When you win the lottery, it can be a life-changing event. You’ll find yourself with more money and freedom to spend it. But you may also face financial decisions you never thought you would have to make. If you don’t have a plan, you could end up making the wrong choices.
Lottery winnings are taxed like regular income, but you can choose whether you want your winnings in one lump sum or in installments. This depends on the type of prize you won.
One of the most famous lotteries is the Powerball. The prize is worth a billion dollars, and is paid out over 29 years. Depending on how you split the winnings, you can receive a small investment gain.
Besides the money, you may also be able to get a brand new car, a vacation, or a house. However, it’s important to remember that spending and gift-giving aren’t always wise.
In fact, the odds of going bankrupt are a bit higher than winning the jackpot. Studies have found that the probability of filing bankruptcy within the first three years after a big win is only half.
To avoid becoming a victim of a lottery scam, you should always do your homework before investing. Make sure your financial advisers are reputable and that they can look out for your best interests.
It’s also a good idea to set up a blind trust. An attorney can help you set up a legal structure in which your winnings can remain hidden.