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What To Do After You Win The Lottery

Updated on March 24, 2017


Thanks for visiting my hub on what to do after you win the lottery. I will warn you in advance that some of what I advise may not be in line with conventional wisdom. However, I think that it is sound and I think you'll see the logic of my arguments. With that said, let's take at a look at how to preserve all that money you just won! (And if you're looking for tips on how to get to this point, please visit this hub on How To Win The Lottery.)

Congrats! You Just Won the Lottery!!!

We all dream about what it would be like to win the lottery - to suddenly have more money than we ever dreamed of. Of course, money doesn't necessarily make life any easier. In fact, in the case of lottery winnings, it can make it a lot more complicated. Moreover, there are many tales of woe amongst lottery winners who made terrible missteps and found themselves worse off financially than they were before.

With that in mind, I'm going to focus on the financial aspects of what you should do with your lottery winnings. Naturally, there are other things you should do - change your phone number, etc. - but I'm not going to go into ail regarding those activities. (The only thing I will say is that you don't have to claim the lottery winnings in your own name; you can establish a trust - or some other entity - for that purpose, and thereby try to keep your anonymity.)

(Poster available at


First Decision: The Lump Sum or The Annual Payout?

One of the very first decisions you'll have to make after winning the lottery is whether to take the lump sum or the annual payout. Many experts will say that you should take the annuitized payouts: you'll have a steady stream of income, you can better manage taxes, and the overall amount you'll receive is greater. If you win a $100 million lotto, your payments over whatever the payout period is will equal at least $100 million.

With the lump sum, you'll get everything you're entitled to up front, and there's some merit in that. But, you should be aware that you're not going to get what's advertised as the jackpot amount. First of all, that amount is an annuitized number, based on the multi-year payments you would receive if you chose the annual payment option. Taking the lump sum means that you get the present-day value of the pot - usually about half. So, winning a $100 million lotto and taking the lump sum means you'll probably end up with about $50 million.

In addition, other factors may also come into play besides just the overall amount you'll get. Your age, for instance, may play a role in which option you choose. If you're 60 years old, do you really want to bank on living another 30 years in order to collect that last check? Moreover, if you die, there's a chance that the annual payments will come to a halt. (This will depend on the rules of the lottery you win under, so it's worthwhile to consult with experts to figure this part put.)

Personally, I favor the lump sum option. Yes, you'll get the reduced, present-day value of your winnings and have a whopping tax bill, but if properly managed you can come out much further ahead with the lump sum than the annual payments.

By way of example, let's say that 30 years ago, you and a friend won $8M in a lottery and split it evenly. That's $4 million each. You decide to take the annual payout of $133,333.33 for the next thirty years. After taxes, let's say you're clearing $80K per year.

Your friend takes the lump sum payout. Present-day value makes it only worth about $2M, and after taxes he's got about $1.2M to do as he sees fit. He splurges a little, but is also astute enough to invest $100K in Johnson & Johnson stock.

Fast-forward to today. You've just received your last annuity check for $80K (after taxes). You've had a good life, not having to work for thirty years, but $80K per year isn't what it used to be. In the 1980s it was a lot of money, but as time went by that buying power slowly got whittled down. While that check gave you an upper-class lifestyle in the 1980s, it really just makes you middle class these days - and now the well has run dry. Moreover, while you never went completely overboard with your spending - you kept to an annual budget of $80K or less - you never really put anything aside for investing because there was always "next year". By the time you finally thought to do it in earnest a few years ago, there was a global financial crisis, and well, the rest is history...

Your friend, on the other hand blew through about half his winnings within the first two years. He then knuckled down and spent the next two decades experiencing various successes and failures in business as he tried to parlay his winnings into something more. He never really hit it big, but he had modest successes that kept him from having to work a traditional 9-to-5. Moreover, he never touched the J&J investment, calling it his "nest egg." Now, 30 years later, his J&J investment is worth nearly $4 million. Moreover, it's throwing off $138K every year in dividends alone. In short, your friend has roughly 40 times his original investment - now equal to roughly the same amount that he originally won - plus he's getting a sweet dividend income that he can live off of every year. And that's just from investing $100K of the his initial winnings. (You can check my numbers using Johnson&Johnson's Investment Calculator.) Where might he be had he invested more?

Long story short, I think you can give yourself a better deal if you take the lump sum, but you have to be smart about what you do with it. (And FYI: If you're curious as to how beneficial smart investing can be - even if you don't win the lottery - please visit my hubs on Getting Rich with Dividends and How Ordinary People Got Rich.)

Don't Quit Your Job Just Yet!

One of the first impulses people have after a lottery win is to "call in rich." In other words, quit their jobs. Don't! At least not right away.

