Tuesday, January 12, 2016
What should you do after you win the lottery?
This week's $1.5 Billion (yes, that's Billion with a "B") Powerball Jackpot has the internet abuzz with dreams of becoming the first instant billionaire (well, multimillionaire, after taxes). It is highly unlikely that the winner or winners will ever read this, but still, it is fun to dream. What would you do if you were holding the winning ticket. What should you do?
Certainly, winning the lottery can be a life-changing event. It changed the lives of 42 residents of Roby, Texas, who won $43 million, but not for the better. Jack Whittaker endured plenty of misery, divorce, criminal accusation, and death of his loved ones after winning $314 million. Abraham Shakespeare won $30 million, and was murdered by his girlfriend and buried in a concrete slab. The list of people who turned good luck into bad luck is long. But it could be fun to win, too. Plenty of winners have had positive futures after winning the lottery.
Here are some important steps to consider, if you ARE the lucky winner.
1. Tell No One
After picking yourself up off the floor, the first thing you want to do is spread the good news, right? Wrong. Tell no one at first. Not your spouse (who holds the power to divorce you or kill you in your sleep). Not your children (who might suddenly decide to splurge on their inheritance and tell everyone your good news). Not your best friend (whose cousin needs bail money). Not your pastor (struggling to balance the church budget). Money has a funny way of turning otherwise good relationships into cesspools of deceit and manipulation. Greed can polarize friendships and family. And, as news spreads, you could be making your friends and family targets for kidnapping or for emotional sob stories from every needy and deserving person.
2. Safeguard the Ticket
After telling no one this secret that is burning a hole in your life, you should take immediate steps to protect the ticket. Lottery tickets are one of the last true types of "bearer paper." That means that if the ticket is lost or stolen, anyone in possession can turn it in. If the ticket is destroyed, it is gone forever. Make paper copies and digital copies of the ticket, and store the original in a bank safe deposit box.
3. Take Your Time
Once you have secured your ticket, it is time to relax and assemble your team of professionals before you do anything else. This also allows all of the media frenzy time to die down. The last thing that you want is publicity. You will be running away from that for the rest of your life.
4. Don't Quit Your Job or Spend Money on Large Purchases
Remember number 1? Now is not the time to be making life-changes. Particularly without a plan in mind. You need to disappear quietly, not tell your boss to "shove it" the morning after they announce that someone from your city has won a bajillion dollars. You will always have time to quietly retire, but you need a plan in place first.
5. Hire a professional team
You will want to get an attorney. Probably more than one. At the very least, an attorney who is board certified in estate and tax planning law, to help create the corporate structure you will need and avoid paying more than necessary in taxes. You will also want two financial advisors -- one who can draft a financial plan for you on an hourly fee, and another who can review it and give you independent advice.
6. Stay Anonymous if Possible
In some states, it is possible to stay anonymous when you finally claim your winning jackpot. If you can do this, do it. In other states, you might be able to form a corporation, LLC or trust and transfer the ticket to that entity, who can claim it through its attorney, in order to put layers between you and a money-hungry list of predators who will try to prey on you.
7. Get a Sober Companion
Suddenly becoming a millionaire overnight has the potential to give you the means to achieve your wildest dreams, while, at the same time, silencing your inhibitions. No matter how "good" a person you think you are, you cannot handle it alone. When you have surgery, you need someone to drive you while you are under the effects of anesthesia. Much the same, you need a "designated driver" now. This is someone without a direct financial stake in your life, and someone with honesty, integrity, and clarity of thought. Someone who can keep you from drowning in a pool of expensive alcohol or giving away your entire fortune to the line of people outside your door who mysteriously need transplants. Try to find someone like Ghandi or Mother Teresa, if possible. And insist on paying them by the hour for their advice.
8. Go Off the Grid
Before you claim your prize -- disappear. Really. Change your cell phone number, change your email address, get a post office box, rent an "office" preferably in an executive suite with a shared receptionist to receive deliveries. Move to a new location where you rent a home or purchase a new home in the name of a separate corporation or trust. A move to the new city or state where you have always wanted to live, or to a remote mountain location might be in order.
9. Follow Your Plan
Form and follow a plan to claim the winnings, decide whether it is better to take the cash value or installments, create an estate plan, invest, make charitable gifts, whatever it is that you want to do with the money. Remember that, as remote your chances of winning, it is highly likely that you will never win another jackpot, so this will have to last for you and your friends and family that you choose to share it with.
10. Learn to lovingly say "No."
The truth is that money changes people, and it polarizes relationships. The hunger and yearning to pry money out of your hands can infect even the closest family members and (former) friends. Don't be surprised if your pastor suddenly sees in you a source for funding the church's new sanctuary, or your cousin shows up begging for money for his wife's chemotherapy. It happens. Wealthy people are used to insulating themselves with layers of "no men" just to protect them from the line of needy people at their door. Even if you want to help people, you can't help everyone, and you must make careful decisions about who you can help. You could easily go broke giving your money away to other people, and sometimes giving other people a windfall amount of money could have negative consequences for their own lives, if they are not able to manage it properly. Learn to say "no" to people so that you can say "yes" to the causes you really, truly, want to support.