You won the lottery! With the winning ticket still in your hand, you are probably thinking about how lucky you have been. But what happens next? Keep reading this article to learn how to claim your winnings and how to use this manna from heaven wisely.
Steps
Method 1 of 3: Actions to Take Immediately After Winning
Step 1. Keep it to yourself
Don't tell anyone you've won until you have the money in your pocket. Whatever magnitude the sum is, your life will change dramatically, and it can take some time before you actually realize it. So relax, take a deep breath and don't talk too much. Best to keep it secret as long as you can.
Step 2. Read carefully all the instructions on how to redeem your prize
You can find them on the lottery ticket and on the website of the responsible agency. You don't want the money to be lost due to a technical quibble, do you?
- Sign the back of the ticket with your name, unless it is against the rules or you want to delegate the withdrawal of the money to someone else.
- Make a double-sided photocopy of your ticket and deposit the original in a safe deposit box of a reputable bank.
Step 3. Contact a lawyer immediately
You should consider the legal options related to maintaining bank accounts and sharing your winnings. His expertise will help you avoid running into any legal pitfalls.
Method 2 of 3: Consider Possible Legal Issues
Step 1. Protect your privacy and identity
The media usually publish the names of the lottery winners, and local news outlets will probably ask you to give some interviews.
- You can manage to protect your privacy by choosing one way of receiving your win over another or by using legal entities to help keep your identity hidden.
- Think seriously if all media advertising is just what you want. Becoming a celebrity can be fun but consider the drawbacks. Your friends may start asking you for money. Your actions would end up under the magnifying glass. Considering that you have become rich, people will expect you to perform certain actions. If you want to avoid these inconveniences, courting media attention may not be the best step to take.
Step 2. Set up a trust fund with the help of your lawyer
This will help you receive the money while maintaining anonymity. You will be able to designate the power of attorney, and your attorney will help you iron out any problems you may encounter in the arrangement.
Step 3. Consider your taxes
Only two things are certain in life: death and taxes. Well, you most likely don't have to worry about death for now, unless the shock of winning has put your heart system to the test. But, yes, you have to pay taxes. Your winnings may be taxed twice, once upon receipt, and once if your tax rate increases, resulting in a second tax at the end of the year.
- Lottery winnings are all considered taxable income, regardless of whether they are collected as a one-time payment or in the form of an annuity.
- Paying your winnings into a trust fund can offer some tax advantages, for inheritance reasons and because it reduces property taxation.
- Translation: Trust funds are not heavily taxed, so consider creating one.
Step 4. Create a company if you bought tickets together with other people
If you bought your ticket as part of a group, you will most likely have to face discussions and make decisions.
Consider the circumstances in which tickets were purchased jointly or by a group of people. Was there a verbal agreement on how to divide the winnings? Can it be approved or enforced under the law? A company might be the right type of entity to set up in order to be able to register the winnings and be able to redeem it on behalf of the members, instead of just one person receiving the check
Step 5. Beware if spouses or similar conditions are involved
Winning the lottery can fall under the legal community of property regime if it is an event that occurs during the marriage, especially if the ticket was purchased with mutual funds.
This means that it could be the subject of division between the parties in the course of a divorce. Even if they were not married (or could not marry, as for example in the case of a homosexual couple, in some countries), there may be an acquired right to winnings as a couple
Step 6. Consider donating money to relatives and friends
Whoever wins the lottery can make the win the object of a donation, up to the annual limit of exclusion, without incurring taxation. This further attenuates the tax profile. Charity can also have similar effects.
- Consider making donations to associations you feel closest to or charities that need them. The most popular choices fall on cancer research and charities for children.
- Have the recipients of your donations sign a confidentiality agreement. This will prevent them from revealing it for at least five years.
Method 3 of 3: Actions to Take After Claiming the Reward
Step 1. Contact a good accountant or financial advisor
You should do this before you start spending the money. These people can help you evaluate all the options on how to manage your winnings.
- Your financial advisor will discuss an expense and savings plan with you, regarding how much and where to invest, as well as a projection of when you can retire.
- Consider using a private bank and advisor solely for your winnings and keep the proceeds of your investment deposited in your regular savings account, moving money only when needed.
- Open a credit at your bank for your children and grandchildren.
Step 2. Indulge in just a few little insanities at the beginning
Lottery winners who go bankrupt are often the ones who squander huge sums of money on homes and cars in the early days of their new life as rich. Set aside your winnings so you can live on income.