First of all, let's ponder a question: the richest people in the world - Bill Gates, Warren Buffett, Carlos Slim - what's one thing they all have in common (aside from billions of dollars)? They're all still working! Not a single one of them made a billion dollars and then retired to the beach to sip mai tais! They're all still active and engaged businessmen. Why? Because they're doing something they love. But I suspect they also know something that most working-class people don't: doing nothing is boring!

You can quit your job, but in no time at all you will be bored out of your skull. I actually know someone who won a substantial amount of money in a lottery. Afterwards, they ended up taking a job at a fast food restaurant - just to have some human interaction and to have something to do every day. Without that, it's very easy to see the money as a way to entertain yourself, and before long you're spending it on things you don't need and never even wanted, just to have something to do.

In addition, even though you're now rich, you should still remain professional. That means that if even if you do decide to quit, you should render the traditional two weeks' notice. (It would be a shame if sudden wealth transformed you into an inconsiderate, uncouth jerk.) And who knows? With no more financial pressure, you might even find work enjoyable - if not the job you're doing, then something else. (I'm sure you had a dream when you were small about what you wanted to be or do when you grew up. Now's your chance to pursue that.) The real point is that you shouldn't suddenly become idle or slothful. If you really hate your job but don't know what to do with yourself, take some classes and try to figure out what you like. But simply deciding to do nothing at all for the rest of your life is a bad idea.

Poll On Working After a Lottery Win

If you won the lottery - $10 million or more - would you continue working?

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Two Certainties in Life: Debt and Taxes

Now we get to the meat and potatoes of this hub: what to do with the money. First of all, take care of your debts. Almost all of us owe money: car notes, student loans, mortgages, etc. Get those out of the way asap so that you can become debt-free.

Next, be aware that you have to pay taxes on your winnnings. It never ceases to amaze me when someone gets a windfall, and then the next year (or a few years down the road) they're declaring bankruptcy because they never paid any taxes and Uncle Sam swooped in and took the last of their winnings. Go ahead and set aside about 40% of your winings for tax purposes.

In short, your debts and taxes (not exactly what Ben Franklin said, but close enough) should be the first two things you take care of before you spend one red cent of your winnings on yourself. To help with this, one of the first things you should do is consult with three types of professionals: a lawyer, an accountant and a financial planner.

(Poster available at

Avoid any Spending Sprees

From the moment you first discover you've won, that money is going to be burning a hole in your pocket. You're going to have the urge to splurge and lavish gifts on yourself. Don't! Not immediately, anyway.

The money is going to feel like a drug, and you're initially going to be completely stoned: giddy, over-the-top emotions, etc. Moreover, you're going to have the munchies - except you'll be hankering for consumer goods. Just like with a real drug, this is not the time to be making important decisions. Let the high wear off a little first, then look at the situation rationally in terms of what you want to buy.

Maybe you do need a new house; maybe you do need to trade in your old jalopy. But be smart about it. If you win $2M, think about whether it makes sense to go buy 4 cars and a million-dollar mansion. (By the way, at 3% the taxes on a million-dollar home will run you $30K per year.)

In short, no one is saying that you should never spend this money or treat yourself a little. You just need to be smart about it and think it through. ("Impulse buying" is one of the things people tend to pick up with a lottery win, but they don't put that anywhere on the giant check they give you.) Simply put, you should put off purchases until you've started putting the money to work for you, whether through stocks, bonds or other kinds of investments.


Investing for the Long Term

Okay, assuming all of the advice above is adhered to, you've gotten your money, you've paid off your debts, you've set money aside for taxes and you've avoided any excessive purchases or spending sprees. Now let's put this money to work:

Replace Your Salary: First, you're going to need money to live off of each year. It's best if you establish a budget (yes, a budget, Daddy Warbucks!), so you need to figure out how much you'd like to have as income each year. The experts all seem to say that - if properly invested - you should be able to withdraw 5% of the money each year without running out. Focusing on that, you'll need to invest about 20 times whatever amount you'd like to get annually. (This is because 20 x 5% = 100%.) So, if you want income of $50K per year, you need to invest $1M. (20 x $50K = $1M.) If you want $100K per year, you need to invest $2M dollars. (FYI: 5% is more than achievable, and is below the amount that stocks have historically returned. A good financial planner can steer you towards investments that can achieve the kind of returns you're looking for.)

Invest For the Long Term: In addition, like the Johnson & Johnson example mentioned above, you need to make some quality investments in financial instruments (stocks, bonds, etc.) that you never plan to touch. It should be money that's simply invested and allowed to grow. There are many stocks, mutual funds and so on that can help you achieve dynamic growth in an investment portfolio without taking on an undue amount of risk. (Again, a good financial planner can help you make great investment selections.)

