'Toughest thing' for lottery winners to do as Powerball reaches $1.4 billion
Legal experts have revealed the 'toughest thing' winners have do as the US lottery Powerball reaches $1.4billion.
The jackpot has risen to the life-changing figure before it is drawn on Saturday night. And financial experts have given some unexpected tips for the lucky winner.
It is the third largest prize in its history and any lump sum will be worth $614 million or an annuitized prize of $1.4 billion (£1.15billion)
But there are many pitfalls which can affect winners eager to spend their cash and experts have given their warnings about excessive spending, investing poorly and family members demanding money. Andrew Stoltmann, a Chicago-based lawyer who has represented several lottery winners, says being cruel to be kind is often the best thing to do.
He told CNBC: “Saying ‘no’ to family might be the toughest thing that lottery winners have to do. He then suggested other more mundane things they should do first rather than buying a yacht or a new luxury home. He says they should first:
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The jackpot has risen to a life-changing figure (Getty Images)Assemble a team of professionals
Stoltmann said: “Lottery winners historically are from lower socio-economic backgrounds. They don’t have the experience managing money or establishing the financial team.”
He suggested they should recruit a financial adviser, a tax professional and a legal representative.
Other suggestions he makes include:
Considering a ‘cooling off period’
He says the first thing they should do. is do nothing. He said: “My recommendation is to initially do nothing."
He reckons they have a “cooling off period” to make plans and weigh-up the pros and cons of their windfall. A full prize is offered up front to the winner, but an annuity provides one immediate payment, followed by 29 annual payouts which rise to 5% every year.
Money is an emotional thing and winners are advised to avoid making emotional decisions.
Powerball lottery tickets must be be snapped up before Saturday night (AFP via Getty Images)In September, the Powerball jackpot rose to an estimated $835million (£686 million) ahead of the next draw, becoming the largest-ever prize in the American lottery game's history.
It reached the huge sum after no tickets matched all six numbers drawn on Monday and, according to Powerball's website, the prize has an estimated cash value of $390.4million (£321million). There have been 29 consecutive drawings without a jackpot winner after a lucky player won $1.08billion (£822,650,000) in California in July.
Powerball is played in 45 states, Washington DC, Puerto Rico and the US Virgin Islands. Drawings are held Monday, Wednesday and Saturday at 10.59pm ET. Sales cut-off times vary by one to two hours before the drawing, depending on the selling jurisdiction.
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