- Before doing much of anything, a lottery winner should assemble a team of professionals, starting with an experienced attorney.
- California's newest mega-millionaire has to choose between a lump sum payment of $320.5 million or yearly payments averaging about $17 million over 30 years.
Whoever is holding the single winning ticket for Mega Millions jackpot is about to discover that picking the winning numbers was the easy part.
Basically, that $543 million win is life-changing. It's not as simple as collecting a check and going on with your day. The estimated jackpot prize amount has been revised based on final sales totals and is now worth $543 million (up from the first reported estimate of $522 million) The final lump-sum cash option is $320.5 Million, up from $308.1 million.
The prize marks the fifth-largest in the game's history. The winning ticket was sold at a liquor store in San Jose, California.
Of course, you won’t actually get the advertised amount. And you can thank Uncle Sam for that.
While California does not tax lottery prizes unless they were won in another state, the IRS will take 25 percent of your win right off the bat. If you choose the lump-sum option of $320.1 million, that means about $80 million goes to federal coffers, leaving you with roughly $240 million. However, you can expect to owe more to the IRS at tax time.
For the winner, here are some things that should top his or her to-do list.
In California, you get six months to claim your Mega Millions winnings.
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. Choose these experts carefully.
Source: Source: MegaMillions.com
The standard advice from experts is to sign the back of the winning ticket so that if you are separated from it, your signature can help ensure you still get the prize.
A handful of states allow you to claim the money anonymously. California, however, is among those that requires the winner's name to be released.
This illustrates why you should contact an experienced attorney before doing much of anything. And make sure you put the original winning ticket in a safe place.
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Obviously, this will be difficult once you claim your prize. In the meantime, avoid sharing the news with anyone beyond your closest circle of friends or family.
If you can't avoid publicity due to California's rules for naming the winner, consider changing your phone number or living somewhere else temporarily to avoid media attention and sudden money requests from long-lost friends or relatives.
Figure out whether to take the lump sum of $303.1 million or yearly payments averaging about $17 million over 30 years.
Winning $522 million puts you in the highest tax bracket (now 37 percent instead of the previous 39.6 percent, courtesy of the new tax law that took effect Jan. 1). This is when relying on the advice of pros (not friends or family) makes sense.
Before spending a dime, think about what your sudden wealth means. Not just financially, but emotionally.
Instead of giving in to the temptation to buy big-ticket items right off the bat, 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.
(Editor's note: This story has been updated to reflect the accurate taxation of lottery wins in California.)