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Twelve things not to do if you win the lottery

A sign showing the estimated winnings of a Powerball lottery jackpot hangs in the window of Rip’s Wine and Spirits Shop in Bowie, Md. (Photo: Susan Walsh, AP)

Story Highlights

  • Don’t tell everyone you know or become the generous high roller
  • Think hard before deciding to take the up-front cash
  • Don’t ignore a budget or think you are an expert in managing your money

Imagine becoming vastly wealthy overnight. Being a winner of a multimillion dollar lottery has to be incredible. It certainly is going to be a life-changing event for almost every single lottery winner. But what about when the prize is an astronomical sum of $100 million, $200 million or $300 million? If you happen to be lucky enough to win a lottery, please avoid some of the simple mistakes, and complex mistakes, that have taken other lottery winners into bankruptcy.

Imagine being Joe Somebody and turning into Sir Joe the Magnificent overnight. Now imagine the unthinkable that Sir Joe could become Joe the Village Idiot in a very short time. Supposedly most lottery winners end up broke again. That just doesn’t seem right at all.

24/7 Wall St. has decided to offer up 12 key things not to do if you are a lottery winner. We have looked around at many research papers and other articles on the matter about those who land in instant riches against all odds. It seems too cruel to imagine that many winners become losers. There is a saying that you should only have to get rich once. Some people just cannot help themselves in avoiding the pitfalls of instant wealth.

While many lists exist on what you should do if you win, it is surprising how few actual warnings are out there that can be used a scare-tactic guide that makes lottery winners do the right thing. Did you know that you might become a target if you are a lotto winner? Some people find instant enemies, and some people turn out to be their own worst enemy. It might have been very hard to spend $30 million in 30 days in “Brewster’s Millions” during the mid-1980s, but that could be done easily and perhaps just in a single day now.

Some points may overlap or seem redundant, but there are many pitfalls which snag lottery winners or those who find themselves incredibly wealthy in a very short period.

Here are 12 things not to do if you win the lottery:

Forget to sign a ticket or report it to the state. After doing some research, we find this is apparently the simplest and easiest error to make. Can you imagine losing a lottery ticket? Then imagine what can happen if someone else snags your ticket and shows up to collect the prize. Fighting over this is no simple task. In a way, lottery tickets are the last form of bearer bonds that anyone collect on if they show up with the coupons and bonds.

Tell everyone you know. If you win this much money, chances are high that you will to want to brag about it. How could you not? The problem is that telling everyone you know before you collect puts you in danger, and in more ways that just one. Everyone who has ever done anything for you now may come with their hands out asking for something, or worse. You probably have heard of kidnap and ransom insurance before. One recent lottery winner even became the victim of what appears to be murder. If you can manage it, and if your state allows it, try to remain anonymous for as long as humanly possible. How you became vastly wealthy will be found out in time anyway, but there is no need to hurry that along.

Automatically decide to take the up-front cash. Supposedly some 70% of lottery winners end up broke again, many within a couple or few years. If you get $172 million up front, it may sound better than having to receive a payout of $300 million slowly over the course of a lifetime. After all, it is instant empire-making money. Go see a tax pro and a legitimate investment advisor at a top money management firm, a theme you will see here throughout, before you automatically make this decision about a lump-sum or annuity option.

Think that you are the smartest person to manage your money and finances. If you go from living paycheck to paycheck, does it sound right that you will know the best things to invest in and the best tax and asset protection strategies? Your drinking buddy might not be the best choice either. Having a solid and respectable team in place will act as your buffer that protects your assets now and in the future. Do you know how to protect your assets against all threats and know exactly how to protect your estate in case you die or become incapacitated? If you answered yes, you probably did not bother playing the lottery.

