Congratulations, you just won $330 Million in tonight’s Mega Millions lottery! Now what?

It’s all too often we hear about the multi million dollar lottery winner who squandered there fortune in a few short years and are back in the poor house. Here’s some ideas to help you out if you ever strike it rich, so your money will last as long or longer than you do. Please note, you should consult you’re financial planner, accountant and/or attorney before making any decisions and should not consider this article as legal or financial advice.

Rule #1 – Get professional help. This is a no-brainer, but many people fail to consult professionals for legal, accounting and financial advice after winning a large amount of money. There are many legal issues surrounding a sudden influx of money into your life that starts with how to accept your jackpot. There are several options including having a revocable trust formed to accept the money on your behalf, this also shields you from the immense publicity and endless phone calls that are common place for people with money. You are also going to need help on investing the money for the future and this is where a certified accountant and financial planner come into the picture. There are many more tax issues to be concerned with when dealing with so much money and these experts are trained in these areas and can save you many thousands or even millions of dollars.

Rule #2 – Take the lump sum. Most every lottery offers two options for accepting payment for a large lottery jackpot. You may elect to receive equal annual payments for a certain number of years (the total sum of those payments equals the jackpot amount) or you can choose to take a single lump sum payment. The lump sum is most commonly calculated by taking the amount of money needed to buy the annuity for the annual payment option. The reason most financial experts recommend the lump sum payout is because even the most average of investors can earn a higher return on the money than an annuity would pay out. Simply put, this means a lump sum invested with a higher return than the annuity would make your jackpot actually worth more than advertised at the time of the drawing.

Rule #3 – Don’t forget about taxes. One of the most important things to realize about that money you just won is that you aren’t the only winner… Uncle Sam wins too. Your multi million dollar win just vaulted you into the highest tax bracket and means you will have to set aside as much as half of your jackpot to cover any federal and state taxes you will be subject to. The government is a great entity to be because there odds of winning are not 1 in 176 Million like yours, their odds of winning every jackpot in the country is 100% every time someone collects.

Rule #4 – Live off an allowance. The easiest way to make that jackpot last for years to come is to put yourself on an allowance. Yes I realize this makes you feel like a kid living with your parents again, but setting up a realistic withdrawal rate from your jackpot means your money will last longer than just if you just spend like everyday is a party. The most commonly recommended withdrawal rate on retirement nest eggs is about 3-4% of the principal each year assuming it is invested 3 to 1 in stocks and fixed income. As long as you earn a respectable 6-10% return on your money, a 3-4% withdrawal rate plus about 3% inflation means your principal will likely last forever.

Rule #5 – Don’t expect to win. If you’ve read this far, great! You are now have more information regarding what to do if you win the lottery than most people, so don’t blow it. But this rule is the most important one of all. You are most definitely not likely to win the lottery. I’m sorry to burst your bubble, but its best that you not expect it or else when the numbers come up on the TV you’ll only feel disappointment. The odds of winning the Mega Millions are 1 in 176 Million – that’s like you being one of two people randomly selected from every man, woman and child in the United States… yikes.

Here are some more articles about the lottery that may interest you:

Unlucky lottery winners who lost their money

How to deal with winning the lottery

Powerball winner says he’s cursed

8 lottery winners who lost their millions

If you hold a winning ticket

[tags]lottery, mega millions, powerball, lotto, shaun carter, attorney, accountant, financial planner, adviser, money, savings, investing, retirement, wealthy, rich, revocable trust, taxes[/tags]