Establish Trust Funds for Your Children (and Grandchildren): One of the terribly sad things about many lottery winners who end up losing it all is the fact that they really had a chance to set their entire family up for life - kids, grandkids, the whole shebang - but they never did. (Some never even thought that far ahead.) How great would it be to establish a trust that pays for everyone to go to college? Or that holds some investments for your kids so that when they become adults (or some time thereafter) they have a tidy little nest egg that will keep them from ever having to struggle the way you did? That way, even if you blow every other penny, you've still given your kids a great head start in life. (In addition to establishing trust funds, you can further flesh out your estate planning by visiting these hubs on Drafting a Will and Power of Attorney and Other Documents You need.)

Avoid Trying to Prove You've Got a Head for Business: For whatever reason, people who come into large sums of money - whether via the lottery, professional sports, legal settlements, what have you - always feel the need to prove themselves as astute businessmen. They'll invest in car dealerships, fancy restaurants, hotels... Just about everything under the sun (and often lose their shirts in the process). That is completely unnecessary. Again, as the Johnson & Johnson example above showed, there are already tons of great companies out there that you can invest in - companies that have been around for ages, with proven track records and proven results. You don't have to reinvent the wheel here by trying to invest in some new start-up or hair-brained scheme. Unless it's always been a dream of yours to have your own restaurant, music studio, hotel, etc., I'd avoid all of those and find some solid dividend-paying stocks/mutual funds to invest in and call it a day.

In brief, the money - no matter how large a sum it is - won't last forever unless you're smart with it. You're going to have to invest it shrewdly and make it work for you.

Generosity to Family and Friends

It's no surprise that - despite your best efforts at remaining anonymous - people will start coming to you for handouts if they find out about your good fortune (even complete strangers). With this in mind, all of the experts say that you have to learn to start saying "no" to everyone. I tend to disagree.

If, in accordance with the advice noted above, you've taken care of debts and taxes, and have enough set aside for the long run (not to mention trust funds for your kids), then it's probably time to be generous. For most of us, no matter where you are in life, someone at some time helped you get there. Maybe they wrote you a letter of recommendation. Maybe they gave you a loan when you were desperate. Maybe they helped you take advantage of an opportunity. Basically, all of us have people in our lives that have helped us at some point or another. Now that your ship has come in, you shouldn't make everyone come to you and kiss your ring like you're Don Corleone passing out favors.

Personally, I tend to think that your generosity should start with parents and siblings. How much? Well, I would say that depends on how much you won. But let's say you won big,and after taking all of the advice noted above, you have $20M left. If you have a brother and sister, I'd advocate giving them $1M each, and $1M to your parents. (You've already got more than enough for a couple of lifetimes. Don't be stingy. Besides, what would you want them to do if your positions were reversed?) Also, just in case your siblings are bad with money, a trust fund for your nieces and nephews to go to college would be a nice gesture.

After family, you can decide who's been a good enough friend to you to merit something, although you shouldn't feel obligated to hand out cash to every single acquaintance. You know the ones that have been like a brother or sister to you, and those are the ones your largesse should extend to. (And it doesn't have to be - and probably shouldn't be - at the same level as your siblings, but that's your call).

Enjoy Your Wealth!

Last but not least, enjoy your winnings! If you've done everything right, the future of you and your entire family is completely secure. Congratulations! (Now you can head to the beach and get that mai tai...)

And just in case you need some kicks and grins while counting your millions, you can check in and see what the poor people like myself are doing this season by visiting the Passive Pursuit of Income Blog, where I chronicle my attempts to build up passive income online, as well as list my Resources for Generating Passive Income.

(Poster available at


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    • Hypersapien profile image

      Hypersapien 4 years ago

      I think the annual gift tax exclusion is now $14K per person per year (and that doubles if your spouse also makes a gift to the same person). Regardless, there are lots of ways to structure gifts such that taxes are minimized - particularly via trusts. Moreover, if you win, say, $100 million and you want to give $1M of that to your brother, share the prize by giving him 1%. He'll have to pay the taxes on that, but you would have had to pay them anyway if you'd kept the extra million for yourself, so there's no net gain from a tax standpoint between keeping that prize money and sharing it. In short, there are lots of tax-advantaged ways to make gifts if you really want to.

    • profile image

      cheryldenise 4 years ago

      A lot of great advice here! Will start making some investments now. Not waiting around and dreaming ................. what if ?

    • profile image

      emery16761 4 years ago

      All good advice EXCEPT: You can't just give away a million dollars here and there. Anyone who knows anything about money should know this. By "giving away" anything more then $11,000 per person per year, you have to pay taxes. So the very worst thing you could ever do with your wealth is to transfer large sums of money to someone else, and give 35% or more of it to Uncle Sam. You would be much better off to create great paying jobs (real jobs) for those loved ones than to lose 35% of the handout to straight out taxes. Gifting is simply not a good idea for tax purposes, and not a good idea for many other relationship ruining reasons. If you want to help your family, help them establish themselves in what they want to do, but require them to work hard for it.

