Let's suppose I won the lottery. Now what?
January 12, 2016 6:37 AM   Subscribe

So as you might have heard, Powerball is close to a billion and a half right now. Let's say I'm holding the winning ticket and I take it down to the lottery office to collect. Now what?

We've all got ideas of what we'd do if we won the lottery. Pay off the bills, get the house and car we want, maybe dump a chunk on some deserving charities. But what's the logistics of it all? For example, let's say I took the cash option. I'm not going to go and just drop a nine figure sum into my savings account, am I? I'd need a financial advisor who is capable of helping me manage several hundred million dollars. I'd need a tax advisor. I'd need a firewall to keep the hordes of inevitable calls from your typical people seeking money for investments or wanting to sell high dollar items. Basically, I'd have to go from a typical working life to being ultra rich overnight and that involves more than just cashing a huge check. What would be the logistics of making such a drastic immediate change? (Not that I plan on winning the lottery, just curious how a person would go about doing this smartly so quickly.)
posted by azpenguin to Work & Money (22 answers total) 38 users marked this as a favorite
 
Best answer: There's a thread from last year on Reddit (with a comment reposted from an even older thread) that details some of the best steps you might take.

Essentially, do not claim it right away, hire the best team you can, and be very careful.
posted by papayaninja at 6:44 AM on January 12, 2016 [13 favorites]


Mod note: Quick Note: This is a bit close to chatfilter, but if folks can provide some concrete info on financial logistics, other planning, and professional help, etc., in this sort of situation rather than "here's what I'd do if won the lotto," it should be okay.
posted by taz (staff) at 6:48 AM on January 12, 2016 [3 favorites]


That's funny, Today just ran a story on what you *should* do if you win the Powerball.

Edit: One thing it didn't say to do, and what I *would* do, is get a trusts and estates lawyer to set up a blind trust so you could keep your identity a secret. The trust can collect the winnings.
posted by pipti at 6:53 AM on January 12, 2016 [12 favorites]


If optional, request to remain anonymous and not have your name released. Of course, with a jackpot this big, that is probably not likely.
posted by Kitteh at 6:59 AM on January 12, 2016 [2 favorites]


Best answer: If you win the lottery, you should first go talk to people in the trust department of a big bank. They will know how to structure your holdings so that your privacy is protected and your assets are properly allocated. They will have experience in helping people adjust to the reality of being wealthy. They will know how to structure your trusts so that your family is well taken care of, but spending is kept at a sane level.
posted by Midnight Skulker at 6:59 AM on January 12, 2016 [3 favorites]


Best answer: My step one would be to go to the biggest law firm in town - or in the biggest city in your state - and speak to their wealth management partner.
posted by desjardins at 7:09 AM on January 12, 2016


Best answer: First: keep your mouth shut, do not tell anyone --- friends, family, anybody --- you have the winner. Keep working for the time being; you can always quit later; remember, you won't get the first checks the day you make the claim, there'll be a delay before you start receiving money.
Next: sign the back of the ticket, xerox it, and place the original in a safe deposit box.
Third: set up appointments with a financial advisor and lawyer; get a plan in place before you claim your winnings --- this'll include how to claim (lump sum or yearly payments), a financial plan for the future, with a budget so you don't just throw it away; how much/what current debts to pay off now; how much if anything you want to give to your kids or whoever, perhaps including trusts and college funds.
Fourth: if you have a landline, change it now. Get caller ID if you don't already have it. Consider moving. Remember you don't owe anybody any of your winnings just because they're your third cousin twice removed..... if they never sent you a Christmas card, screw 'em.
Fifth: once you're all set up, now you can go claim your money. (You usually have 6-12 months to make a claim, so there's no rush.)

Do you live in one of the states that'll let you claim anonymously or as a corporation? If yes, do that!
posted by easily confused at 7:11 AM on January 12, 2016 [8 favorites]


If optional, request to remain anonymous and not have your name released. Of course, with a jackpot this big, that is probably not likely.

