Mega Millions - 1 BILLION DOLLARS

[BCClone]

It also isn’t that great of advice. You can’t just go and invest $200 million into an index fund. You will need some sort of financial advisor. Now you do want someone who is going to be low cost and target things like index fund type investments but it’s going to be a lot more complicated.

The key is to move slowly and get multifaceted advice. You are going to make some people mad and there’s nothing you can do to prevent it. If someone wants to kill your relationship over money the relationship wasn’t worth much in the first place.

What makes you say that?

 

[qwerty]

I'm going to burn my ticket.

Just sign it over to We Will Collective and let BB have all of the headaches listed above.

Maybe you could upgrade to Wendy's now that you'd be rolling in the dough.

Whoa, Whoa there big spender. A buck doesn't go as far as it used to.

 

[keepngoal]

It also isn’t that great of advice. You can’t just go and invest $200 million into an index fund. You will need some sort of financial advisor. Now you do want someone who is going to be low cost and target things like index fund type investments but it’s going to be a lot more complicated.

The key is to move slowly and get multifaceted advice. You are going to make some people mad and there’s nothing you can do to prevent it. If someone wants to kill your relationship over money the relationship wasn’t worth much in the first place.

from a person i am pretty close with, who had a hit mob movie made about their dad, has shared that everything is in trusts and with lawyers. They live on a 'fixed' income with bumps during lifes fun moments. Everything is through their lawyers.

 

[BCClone]

Just sign it over to We Will Collective and let BB have all of the headaches listed above.

Whoa, Whoa there big spender. A buck doesn't go as far as it used to.

50 cent frosties though.

 

[WIBadger]

It also isn’t that great of advice. You can’t just go and invest $200 million into an index fund. You will need some sort of financial advisor. Now you do want someone who is going to be low cost and target things like index fund type investments but it’s going to be a lot more complicated.

The key is to move slowly and get multifaceted advice. You are going to make some people mad and there’s nothing you can do to prevent it. If someone wants to kill your relationship over money the relationship wasn’t worth much in the first place.

I think the advice is good in broad strokes (e.g. get lawyers involved, invest conservatively, be careful who you take advice from, etc.)

But I also don’t know who the person is, they have no legal obligation to provide good advice, and they’re basically telling me that if I win the lottery and don’t follow their advice I will at best be financially ruined. All of those things make me really skeptical.

 

[drmwevr08]

Continued…..

———————

So, what the hell DO you do if you are unlucky enough to win the lottery?
This is the absolutely most important thing you can do right away: NOTHING.

Yes. Nothing.

DO NOT DECLARE YOURSELF THE WINNER yet.
Do NOT tell anyone. The urge is going to be nearly irresistible. Resist it. Trust me.

/ 1. IMMEDIATELY retain an attorney.
Get a partner from a larger, NATIONAL firm. Don't let them pawn off junior partners or associates on you. They might try, all law firms might, but insist instead that your lead be a partner who has been with the firm for awhile. Do NOT use your local attorney. Yes, I mean your long-standing family attorney who did your mother's will. Do not use the guy who fought your dry-cleaner bill. Do not use the guy you have trusted your entire life because of his long and faithful service to your family. In fact, do not use any firm that has any connection to family or friends or community. TRUST me. This is bad. You want someone who has never heard of you, any of your friends, or any member of your family. Go the the closest big city and walk into one of the national firms asking for one of the "Trust and Estates" partners you have previously looked up on http://www.martindale.com from one of the largest 50 firms in the United States which has an office near you. You can look up attornies by practice area and firm on Martindale.

/ 2. Decide to take the lump sum.
Most lotteries pay a really pathetic rate for the annuity. It usually hovers around 4.5% annual return or less, depending. It doesn't take much to do better than this, and if you have the money already in cash, rather than leaving it in the hands of the state, you can pull from the capital whenever you like. If you take the annuity you won't have access to that cash. That could be good. It could be bad. It's probably bad unless you have a very addictive personality. If you need an allowance managed by the state, it is because you didn't listen to point #1 above.

Why not let the state just handle it for you and give you your allowance?

Many state lotteries pay you your "allowence" (the annuity option) by buying U.S. treasury instruments and running the interest payments through their bureaucracy before sending it to you along with a hunk of the principal every month. You will not be beating inflation by much, if at all. There is no reason you couldn't do this yourself, if a low single-digit return is acceptable to you.

You aren't going to get even remotely the amount of the actual jackpot. Take our old friend Mr. Whittaker. Using Whittaker is a good model both because of the reminder of his ignominious decline, and the fact that his winning ticket was one of the larger ones on record. If his situation looks less than stellar to you, you might have a better perspective on how "large" your winnings aren't. Whittaker's "jackpot" was $315 million. He selected the lump-sum cash up-front option, which knocked off $145 million (or 46% of the total) leaving him with $170 million. That was then subject to withholding for taxes of $56 million (33%) leaving him with $114 million.

