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With Mega Millions and Powerball jackpots both topping $ 400 million, there are likely to be many players daydreaming about how they would use such a windfall.
They may also want to think about what they need to do as a winner before the money actually reaches them. That is, there would be some big decisions to be made before they even think about going to the lottery headquarters to claim the prize.
“This is extreme wealth,” said Walt Blenner, a lawyer and founder of the Blenner Law Group. “You really have to have everything in order.”
The Mega Millions jackpot has reached an estimated $ 405 million for Friday night’s draw, after no ticket matched all six numbers drawn on Tuesday. Powerball’s biggest prize is $ 432 million for Wednesday night’s draw.
While the chances of a single ticket winning the grand prize in both games are slim – 1 in 302 million for Mega Millions and 1 in 292 million for Powerball – it’s still worth considering how you would handle such a windfall if you should beat the odds.
Here are three immediate considerations for winners.
Who should tell
It is best to share the news with only a small group, experts say
“Tell as few people as possible,” Blenner said. “It means your nuclear family, though I would say you should not tell children anything other than to refer to a vague reference about how changes are coming in your life.”
You may also be able to protect your identity from the public, depending on the state you are in. Although only a handful allow the winners to remain completely anonymous, you may be able to claim your prize through a trust or corporation that do not have it does not have your name on it.
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In general, this means that you get help from professionals. You should put together a team that includes a lawyer, a tax advisor and a financial advisor – all of whom have experience helping lottery winners navigate their winds.
How to take your winnings
You can choose to receive your winnings as a fixed amount in cash or as an annuity spread over three decades. Either way, the money is taxed when you receive it.
Most lottery winners choose to receive a lump sum. For the Mega Millions $ 405 million jackpot, the cash option is $ 294.7 million. For Powerball’s top prize of $ 432 million, it’s $ 313.5 million.
Keep in mind that federal income taxes right now are low from a historical standpoint – and it’s impossible to know where they may be years from now. This means that from a tax perspective, it may cost you more to take the annuity because tax rates are more likely to rise than fall.
When to make demands
Generally, lottery winners get anywhere from a few months to a year to claim their prize, depending on the state. That means you do not have to rush down to the headquarters the day after you discover your happiness.
It will take a while to get everything set up, Blenner said. It includes putting together the team that guides you.
“It takes some time,” he said.
In the meantime, make sure you make a copy of your ticket and put it in a safe place, e.g. A fireproof lock case or a safe.