    • Hypersapien profile image

      Hypersapien 4 years ago


      The professionals you speak of - lawyers, accountants and the like - typically charge by the hour. However, be aware that financial advisors may also charge a percentage of assets under management - e.g., 2% - as part of their fee; for them, it probably boils down to whether they are just providing financial advice (in which case an hourly rate is appropriate) or financial/investment management (which is when they usually charge a percentage and/or commissions).

      Bearing all that in mind, I'd say that setting up a trust shouldn't run you more than a few thousand dollars, and none of the work you're asking these guys to do should take a sizeable bite out of your winnings. Just make sure that you're comfortable with the person you hire and their knowledge/experience. For instance, you should look for a lawyer who specializes in estate planning, such as wills and trusts.

    • profile image

      lksinnj 4 years ago

      I've searched the net and the library for the answer to a lottery-winning related question for which I haven't found an answer. Any guidance you can offer would be appreciated.

      A lottery winner is advised to seek financial advice from an expert, or to assemble a team of financial advisors, tax accountants and attorneys. The potential winner is also advised to set up a trust. There are good reasons for doing thest things. My question is- what will it cost? Say someone wins a 10 million jackpot. After taking the cash payment and after taxes the final amount is about one-third of that. How much of the remaining 3.3 million will go to the financial team and for the cost of the trust?

    • Hypersapien profile image

      Hypersapien 4 years ago

      As I understand it, lottery winnings are treated the same as gambling winnings and are therefore taxable. (By the same token, you can also deduct your losses for buying lottery tickets, just as you can for other forms of gambling.) The argument that you don't have to pay taxes on those winnings is - in my opinion - a lot like those arguments that say you don't have to pay taxes at all because the government doesn't have the right to get its grubby little paws on your hard-earned dollars. There's an old saying: "You can't fight City Hall." In this instance, you can't fight the feds and it isn't even worth it to try. I say consult a tax advisor, pay the taxes and move on. It's just not worth it to do otherwise.

    • profile image

      ALVIS 4 years ago

      Some people know the law when it comes to taxes but millions don't have a clue and pay taxes when they don't have to. The Lotteries cannot lawfully tax lottery winnings by withholding. There is no law that allows lottery prizes to be federally taxed on private sector (non-federal) citizens. This website just tells you you have to pay the tax but NEVER quotes the law saying you have to. Why give the IRS millions for not doing anything to earn it ? If you are satisfied in giving part of your prize away, then that is your choice.

    • UKPaintBalling profile image

      UKPaintBalling 4 years ago from United Kingdom

      If I won the lottery, I'd organise one of the most epic paintballing games that ever been played. There would be apache gunship helicopters, typhoon jets, and it would span 3 continents....There would be paintballing centres in the UK, Australia and Canada all playing the same rules, with the same objectives...and the points from this "red" and "blue" team would be tallied to determine the ultimate winner..

      I have outlined this game in detail on our blog here

    • Clay Freeman profile image

      Clay Freeman 5 years ago

      My friend won 1 million on a Tx. Scratch off. He promptly cut off all communication with his sister (single parent w/2 girls). It's been 2 years hasn't spoke to them mush less helped financially. They have almost been homeless twice. His wife this year inherited over a million and still zero. His fat assedwife quit her job and now sleeps til noon then begins her shopping and eating. He is approaching 300 lbs. she 200. Suffice to say 2 horrible human beings that are indulging in evry sin the devil has provided. Sad! The gates of hell awaits.

    • Hypersapien profile image

      Hypersapien 5 years ago

      I believe that if you win the lottery this year you would pay taxes on it along with the rest of this year's earnings (that is, anything you made from your job). However, you only pay the taxes on your winnings once. You will, however, pay taxes on any earnings that your winnings accumulate after that.

      For instance, let's say you win the lottery this year and after paying taxes on it you have $1 million left. You never have to pay taxes on that $1 million again. But, if you invest the million bucks in, say, a CD paying 5%, you'll earn $50,000 a year off of that million-dollar investment. Thus, you'll have to pay taxes on the $50K that you earned. (But don't forget that you can always put the money in tax-free investments like municipal bonds and not have to wory about paying taxes on any earnings.)

    • Lovelovemeloveme profile image

      Lovelovemeloveme 5 years ago from Cindee's Land

      Thanks for the advice! There's been a lot of cases of people who won the lottery, only to file for bankruptcy a year later. SHOCKING!

      what i wonder is. if win the lottery and i pay tax on it, do i have to pay the tax again on my winnings the following year? every year ? to come?

