Domestic Affairs Economic Theory Gerald Steven

You Won the Lottery. Congrats! Here’s What You Need to Do Next.

Very few people get the chance to win the lottery. If you happen to be one of those people, be sure to know the best ways to secure your winnings.

By: Gerald Steven

Very few people get the chance to win the lottery. If you happen to be one of those people, be sure to know the best ways to secure your winnings.

What are your chances of winning a lottery? If you ever dream about winning the Powerball Lottery, which now has a winning ticket of $620 million, then your chances are 1 in 292 million. If you want to win Mega Millions, now valued at a staggering $1.6 billion, then your chances are 1 in 302.6 million. With these chances, you are more likely to get struck by lighting on your way to get a ticket than to win the lottery. But someone will win, and if you happen to be that lucky person, what should you do? While picturing yourself as the lottery winner is the easy part, figuring out how to secure your winnings afterwards is not so easy.

In 2006, Abraham Shakespeare from Florida won $31 million in a lottery. But by 2009, after he spent most of his money, Shakespeare suddenly disappeared. A year later, his body was found under a concrete slab. Police investigations found that a woman who had befriended him after he won the lottery was responsible for the crime. Stories of lottery winners suddenly falling into tragedy is not uncommon in the U.S. Amy Wang from the Washington Post stated that “lottery winners are famously susceptible to becoming targets for everything from extortion to blackmail to even kidnapping.” As it turns out, the “lottery curse” has happened numerous of times in the U.S.

In most states in the U.S., lottery winners are required by law to publicly disclose their identity, which can often endanger a winners’ safety. Only  in eight states: Delaware, Georgia, Kansas, Maryland, North Dakota, Ohio, South Carolina, and Texas, are winners allowed to stay anonymous after winning the lottery. In an earlier Powerball drawing last January, a woman from New Hampshire who bought the winning ticket for $560 million, had to go to court to keep her privacy. Her lawyers argued that the winner was concerned about her safety and wellbeing. The court eventually sided with the winner and they stated that disclosing her identity would lead to an invasion of privacy.

It was only until recently that bills have been proposed to allow winners to their right to privacy. Dennis J. Siciliano, an estate and business lawyer in Ohio, has been hired by lottery winners in the past by giving them advice on how they can collect their prize. In August 2004, Siciliano helped the winner of a $52 million Mega Millions jackpot by serving as the trustee of a blind trust to keep the winner’s name private.

The most important advice that Siciliano gives to his clients is to not tell anyone except close people. “The bottom line is that once someone discovers that they won the lottery, the first thing they should do is secure the ticket,” Siciliano mentioned. The most common mistakes that lottery winners make is to announce that they have won, quit their job, buy expensive items, and sign the winning ticket. Siciliano tells his clients to be patient and methodical. Receiving lottery prizes can take several months so “proper planning upfront is really beneficial,” he said.

Siciliano also advises his clients to find a wealth adviser and an accountant. A wealth adviser will help winners invest in their winnings so that it will last for years, while an accountant can reduce the surprising taxes, including federal, state, and local taxes that lottery winners might encounter. Saran O’Brien from CNBC found that the Mega Millions and Powerball jackpots will come with 24% to 37% federal tax and 0% to 8.82% state tax. After tax, the Mega Millions jackpot will be reduced from $1.6 billion to just between $489.8 million and $569.5 million, while the initial $620 million Powerball jackpot will come down to between $192 million and $223.3 million.

Most people will not have to deal with these next steps, but it is still nice to know what it would be the most important things if you were to win the lottery. Regardless, if you do win, you now know what to do next.

Works cited:

Image source: https://abcnews.go.com/US/winning-400-million-powerball-ticket-claimed-south-carolina/story?id=20349066

Haag, M. (2018, October 19). Powerball and Mega Millions Jackpots Are Up to $2 Billion. Here’s What to Do if You Win Both. The New York Times. Retrieved from https://www.nytimes.com/2018/10/19/us/lottery-mega-millions-powerball.html?rref=collection%2Fsectioncollection%2Fbusiness

O’Brien, S. (2018, October 20). Powerball now at $620 million, while Mega Millions jackpot hits $1.6 billion. Do this if you win. CNBC. Retrieved from https://www.cnbc.com/2018/10/20/mega-millions-jackpot-surges-to-1point6-billion-if-you-win-heres-how-to-avoid-big-mistakes.html

O’Brien, S. (2018, October 22). Here’s the tax bite on $1.6 billion Mega Millions and $620 million Powerball jackpots. CNBC. Retrieved from https://www.cnbc.com/2018/10/22/mega-millions-powerball-jackpots-come-with-big-tax-bite.html

Seelye, K. (2018, March 12). $560 Million Powerball Winner Can Keep Her Name Private, Judge Rules. The New York Times. Retrieved from https://www.nytimes.com/2018/03/12/us/lottery-winner-privacy.html?action=click&module=inline&pgtype=Article

Shrikant, A. (2018, October 23). Lottery winners can’t stay anonymous in most states. Some people are trying to change that. Vox. Retrieved from https://www.vox.com/the-goods/2018/10/23/18015978/lottery-winners-anonymous-mega-millions-prize-jackpot

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