How Mega Millions and Powerball winners can protect their advantages

Mega Millions players can let waking dreams continue.

With no one reaching the six numbers released on Friday, the biggest prize has risen to $ 376 million. And Powerball, with the next draw scheduled for Saturday night, is $ 341 million.

Of course, due to taxes, these advertised amounts are not the ones you would end up with if you managed to exceed the astronomical odds of winning a single ticket (1 in 302 million for Mega Millions and 1 in 292 million for Powerball).

However, the sudden blows of your life will probably feel overwhelming, experts say. And while you may be eager to claim your winnings, experts say it’s best not to run to the lottery headquarters on the day you discover your good fortune.

In other words, take a deep breath.

“The first thing I would recommend is to form a team of professionals to handle the many aspects of making that kind of money,” said certified financial planner Doug Boneparth, president of Bone Fide Wealth in New York.

This team should include an accountant, a financial advisor, and a lawyer. Here are some other considerations if you get the biggest prize.

You can choose between taking your earnings as a lump sum or an annuity paid for 30 years. For the Mega Millions $ 376 million prize, the cash option is $ 287.4 million. For the $ 341 Powerball award, that amount is $ 262.5 million.

Experts usually recommend getting the money at once, which is what accompanies most winners.

“Taking the distribution of a global amount would be the preference,” Boneparth said. “Doing this makes you better control your money.”

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He added a warning, however.

“If you’re not disciplined or afraid of how to invest it even with help, profitability may be the best option,” Boneparth said.

Before your money arrives, 24% of federal taxes will be withheld. For the $ 287.4 million Mega Millions cash option, that would mean about $ 69 million coming out of the top to leave you with $ 218.4 million. For the $ 262.5 million overall Powerball amount, the withholding would be $ 63 million, with $ 199.5 million remaining.

But that is not the end. The higher marginal rate of 37% applies to income above $ 518,400 for taxpayers ($ 622,050 for married couples filing jointly), which means they would have to pay much more in the time of taxes. And there may be state taxes withheld or expired.

“In some places, if you take municipal, state and local taxes into account, you might be looking [close to] 50% goes to taxes, ”Boneparth said.

There may be strategies to reduce what you pay in taxes, so it’s crucial to have a tax advisor on your team.

If you can’t claim your prize anonymously (depending on the state), you may want to skip the city for a while. Unwanted attention can come from both the public and the extended family.

“The fifth uncle once eliminated may catch you,” Boneparth said. “Find a comfortable place and run away.”

Also, if you want to share some of the money with family or friends, plan these gifts in advance, Boneparth said.

“You want to avoid getting hit repeatedly,” he said. “You can set expectations ahead of time. That’s when planning really comes into play.”