June may be the start of the summer doldrums, but there is about to be some serious excitement around the lottery again. There were no jackpot winners for last Saturday’s Powerball drawing, and now the grand prize is up to $375 million. The next drawing will be Wednesday, June 7, 2017. As far as the $375 million annuity value, that would come to $235.4 million cash for those who choose the upfront, all-cash payment option.
Whether lottery winners take the annuity payment or the all-cash payment, it represents nothing less than multi-generational empire-making money. Keep in mind that the odds of winning the grand prize are one in 292,201,338. The odds of winning $1 million are a more reasonable one in 11,688,053.
24/7 Wall St. has created a guide for lottery winners, which is also the same path for anyone who unexpectedly comes into vast wealth. Any would-be winner, or multiple winners, better have an idea of what they should do if they win. Perhaps even more important is what not do!
This is the 12 Things Not to Do If You Win the Lottery.
What has become obvious in recent years is that winning the lottery is the new American Dream. After all, a life of hard work and saving up for years just doesn’t have the same instant sizzle as winning the lottery. This is immediate gratification that doesn’t require nerves of steel, being smart in business or knowing how to invest, and it doesn’t require all those pesky responsibilities over a lifetime. And to make the American Dream even more bent toward the lottery now, the media and politicians keep telling the public that it is just too hard these days to get ahead and live well.
Whether you are talking about $375 million paid out over a lifetime or a lump sum of $235 million, this lottery winner needs to understand there are pitfalls that must be avoided at all costs. It is quite sad to report that many lottery winners have gone broke, and some went broke in a short period. With extreme wealth comes extreme responsibility.
Most lottery winners will choose to take the cash lump sum option rather than the annuity payout over 20 years. Even after the discount and then having to pay the super-high tax bills, the reality is that $50 million, $100 million or $200 million is more money than almost everyone you know can imagine making in their lifetimes.
24/7 Wall St. does not want to see anyone who attains new wealth suddenly go broke. There are many temptations waiting ahead that can be too much for some people to handle. As hard as this is to believe, it is just too easy these days to blow through vast sums of money. You can easily spend $100 million to $200 million in a period of months or weeks if you choose to. A lack of planning and refusing to live within reasonable limits have to be prevented at all costs.
Lottery winners must assume that their family relationships and friendships are going to be tested by such instant and vast wealth. Bragging about getting super-rich could even cost you your life — and that’s no joke. Thinking that financial and tax advice are not needed will wreck you. Living on a budget, as lavish as it might be, is crucial to the newly wealthy keeping their wealth.
If any or all these points sound silly, then take this to heart: You are at severe risk of going broke after becoming filthy rich.
Some simple math can spell all this out. Add up the cost of private jets and yachts, of mega-mansions and lavish vacations with the rich and famous. Why not get a private island too? And throw in an entourage, and then think of all the insurance and security you will need to protect yourself and your vast collections. Art auctions, the best jewelry and luxury items, and vintage car collections are not cheap. Any combination of just a few of these can easily wreck your vast sum of wealth.
Hopefully reality is setting in here. The entire point behind this list of things not to do if you win the lottery is to keep anyone who becomes suddenly wealthy from going broke. After all, it’s hard enough to become wealthy, so don’t ever forget that you should only have to become rich once.
Here are the 12 things not to do if you win the lottery.
1. Do not forget to sign the winning ticket and report it immediately.
It may seem nearly impossible to imagine that some people might not sign a winning lottery ticket. It seems even crazier to think that a winner would forget to report the winning ticket to the state. It has happened. Now imagine if you have the winning ticket and it gets stolen. Or think about if it burns up in a house fire. Endless millions of lottery dollars have gone unclaimed. Some people somehow manage to not report to the state that they won.
Now imagine how you would feel if you lost a winning lottery ticket. Or what about if someone else takes your winning ticket and then shows up to collect the prize? Fighting over a winning lottery ticket is no simple task, and disputes have arisen over who was the real owner of winning lottery tickets.
In more ways than not, a winning lottery ticket is like the last form of bearer bonds. Whoever shows up with the right paper gets paid. You have to sign and secure that ticket, and you then have to report to the state.