12 Things Not to Do for a $348 Million Lottery Winner

May 3, 2016 by Jon C. Ogg

May is starting out with a Powerball lottery that has an annuity value of $348 million. The reality is that this is an instant creator of multi-generational wealth. It’s nothing short of king-maker money, and it will make the winner have the mega-rich status overnight.

24/7 Wall St. has tracked many lottery winnings over the years. Unfortunately, many lottery winners end up broke. Some winners even end up in the poor house after just a few years. That is why we have created a how-to guide for lotto winners with 12 things not to do if you win the lottery!

The Powerball jackpot starts at $40 million and then grows at each drawing until someone matches the winning Powerball numbers. The current estimated annuity value of $348 million for the drawing on Wednesday, May 4, comes with a lump sum estimated cash value of $221.6 million.

Most people who win the lottery choose the lump sum payment rather than drawing it out over a lifetime. The official Jackpot odds are one in 292,201,338 for the larger sum. For a $1 million lottery winning without the extra ball, those five numbers for the $1 million prize come with odds of one in 11,688,054.

So what happens if you win the lottery? It is without a doubt that you just became filthy rich. What matters now is that this newly found wealth comes with an extreme responsibility. Again, many lotto winners end up broke again.

Imagine winning $10 million, $50 million or $200 million only to be poor in a few years. Those fortunate winners who become losers like that certainly will be the brunt of jokes at every gathering with friends and family.

The first thing that you need to do, outside of signing the winning lottery ticket and reporting to the state, is to line up solid financial and tax advice. Then you need to think about what sort of lifestyle you really want to have — and you are going to need a budget.

Some pitfalls that have wiped out lottery winners might seem obvious. But think about this: if the right things to do are so obvious, then why do people still go broke? If you want to keep up with superstars and become the newest high-roller, you might be dooming yourself and your new-found fortune. Bragging to everyone you know about how you just became filthy rich is another recipe for disaster. You might lose friends — or you could even lose your life.

So maybe this message hasn’t set in yet that you could conceivably blow the after-tax cash from your $226 million or so from the cash option. The 1980s film “Brewster’s Millions” made it real hard to blow just $30 million in 30 days — something the imaginative and reckless could accomplish in days (or even hours) now. Private jets, mega-yachts, entourages, private islands, mega-mansions, luxury cars, private concerts, luxury jewelry, fine art and other collectibles — they could all add up to $100 million or more without even being that creative.

Do you keep it all or become the world’s largest benefactor? Do you back all your friends and family businesses? Do you buy everything for everyone? These are just some of the things that a lottery winner will have to consider.

24/7 Wall St. does not want to see any lottery winner go broke. You should only have to get rich once. These are the 12 things not to do if you are ever lucky enough to win the lottery.

1. Don’t forget to sign the ticket or report to the state.

It is sad, but research has shown that not signing a ticket or failing to report to the state are the simplest and most common errors to make. Many lottery winners never know they won. Can you imagine losing a lottery ticket? If that isn’t bad enough, imagine if you are one of the few instances where someone else takes your ticket and shows up to collect the prize. Fighting over true ownership of a lottery ticket is not a simple task. There have been many disputes over who the true owner of the lottery ticket was.

In some ways, 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 generally in 90 days to one year.

2. Don’t go brag about winning to everyone you know.

If you suddenly win millions of dollars, chances are pretty high that you will to want to brag about it. After all, how could you not? Where this is such a problem is that lottery winners announcing that they won before collecting the winnings are putting themselves literally in grave danger. Chances are high that anyone who has ever done anything for you now may come with their hands out asking for something.

Then there are the extremes. Have you heard of kidnap and ransom insurance before? Two lottery winners have even found themselves victims of murder. 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. There is just no need to alert everyone before you get your plans in place.

3. Don’t automatically decide to take the up-front cash.

Some lottery winners may choose to get an annuity payment over the course of their life. Most winners want all the cash up front, and they take a discounted amount in order to do so. Getting tens of millions of dollars at once (or well over $100 million) probably sounds better than getting a paycheck for the next 30 years or so. Again, keep in mind that close to 70% of those who gain instant wealth without earning it end up in hard times again.

Hiring a highly reputable and visible tax professional and a reputable financial advisor with long histories is a must here. The theme of “reputable and visible” will echo throughout here, but please hire those two people before you make the decision about a lump-sum or annuity option.

4. Don’t think that you are now the smartest money guy in the room.

Just because you become wealthy overnight, it’s a very good bet that you did not become the best person to manage your money and financial interests overnight. If you go from living on a few thousand a month or struggling from paycheck to paycheck, what are the odds 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 this new fortune. That might not include just buying stocks and bonds and letting it ride.

Chances are extremely high that 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. Don’t count your eggs before they hatch — this money is not at all tax-free, with the highest IRS tax bracket, and don’t forget about state and local income taxes either.

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? If you want a hint, consider this: If you answered yes to that question, then you probably did not bother playing the lottery in the first place.

5. Don’t forget about the debt and obligations you already have.

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. Regardless of whether you take the lump sum or the annuity option, if you have even one cent of debt in the immediate future and distant future then something is seriously wrong with you.

