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With the Mega Millions and Powerball prizes in excess of $ 400 million, there are likely to be many players daydreaming about how they would spend an unexpected adventure.
They may also want to think about what to do as a winner before the money really reaches them. That is, there would be some important decisions before you even think about heading to the lottery headquarters to claim the prize.
“This is extreme wealth,” said Walt Blenner, a lawyer and founder of Blenner Law Group. “You really have to have everything in order.”
The Mega Millions prize has reached the estimated $ 405 million for Friday night’s draw after no tickets match the six numbers drawn on Tuesday. The maximum Powerball prize pool is $ 432 million for the Wednesday night raffle.
While the chance of a single ticket winning the maximum prize in either game is tiny: 1 in 302 million for Mega Millions and 1 in 292 million for Powerball, it’s still worth considering how you would handle this advantage if exceed the odds.
Here are three immediate considerations for winners.
To whom to explain
It is best to share the news with a small group, experts say
“Tell as few people as possible,” Blenner said. “That means your nuclear family, although I would say don’t tell kids not to make a vague reference about how there will be changes in your life.”
You may also be able to protect your public identity, depending on your status. While only a handful allow winners to remain completely anonymous, you may be able to claim your prize through a trust or limited liability company that does not. I don’t have your name.
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In general terms, this means asking for help from professionals. You will need to put together a team that includes a lawyer, a tax advisor, and a financial advisor, all of whom are experienced in helping lottery winners navigate their expectations.
How to make your profits
You can choose between receiving your win as a lump sum or as an annuity spread over three decades. Either way, the money will be imposed when you receive it.
Most lottery winners choose to win a lump sum. For the Mega Millions $ 405 million prize, the cash option is $ 294.7 million. For the $ 432 million Powerball maximum prize, that’s $ 313.5 million.
Keep in mind that right now, federal income taxes are historically low, and it’s impossible to know where they might be in a few years. This means that, from a tax perspective, it could cost you more to collect your income, as taxable rates are more likely to increase and decrease.
When to claim
In general terms, lottery winners can go from a few months to a year to claim their prize, depending on the state. This means you won’t have to run to headquarters the day after you discover your good fortune.
It will take a while to set it all up, Blenner said. This includes assembling the team that will guide you.
“That takes a while,” he said.
In the meantime, be sure to make a copy of your ticket and place it in a safe place, such as a fireproof safe or a safe in a bank.