Personal Finance

If you win the $421 million Mega Millions jackpot, here's what you should do

Key Points
  • The most important thing is to remain anonymous if you can. Make sure you know the state's laws for lottery winners, because it's not easy to protect your identity everywhere.
  • You also need to prepare to protect your newfound wealth.
  • Hire seasoned attorneys and wealth managers and be ready to protect against lawsuits.
This is what you do if you win the lottery
This is what you do if you win the lottery

If the $421 million Mega Millions drawing Friday night has a winner, the lucky person will likely discover that buying the ticket was the easy part.

With the prize marking the fifth-largest jackpot in the game's history, whoever ends up snagging that windfall — if anyone does — will discover that handling that sudden wealth can be overwhelming. It's not as simple as getting a check and going on with your life.

First up, say experts, is trying to protect your identity. Some states make it easy to remain anonymous when claiming the prize, while others require a bit more planning. And in some states, it's impossible.

Photo by Justin Sullivan / Getty Images Staff

When you buy a lottery ticket, you should be aware of that state's laws. Even if you live in a different state, where you bought the ticket determines your options for remaining anonymous.

"Although the odds of winning a large jackpot are astronomically low, it's still worth a few minutes to do some Google research in advance," said Jason Kurland, an attorney with Certilman Balin Adler & Hyman, a law firm in East Meadow, New York.

Here are some other tips for winners of big jackpots.

Keep the ticket close

The general advice is to sign the winning ticket and make several copies. The idea is that if you somehow are separated from the ticket, your signature should help ensure you get the prize.

However, a recent lawsuit in New Hampshire shows the importance of knowing your state laws before you do much of anything.

In that court case, a woman known only as Jane Doe sued to keep her identity private after winning the $559.7 million Powerball drawing on Jan. 6. She had signed the back of her ticket, only to discover that her signature meant she could not try to claim her winnings anonymously.

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%

Source: SOURCE: TD Ameritrade

While the judge in the case ultimately ruled that her right to privacy was more important than the public's right to know her name — she was allowed to collect the money via a trust — the situation illustrates the importance of knowing your options.

Take a deep breath

Typically, lottery winners have several months to claim their prize. This gives you time to assemble a team of experts that includes a financial advisor, accountant and attorney. (This should be your first call.)

When you suddenly become one of the wealthiest people in the country, protecting your assets will become a priority. Make sure you choose your advisors carefully.

Consider vulnerability

Whether you remain anonymous or not, actually spending the money could reveal your new-found wealth. Experts say that having this cash makes you more vulnerable to lawsuits.

"If someone gets in a car accident with you or falls in your home and they think you have deep pockets, they might try taking legal action against you," said Annmarie Camp, an executive vice president at Chubb Personal Risk Services.

How to avoid lottery scams
How to avoid lottery scams

"Even if you're in an accident, and a high-end luxury vehicle comes to pick you up, the other person might say, 'Hmm, maybe my neck does hurt,'" Camp said. "That is absolutely a reality."

Consult with an insurance agent who can offer protection against such potential claims, and make sure there are no gaps in your coverage.

Decide how to take your winnings

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 or friends) makes sense.

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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