The new harsh reality is that lottery winners should not have a single debt ever again. What if, even by no act of your own, you end up broke again and still have a mortgage, car payments, student loans, credit card debt and personal bills? You won’t have the right to be angry when all of your friends and family ridicule you every day for the rest of your life.

6. Don’t become a high-roller or live too large.

If you go from living a simple life to suddenly being able to blow hundreds of thousands of dollars each week, there is a good chance that it will change your expectations for life ahead. Most people who get to that level don’t want to go backward. If you start gambling in Las Vegas and are not happy until you are gambling with hundreds of thousands of dollars per play, you are dooming yourself. Now imagine what happens when 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.

7. Don’t go buy everything for everyone and for yourself.

There is always a temptation for lottery winners to share all that new wealth. Buying all the millionaire toys you can think of might crush a lottery winner. How to avoid this is simple to say, but history has proven that it is hard to follow. Chances are high that you will regret the decision if you go out and buy dozens of cars and houses for you and for your friends and family members. This will start you on a bad path, and you could easily become the next friends and family personal welfare department.

If you start buying everything for everyone, there is a good chance that they are going to come to you expecting more of the same ahead. And what if they can’t afford the upkeep of such a gift? The other end of the spectrum is that you do not have to be a cheapskate either, but a budget and a team of advisors will keep you steered in the right direction. Do not be the lucky winner who bought more than 30 cars and multiple houses in three months for himself and friends and family.

8. Don’t think you don’t need a budget!

Do millionaires have budgets? You bet your assets, at least from the smart ones. Again, extreme wealth brings the need for extreme responsibility. Maybe it sounds funny that the mega-rich have to live within certain means with instant empire-making money. This is true, even when you consider that most lottery winners instantly become wealthier than everyone they know combined.

The notion of living within your means also goes back to having advisors and being prudent, but at the end of the day you do still have a finite sum of money. Chances are very high that you will make some serious purchases and your lifestyle will be changed forever. Not setting realistic limits for yourself, and not limiting how much you are willing to do for others, is a recipe for disaster. Again, many lottery winners go broke in a short time.

9. Don’t become a banker and business backer for everyone!

Leave the venture capital and merchant banking world to venture capitalists and merchant bankers. One way too common theme that has ruined lottery winners with instant vast sums of cash is that friends and family start pitching them on endless business ideas. Sure, some will sound great and some will sound crazy. Other friends and family members may expect you to become their own overdraft source of funds. Avoid this at all costs.

If someone has no knowledge of a particular business and does not know what it takes to actually run a business, will that person do better because a lottery winner who lucked into vast wealth provided money to start it? If your answer is yes, you seriously need to protect yourself — from yourself.

Now think about whether most lottery winners had the understanding of how to run a business the day before they won the lottery.

10. Don’t just give it all away!

Some lottery winners might feel so lucky that they want to give away just about all their money to a charity or to a religious institution. This may sound great on the surface, but even the truly wealthy who earn their money the hard way do not do this in the manner you might think. You can be more than generous without doing the unthinkable of giving away the whole treasure trove. Imagine what you will feel like down the road if or when a serious crisis arises in your life or your family’s lives and you no longer have the finances to help.

Should you be charitable? Absolutely! Should you give it all away just because a church or a charitable group does good things? Absolutely not. If you insist on giving away your new-found fortune, do it the way the wealthy do it. They generally structure their wills or trusts to give away that fortune upon death.

11. Don’t get celebrity and athlete envy.

Being a high-roller is one thing, but you can go incredibly broke trying to keep up with celebrities. Keeping up with the Jonses is bad enough, but do not try to keep up with the Kardashians and their like. It may seem cool to own a 200-foot yacht or private jet, or to have your own entourage. It may also seem cool to own castles in Europe or Picasso paintings. These can easily drain your financial statement to zero. Trying to dodge taxes might even sound appealing to misguided people. Now go add up the price tags of these things, plus the cool cars and houses and the rest of it. You can go broke very quickly. Just ask the endless movie stars, athletes, musicians and people who come into vast sums overnight.

Many famous people have had it all, only to end up broke. And thinking you can dodge your taxes like so many famous people have done is another recipe for disaster, one that may come with a greater price than just mere penalties.

12. Don’t think that laws and decency no longer apply.

It is true that the wealthier you get, the better attorneys and legal defense you can afford. Still, you will have to live under the “good citizen” laws, and you still likely will have to pay taxes just like Warren Buffett’s secretary. Living a reckless life without concerns about the laws of the land will not keep you from going to prison (or worse). Most good sports coaches will tell their star athletes upfront that chances are high they will have to be human for far longer than they will be stars.

Movies can glamorize scoundrels, but what good does it do you if you are incredibly wealthy and such a pariah that no one will associate with you? Remember, you don’t get to take any of your wealth with you when you die. And how fun will it be to be paying out all of your winnings to attorneys fighting to keep you out of jail or fighting civil suits looking to take your new wealth away?


Again, 24/7 Wall St. would not want anyone who wins the lottery to end up without a penny to their name (or worse). Remember this adage: You should only have to get rich once! Following a list of things to do or not do sounds easy enough. Unfortunately, life’s temptations can get in the way of logic.