    • monicamelendez profile image

      monicamelendez 5 years ago from Salt Lake City

      Pretty great advice for someone in this position. I would sit down with each of my siblings and my parents to talk about how they were going to use the money if I was in that position. Otherwise, they would honestly throw it away in like 2 years. Maybe less

    • Hypersapien profile image

      Hypersapien 5 years ago


      Once a person has won, they are entitled to the money. If they choose the annual payout and then die before receiving all checks, their estate is still entitled to the money. If they have a will, the cash should eventually find its way to their heirs. Likewise if they don't have a will (although in the case of a minor child, I would suspect that a trust would be constructed). In short, you can't put the winnings in a minor child's name, but you don't have to.

    • DreamerMeg profile image

      DreamerMeg 5 years ago from Northern Ireland

      That depends on the lottery rules. If you are in this position, you should consult a legal adviser to see if that can be done. I would suggest that this is probably not possible, but talk to a legal adviser.

    • profile image

      enquiry_SLT 5 years ago

      If somebody wins the lotto, and they choose for the payment over long term, can they put the winnings in their childs name, so that even when the parent dies, the child will continue to claim the prize...?

    • dicaslotofacil profile image

      dicaslotofacil 5 years ago

      Thanks for this great hub, much valuable information

    • DreamerMeg profile image

      DreamerMeg 5 years ago from Northern Ireland

      Some very interesting and useful advice there, even if you DON'T win the lottery. A very thought provoking hub with some sound solid advice that anyone can take.

    • iefox5 profile image

      iefox5 5 years ago

      Investing for the long term is important for those lucky lottery winners, they will have regular steady income in this way.

    • collegebeat profile image

      collegebeat 5 years ago

      I get to kill time during the day, and sleep at night smiling, merely thinking how I'd spend such a fortune.

    • Angela Brummer profile image

      Angela Brummer 5 years ago from Lincoln, Nebraska

      I really hope that I will be searching for this one day..a winning ticket in one hand... but, in the mean time it is so nice to dream!!!

    • PenHitsTheFan profile image

      Amy L. Tarr 5 years ago from Home

      I'd thank the good Lord because it would take a miracle to win.

    • profile image

      carieg 5 years ago

      Very informative!! love it. Voted up!!

    • naimishika profile image

      Venugopaal 5 years ago from India

      I am not interested to win a lottery. I think I work and destiny will help to earn more and more

    • profile image

      5 years ago

      I think after securing my future through investments, and a great deal of travel, I'd fill my schedule with all kinds of things to learn, languages, music, acting, I'd base myself in NY, who knows where everything would lead.

    • vox vocis profile image

      Jasmine 5 years ago

      I wouldn't have a problem deciding what to do if I won a lottery ticket lol Your tips are great, though! Now I just have to win - piece of cake, right? Voted up all over (funny, too :))

    • eric-carter profile image

      eric-carter 5 years ago from Fulham, UK

      The first thing which pops to mind (after the shock of course) is "Oh boy, I'm SO spending it all!", but in a few minutes a person starts thinking more reasonably, trust me - I've been there ;) Great hub by the way! The topic is very interesting and original!

    • Hypersapien profile image

      Hypersapien 5 years ago


      You are spot on when you talk about personal fulfillment. You have to find things to do that matter to you. Like the gentleman you knew, I personally like working with non-profits. For instance, back when I had more time - and before I relocated - I volunteered for Meals on Wheels for a year (which sounds like what your friend is doing), and I found it very rewarding. I've also worked with Special Olympics, Toys for Tots, Habitat for Humanity, Christmas in April and a host of other volunteer opportunities.

    • billd01603 profile image

      billd01603 5 years ago from Worcester

      I definitely would quit my job if I won enough $. I feel many people that don't love their jobs would quit while people who were fulfilled by their careers would not. Without a concern about making money, the people who did not like their jobs, including me, would do something that makes them feel fulfilled. I would take a few months off to adjust to my new life, and then seek the perfect occupation. I once knew a man who made millions with bank stock. This high powered businessman got a job delivering meals to the elderly and shut ins. He loved it.

      I still would follow most of the advice in this Hub

    • Hypersapien profile image

      Hypersapien 5 years ago


      LOL! That's a kind thought, and I appreciate the sentiment. It's nice to know that someone thinks that highly of the information I've provided, so it makes me feel validated as a writer.

    • profile image

      jonathan owens 5 years ago

      if i ever won id give u something for the knowledge and help tht u have given me. hope this hub stays up forever. thts how long it may take me to win but id need this to look back on. lol

    • profile image

      lasertekservices 5 years ago from Fargo, North Dakota

      There's a lot of things one can do with a big amount of money.

    • Lisas-thoughts101 profile image

      Lisas-thoughts101 5 years ago from Northeast Texas


      great advice. I find the stories of lottery winners who end up worse off than when they started terribly sad and ironic. It is too bad this hub couldn't be passed out with all winning lottery money. Even if it could though, so many wouldn't heed the suggestions. Terrific writing. I voted up and interesting. Isn't it fun to daydream about winning the lottery? I'm one of the ones that voted I'd quit my job. I would do so because there are so many volunteer opportunities that NEED doing out there! I'd love to be able to do that full-time.


