South Carolina officials say that a winning ticket for the $1.6 billion Mega Millions jackpot was sold in the state. South Carolina is one of just 7 states where the lottery winner is allowed to remain anonymous.
Whether the winner comes forward publicly remains to be seen. But Virginia Tech finance professor Derek Klock offers some timely advice for the lucky ticket holder:
Depending on your state of residency you have from 180 days to one year to claim the jackpot.
- Tell no one – yet. Family, friends, and everyone else will find out soon enough.
No Social Media. No traditional media. No interviews (without legal counsel – see #5 below). Be prudent in what you say even to family members; consider that children might not understand the ramification of the off-handed “Mom won the lottery.”
- Get a bank safe deposit box – or similar.
Make a plan to store your winning ticket in a safe location until you are ready to come forward. Remember that the location(s) where winning ticket(s) are sold are made public nearly immediately.
- Wait for a bit before making any financial changes
Just like many other significant life events wait to make any decisions until after your head is no longer spinning. This will be a shocking event. Literally life-changing. Just like other BIG changes it will take time to adjust to a new normal.
- Seek legal advice
Ownership is important to consider. Having prudent legal advice will assist with asset titling, trust creation, and other gifting issues. Find a lawyer with specialized knowledge in estate planning and other issues related to extreme wealth. This will take time, but will be well worth the cost.
- Seek financial advice
Winners face several important financial decisions, but the first one will be the matter of “annuity” vs. “lump-sum” payout and the associated very significant tax implications. Seeking out a financial planner and/or state-licensed accountant with specific skill in financial transitions and extreme wealth will be instrumental to both short-term and long-term success. Visit http://www.letsmakeaplan.org to find a CFP® Professional to help you.
- Seek personal support
Winner’s financial lives WILL change and therefore winners must find advocates for both the financial changes but potentially the emotional changes as well. The old adage is the money is relative – the more money you have the more relatives find you. Be prepared. Learn to say “no,” or at least “not yet.” Beware of scams, even from loved-ones.
- Contact the Lottery
But read the FAQs first. See http://www.megamillions.com/faqs for available information.
- Don’t Panic. Enjoy!
Derek Klock, CFP®, is an Associate Professor of Practice of Finance in the Virginia Tech Pamplin School of Business. In this capacity he also serves as the Coordinator for the CFP Board Registered Program in the Finance Department. His teaching and advising contributions have been recognized multiple times with various University-level awards and certificates. He frequently guest lectures and makes presentations to University organizations concerning personal finance. In his time away from the University, Mr. Klock has worked on a variety of books related to personal finance including two “capstone” course texts.