OK, so you didn't win the big one.
But if, just if, one day you did, here's what to do.
First, no strutting like a peacock. Yeah, you'd like to show that ex of yours (whether it be a spouse, a boss, or whatever) what he or she missed out on, but if your state allows it, keep it to yourself. Otherwise, you will almost certainly find a line of supplicants as long as the running of the brides as Filene's Basement at your door. "Mum's" the word.
How then do you keep it zipped?
One way may be to set up a trust or limited liability company to receive the winnings. And wait a little while before you belly up to the lottery bonanza bar. Most of the major lotteries allow you at least 180 days before you claim your prize. Wait at least a good number of those days but not all of them because as the "end time" to claim the prize grows near, the media becomes all a-lather about the winner not yet coming forward. And by the way make sure how many days you've got. You'd hate to show up on the 181st day if you've only got 180. Mark it on a calendar or three.
Now spend those days productively. There will be time to go on spending sprees like a Michael Jackson or a Roman emperor, but not just yet. Stash the winning ticket in a secure place, let someone near and dear know where it is just in case you get run over by a steamroller in the interim, and huddle with your "team" which should include a smart lawyer, a good accountant, a wise financial advisor, and your insurance agent. If you don't already know and trust them, thoroughly check out their bona fides. There are conmen aplenty in sharp suits. Once the team is vetted and gathered, together you must make a plan. Otherwise your windfall could soon turn into a nightmare. It is a fact that many, many lottery winners ultimately go broke.
Callie Rogers blew a $3 million jackpot on shopping, cocaine, friends and breast enhancement. Six years later she was working as a maid. William "Bud" Post of Pennsylvania managed to blow every last centavo of his more than $16 million in winnings on fast cars, bad businesses, and bling before going bankrupt and serving time for firing a shotgun at a bill collector. Hey, don't be that guy.
If the quarterback of your team is your attorney, the ball-snapper should be your tax guy. One of the first choices to be made is whether to take your prize in cash or as an annuity. While the King Midas in all of us may wish to get our grubby little mitts on the cash as quickly as we can, it may or may not be the best choice. With a lump sum payment, Uncle Sam gets his cut up front as well. You may be better off getting payments every year for the next couple of decades and paying taxes only as each installment is received. You should also weigh-in honestly about yourself. If temptation is your polestar, you may be better off enjoying your lucre in annual dribs and drabs.
At the end of the day, your tax advisor will compare the effective yield of the annuity as compared to what you could reasonably earn by taking the money in a lump sum, paying the tax piper and investing what is left.
Another consideration is whether in taking an annuity your family might be left without sufficient scratch to satisfy estate taxes if you die before the annuity runs out. One way to potentially solve this little conundrum is to take out a life insurance policy to cover that eventuality.
Pay off all your debts. Avoid profligate spending. Don't make major changes to your lifestyle. Not just yet at least. Let the euphoria simmer down a mite. Maybe set aside a little mad money but buying that estate in Fiji that you've always dreamed of, despite never having actually been to Fiji, is probably best to hold off on at least a first.
Invest your money prudently. You've already got a pile of cash. The goal is conservative growth and asset preservation. You don't need to turn a gazillion into two if the cost of doing so is too much risk.
Now, take steps to protect your assets. You need to guard against losing assets to conmen, creditors and opportunists. These may range from the high school sweetie who 20 years after dumping your sorry self, now finds you irresistible, to suddenly tottery neighbors throwing themselves at the wheels of your new Grancabrio so they can sue for their unfortunate injuries. The best defense is always a good offense. Like the approaches to a sturdy fortress, moats, minefields, and the Queen's Guard should be erected up to protect you. Some of these legal devices may include trusts, family limited partnerships and/or limited liability companies.
Map out your charitable giving. Remember, it is more blessed to give than to receive. And you may just end up with some nice fat tax credits.
Go over your estate plan. You want to make sure that who you want to end up with your windfall should you die is who will actually get it. You want the plan to be as air tight as possible so that when you go, there is as little bickering as possible.
Hey, by the way, I just might be the guy who bought the winner in Arizona who hasn't yet come forward. Uh-uh. I'm not tellin'.
Rohn K. Robbins is an attorney licensed before the bars of Colorado and California who practices in the Vail Valley with the law firm of Stevens, Littman, Biddision, Tharp and Weinberg LLC. His practice areas include business and commercial transactions, real estate and development, family law, custody, divorce and civil litigation. He may be heard on Wednesdays at 7 p.m. on KZYR radio (97.7 FM) and seen on ECOTV 18 as host of "Community Focus." Robbins may be reached at 970-926-4461 or at either of his e-mail addresses, firstname.lastname@example.org or email@example.com.