    • annathegreat111 profile image

      annathegreat111 5 years ago

      thanks for the advice

    • 2besure profile image

      Pamela Lipscomb 5 years ago from Charlotte, North Carolina

      Great points, in this hub! There something that happens when you get something, quickly, something you did not work for. The saying is, easy come, easy go. It should be mandatory that you hire a financial advisor. I trust Suze! Voted up, shared socially!

    • tipstoretireearly profile image

      tipstoretireearly 5 years ago from New York

      Excellent advice for anyone so fortunate.

    • Hypersapien profile image

      Hypersapien 5 years ago


      The concept of liability insurance is interesting one, but I don't think you have to devote a lot of time to it. First of all, you generally can't be sued by just anyone who wanders onto your property. Your duty to provide a safe area only extends to guests and invitees. Thus, a trespasser who trips and falls on your steps really doesn't have a claim because he wasn't supposed to be there in the first place. It's the equivalent of a burglar falling down the stairs and suing you because he broke his leg. (The exception to this would be an "attractive nuisance" - like having a refrigerator on your property - something that is dangerous but is likely to attract kids who'll want to play with it. Believe it or not, a swimming pool is another example of an attractive nuisance, but people don't stop building them just out of fear that some uninvited kid might jump the fence, fall in and drown.) Also, I would anticipate that with a huge win any decent legal/financial advisors will probably have you set up a trust or some other entity and claim the winnings in that name. (With that kind of money, you'll probably want to set up a "family office" which is a private company that manages investments and trusts for a single wealthy family. They also perform personal services like making travel arrangements, managing household staff, etc. Many wealthy people have family offices: the Rockefellers, Oprah Winfrey, etc.) Afterwards, you can set it up a number of ways, but you don't have to own your house personally; it can be owned by an entity that you control. Thus, any claims would not be against you personally and all assets in your name would be safe. In addition, while you can file a lawsuit against someone for any amount of money, anything you would be entitled to get would have to be related to your damages. For instance, if a surgeon making $500K a year hurts his hand because of your negligence, his economic damages will be based on his earnings. So, if he can't perform surgeries any more, maybe this costs him $200K in salary per year, and if he's 55 years old and was facing mandatory retirement in 7 years, you're talking about max economic damages of $1.4M. A bum who has never worked a day in his life will have economic damages that are far, far less. Of course, I haven't taken into account other kinds of damages, but you see my point. It may be worthwhile to bump up your current coverage a little, but I see no reason to go overboard. (You certainly don't need $500M worth of insurance, in my opinion. Plus, the premiums on that would be monstrous.) As to the hot cup of coffee case, I was critical of that outcome myself, but I saw a well-made documentary on it about a year or two ago. They showed the photos, and that woman had widespread, 3rd-degree burns - you would have thought that she'd been in a housefire (not to mention the fact that she almost died). In short, I think you raise a good point, but I don't think it's not something that you have to go hog-wild about or spend a lot of time fretting over.


      The giant check you get is, of course, symbolic. I believe that most winnings will be bestowed by wire transfer. But yes, you have to stash the cold, hard cash somewhere initially, whether it be a money market account, a bank, numbered Swiss account, what have you. (Again, this is what you're paying those advisors for.) The tax you pay subsequently will be dependent upon your investments. If you won the whole shebang of $640 million, the cash option was estimated to be about $460M. Assuming a tax rate of 35%, you'd be left with about $300M. If you're extremely risk averse, you might put a big chunk - say $50M - in a relatively safe, tax-free investment like municipal bond funds; if the fund throws off 5% per year, that's $2.5M in your pocket tax-free every year. (Think you could live off that?) Plus, you'll still have $250 million to do what you want with - paying debts, gifts to family and friends, charitable donations. Let's say you invest the rest in dividend-paying stocks. The maximum tax rate on qualified dividends is 15%, and it's 35% for ordinary dividends (because they're treated as ordinary income.) Moreover, long-term and short-term capital gains have maximum tax rates of 15% and 35% respectively. In short, I would see your tax rate being a lot lower going forward, as long as you aren't out there doing crazy stuff, like buying and selling every day like some loose cannon daytrader. My advice would be to put at least some amount into tax-free bond funds; that way it'll be producing annual income for you (a "mere" $5M would typically give you a couple of hundred thousand per year) and the principal is likely to always be there if you need it. But don't forget that with that kind of money you could also set up a family office, as discussed in my reply to tbssic above.

    • stricktlydating profile image

      StricktlyDating 5 years ago from Australia

      That's really interesting information, and I'll be sure to take it into account should I ever be so lucky!

