments – and figuring out how much in taxes you’ll owe.