This is probably not the most attractive proposition, but it will strike a balance between your short-term interests and your long-term goals. Over time, no one has ever regretted saving money
Step 3. Consider the idea of collecting the premium in the form of an annuity, rather than in a single payment
This will allow you, for a year or two, to make potentially wrong financial decisions while you learn how to better manage your money.
Step 4. Consider not leaving your job
Now you are very rich; however, you will still need something that will keep you busy and keep you from spending all the money. Try part-time or take a leave of absence.
- Now is the best time to look for the job you've always dreamed of doing. Whether you are a stock trader, skydiver, or school teacher, now that you have the means to do it, pursue your dream job.
- Consider going back to studying, especially the one you are most passionate about. If you love learning and love the satisfaction that knowledge brings, consider enrolling in the courses that interest you. You don't need to go to the most renowned university in your country. Even a simpler school will keep your brain in training.
- Take economics lessons, they will help you understand more deeply the reports of your team of financial advisors.
- Pay your debts.
Step 5. Invest, invest, invest
You know the saying "You need money to make money". Well, that phrase no longer fits your situation. You can only make good money with investments. It's not bomb-proof, but it's a good way to make sure your money isn't "immobile".
- Remember, if the return on your investments does not exceed the inflation rate, it means that in real terms the purchasing power of your money is actually decreasing.
- Diversify your financial portfolio, but protect yourself against risky investments. Consider safer avenues, such as pension funds, time deposits, certificates, or financial markets. Ask a local financial cooperative if you can join as a volunteer advisor. Learn to move in the world of finance.
- Remember that the government insures any bank account up to € 100,000, which means it is better not to have an account that exceeds that amount if you want to have security. Invest money that is not in the bank in bonds or the stock market.
Step 6. Purchase with membership rewards credit cards only, and pay the bill monthly from your deposit
This way you can reap even more benefits at no cost. Just make sure you pay on time, so you don't have to risk paying interest to the bank.
Step 7. Keep a low profile
Keep your old friends close. It will keep you or others away from unwanted attention. There is no need for a press conference. You don't need advertising. You can live comfortably even without arousing suspicion.
Step 8. Shop smart
While you can afford to buy an island to found a micro-nation, remember that you will have to rule it too. So before you buy, consider the additional expenses that come with it.
- Think before buying a house. How much are the property taxes? How much will it cost to maintain it? Remember that the value of a home often fluctuates with the market.
- Think about it a couple of times before buying a fleet of Porsches. Cars are already losing half of their value the moment you sit on them at the dealership and drive them home. Expensive cars require a high level of maintenance, and foreign cars already have basic government taxes.
Step 9. Treat your family members well
They were there for you long before you won the lottery. You probably want to give them something special, but remember that you are under no obligation to solve their financial problems, if they have any. Don't forget, however, that your family is always there when you need help.
Step 10. Buy insured high value certificates of deposit (CDs) and enjoy the proceeds
Buy CDs with shorter maturities and higher interest rates, and buy them back at a higher rate. Your bank can help you with this.
Advice
- Before collecting the money, make a list of everything you would like to do or accomplish, what you want to avoid along the way, and the feelings you currently have about the present and future situation. This will allow you to later go back and see how you felt and what you wanted to do when you didn't know what it meant to be a millionaire. It could come in handy if your outlook on life is distorted by money.
- Maintain self-control. Extravagance can go to your head, you and your whole family.
- If you are sensible and don't change the spending habits you had before that lucky day, you will always have a lot of money to deal with emergencies. Take off some important whims and then go back to the life you used to do before.
- Don't throw your money to the wind by buying things you don't need, stick to a few small sprees.
- Create a wish list. Do you really need all those things? In all likelihood it is better that some of them remain only in dreams !.
- Remember that when dealing with small banks, it is best to go directly to the vice president or higher management levels. With major banks, contact their division dedicated to wealthier clients. They may offer more options related to banking services and have a better understanding of the bank's security and investment procedures.
Warnings
- Many lotteries may require a statement from you to advertise their game, but you may want to seek the advice of a lawyer on how to avoid this in order to preserve your privacy. In case you are not allowed, as a last resort, wear dark glasses, use different clothes than usual and dress up in all public photos.
- Remember that money doesn't buy happiness. Some of the richest people in the world are also the most unhappy.
- Don't let money be the main focus of your conversations with friends, family, or boyfriends.
