Powerball Winning 101: How To Stay Rich After Winning The Lottery Jackpot
by Winnie Sun, CONTRIBUTOR, Forbes
The Powerball Lotto has reached astronomical levels of interest as the jackpot nears $1.5 Billion Dollars! If you’re one of many who purchased tickets, you might be daydreaming about your future. Today our local news station visited me at the office asking for financial planning insight for potential winners. Below are some thoughts and action steps I shared with the reporter:
- Sign your ticket. If you haven’t already done so, make sure you sign the back of your ticket with a permanent marker.
- Try to stay anonymous if your state allows. Currently only six states allow winners to remain anonymous – Delaware, Kansas, Maryland, North Dakota, Ohio and South Carolina. Four more — Colorado, Connecticut, Massachusetts and Vermont — allow winners to remain anonymous if they claim their winnings through a trust.
- Breathe and enjoy. Your future success is all determined by how you keep your cool and how well you’ve planned.
- Before you cash in your ticket, create a checklist and start building your financial team. Don’t turn that ticket in until it’s done. It’s important to have people in place before the news vans arrive at your door.
Who should be on your financial team? Below are the four most crucial players
1. Tax professional. I recommend a team of accountants from a trustworthy firm. You’ll want to talk to your accountant about possible giving, deductions, and other tax considerations on these winnings.
2. Financial Advisor. This person or team should not be your tax professional. When one of my clients came to me after winning the lotto, the first thing we did was close the door and quietly talked. Map every penny out of where it will be, how you’ll invest it, how you’ll have access to it, and how it will be titled.
Proper financial planning takes time, and a windfall like this takes even longer. Expect your planning on your winnings to take months, if not years. It’s better to take your time to do it right then have to unwind costly mistakes.
Some of the topics you need to discuss with your advisor:
i. Paying off all your debt. This includes student and tax debt, credit cards, mortgages, cars, promissory notes and anything else that you owe on.
ii. Your standard of living and how you would like to see it stay the same, improve, or change.
iii. Your giving intentions. This can be to family, friends, charities, and others. If you have this mapped out, you won’t feel so overwhelmed. Your advisor can help you set-up a family foundation or other charitable entity to help with the ocean of inquiries you can expect to come calling. You can discuss how you’d like to give and utilize your winnings without overspending, over-giving, or worse, losing.
iv. Creating an income stream. Have your winnings continue to earn and win for you. You can structure your winnings in your own annuitized fashion. Talk to your advisor about diversifying your investments, income, liquidity, and insurance. There are many different types of investments that can help you accomplish income, but you’ll need a professional to help you navigate your options.
Once you have your income mapped out, you could then create a map of giving from this income. Have your advisor keep as much of your original winnings invested, intact, and as safe as they can.
v. You can have your financial advisory firm serve as the gatekeeper to your winnings. What this means is that they would be the referred contact for all financial requests and they would in turn report back to you.
3. Estate Planning Attorney. Meet with an Estate Planning Attorney to help you plan for your winnings. Topics of discussion will include your Living Trust, gifting to your loved ones, a foundation, endowment, charitable giving, and more. You should look for an attorney who specializes in working with large estates and who doesn’t pressure you to give to his/her charitable causes.
4. Publicist. If you can’t stay anonymous, a good PR team is crucial when dealing with the press calls and door knocks. You’ll want to be professionally handled in the public eye. This team will handle all the incoming demands for interview, comment, and other “opportunities.” A professional will know how to help you navigate effectively on your terms. The stress of saying no can be as challenging as saying yes. And in this case, you’ll have pressures to do both over and over again.
Whichever professionals you choose, be sure to check references, education, work history, and customer complaints. Most importantly, find people you can understand. All too often clients tell me that they don’t understand their tax professional or their attorney. Don’t rush this process and choose wisely.
With most things financial, a little planning goes a long way. But in the case of Powerball, it’s crucial to have the right plan and the right team to secure your secure your financial future with newfound wealth.
Winnie Sun is a wealth advisor to small business owners, senior executives, celebrities, and established families. nvestment News has named her Twenty Women To Watch. Reach out for a complimentary consultation and connect with her on LinkedIn.