What Happens After You Win The Lottery?

A guide to winning lotteries: what to do with the money, ways to invest, when you can spend and how.

Everyone fantasizes about winning the lottery. Nor only have most of us dreamed of being handed a multi-million dollar check, many of us have even made mental lists of the things we'd do with those millions once we've cashed in the winning ticket. Visions of houses, boats and Rolex watches dance in our heads as we picture ourselves quitting our jobs and living a life of leisure. Don't go shopping yet. If you're playing to win, you should also be aware of what could happen should you actually win that prize because what you don't know can hurt you.

Each state varies, but you may have up to one year to claim your prize. Take time to think about whether or not you really need to claim those millions right away. It might be in your best interests to keep your good news to yourself for a while. Of course, you should feel free to share the news with your spouse and maybe a few other immediate family members, but you should consider what happens when the news gets out. First of all, the media will be all over you requesting interviews.

Once you're on television and in all the newspapers, long-lost cousins, other relatives and high school acquaintances will start to come out of the woodwork with their hands out. Charities will call, as will every financial advisor and accountant in the book. It's best to keep the news under your hat for as long as possible, or at least until you've made some decisions about what you'd like to do with your millions. Consider changing your phone number to one that's unlisted. If you already have an unlisted number, change it again. The only state allowing lottery winners to remain anonymous at this time is Delaware; the rest require lottery winners to make media appearances.

If you won't be sharing your news with the world right away, put your ticket in a safe place, perhaps the safe deposit box at your bank. Your ticket is no good to you if it's lost. In fact, it's probably a good idea to write your name and address on the back of the ticket. This way if it is lost, and someone else finds it, it'll be easy enough to prove it was yours in the first place. Make copies of the ticket prior to locking it away.

If your state allows it, you may have already decided whether or not you'd like to receive an annual annuity payment or lump sum. Keep in mind that the lump sum will be less money after all applicable taxes are removed. If you can make the decision after your ticket is purchased, you might want to consult with a financial advisor to see what the best option might be. You'll want to consult with an accountant who specializes in this sort of thing to see what taxes need to be paid right away. The last thing you want is to spend your winnings on fines imposed because you didn't pay the proper taxes. In fact, the first person on your list of people to meet with should be a tax attorney or specialist.

Once you've claimed your winnings, the best thing to do is nothing. Experts recommend that you wait before making any major purchases or quitting your job. In fact, financial advisors recommend placing your prize in an interest-bearing bank account for the first few weeks at least. This way you can consult with professionals and decide what to do next. A benefit of claiming your prize right away is that you can maximize the interest income.

Even though you may want to immediately quit your job, you should consider a leave of absence instead. Too many people make the mistake of thinking in the short term when they should be doing just the opposite. Do you want the kids to go to a good four-year college? Will you need to open a retirement fund? Will you have older family members who will need to be looked after? It's best not to make any major purchases until decisions have been made about your future. Discuss your decisions with your team of advisors to see how your money can be best invested. Once you've made provisions for the future, see how much money is left to be blown on something frivolous.

If you've won a great deal of money, your employers may assume you want to quit your job anyway, even if you have stated this is not the case. Because they may think you don't need the money or the job, you may be passed over for promotions, raises and other advances. Co-workers may be resentful as well. If you have no intentions of ever leaving your current place of employment, meet with your superiors to make sure they know this is the case, and that your work will not suffer. If you need to, take a vacation or leave of absence until the excitement dies down. It's best not to make your windfall a daily topic of conversation.

Another thing you'll need to consider is how money will change you as well as your friends and family. Will things be different between everyone? Will people expect you to buy every drink or pay for every meal? Will you be expected to buy extravagant gifts through the holidays? Make sure your loved ones know you'll still be the same person and don't intend to go overboard with the spending. Winning the lottery is an exciting event. Too many people enter into this contest blindly. Knowing what to expect can mean the difference between a year of impulse buying and a lifetime of comfort.

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