The Mega Millions prize rises to $ 850 million. How to handle an unforeseen

Once again, the Mega Millions award has catapulted higher.

The top prize is now a staggering $ 850 million, the third largest in lottery history, after no ticket matched all the numbers released Friday night. Then there’s Powerball: Its maximum prize is estimated at $ 640 million for Saturday night’s draw.

Of course, the odds of winning either game are not favorable: the chance of a single ticket matching all six numbers is 1 in 302 million for Mega Millions and 1 in 292 million for Powerball.

Still, it’s still worth considering how you would handle this unexpected adventure if you exceeded the odds.

Normal prize winners usually get six months to a year to claim their prize, depending on the state where it was purchased. This usually means you don’t have to go to the lottery headquarters.

In other words, winners should take a deep breath.

Whoever ends up winning either prize should be prepared for a roller coaster of emotions.

Experts say that once the initial illusion of winning the prize is over, the magnitude of their advantage can be settled.

“For anyone experiencing newly created wealth … there are feelings of dislocation and a sense of overflow,” said Valerie Galinskaya, general manager and head of the Merrill Center for Family Wealth.

Of course, you don’t have to go there alone.

Given the sheer size of these awards, winners should bring together a team of experienced professionals, including a lawyer, a CPA, and a financial advisor, to help them navigate seamlessly.

“You want to hire the right advisors who can provide not only good advice, but advice that suits your needs and desires,” Galinskaya said.

You will need to make a copy of your ticket, place it in a safe place (i.e., a safe or secure deposit at a bank) and resist the urge to share your news with everyone in your community. life.

“Don’t inform people immediately, except for your immediate and trusted family,” said certified financial planner Jim Shagawat, a New Jersey partner advisor at Los Angeles AdvicePeriod.

In addition, you should protect your identity when claiming the prize, if possible. While standard advice is to sign the back of the ticket, this could interfere with maintaining anonymity if state laws allow you to create a trust or limited liability company to claim the discount instead of your name.

More information on personal finance:
The IRS is delaying the start of the tax filing season until Feb. 12
Fighting Holiday Debt: These eight strategies can help you
How to get out of a shared vacation in the middle of a pandemic

If your state laws require your name to be publicly announced, it’s worth preparing how to respond if other people highlight your unexpected conversation, Galinskaya said.

“You say,‘ I’m very grateful and we’re still working out everything that means to us, ’” he said.

For the $ 850 million Mega Millions prize, the cash option (chosen by most winners instead of an annuity) is $ 628.2 million.

Before that happens to you, however, 24% (or $ 150.8 million) will be withheld for federal taxes. You could also rely on much more on Uncle Sam because of the higher marginal rate of 37% that applies to incomes above $ 523,600 for individual taxpayers and $ 628,300 for married couples filing along with. Usually state taxes also have to be paid.

For the $ 640 million Powerball prize, the overall amount option is $ 478.7 million. The 24% withholding would be about $ 114.9 million. And again, more would be needed.

One way to reduce the tax bill is to think charitably. Basically, the government gives you a tax credit if you use private money to do the public good.

“It’s not just about what you want to do for yourself and your family, but also philanthropically,” Galinskaya said.

You can contribute cash, up to 60% of your adjusted gross income, to a public charity or donor-advised fund and get a tax deduction for the amount of the year you donate. You can also create a private foundation, give it income, and then determine over time how to use it.