    • profile image

      Marc 5 years ago

      Not entirely related, but there is the more likely scenario of life insurance payouts. After careful thought I named my brother as my primary beneficiary. I have lots of other family who would appreciate some money, but who also have zero ability to hold onto it. My brother was fortunate enough to get a trust fund 20 years ago and has humbly lived off the interest since, while vastly increasing his wealth.

      If I had a Picasso to leave to someone, I'm going to leave it to the family member who has a museum full of Picassos - not the "less fortunate" one who would immediately auction it to buy a new car.

    • Kiwi Max profile image

      Max Zvyagintsev 5 years ago from New Zealand

      Avoid quitting your job!? But tempting :(

      Great hub!

    • FashionHouse profile image

      FashionHouse 5 years ago from In Between Here And There

      Appreciate the information and advise. Very informative, now I know how to hand the situation should I ever win the lottery.

    • Talullah profile image

      Talullah 5 years ago from SW France

      I enjoyed this hub. As they say, 'you've got to be in it to win it', and I suppose I really ought to buy a ticket now and again!

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      hectordang 5 years ago from New York

      I'll come back to this article after I win the lottery! It will happen! It will happen! Just let me say it ten times fast. I like the idea of investing it for the long term and being generous!

    • billd01603 profile image

      billd01603 5 years ago from Worcester

      It really does depend on how much you win,The Massachusetts lottery has 5 daily games, (plus Keno, Numbers, and Scratch Tickets)They range from $500k to tens of millions of $. Whether I continued to work and how much I would invest depends on the amount I won I agree though no matter what I won my debt would be paid off.

      Great article Hypersapian. I Enjoyed it. Winning the lottery is a long shot, but I like the saying "somebody's got to win"

    • CZCZCZ profile image

      CZCZCZ 5 years ago from Oregon

      Great tips and advice for a lotto winner. Well I'm still on hubpages so have not gotten the luxury to implement the advice above due to a new windfall of cash, but hopefully someday, whether it be nickles from hubs :) or winning the lotto having serious cash would sure be nice.

    • profile image

      halbeme 5 years ago

      ok fantastic hub. here are a few simple questions.

      win the 600 mill megga millions, take the cash option, so ya get around 300 mil ? pay average tax on that say around 75 mil ? leaves 225 mil. it would take a little time to actually open investment accts etc. what do you do in the mean time. walk into the local bank with that big check ;) and deposit 225 mil ? ok lets say between family friends, debts and a splurge you blow 2 mil. now you have 223 mil to safely invest. conservative well thought out investments might bring you a safe 5 to 7 mil a year in interest forever ?? and now what happens do you pay yearly income tax on that 5 to 7 mil ? at say 35% ?? also as for the family/very close friends gifts i personally would pay the tax for those people i care enough about them to give money to. my bottom line question is really what could be the typical net after taxes "profit" that one could live on so that the initial investments last forever. a nice caveat would be to scrimp and scrape on the yearly net income after all taxes and re invest a good portion of it to grow the principle even more. i am really looking for input on these "opinions" feelings. also lets not forget giving anonymously every year to those in need and ones favorite causes. not for the tax incentives but for the sake of giving without wanting anything in return.

    • profile image

      mikeydcarroll67 5 years ago

      You've covered a fair amount of the things that can be done when winning the lotto. I'd never spend the money to win, but it's kinda nice to read up on the winners!

    • profile image

      tbssic 5 years ago

      after reading a few of these self help types of articles,,, i have found that not one single expert addresses the liability issue. they are all accurate when they tell you to sign the ticket,, make copies and then rat hole the original but,,,,, the second thing you should do is call your insurance man. how good would you feel if you hit the $500 million and 10 minutes later someone who has never worked a day in their life,, tumbles down the steps in front of your house and is unable to work for the rest of their life and decides to sue you for,,,,,,, maybe $500 million?? you go from the penthouse to the outhouse in no time flat,,, or spend the rest of your life in a court room.. or maybe you're in the grocery store and you bump the very same person i mention above with your shopping cart and he is now paralyzed from the neck down?? or you're pulling out of your parking spot and you happen to "nick" the car next to you and mister never worked a day in his life is behind the wheel of that car?? so my advice is to get yourself a blanket liability policy for maybe,,, $500 million... unless of course your homeowners policy and your car insurance policy already have that much coverage.. but that still won't cover you in a reckless shopping cart pushing incident. remember the woman who burned herself with the hot coffee??? there are about 2 million lawyers in this country who would love to have a crack at a $500 million case... just sayin......

    • Sworu Roy profile image

      Sworu Roy 5 years ago from Trivandrum, India

      great work...thanks!!

    • farru profile image

      farru 5 years ago from Lahore

      That's Great! Thanks for good advice. I will enjoy my wealth with my family.

