justin sullivan | fake images
If you play Powerball, chances are you’ve daydreamed about how you’d spend your money if you hit the jackpot.
With the lottery game’s top prize of $454 million announced for Wednesday night’s drawing, you might also want to think about what you’d actually do if you had to match all six numbers drawn. Experts recommend that big lottery winners take immediate steps to protect their windfall.
To begin with, remember that a lottery ticket is considered a “bearer instrument”, that is, whoever owns it is considered the owner. This means you need to protect it.
You can take a photo with the winning ticket and then store it in a safe place, like a safe deposit box, until it’s time to claim your windfall.
Also, you may want to sign the back of the ticket. Just be aware that in some states that do not allow you to claim your winnings anonymously, doing so could interfere with your ability to take possession of the prize through a trust or other legal entity that would protect your identity from the public.
It also pays to share life-changing news with as few people as possible. If you can’t remain anonymous, you should consider how to avoid becoming a target for scammers, as well as long-lost family and friends.
You should also turn to experienced professionals to guide you through the claim process and the many facets of protecting your windfall. Your team should include an attorney, a financial advisor, a tax advisor, and an insurance professional.
This group can help you determine whether to take your earnings as a lump sum or as 30 payments spread over 29 years. Most lottery winners choose the reduced and immediate cash amount. For this $454 million jackpot, the cash option is $271.9 million.
Either way, the money would face 24% federal tax withholding before it reaches you. For this jackpot, taking the cash would mean about $65.3 million being cut off the top. However, additional federal taxes will likely be due at tax filing time, given the top rate of 37%. There may also be state taxes withheld or owed.
It’s also worth reflecting on how your life is going to change, and not just from a financial perspective. Some experts suggest seeking the guidance of a financial therapist or mental health professional to help you deal with the stress of winning.
Meanwhile, the Mega Millions jackpot is $43 million ($25.9 million in cash) for Friday night’s drawing.
The probability of a single ticket winning the Powerball jackpot is 1 in 292 million. For the Mega Millions jackpot, it is 1 in 302 million.