What to do if you win the powerball lottery

What to Do If You Win the Powerball Lottery

The biggest Powerball jackpot to date was $1.586 billion in January 2016, according to the Associated Press. That same year, the North American Association of State and Provincial Lotteries reported that national ticket sales reached $80 billion, which was more than sales from entertainment, gaming, and sports events combined.

Everyone dreams of winning the next Powerball lottery. But as the winnings continue to grow into billions and the odds shrink (1 in 292 million for the Powerball grand prize), there are only a lucky few who win big. And those winnings come with provisions. If you’re a sudden wealth individual who has won hundreds of millions, you need to know what to do if you win the Powerball lottery.

Protect that ticket

After the excitement of seeing those winning Powerball numbers, a sudden wealth event, such as winning the lottery, can sometimes be overwhelming. Even if you don’t post your windfall on social media or go on a spending spree, predators could still possibly come knocking at your door. When you have a lot of assets you can become a target for lawsuits, harassment, and requests for money from family, friends, or even complete strangers. But by understanding what to do if you win the lottery, you can protect your winnings for the future.

Some of the first steps you can take are the easiest. Before you rush to claim your winnings, pause and take your time. Every state has their own rules, but typically you have between 180 days to 1 year to claim your ticket. Lottery officials also recommend keeping your ticket safe and consulting with lawyers and financial advisors who have experience with large windfalls.

Next, create a plan that details your lifestyle and financial goals for the future. One of your first decisions is whether to take the cash option, or an annuity which will pay out your winnings annually over a period of time. Furthermore, in order to protect your winnings, lottery officials recommend you set up a trust. In fact, protecting your money is the “number one” reason to create a trust, particularly in states where you cannot remain anonymous.

Trusts come in two general types: revocable and irrevocable. A revocable trust allows you to make changes or terminations during your lifetime however, you have no protection from creditors. An irrevocable trust gives you greater asset protection. This type of trust protects lottery winnings because the assets legally do not belong to you, and they benefit your family, as they are not subject to estate taxes. Additionally, an irrevocable trust can only be changed if the grantor, creator, trustee and beneficiaries agree to the changes. If you are part of a winning lottery pool an irrevocable trust guarantees that everyone gets their share of the winnings and helps prevent future disputes among the winners.

What not to do

If you have recently received lottery winnings think carefully about how to protect your earnings. What you do next can put you on the path to financial wellness or leave you  disappointed and experiencing a loss. Above all, you want to protect your anonymity. For that reason you may want to wait before you tell friends and family or quit your job.

Proper estate planning is essential whenever large sums of money and assets are involved and lottery winnings are no different. The Jeffrey M. Verdon Law Group provides concierge-style service to their clients on asset protection trusts and customized strategies that safeguard personal assets. If you need help protecting your lottery winnings or any assets, call us today.

Posted in Asset Protection, Trust, Updates.