Forget to sign a ticket, or report it to the state.
It is sad, but a modicum of research shows that not signing a ticket or failing to report to the state are the simplest and most common errors to make. Can you imagine losing a lottery ticket? Then imagine what can happen if someone else snags your ticket and shows up to collect the prize. Fighting over true ownership of a lottery ticket is not a simple task, and many disputes have arisen over who owns what ticket. In a way, lottery tickets are almost like the last form of bearer bonds that anyone can collect on if they show up with the coupons and bonds in hand. Lottery tickets expire at different times from state to state, but they generally expire in 90 days to one year.
Tell everyone you know.
If you suddenly win millions of dollars, chances are pretty high that you will to want to brag about it. How could you not? The problem is that announcing to the public that you won before you collect your winnings can put you in grave danger. Literally, grave danger. Everyone who has ever done anything for you now may come with their hands out asking for something, or worse. You probably have heard of kidnap and ransom insurance before. One lottery winner was even murdered. If you can manage it, and if your state allows it, try to remain anonymous for as long as humanly possible. How you became vastly wealthy will be found out in time anyway, but there is no need to alert everyone.
Automatically decide to take the up-front cash.
Some lottery winners want all the cash up front, and they take a discounted amount in order to do so. Other lottery winners choose to receive the annual annuity payments. Getting tens of millions of dollars at once probably sounds better than getting a paycheck for the next 30 years or so. Now consider that close to 70% of lottery winners end up broke, many within a couple or few years. Let’s say that you can choose to get $172 million up front, or you can choose to receive a payout of $300 million slowly over the course of a lifetime. Most people choose the lump sum rather than the annuity payment, as it is instant empire-making money. Go see a reputable and visible tax professional and a reputable investment advisor at a top money management firm with a widely recognized company name and a long corporate history. This theme of “reputable and visible” will echo throughout. Do this before you make the decision about a lump-sum or annuity option.
Think that you are the smartest person about money and finance.
Just because you become wealthy overnight, chances are extremely high that you are not the best person to manage your money and financial interests. If you go from living paycheck to paycheck, does it sound right that you will know the best things to invest in and the best tax and asset protection strategies? There are many ways to invest and protect that fortune, and that might not include just buying some stocks and bonds and letting it ride. Your drinking buddy might also not be the best choice as an advisor and expert. Having a solid and respectable team of advisors and managers in place will act as your buffer that protects your assets now and in the future. Also, don’t think that this money is a tax-free payment, as you probably will have to pay the top tax bracket to the IRS and the highest state and local income taxes. Do you know how to protect your assets against all threats and know exactly how to protect your estate in case you die or become incapacitated? Here is a hint: If you answered yes, you probably did not bother playing the lottery.
Let your debts remain in place.
If you get the “I’m rich and don’t have to pay anymore” bug, you might be dooming yourself. One lottery winner in California was strapped with debt from property purchases and what seemed to be excessive insurance policies. Whether you take the lump-sum or the annuity option, if you have a single penny of debt in the immediate future and distant future, then something is seriously wrong. For that matter, you should not have a single debt ever again. If you manage to go broke down the road and still have a mortgage, car payments, student loans, credit card debt and personal bills, you will have lost the right to be mad when all of your friends and family members ridicule you every day for the rest of your life.
Be a high-roller or live large.
If you go from living a simple life to instantly being able to spend hundreds of thousands of dollars (or more) per week, what do you think happens to your expectations in life ahead? Chances are high that you will want more of the same. If you start gambling in Las Vegas and are not happy until you are gambling with hundreds of thousands of dollars (or more) per play, you are dooming yourself. Wait until the real con men find you. Taking you and your favorite 50 people on a luxury cruise around the world can become very expensive, very fast. Having an entourage generally only works for people who keep making more money, and entourages have bankrupted many musicians and athletes.