Lottery winner who scooped £176,000 only took home £126,000 due to unknown rule
A lucky woman scored a life-changing jackpot, but her doubting husband wasn't convinced. In the end, though, she only took home just over half of her $224,000 (£176,000) win due to a little-known win.
Ashley Smith, from Mason County, Kentucky, decided to play an online lottery game one night last week. The mum of two said: "I was just waiting for the kids to go to sleep and decided to play."
Next thing she knew, the Bank Buster online jackpot popped up on her screen. When she saw it, Ashley jumped out of bed and screamed. "I thought she was faking", said Ashley's husband in a press release. "I called my mum, and she couldn't believe it either."
The next morning, the whole family piled into their care and drove to the Kentucky Lottery headquarters. There, they cashed in a cheque for $160,409 (£126,200), after taxes.
They took the lump-sum payment option, meaning they took home just over half of their jackpot. The money came at just the right time, as Ashley had just totalled her car.
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Ashley had been playing an online lottery game when she hit the jackpot (AFP via Getty Images)"And I hit a deer this morning," her husband said. "I had to go home and switch trucks to get to work."
The family are planning to put the money to good use, and have decided to spend the majority of their winnings on bills.
Lottery winners have two options when it comes to collecting their winnings. They can either collect them in a lump-sum or save on taxes and choose annuity payments for the next 29 years.
There are pros and cons to collecting winnings in annuity payments. While they can help lucky players avoid overspending their winnings and becoming bankrupt, they do also mean having to remember to claim your winnings every year when you file taxes.
Most financial advisors recommend taking the pay cut, choosing a lump sum. However, it's wise to have a team of experts by your side to help you navigate your new lifestyle.
A good long-term financial planner, a lawyer and an accountant to help wade through complex tax filing are a good trio to have on your team. However, some financial advisors say annuity payments are underrated.
Legal expert Andrew Stoltmann points out that one-third of winners go bankrupt. He said at least 90 per cent of lottery winners take the lump-sum payment which he says is the first, and worst, mistake a winner could make.
Speaking to the US Sun, he said a lot of winners don't have the "infrastructure" to handle such large quantities of cash. He said it has a lot to do with financial education and the socioeconomic background of lottery winners - which he says tends to be lower.
"So they then take this massive sum of money and they just don't really know what to do with that," he told the outlet.
But, he said, those who take the annual payments can make mistakes and not lose the entirety of their winnings in one go.
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