Occasionally, a chance comes along, although a 1 in 20 million shot, is one worth taking. For a few $, £, €, ¥ or whatever your local currency may be, you can change your life and those around you for generations. It may sound like a pipe dream, but with the current amounts of $470 million and $282 million for Powerball and Mega Millions respectively, why wouldn’t you take that chance. On Tuesday October 9, 2018 the Powerball will be drawn and on Wednesday October 10, 2018 the Mega Millions will be drawn.
What is the take on each of these if you win?
If you happen to win either of these, my suggestion would be to go under-ground for a few day or weeks. Your prize is not going anywhere, and it would behoove you to step back and try to wrap your head around this mess. I say “mess” because once you get your sanity back, your whole world will be turned upside down and inside out. Historically speaking, those who win suffer the cruel joke of “be careful for what you wish for”, and in many cases take a terrible fall in both their finances and overall well-being. This has been discussed in a previous article but must be brought up again to remind those of the pitfalls of winning.
The take for each of these if you decide on the lump sum is approximately $200 million for the Powerball and $122 million for the Mega Millions. These two sums reflect a one-time payment which is discounted from the original amount and includes the deduction for Federal Taxes. Your State and Local tax could reduce these amounts a bit more, but nothing of any consequence.
What should you do if you win?
After you emerge from hiding, my advice would be to contact a lawyer, and keep your secret to yourself and/or those who need to know. Going on TV and announcing to the world that you are now a multi-millionaire is only self-serving and does you no good! Doing so makes you a “target” for every scammer, moocher, hanger on, and anyone looking to make a quick buck, and these are just your relatives. Hire a credible lawyer and lay low until you figure out what your next step will be.
Your next should be to hire a professional financial planner. There are many who claim to be financial planners, but these are the guys who “plan” for professional athletes and celebrities and end up leaving them broke and in-debt. It’s actually very sad and happens more times than not. Just as you would hire a top-notch surgeon if you needed brain surgery, there is no excuse not to hire a reputable and top-notch firm.
My suggestion would be to hire only reputable firms such as Goldman Sachs, Merrill Lynch, Morgan Stanley, JP Morgan and others. We are not talking about your 401K but tens of millions of dollars. These firms have years and years of experience and have reputations to boot. Also, if you do get “taken” then you have recourse because of your advisor’s association with the firm. In other words, you can always sue the if need be (see below comment). This is NOT a job for your sister’s cousin or Jimmy at your local bank branch.
I’m sure many of you recall the Bernie Madoff Ponzi scheme and the billions of dollars he bilked from his clients. Many of these individuals were close friends who trusted Mr. Madoff do give them returns above and beyond what is credible. In other words, they were greedy, which is not a crime, and let their common sense and financial acumen take a vacation. Because Mr. Madoff had his own firm, there was no way his clients could recover their lost money. It’s a sad and almost disgusting story which happens all the time to those who are just naive or want to believe they are doing the right thing. These individuals and groups are experts in stealing money and if you slap your face on TV with one of those oversized checks, you’ll be a target far and wide.
Set up a Trust for your Children and future generations
Think about what you could do with the money and how many lives you could change for the better. For example, with $200 million and a return of 5% (which is conservative) you would make $10 million per year. 99.999% of us would have no idea what to do with that kind of money let alone $200 million. Forget the idiotic purchases such as a plane, yacht, houses around the world, all of which you didn’t need before and still don’t need. Of course, you’re going to want to spend some money and get crazy, but with that amount and earning $10 million a year on interest, you would have to be a complete Neanderthal to blow all of that, although it has happened.
A Trust or something along those lines would ensure that money is set aside which only your children and/or grandchildren can access at a specific age. This guarantees that no matter how much you screw up, at least your offspring will not lose out because of your stupidity. I say this tongue in cheek, but there is not one of us out there who would not become completely overwhelmed with that kind of money.
What you’re trying to do is to minimize any complete misadventures and guarantee, through a financial advisor, that your finances are in order. They can’t keep you from spending your money, but they will hopefully give you sound advice which can ensure an enjoyable life, and not one filled with regret or worse. Another option is that you take the yearly payments which would at least keep you from spending the lump sum, but remember, if you die then that’s it as the money/payments are none transferable. But we will save this for another article if no one wins on October 9th or 10th.
