Personal Finance

Don't repeat a mistake from this $559M Powerball winner

Key Points
  • A New Hampshire woman known only as Jane Doe was permitted to receive her after-tax winnings of $264 million on Wednesday via a trust. However, a judge has yet to rule whether she can maintain her anonymity.
  • At issue is the fact that she signed her name on the back of the ticket before finding out that her signature meant her name would become public.
  • Other jackpot winners, however, should not automatically avoid signing the back. Doing so comes with its own risks.
This is what you do if you win the lottery

A recent Powerball winner discovered the hard way that trying to remain anonymous after hitting a huge jackpot takes some advance planning.

Known only as Jane Doe, the New Hampshire woman who won $559.7 million in the Jan. 6 Powerball drawing collected her after-tax winnings of $264 million on Wednesday. However, whether she can maintain her anonymity remains in the hands of a judge.

At issue is the fact that she signed her name on the back of the ticket upon discovering she won. This is standard advice from lottery experts, because if you are somehow separated from the ticket, your signature should help ensure you still get the prize.

Justin Sullivan | Getty Images

However, in this instance, it also meant the winner gave up her ability to shield her identity from the public.

New Hampshire law allows lottery officials to release the name on the ticket. The woman only found out after signing it that she could have created a trust to receive the money and put its name on the back of the ticket.

So she filed a lawsuit to block her name from being released publicly.

Although her winnings are now in her possession — via a trust that was permitted to receive the windfall — whether her identity will remain shielded is awaiting a ruling in the court case.

Despite the problem this winner faced by putting her name on the ticket, other jackpot winners should not automatically forego signing their ticket.

How investors would handle a multi-million-dollar lottery win

Take the lump sum74.8%Take the annuity25.2%
Claim the ticket immediately43.4%Wait to come forward56.6%
Consult a lawyer/accountant/financial advisor before claiming80.1%Claim the ticket with no outside help19.9%
Remain anonymous90.7%Step into the spotlight9.3%
Quit my job immediately48.1%Keep working51.9%
Hire a financial advisor63.6%Manage it myself36.2%

"It's hard to give blanket advice because all state laws are different, but if you don't sign the back and someone else gets a hold of it, signs it and turns it in, they'll get the money," said Jason Kurland, an attorney at Certilman Balin Adler & Hyman, a law firm in East Meadow, New York.

At the same time, however, this winner's experience illustrates the importance of turning to trusted experts before doing much of anything if you win a huge amount.

In some states, remaining anonymous is impossible. In others, it's easy. And in others like New Hampshire, it takes extra planning to protect the winner's identity.

Here are some other tips for lottery winners.

1. Take a deep breath

Typically, lottery winners have three months to stake their claim. Before you decide to prove you've won, however, it's best to first enlist the help of a team of pros: an attorney (this should be your first call), a financial planner and an accountant. Make sure you choose these professionals carefully.

2. Remain anonymous if possible

It's best not to announce to the world that you've won. An attorney can help create a legal entity — i.e., a revocable trust or a family limited partnership — that protects your identity.

If you can't avoid publicity (some states require publishing your identity), consider changing your phone number, or living somewhere else temporarily. That will help avoid media attention and sudden money requests from long-lost friends or relatives you never knew you had.

How to avoid lottery scams

3. Choose a lump sum or annual payments

Figure out whether to take the lump sum or 30 allotments over 29 years. This decision is often made based on your tax situation. This is when relying on the advice of pros (and not family) makes sense.

4. Consider the big picture

Before spending a dime, think about what this sudden wealth means — not only financially, but emotionally.

Give yourself time to process the magnitude of your win. This is often when winners begin to think about their legacy and what societal contributions they want to make. Some even set up their own charitable organizations.

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Don't repeat a mistake from this $559M Powerball winner