    • EuroCafeAuLait profile image

      Anastasia Kingsley 5 years ago from Croatia, Europe

      Excellent, Hypersapien, awesome. I kept thinking it was finished, but more good info, and more, you were definitely generous with your factual knowledge. I liked the analogy about giving to family members - but AFTER taking care of taxes, debts and trust funds. Well thought out, I really enjoyed the read. Many people I know wax nostalgic when mentioning the lottery, but you laid it out beautifully - after all, you never know!

    • Hypersapien profile image

      Hypersapien 5 years ago


      I don't think there's enough room in a comment to fully address the tax implications you mentioned, but with respect to gifts I believe the annual exclusion is now $13K ($26K if it comes from a married couple), and the lifetime exemption is $5.12 million. Again, I can't do a deep dive on these two here, but in simple terms the annual exclusion is what you can give to someone yearly tax-free, while the exemption is the total amount you can give in your lifetime tax-free.

      The possible solution that immediately leaps out is share the prize. For instance, if you win $100M, you might share 1% ($1M) with a sibling. They'll have to pay taxes on it, and will thus walk away with less than the $1M you may have wanted them to have. Doing it in the manner I suggested in my hub means you would pay the gift tax on it. (And let's be honest: it's not exactly chump change, but you would be in a better position to absorb it.) The problem, of course, is that you really don't want to give Uncle Sam any more money than required. This, of course, is where those experts you hired - accountants, lawyers, etc. - start earning their keep. They can hopefully advise you of the most cost-effective and tax-efficient ways to achieve the end you have in mind.

    • Ruby H Rose profile image

      Maree Michael Martin 5 years ago from Northwest Washington on an Island

      Great article on investing, even if it isn't the lottery! True, you have to be into buying the tickets. Great hub, you have some great ideas. Keep writing them for us to read. LOVE IT!

    • David Warren profile image

      David Warren 5 years ago from Nevada

      Thought provoking and well written. The Mega lottery in California is currently $500 million dollars! I refuse to drive the ten minutes from Reno to stand in line for hours to buy a ticket but do agree this was a great idea for a hub.

    • wiserworld profile image

      wiserworld 5 years ago

      Great hub idea. You should put a few more options on your poll, like what people would do with the money etc. Thanks!

    • jobinfo profile image

      jobinfo 5 years ago from East Coast, U.S.A.

      Thanks for the info. If I win powerball here in NY, I'll be better prepared.

    • Gloshei profile image

      Gloria 5 years ago from France

      Like the anonymity bit Andy, never thought of that and they say woman are crafty!!

    • profile image

      Snobfreelady 5 years ago

      Great information. Now you got me thinking in the right direction about my lottery winnings!

    • profile image

      Andy 5 years ago

      First I would change my name to Johhny Mega Millionaire, claim the prize, then change my name back. Instant anonymity (important if you state doesn't allow winners to remain anonymus).

    • profile image

      ken 5 years ago


    • delaxshi profile image

      delaxshi 5 years ago from Toronto

      What a wonderful hub. Unfortunately, the majority of us will not win the lottery, but this information is still very useful if you manage to inherit a large sum of money or just receive a hefty sum of money in one way or another. Great tips for how not to go bankrupt. I know it would be quite tempting to go on a spending spree and blow it all away.

    • Gloshei profile image

      Gloria 5 years ago from France

      Great hub but we have already decided what we are going to do. Apart from helping the children and investing for the grandchildren, a majority of it will be given away to the ones that need it.

      That would give us more pleasure than winning.

    • Claudia Tello profile image

      Claudia Tello 5 years ago from Mexico

      Someone has to win the lottery, why shouldn’t it be me? I would certainly invest for the future and guarantee that I won’t run out of money. I could do sooooo many things I get excited just thinking about it!!!

    • profile image

      babithababa 5 years ago

      Actually I do not have the mind-set to become rich thro' loteries .Still I read your article because it was curious yeah..

    • greatstuff profile image

      Mazlan 5 years ago from Malaysia

      I guess we must first BUY the lottery in order to WIN the lottery. So guys if you are dreaming of winning a million or more in lottery, don't forget to invest first!

    • LauraGT profile image

      LauraGT 5 years ago from MA

      Love this! One of my favorite pasttimes is thinking about what I would do with my lottery earnings. If only I could get myself out to buy one... Very good hub!

    • Kalmiya profile image

      Kalmiya 5 years ago from North America

      Thanks for this very good advice! There are many stories of lottery winners who are broke within a few years so money management is very important. Thanks.

    • b2b-sales-europe profile image

      b2b-sales-europe 5 years ago from Berlin, Germany

      Great hub! Best advice: don't tell anyone and think thoroughly before doing the next steps!

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      hengwug 5 years ago

      you have given out more knowledgeable advise than i have expected. Great hub.