Looks like someone will be starting the new year an estimated $1.22 billion richer.
A winning ticket for the Mega Millions lottery was recently sold in Cottonwood, California, for the Dec. 27 drawing. The lucky ticket matched all the white ball numbers — 3, 7, 37, 49 and 55 — plus the gold Mega Ball 6.
This comes after a Florida resident won the biggest jackpot in Mega Millions history, $1.6 billion, in 2023.
With so much money coming in, you have to have a plan on what you’re going to do after cashing in your ticket. Big paydays have spelled disaster for some lottery winners. Not only do most winners have to deal with people coming out of the woodwork looking for a handout, but there have also been cases of bankruptcy, murder, robbery, drug abuse and various legal woes in the wake of big wins.
So, before you start picking out the gold finishings of your fleet of yachts or buying all your friends a set of matching mansions, here’s a list of nine tips on how to handle a mega windfall from people who know what they’re talking about.
1. Establish proof that it’s your ticket.
While signing the back of the ticket is one step a winner will want to take, Robert Pagliarini of Pacifica Wealth Advisors once told TODAY it would be smart to take another step in case you ever need to prove it’s yours.
“I would take a selfie with it,” he said. “I would take a video of the ticket and me smiling.”
2. Keep it on the down low.
That selfie or video clip isn’t for bragging on social media. While no one would blame you for wanting to shout from the rooftops that you’re the latest member of the billionaire club, Pagliarini added, “You really want to keep this as private as possible.”
Or as Laura Adams, author of “Money Girl’s Smart Moves to Grow Rich,” once told TODAY, “Other than a spouse or life partner, I wouldn’t tell anyone about your good fortune until after you’ve created a solid plan with the professionals. Well-meaning friends and family may not offer you the best financial advice.”
3. Hire a team of professionals to manage your money.
In fact, a man who won $20 million from a Quick Pick ticket in 2014 considers getting professional help his own top tip.
Cameron, who preferred not to reveal his last name when he spoke with TODAY, said, “Get you a financial advisor and get yourself a lawyer.”
Ric Edelman, chairman and chief executive officer of Edelman Financial Services, recommended using a financial advisor “as a buffer with all those who ask you for money — this will help insulate you and protect your relationships.”
4. Don’t accept the prize money right away.
No matter how excited you are to deposit that huge check into your bank account, Kathleen Jacob, public affairs specialist at the North Carolina Education Lottery, suggested holding out as long as possible.
“One of the biggest things we urge players to do is to take their time,” she said. “Prize claim policies may vary in each state, but here in North Carolina players have 180 days to claim their prize. This will give a player time to make some very important decisions, like what they want to do with the money and how they think it will change their life.”
5. Don’t hand out cash to family and friends.
Having a lot of money means you can help a lot of people, but that doesn’t mean you can help everyone — nor should you. “Don’t feel obligated to bail out, reward, loan or give out lumps sums of cash to friends and family members,” William R. Patterson, chairman and CEO of the Baron Solution Group, advised. “It may seem like harsh advice, but this is one of the fastest ways to lose your money. Talk with your financial advisers about strategies and vehicles, such as trusts, that can allow you to help others and also preserve your wealth. Additionally, cash and other gifts can have significant tax consequences.”
6. Don’t forget about all those taxes.
Even though the jackpot is over a billion dollars, that doesn’t mean you’ll really see all that money.
More than half will likely go to taxes immediately. And it doesn’t end there. “It sounds boring, but planning for taxes is very important,” Erica Sandberg, personal finance expert and author of “Expecting Money: the Essential Financial Plan for New and Growing Families,” once told TODAY. “The inclination is to not plan for taxes and not anticipate them. If you have investment income you’ll have to pay taxes each year. If you walk away with $500 million, it’s going into some sort of investment account that will earn money. All of those earnings are taxable.”
7. Set a budget.
How could you blow through that kind of money, right? Wrong. Even with a huge sum of money, you still have to set a budget. “Realize it’s not a bottomless pit of money. Don’t spend wildly in the belief that it’ll last forever,” said Edelman. “A financial adviser can tell you how much income you can receive monthly from your winnings — you need to live on that amount or less.” Sandberg agreed, saying, “Set a budget, but also allow yourself those dream purchases. It’s a balance.”
8. Donate to charity.
Do some good with your money! “Identifying some organizations you want to donate to will help counteract any feelings of guilt and will also help with your taxes,” said Sandberg. “You’re going to have to set boundaries early though and stick to them as much as possible. You can’t help every sick person out there, so set aside a certain percentage of your money that will go to a selection of organizations.”
9. Hire a therapist.
Along with your team of professionals helping you manage your money, you should also consider having a therapist to help you manage all the emotions that come with winning the lottery. “A therapist should probably be your second call after telling your closest family members,” said Sandberg. “People who do have a huge windfall can’t anticipate all of the emotions they’ll feel. It’s quite a massive pill to swallow. It’s not as joyful as people expect. Expect that your emotions will run all over the place. It could be terror, lack of deserving, the pressure that your friends, family and strangers might put you under. Find someone who can help you manage the emotional response.”
Editor’s note: This story was first published in January 2016 and has been updated to reflect the latest Mega Millions jackpot.
This article was originally published on TODAY.com
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