We’ve all fantasized about hitting the lottery and winning millions of dollars at one time or another. It’s hard to resist buying a ticket or two when the jackpot hits $100M or more. But what happens if you actually win? Would you be ready to handle your new-found fame and fortune? The answer is probably NO.
- William “Bud” Post won $16.2 million in the Pennsylvania lottery in 1988 but was $1 million in debt within a year. On top of that, his brother was arrested for hiring a hit man to kill him in the hopes he’d inherit a share of the winnings. Read More
- After winning a $10M lottery jackpot, Tonda Lynn Dickerson, a former Waffle House waitress, was forced to pay a $1,119,347.90 Gift Tax because, not knowing any better or getting decent legal or financial advice, she placed her winnings in a corporation and granted her family 51% of the stock, thus qualifying her for the tax. Read More
- In 2002, West Virginia building contractor Andrew Jackson Whittaker Jr. hit a $315 Million multi-state Powerball jackpot. Then, in two separate instances, thieves stole his car, where he had hidden nearly three-quarters of a million dollars. Six months later, robbers once again broke into his car, stealing an estimated $200,000 in cash that was later recovered. He is also being sued by an Atlantic City casino for allegedly bouncing $1.5 million in checks. Within four years, his fortune was gone. Read More
Tips to Help You Keep Your Newly Acquired Fortune
- Disappear: limit all publicly accessible information, change your phone numbers, and move
- Seek out an income and estate tax expert with abilities to ensure you are not the victim of the next Madoff or sold high commission products and plans that lock your money in with penalties
- Consider structures to minimize taxes and maximize flexibility, including retirement plan-like of structures with asset protection
- Apply Kitchen table wisdom to all decisions by asking, “what would Mom and Dad recommend in this situation?”
- Redo your own estate plan with an eye towards family preparedness, beneficiary responsibility, and what’s most important to preserve your values: if you set up specific generational trusts to keep your children and other beneficiaries from spending their inheritance, apply priorities and instructions to help your heirs grow and understand their responsibilities are far more important than their rights, and that your love and faith in them is the reason for whatever plan you design. Use systems to make it easy for them to buy into this.
1. 20 Lottery Winner Who Blew It All; Mandi Woodruff and Michael Kelley, December 14, 2013, BusinessInsider.com
2. “The Tragic Stories of the Lottery’s Unluckiest Winners”; Nick, Carbone, November 27,2012, Time.com