Let your debts remain in place. If you get the “I’m rich and don’t have to pay anymore” bug, you might be dooming yourself. Whether you take the lump-sum or the annuity option, if you have a single penny of debt in the immediate future and distant future, then something is seriously wrong. For that matter, you should not have a single debt ever again. If you manage to go broke down the road and still have a mortgage, car payments, student loans, credit card debt and personal bills, all of your friends and family members should get to spank or ridicule you every day for the rest of your life.

Become the generous high-roller, living the life. If you go from living a simple life to instantly being able to spend hundreds of thousands of dollars (or more) per week, what do you think happens to your expectations in life ahead? Chances are high that you will want more of the same. If you start gambling in Las Vegas and are not happy until you are gambling with hundreds of thousands of dollars (or more) per play, you are dooming yourself. Wait until the real con men find you. Taking you and your favorite 50 people on a luxury cruise around the world can become very expensive, very fast.

Buy everything for everyone, or even for yourself. Do not go out and buy dozens of cars, followed by houses and whatever else, for you and your friends and family members. This will start you on a bad path, and you could easily become the next friends and family personal welfare department. If you start buying everything for everyone, chances are high that they might expect that to last forever. You do not have to be a cheapskate, but after hearing a personal story of someone buying more than 30 cars and multiple houses in three months it is just crazy.

Say to hell with a budget. Maybe it sounds crazy that you have to live within means when you get empire-making money. After all, you are now wealthier than everyone you know combined. This also goes back to having advisors and being prudent, but at the end of the day you do still have a finite sum of money. Chances are very high that you will make some serious purchases and your lifestyle will be changed forever. Without setting limits for yourself and for what you do with others is a recipe for disaster. Again. most lottery winners go broke.

Become the business backer for all your friends and family. One common theme that has come up with lottery winners (and judgment winners) who suddenly get vast sums of cash is that their friends and family start pitching them on endless business ideas. Sure, some will sound great and some will sound crazy. If someone has no knowledge of a particular business and does not know what it takes to actually run a business, will they do better because a lottery winner who lucked into vast wealth gave them money to start it? If your answer is yes, you seriously need to protect yourself (from yourself).

Give away the whole enchilada. This is probably not the case for the vast majority of lottery players, but some people might want to give away just about all of their money to a charity or to their religious institution. You can be generous without doing the unthinkable. Imagine what you will feel like down the road when a serious crisis arises in your life or your family’s life, knowing that you no longer had the means to change it. Should you be charitable? Absolutely! Should you give it all away? Absolutely not!

Get celebrity and athlete envy. Keeping up with the Jonses is bad enough, but definitely do not try to keep up with the Kardashians or other celebrities. It may seem cool to own a 200-foot yacht. It may seem practical that certain celebrities have an entourage, or to have a film crew following you around. It may seem cool owning castles in Europe. Owning an original Picasso painting sure sounds impressive. Having a big new private jet makes sense for a lot of people. Trying to dodge taxes might even sound appealing to misguided people. Now go add up the price tags of these things, plus the cool cars and houses and the rest of it. You can go broke real quick. Just ask people like Nicolas Cage, Wesley Snipes, MC Hammer, Evander Holyfield and many other famous people who had it all and ended up broke how they feel about things.

Think that laws and decency standards no longer apply. It is true that the wealthier you get, the better attorneys and legal defense you can afford. That being said, living a reckless life without concerns about the laws of the land will not keep you from going to prison (or worse). Movies often glamorize scoundrels, but what good does it do you if you are incredibly wealthy and such a pariah that no one will associate with you? Remember, you don’t get to take any of it with you.

24/7 Wall St. is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

If you are lucky enough to win a lottery, please avoid some of these simple mistakes.

Thinking of Going Off the Grid After Winning the Lottery? Not So Fast

Everyone dreams of it: having a small piece of paper with the right numbers printed on it and winning the life-changing $200 million, $700 million or $1 billion jackpot. But what happens after you win?

Many winners decide to remain anonymous — or at least try to — but that can be difficult when many states demand that the winners of large jackpots show their faces at news conferences.