In general, you should expect to get about half of the original jackpot if you elect a lump sum (maybe better, it depends). After that, you should expect to lose around 33% of your already pruned figure to state and federal taxes. (Your mileage may vary, particularly if you live in a state with aggressive taxation schemes).

/ 3. Decide right now, how much you plan to give to family and friends.

This really shouldn't be more than 20% or so. Figure it out right now. Pick your number. Tell your lawyer. That's it. Don't change it. 20% of $114 million is $22.8 million. That leaves you with $91.2 million. DO NOT CONSULT WITH FAMILY when deciding how much to give to family. You are going to get advice that is badly tainted by conflict of interest, and if other family members find out that Aunt Flo was consulted and they weren't you will never hear the end of it. Neither will Aunt Flo. This might later form the basis for an allegation that Aunt Flo unduly influenced you and a lawsuit might magically appear on this basis. No, I'm not kidding. I know of one circumstance (related to a business windfall, not a lottery) where the plaintiffs WON this case.

Do NOT give anyone cash. Ever. Period. Just don't. Do not buy them houses. Do not buy them cars. Tell your attorney that you want to provide for your family, and that you want to set up a series of trusts for them that will total 20% of your after tax winnings. Tell him you want the trust empowered to fund higher education, some help (not a total) purchase of their first home, some provision for weddings and the like, whatever. Do NOT put yourself in the position of handing out cash. Once you do, if you stop, you will be accused of being a heartless bastard (or *****). Trust me. It won't go well.

It will be easy to lose perspective. It is now the duty of your friends, family, relatives, hangers-on and their inner circle to skew your perspective, and they take this job quite seriously. Setting up a trust, a managed fund for your family that is in the double digit millions is AMAZINGLY generous. You need never have trouble sleeping because you didn't lend Uncle Jerry $20,000 in small denomination unmarked bills to start his chain of deep-fried peanut butter pancake restaurants. ("Deep'n 'nutter Restaurants") Your attorney will have a number of good ideas how to parse this wealth out without turning your siblings/spouse/children/grandchildren/cousins/waitresses into the latest Paris Hilton.

/ 4. You will be encouraged to hire an investment manager. Considerable pressure will be applied.

Don't.

Investment managers charge fees, usually a percentage of assets. Consider this: If they charge 1% (which is low, I doubt you could find this deal, actually) they have to beat the market by 1% every year just to break even with a general market index fund. It is not worth it, and you don't need the extra return or the extra risk. Go for the index fund instead if you must invest in stocks. This is a hard rule to follow. They will come recommended by friends. They will come recommended by family. They will be your second cousin on your mother's side. Investment managers will sound smart. They will have lots of cool acronyms. They will have nice PowerPoint presentations. They might (MIGHT) pay for your shrimp cocktail lunch at TGI Friday's while reminding you how poor their side of the family is. They live for this stuff.

You should smile, thank them for their time, and then tell them you will get back to them next week. Don't sign ANYTHING. Don't write it on a cocktail napkin (lottery lawsuit cases have been won and lost over drunkenly scrawled cocktail napkin addition and subtraction figures with lots of zeros on them). Never call them back. Trust me. You will thank me later. This tactic, smiling, thanking people for their time, and promising to get back to people, is going to have to become familiar. You will have to learn to say no gently, without saying the word "no." It sounds underhanded. Sneaky. It is. And its part of your new survival strategy. I mean the word "survival" quite literally.

Get all this figured out BEFORE you claim your winnings. They aren't going anywhere. Just relax.

We love to tear people down far more that anything else. That's at least part of the problem.

 

[yowza]

I’ll take a couple posts to do the classic Reddit comment from 8 or so years ago.

——————

Congratulations! You just won millions of dollars in the lottery! That's great.
Now you're ******.
No really.
You are.
You're ******.

If you just want to skip the biographical tales of woe of some of the math-tax protagonists, skip on down to the next comment. To see what to do in the event you win the lottery.

You see, it's something of an open secret that winners of obnoxiously large jackpots tend to end up badly with alarming regularity. Not the $1 million dollar winners. But anyone in the nine-figure range is at high risk. Eight-figures? Pretty likely to be screwed. Seven-figures? Yep. Painful. Perhaps this is a consequence of the sample. The demographics of lottery players might be exactly the wrong people to win large sums of money. Or perhaps money is the root of all evil. Either way, you are going to have to be careful. Don't believe me? Consider this:
Large jackpot winners face double digit multiples of probability versus the general population to be the victim of:

1. Homicide (something like 20x more likely)

2. Drug overdose

3. Bankruptcy (how's that for irony?)

4. Kidnapping

And triple digit multiples of probability versus the general population rate to be:

1. Convicted of drunk driving

2. The victim of Homicide (at the hands of a family member) 120x more likely in this case, ain't love grand?

3. A defendant in a civil lawsuit

4. A defendant in felony criminal proceedings

You can state all this, but give me the money and I will give it a shot. I consider myself financially savvy and easily tell people to F off when looking for me to give them stuff.

