What to Do Before Collecting Lottery Winnings

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You hit the lotto! Sure, go ahead and crack open the Dom Perignon. But follow these steps before you start collecting lottery winnings and let the spending spree begin.

Secure your winning ticket. Lottery officials advise signing your ticket. That's the best way to protect it in case it's lost or stolen. Then make a copy of the signed ticket, and keep the copy with you. Place the signed ticket in a safe deposit box.

Remain anonymous. Many lotteries release the names of winners. So take steps to protect your privacy to avoid being flooded with calls from long-lost family members, creditors, and charities. Your anonymity will also give you some space to make financial decisions thoughtfully and clearly. If you have a cellphone, use it. But if you have a landline, be sure to obtain an unlisted phone number.

Wait. Wait several days before claiming your prize. In the meantime, ask for some time off work. Don't quit your job until the money is legally yours. Consult with an attorney about what steps you can take to claim your winnings anonymously.

Assemble your professional team. Get your trusted team together and develop a financial plan before collecting or spending any money. They'll help you explore the financial implications of each choice before deciding. A reputable financial advisor, certified public accountant, and attorney will recommend the best strategies for obtaining and managing your winnings, while helping you get a sense of your true financial situation.

Unfortunately, a team of professionals doesn't instantly appear once you've come into money. You'll likely encounter smooth-talking, wolves-in-sheep's-clothing "professionals," but steer clear. Handpick your own team players and require them to work together.

Check with your trusted family members and friends for referrals. Consider reaching out to past lottery winners for advice. Make sure the team members have experience working with comparable-net-worth individuals who've encountered situations similar to yours.

Your financial advisor (preferably one with a Certified Financial Planner, or CFP, designation) will help you decide how much money to spend versus save, how and where to invest your money, and help project when you can achieve your financial goals. Your CPA can give you the ins and outs regarding how much you'll owe Uncle Sam and how to minimize your tax liabilities. And your attorney will help you develop an estate plan and draft the necessary documents.

Vet each of these professionals and check for complaints filed against them with the appropriate licensing agencies. For example, investigate FINRA BrokerCheck and the CFP Board regarding your financial advisor. Also, see whether there have been any complaints filed with state disciplinary authorities for your CPA and attorney.

Ultimately, make sure you feel comfortable with these people. Don't work with anyone who rushes you, talks down to you, or pressures you to take actions that you don't understand or aren't at ease with. Your team works for you.

Making the right financial decisions today makes a world of difference for tomorrow.  But with most people chronically overspending and under-saving for retirement, it's clear not enough is being done. Don't make the same mistakes as the masses. Learn about The Shocking Can't-Miss Truth About Your Retirement. It won't cost you a thing, but don't wait, because your free report won't be available forever.

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  • Report this Comment On April 05, 2013, at 5:15 PM, IlanBigfoot wrote:

    I laughed when I saw the title. I was sure the article would be short:

    "What to Do Before Collecting Lottery Winnings"

    Step One: Don't bother buying a ticket. YOU will not wen the lottery. YOU will not BE collecting any winnings.

    Step Two: Take that dollar and invest it! You WILL be richer than most lottery winners, who after a few years of living the high life, get divorced and eventually go bankrupt.

  • Report this Comment On April 06, 2013, at 2:20 AM, herky46q wrote:

    You are really writing a commentary about this topic?

  • Report this Comment On April 06, 2013, at 11:18 AM, oatmeal33 wrote:

    If you want to split the jackpot with some family and friends, can you save a ton on taxes by claiming the jackpot as a group instead of as an individual? Because if, as an individual winner, if you handed out large sums to friends as gifts, would those gifts be taxed again?

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