Whether lottery winners can claim winnings anonymously varies by state, and IIRC there are only six states that let you do it, though in most others you can set up some sort of blind trust to collect on your behalf as mentioned up thread.
posted by Itaxpica at 7:12 AM on January 12, 2016 [2 favorites]


This is a question I've wondered about for years, i.e., the logistics of what to do in the first few weeks. This Sunday NPR had an interview with a winner of a big jackpot. The winner talked about how he immediately formed a team of advisors. There's some good information in the interview, but I wish it had gone into specifics on how he found and hired the team. To me, that's the most important decision you need to make right away, finding the right people who are qualified and who you can trust.
posted by daikon at 7:36 AM on January 12, 2016 [1 favorite]


The California Lottery, which participates in Powerball, has a Winner's Handbook (.pdf) with basic advice, and I imagine the other states do as well.
posted by ogooglebar at 7:51 AM on January 12, 2016 [1 favorite]


Mark Cuban had to deal with a large windfall and provides his current tips. The last part is especially interesting:

There's nothing wrong with just putting the money in the bank, says Cuban. You will sleep deeply, knowing that you won't make big losses. And, let's face it, with a $1.4 billion Powerball win, you should be alright. Unless you suddenly start competing with Elon Musk and Jeff Bezos to send rockets to Mars. I still have a concern about this piece of advice. I'd worry how much the banks that contributed so much to wrecking the world financial system would make out of my money. There it would be, just sitting in their vaults or on their screens. I wonder how big a house I'd need to store around $650 million (the after-tax winnings) in cash.
posted by JoeZydeco at 7:53 AM on January 12, 2016


Whether lottery winners can claim winnings anonymously varies by state, and IIRC there are only six states that let you do it

The current list is: Delaware, Kansas, Maryland, North Dakota, Ohio, and South Carolina.
posted by aught at 7:55 AM on January 12, 2016 [2 favorites]


And Wyoming, which is a *very* recent addition to the lottery so it is not on many of those lists. (Also in WY you don't pay a state income tax, so yeah, good state to win in.)
posted by barchan at 8:07 AM on January 12, 2016 [1 favorite]


Best answer: What would be the logistics of making such a drastic immediate change?

I think among the immediate logistics would be checking into a high-end hotel for a bit of an extended stay. The kind of hotel that handles big business/governmental conferences, celebrities and visits from dignitaries.

You wouldn't be there for the hotel experience, but for the security and moment-to-moment concierge services. You'll have people camped out on your front lawn. Best to hightail it to somewhere that's used to dealing with outside attention. Plus, you'd have a concierge available that can handle bullshit like fetching cars, making calls, travel arrangements, laundry, running basic errands, etc. These kinds of places will also have childcare services and even arrangements with doctors that can make simple housecalls.

You'll pay steeply for all of this, of course, but hey -- lottery.
posted by Cool Papa Bell at 8:24 AM on January 12, 2016


There's nothing wrong with just putting the money in the bank, says Cuban. You will sleep deeply, knowing that you won't make big losses.

BankS.

Because the FDIC insurance only covers so much.
posted by Jahaza at 8:30 AM on January 12, 2016 [5 favorites]


Response by poster: The blind trust thing is something I never thought of. Also, the "don't claim it immediately until you've taken these steps" is solid advice, which would be hard for me since I am paranoid about the idea of losing pieces of paper, but I suppose if I went directly to an attorney that would help. The high-end hotel bit is also something I hadn't thought about, but that makes a lot of sense. While I don't have kids, I can still see the value of a trust to preserve as much value as possible. (I can say that there's a couple of animal rescues that would never worry about funding ever again...) Lot of great answers here - thanks!
posted by azpenguin at 9:42 AM on January 12, 2016 [1 favorite]


Hunh, no mention of social media yet, that I see.

Make your social media feeds private, and prune your followers/friends/family. Start ignoring all friend requests unless it's one you personally solicited from that person. Someone who thinks they can get money from you will make it their paid profession to learn what you like, dislike, how to appeal to you and how to get under your skin.

Suspend your blog/LJ/tumblr etc. Use a new email address in case your current one is out there somewhere. You'll probably want to start avoiding any public media: twitter, G+ public or friends-of-friends sharing (and stop clicking the +1 on other posts, which is the same as sharing), public FB, public Instagram and so on. Pull your amazon reviews.

Pull down pictures of you and ask your friends to do the same; untag you or whatnot.

Social media is where big data is going to bite you in the ass.
posted by Sunburnt at 10:50 AM on January 12, 2016 [3 favorites]


We were joking the other night that one might want to spend $5 to start a new sock puppet account here and ask the question after winning. I mean, if you've won the lottery you can afford $5.
posted by fedward at 11:21 AM on January 12, 2016 [2 favorites]


which would be hard for me since I am paranoid about the idea of losing pieces of paper

Wrap it in plastic. Your attorney can act as a witness that you have the ticket in your possession. And you can stop at a bank to get a safe deposit box while you work through your plan, which can include private security to get you and the ticket to the lotto office safely.

