Funviralpark Winning $640 million isn’t a bad way to end the year.
Here’s the Mega Millions jackpot amount for the next draw set on Friday night. On Oct. 14, he hit $20 million after his two tickets sold in Florida and California matched all six of his numbers, splitting the $502 million jackpot. Since the reset, the top prizes have continued to grow.
The odds of a single ticket winning the jackpot are slim (approximately 1 in 302.6 million), but it’s worth considering how to handle such a huge windfall.
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Susan Bradley, certified financial planner and founder of the Sudden Money Institute in Palm Beach Gardens, Florida, said: “And it can be pretty sketchy.
“Most lottery winners will be sleep deprived for some time.”
In other words, it’s not as easy as claiming your award and moving on with your life.
If you happen to find yourself in possession of a winning ticket, please do the following:
1. Breathe
No need to rush to the lottery headquarters right away.
It can take anywhere from 60 or 90 days to a year to receive your prize, depending on the state in which you purchased your ticket.
It will also take time to figure out how to handle the huge influx of money, according to Janet Stanzak of CFP, founder and partner of Financial Empowerment in Burnsville, Minnesota.
2. Keep your ticket safe
Protecting your ticket is important. Experts recommend taking a picture of yourself with your precious piece of paper and storing it in a safe place, such as a lockbox.
“Protect your ticket,” said Bradley. “People can lose tickets, and no tickets means no money.”
It’s also usually a good idea to sign the back of your ticket to prove it’s yours. Before doing so, though, it’s a good idea to know the rules for claiming victory in the state where you bought your ticket.
Some states allow you to remain completely anonymous. However, if the ticket was purchased in a state where the winner’s name must be made public, it may be possible to avoid identifying the prize by claiming the prize in the name of a trust or other legal entity.
3. Talk to as few people as possible
While you may be tempted to share your fortune, experts recommend keeping the information close at hand. This probably means talking only to immediate family or trusted friends.
“I only want to tell people who have the confidence to look at their backs,” Bradley said.
News travels, and friends and family you haven’t seen in a long time, or scammers who happen to be trying to get their hands on it, can show up on your doorstep.
4. Assemble a team of advisors
Winning such a large amount of money means having to make some pretty important financial decisions. This means it is worth having a team of professionals who can guide you. This group should include experienced attorneys, financial advisors, tax advisors and insurance professionals.
Among the first big decisions you’ll face is whether to take your jackpot as a reduced lump sum or as an annuity paid in annual installments over 30 years. If the state taxed lottery wins, it would take a small loss before the windfall gains reached you.
For this $640 million Mega Millions jackpot, the cash option most jackpot winners choose is $328.3 million.
If a 24% federal withholding tax were required, that amount would be reduced by approximately $78.8 million to $249.5 million. However, the highest marginal tax rate at federal level is 37%. In 2023, the winner will likely claim the prize, but that tax rate will apply to her income above $578,125 for single filers and $693,750 for married couples.
Nonetheless, the amount of money you end up with is more than most people will ever see in their lifetime.
“Ask yourself what this means for you and the people you care about,” said Bradley.
Meanwhile, the Powerball jackpot is $246 million ($128.5 million cash option) in the next draw set on Saturday night. The odds of a ticket winning the grand prize are approximately 1 in 292 million.
