One of my New Year’s resolutions is to win the Lottery, which I am sure is the goal of many. What do we need to know if we win?
Edwin Castro won a huge $2.04 billion in the lottery on February 14, 2023, taking home $997.6 million at once, instead of getting it over 30 years. Someone in Maine also hit the jackpot with $1.35 billion. Winning the lottery means you need to think about how to use that money wisely. You don’t want to lose it all like some winners do.
Be patient. There’s a grace period to claim your prize; in Florida, it’s a 180-day countdown. Don’t rush. Plan how to spend your money even before you get it.
Draw your line in the sand. When your bank account balloons, so might your fan base. Family, old buddies, and even scammers may line up for a share. It’s okay to say no. Still, you might want to give some away to people or charities. Remember, big gifts might mean big taxes. For 2023, you can give away $17,000 without tax or $34,000 with your spouse. Next year, it’s $18,000, or $36,000 for couples.
Think about taxes. The winner from California chose a one-time payment but won’t get the full amount because of taxes. Before spending on big things, wait until you’ve paid all taxes. For example, about 24% of the winnings go to the IRS upfront. Then there’s more to pay in April.
The “lottery curse.” This curse has become almost as famous as the lottery itself. Here’s how the nightmare scenario typically unfolds for some unlucky winners:
Imagine this: The moment you’ve won, your life turns into a non-stop party. Sounds great, right? But the plot twists. A luxury yacht here, a mansion there, and why not invest in your cousin’s idea for underwater hotels? Suddenly, those millions that seemed endless are dwindling fast. Now that you’re living the high life, your old budgeting habits have gone out the window. You’ve swapped coupons for caviar and budget flights for private jets. The thrill of buying whatever you want has replaced the satisfaction of saving for what you need.
And in the final scene, just as quickly as your bank account ballooned, it deflates. You’re left wondering where it all went wrong. The lottery dream has turned into a financial nightmare.
It’s a cautionary tale, but one that’s all too real for some. Winning big can be confusing. Talk to professionals before buying or giving away a lot. Financial advisors can guide you to grow your money. Tax advisors help you understand the best way to take your winnings and make sure your taxes are right.
As estate planners, we work with your advisors to make sure your money is safe, taxes are low, and your wealth goes where you want when you’re gone. We’ll help you make a plan that lasts and avoid quick choices you might regret. Contact us to set up a meeting and plan for your lottery winnings to benefit you and your family in the long term.
Andrea L. Jakob, PA is located at 12401 Orange Drive, Suite 219 in Davie.
They can be reached at 954-862-1479 or on the at www.jakoblegal.com.