 

[WIBadger]

You must be young enough that you'll still know who you are in 30 years.

I hope so haha. But again, the reason I would do it is because I may have a lot of people trying to get money from me in the first year. But in 5, 10, or 20 years?

And this way I know there is always going to be money coming (or at least there will be for 30 years) so I’d be hopeful that it would help me avoid financial issues

 

[snowcraig2.0]

I think the advice is good in broad strokes (e.g. get lawyers involved, invest conservatively, be careful who you take advice from, etc.)

But I also don’t know who the person is, they have no legal obligation to provide good advice, and they’re basically telling me that if I win the lottery and don’t follow their advice I will at best be financially ruined. All of those things make me really skeptical.

What does everyone this is a reasonable conservative return you can get on that much money if you take the lump sum?

 

[BCClone]

I hope so haha. But again, the reason I would do it is because I may have a lot of people trying to get money from me in the first year. But in 5, 10, or 20 years?

And this way I know there is always going to be money coming (or at least there will be for 30 years) so I’d be hopeful that it would help me avoid financial issues

If you build a house that is remotely decent, you will have people beg for money from you as long as you are there. Live in an apartment and you might be able to live somewhat quietly for a bit. Probably best to spend 5-10 MM and go to a gated community if you want to get away from it.

 

[BCClone]

What does everyone this is a reasonable conservative return you can get on that much money if you take the lump sum?

Not sure of your question, but if you hit some decent dividend stocks, you can create your own mutual fund, you should be able to pull around 3.5-4% in dividends. Using it as normal income (talk of killing the special dividend rate but still no FICA) use a 2-2.5% after tax take home. You are talking 4-6MM per year on that without touching the lump sum, assuming only one winner.

 

[ClonesFTW]

Maybe you could upgrade to Wendy's now that you'd be rolling in the dough.

So disrespectful to the King.

 

[coolerifyoudid]

I think concern for your loved ones' safety is a really valid point from that Reddit post.

It's pretty simple for an ordinary person to find a random citizen if you want. Our footprints are pretty easy to follow. If you take someone that may have a few connections that is also motivated by a lot of money, I think most anyone can be found if the desire is strong enough.

I know kidnapping feels like something that only happens on movies, but a spouse or child of a lottery winner could easily be someone's "get rich quick" scheme. With my uncommon last name, I would legitimately be afraid for my daughter if we were unable to remain anonymous.

 

[CloniesForLife]

I think concern for your loved ones' safety is a really valid point from that Reddit post.

It's pretty simple for an ordinary person to find a random citizen if you want. Our footprints are pretty easy to follow. If you take someone that may have a few connections that is also motivated by a lot of money, I think most anyone can be found if the desire is strong enough.

I know kidnapping feels like something that only happens on movies, but a spouse or child of a lottery winner could easily be someone's "get rich quick" scheme. With my uncommon last name, I would legitimately be afraid for my daughter if we were unable to remain anonymous.

Do other Uber wealthy people worry about this or is it just targeted at lottery winners since they didn't "earn it"

 

[NickTheGreat]

I think i've heard that there's 300 million combos of numbers and at $2 a ticket, you're at 600 million. I heard a podcast about a guy who tried to buy every combination of ticket and win the lotto that way. It was a logical nightmare, which I don't think actually worked out for well for him.

Fun in theory, though

 

[snowcraig2.0]

up to $1.1 Billion. $648.2 Million lump sum.

 

[bos]

Do other Uber wealthy people worry about this or is it just targeted at lottery winners since they didn't "earn it"

I’d imagine the Uber wealthy have some concern but they aren’t noobs to the lifestyle and have security measures in place. Most of us new to it would struggle to have any of that going before hand and would have to learn on the fly.

 

[coolerifyoudid]

Do other Uber wealthy people worry about this or is it just targeted at lottery winners since they didn't "earn it"

I would assume there are some extra security measures in place for those with considerable wealth, especially with younger kids, but maybe I'm just being paranoid about it from too many movies and news stories over the years.

Since I'm more likely to drive for Uber than be Uber wealthy, I doubt it will ever be a concern of mine.

 

[SCNCY]

I’d imagine the Uber wealthy have some concern but they aren’t noobs to the lifestyle and have security measures in place. Most of us new to it would struggle to have any of that going before hand and would have to learn on the fly.

Agree, I think the shock and short time frame of getting that wealth is what gets most people.

 

[WIBadger]

I would assume there are some extra security measures in place for those with considerable wealth, especially with younger kids, but maybe I'm just being paranoid about it from too many movies and news stories over the years.

Since I'm more likely to drive for Uber than be Uber wealthy, I doubt it will ever be a concern of mine.

I thought I read once that some people do actually but kidnapping insurance, but I don’t know how common that is