At his own news conference in Madison, Wis., Manuel Franco, 24, who in a Powerball drawing last month won $768 million, the third-largest jackpot in United States lottery history, seemed to be trying not to divulge too much information about himself, perhaps to keep random family members from coming out of the woodwork. Speaking with reporters on Tuesday, he declined to say where he grew up, where he lived, what kind of car he drove or where he used to work. (He quit two days after winning.)

Arizona, Delaware, Georgia, Kansas, Maryland, Michigan, Texas, North Dakota and Ohio allow lottery winners to conceal their identities if the winnings exceed a certain dollar amount, according to the National Conference of State Legislatures.

Other states, like New York, make it easy for winners to collect their prizes under the cover of an L.L.C. or an entity. But states like Wisconsin want winners to come forward to claim their prizes, although Wisconsin does not require them to appear at a news conference as Mr. Franco did.

After Mr. Franco’s $768 million win, “it seems a little ridiculous that there isn’t privacy when it comes to that,” Gary Tauchen, a Wisconsin state representative, said. “Certainly you have a lot of fourth and fifth cousins and it is just a situation when you’re under high stress.”

While Mr. Franco was answering questions about his lottery winnings as concisely as possible, Mr. Tauchen was introducing a bill seeking to ensure the privacy of lottery winners in Wisconsin.

“I know that it is one of those life-changing experiences when you need some time to adjust,” Mr. Tauchen said. “You don’t need the stress of other people putting pressure on you.”

And for jackpot winners like Mr. Franco, the pressure comes nearly immediately.

“For the next two weeks, people are going to be outside of his house,” Jason M. Kurland, a lawyer who has represented several winners of large lottery jackpots, said on Wednesday.

“I get those letters every week,” Mr. Kurland said, referring to the mail he receives intended for his clients. “They range from congratulatory letters to individuals having a tough time asking for handouts, to organizations looking for donations, to business men and women asking for investors.”

Mr. Kurland, who calls himself the Lottery Lawyer and represented the person in South Carolina who won the $1.54 billion Mega Millions jackpot last year, advises his clients to delete all their social media accounts before they claim their winnings. He also tells them to try to remove their address from public view as much as they can and to get new phone numbers. If there are children involved, he will hire security for the first couple of days.

Mr. Kurland tries to help his clients retain some privacy after they win, but if privacy is hard to achieve in 2019, anonymity is nearly impossible.

“It is very hard to participate in civil life and be anonymous,” Albert Gidari, the privacy director of the Center for Internet and Society at Stanford Law School, said on Wednesday. “You can’t buy a car in cash and avoid disclosing who you are because now car dealers are financial institutions,” Mr. Gidari said, adding that it was nearly impossible to transfer money in and out of the United States without disclosing who you are to the government.

“He can get a lot of lawyers and accountants and figure out how to move and hide a lot of that money at great risk to himself for not complying with government reporting,” Mr. Gidari said. “You can’t get very far, but you can get far enough to get some degree of obscurity, even if you can’t get anonymity.”

Last year the winner of a $560 million Powerball jackpot in New Hampshire took the state to court to retain her anonymity while claiming her prize. The woman’s lawyers argued that she would be accosted with requests for money, and the state argued that lottery winners must be disclosed to make sure that winners are not related to lottery employees and that winnings are distributed fairly. The court decided disclosing the winner’s name would be an invasion of privacy and allowed the woman to anonymously claim her winnings.

“You want to be able to enjoy this crazy amount of money you luckily won, but at the same time you want to keep your privacy, so it’s a balance,” Mr. Kurland said.

But going off the grid, setting up shop on the beach and enjoying the fruits of your ticket are not necessarily possible without informing the government.

“If you leave the country, it’s worse,” Mr. Gidari said, adding that leaving the country and failing to report assets in the United States and abroad could lead to losing those assets.

Some states allow the winners of large jackpots to remain anonymous, but is it ever possible to retain your privacy after a life-changing windfall? ]]>