Over the years, the biggest lotteries’ jackpots are now over a billion dollars, which is a significant amount by anyone’s standards.
You might think that you will never have to worry about anything if you win the jackpot. However, contrary to common beliefs, there are some things you still need to do even if you win the jackpot. Here are the most important things to do after winning a jackpot:
1. Remain Anonymous
There are two options available for the winner to claim the prize, remain anonymous or receive the award openly, and let the world know. The second option leads to many problems such as break-ins and robberies, which can be avoided. Many Mega Millions jackpot winners had faced devastating consequences when they chose to announce their win. There are also requests for handouts from friends and family who know about the success, and business proposals will be presented to you by long lost friends. Hence, it is a good idea to check whether your region allows you to claim the prize anonymously.
2. See A Tax Lawyer
Two options for taking the winnings are offered – lump sum or annual payments. In the case of a lump sum, taxes are to be paid on the complete prize right away, and in yearly payments, taxes are also paid annually. Taxes are to be paid on the winnings no matter what choice is made; the lottery’s tax rate is usually very high, and not paying due taxes can be painful in the future. It is essential to visit a tax lawyer or pro who knows everything about the process of paying taxes and calculate which option is better for you.
3. Pay Off Debts
Debts have become an essential part of lifestyle for the people living in the modern era. The best use of lottery money would be to pay off all kinds of debts you currently have. Loans are now available for all types of purchases, and credit cards have changed the spending habits of people with the ‘buy now pay later’ mentality. Over time, these debts pile up, and the interest payments become increasingly large. The best advice for a lottery winner would be to pay off their debts right after winning, reducing the burden on their shoulders.
4. Avoid Any Lifestyle Changes
When there is money in the account, there is a temptation to complete all your whims and wishes. Lifestyle changes are among the first things an individual goes towards after getting a significant amount of money. It is advisable to wait at least six months before upgrading your car, house and going on a luxury holiday. Only spend a small amount of the winnings, and do it subtly so no one can know about your winnings.
5. Invest Your Money
Invest your money in different assets according to your preferences, but looking at good investment options is recommended. The jackpot money invested can make you even more prosperous as time passes, which will slowly increase your standard of living. If the amount of money is large, always look for safe options such as real estate and bonds. Do not invest in assets that are too complicated to be understood or real estate deals which offer return which is too good to be true.
6. Make A Budget
Even though you might feel like splurging, staying within a budget is always a good idea. Create a budget for yourself monthly as if it were a salary you were receiving each month. You should be spending the income you generate over the years from the winning and not the principal amount. If you start spending the principal amount, which is the original investment, the money will evaporate very quickly.
7. Protect The Winnings
When you have a significant amount of money, you will need to guard your assets against people who will be willing to go to any lengths to take the money off your hands. Spouses, ex-spouses, and other people can file and win lawsuits against you, which can be a costly matter. If the money is invested in real estate, consider protecting those by creating a limited liability company or limited partnerships with trusted family members or friends. There are multiple strategies available to protect your capital from potential threats.
8. Plan Gifts To A Charity
Charity, which is set up for a good purpose, will provide satisfaction and help offset tax deductions with the charity. If you are gifting to a public charity, you will be entitled to a 50% tax deduction on adjusted gross income (AGI) for a cash contribution. Keep in mind to stay anonymous while making these gifts because they can also draw attention towards you.
Even if you win the lottery, there are some things you need to take care of, such as staying anonymous to avoid handout requests, pay off debt and taxes, avoid making a large purchase, look for investment options, stay on a budget, protect the winnings, and try to plan gifts to a charity. All these measures will ensure that the chances of blowing the jackpot money are lowered.