Take photos of the ticket with identifiable time stamps and other info (e.g. metadata and the old holding-up-today's-newspaper thing).

Buy your lottery tickets from stores with security cameras (all of them do, but still, smile for the camera). Tickets are time- and location-stamped; the lotto agencies know when and where the winning tickets are purchased (indeed, the stores often share a portion of the winnings, as an incentive to sell tickets in the first place). It would be easy to match the purchase to the camera records.

I'm starting to sound like scarabic, I suppose.
posted by Cool Papa Bell at 12:37 PM on January 12, 2016


I have actually done some research into this. I spent some time reading articles and watching shows about what happens to people who actually win the lottery. IIRC:

2/3 go bankrupt within five years.
Many promptly quit their job, thinking the money sounds bottomless, only to find themselves borrowing against next year's check every year.
Some end up divorced.
The ugliest situations seem to be where "poor white trash" types suddenly have rich people problems and absolutely no means for coping with rich people problems. In some cases, this has involved stuff like kidnappings or murder.

I think it is the NFL (or the NBA?) that requires its players to take financial education courses because the crazy high salaries they are making tend to be short lived and then you typically go back to a more normal middle class income. So people who are making potentially millions at the age of 22 tend to live like there is no tomorrow rather than socking it away and planning to have it provide the basis of lifelong financial security.

If you have 6-12 months to cash it, I would say stick it in a safe deposit box and promptly get a financial education. Cash it after you are less wide eyed and more grounded. Take a class or go to the library and do some reading. The big winnings are never as much as people imagine them to be. By the time you take out taxes and divide an annual payment by 12, the monthly amount is never as crazy bottomless as most people think it is.

One guy was getting $60k annually and quit his job, encouraged his brother to quit his own job and was supporting two families on it. I think they had each been making like $20k or so per year on the job. So it wasn't as big a bump in pay as they imagined.

But here is the kicker that most people do not think about: If you quit your job, you now have time on your hands. How are you going to fill it? If you aren't filling your days with productive work, you are probably defaulting to acting as a consumer. Most Americans are mentally either in money making or money spending mode. If you quit your job and now every minute of every day is a "vacation" in your mind, I think this is why so many go bankrupt. If you spend all your time spending money, it disappears like crazy. Most people do not imagine the "idle rich" actually being idle or sitting around tatting and building models. They imagine them living a Lifestyles of the Rich and Shameless life. They imagine spending their way to happiness. This soon leads back to the poor house.

I would also suggest watching movies like "Brewster's Millions."
posted by Michele in California at 2:10 PM on January 12, 2016 [6 favorites]


Am I the only one who thinks this sounds like a miserable way to live? It's way more hassle than it's worth. Never being able to tell anyone, trust anyone. If you don't tell anyone, you also can't spend it because that would tip everyone off. If you do actually enjoy it and spend it, people do know, everyone is hassling you for handouts and you just end up pushing everyone away. Winning a bit of money where you can dig yourself out of debt and buy a house would be great. Winning billions would be worse, and really stressful in a lot of ways.

Incidentally, my husband (a wealth adviser) deals with these kind of people. He sets up trusts to protect the money from everyone, (whoever the holder of the money would like, really) even current spouses, which I think is really sad. Another thing he does is manage the philanthropic element. This is basically arranging money around charitable giving, setting up a foundation etc, something to consider as there is only so much money you can spend in a lifetime. I'd like to think if I won that much, some good would come of it.
posted by Jubey at 2:57 PM on January 12, 2016 [3 favorites]


I am paranoid about the idea of losing pieces of paper

Which is why you make a copy of the ticket and immediately put the (signed) original into a bank safe deposit box --- if you don't already have a box, you rent one on the spot for around $60/year, and you can afford it since you'll have all those winnings. Take the copy to meetings with a lawyer & financial advisor, don't carry around the original: that stays put in the safe deposit box right up until the day you want to actually make your claim.

And I totally agree with the folks who say the huge payoffs are probably more of a hassle than anything else: don't know about you, but I don't need hundreds of millions of dollars, and I don't want to be harassed by either journalists looking for a story or cranks (including relatives!) looking for a handout. I've always figured one or two million would be plenty: figure that one million, divided into twenty payments, would be about $50K/yearly. Cut that in half for taxes (although hopefully taxes would be less!) and that's $25K/yearly, which is enough to make a nice additional cushion to my paycheck but not enough to draw the beggars out of the woodwork.
posted by easily confused at 4:11 AM on January 13, 2016 [1 favorite]


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