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With Mega Millions and Powerball jackpots both exceeding $ 400 million, there are probably plenty of players who are dreaming of how they would spend such a windfall.
They might also want to think about what they need to do as a winner before the money actually gets to them. In other words, there would be big decisions to be made before even thinking about going to the lottery headquarters to claim the prize.
“This is extreme wealth,” said Walt Blenner, lawyer and founder of Blenner Law Group. “Everything really needs to be in order.
The Mega Millions jackpot reached around $ 405 million for Friday night’s draw after no tickets matched the six numbers drawn on Tuesday. Powerball’s top prize is $ 432 million for Wednesday night’s draw.
While the chance of a single ticket winning the top prize in either game is minimal – 1 in 302 million for Mega Millions and 1 in 292 million for Powerball – it’s still worth thinking about how. which you would handle such a windfall if you had to beat the odds. .
Here are three immediate considerations for winners.
Who to tell
Best to share news with only a small group, experts say
“Tell as few people as possible,” Blenner said. “It means your nuclear family, although I would say don’t tell the kids that except to make a vague reference to how there will be changes in your life to come. “
You may also be able to protect your identity from the public, depending on the state you are in. While only a handful of these allow winners to remain completely anonymous, you may be able to claim your prize through a trust or limited liability company that does not have your name on it.
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In general, it is a question of calling on professionals. You need to build a team of a lawyer, tax advisor, and financial advisor, all of whom are experienced in helping lottery winners manage their windfall.
How to take your winnings
You have the choice of receiving your earnings as a lump sum in cash or as an annuity spread over three decades. Either way, the money will be taxed when you receive it.
Most lottery winners choose to receive a lump sum. For the $ 405 million Mega Millions jackpot, the cash option is $ 294.7 million. For Powerball’s $ 432 million top prize, it’s $ 313.5 million.
Keep in mind that federal income taxes today are historically low – and it’s impossible to know where they might be in years to come. This means that from a tax perspective, it could cost you more to take the annuity, as tax rates are more likely to rise than to fall.
When to claim
Typically, lottery winners have a few months to a year to claim their prize, depending on the state. This means that you don’t have to rush to headquarters the day after you find your good fortune.
It will take some time to put everything in place, Blenner said. This includes building the team that will guide you.
“It takes a while,” he said.
In the meantime, be sure to make a copy of your banknote and put it somewhere safe, like a fireproof safe or a bank safe.