Wealth Management: What to Do If You Win the Lottery
With the Powerball® lottery expected to be a record $1.4 billion for Wednesday night, lottery fever is rampant in all 44 states that participate.
What to Do If You Win the Powerball
A single winner could walk away with roughly $800 million after taxes or equal installments over the next 30 years and although the single winning ticket will yield unprecedented amount, many of the financial considerations are not unique.
Wealth Management for Lottery Winners
Having worked with two lottery winners during the time I was with bank trust departments, I am keenly aware of the issues that winners face. Although many are positive, especially immediately afterward, some are more onerous.
Here are a few observations based on my personal experiences that relate not just to lottery winners, but nearly everyone:
- Develop a trusted team around you that will take into consider all aspects of your personal financial issues, including: income taxes, estate planning, risk tolerance, time horizon, family considerations and other personal issues. No single advisor will have all the answers, but you may find an advisor who will serve as the quarterback to provide direction to other advisors.
- Pay yourself first, maybe think of it as tithing (10% of take home pay) to you. Whether it’s your 401K, 403b another form of a retirement plan or a taxable account or both, make it part of your financial planning to pay yourself first and the more you can comfortably invest for the long-term, the better for you and your family’s financial future.
- Have an emergency fund and set aside money for the unexpected, because a significant financial need can occur for individuals and families no matter how sizable their resources. Related to that, have a qualified professional develop a detailed financial plan that is based on your specific circumstances. Having done that, review and update the plan annually and stick to it!
- For the lottery winners I have worked with, whether it was the financial impact of a divorce or family members requesting money (including “fringe” family members and “friends”), there is no shortage of people and organizations making requests, including very legitimate and worthwhile causes. When you have that trusted team, you should use them to review financial issues and help you determine if they fit into your long-range financial plan. If you don’t have a trusted team, you should consider finding one.
Most importantly, whether you win the Powerball or just accumulate wealth the old fashioned way, spend some time considering what you value in life and those are the areas where your resources should go and do it now.