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Biggest lottery-winner goofs

By Judy Martel · Bankrate.com
Friday, June 8, 2012
Posted: 10 am ET

There are many blunders that can come with sudden wealth, but the aftermath of the largest single payout in the Mega Millions jackpot illustrates one of the biggest screw-ups lottery winners make: not safeguarding the ticket.

It may seem an obvious precaution, but in April, a 37-year-old woman came forward, claiming to be one of the three winners of the record $656 million Mega Millions payout, but was unable to produce the ticket. Sorry, no dice. The ticket has to be present for you to win. Let's look at a few other examples of what lottery winners do wrong, provided by Frank Fantozzi, CEO of Planned Financial Services, and published in Investment News.

They change their lifestyle too much. Rocketing yourself into the stratosphere of the uber-rich may seem fun for a while, but you may later regret losing touch with the common folk who used to be your friends and family.

They don't have a financial plan. Having a road map is essential. Otherwise, it's too easy to spend as if you have a bottomless pit. You don't. It’s a good reason lottery winners don't come forward immediately; they're developing a financial strategy first.

They think they're getting all the money. Up to 50 percent will go toward taxes, so before commissioning the yacht, make sure you know how much you really have.

They don't get professional advice. Attorneys and accountants can save you a lot in taxes and help you design a plan that will not leave you wondering where all the money went after a few years.

They don't follow their own instincts. This may sound counterintuitive to getting professional advice, but it's not. People will come out of the woodwork to offer help, so make sure you choose wisely and find a team that is prudent with an immediate plan as well as one for the long term.

They make stupid investments. See the tip above: Everyone will have a "hot" investment tip. Don't fall for it.

Do you play the lottery? What's your dream if you win?

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103 Comments
Rob
June 23, 2012 at 11:03 pm

Haven't read all the comments, but enough to say....#1... :casting lots" is gambling, although not in our sense of the term, but it can be applied. "Cleromancy" (or casting of lots) is like rolling dice to see an outcome. (If you bet money on it, it becomes gambling.) And no, there is no prohibition on gambling in the Bible. (The negative application comes from the casting of lots to get Jesus' clothing....get a grip.)

Secondly to James Duncan.... the annuity payment is a mistake and your info is all wrong. You will only pay capital gains taxes on the long term (annuity) payment. Lump sum payments are the better bet. You pay federal income tax (25% + 10% = 35%) and state income tax if applicable. Any other taxes arise out of your own investments and dividends. Other costs are up to the winner....shop around for reasonable advisers. Mine gets an hourly rate, not a percentage. Get your facts straight.

Mitch
June 18, 2012 at 6:05 pm

Actually, John, casting lots is not the same as gambling -- there was no money involved, and the "winner" didn't take anything away from the "losers." Please study your Bible before making such remarks.

Mitch
June 18, 2012 at 6:05 pm

Actually, John, casting lots is not the same as gambling -- there was no money involved, and the "winner" didn't take anything away from the "losers." Please study your Bible before making such ignorant remarks.

Steven
June 18, 2012 at 1:47 pm

Uncle Sam would have to get in line BEHIND the doctor treating my heart attack. Once in a while, I toss a couple of $ itno an office pool, but I never buy lottery tikets.

james Duncan
June 17, 2012 at 9:43 pm

The best time to do is to get the 30 year pay out.
The reasons are.
First, as the artical mention you loss 50% of the amount if you take the lump some. Then you loss another 15% in capital gains taxes. no matter what your so call expert finical advisor says you will pay 15% in campital tax.
so if you have your expert finical advisor will have to make that 65% up with your investments then make more for you to live off from the rest of your life.
Second, by taking the 30 year plan. You can leave it in your will to others.
Third, and most important it is insured, so even you want loss it

Mike
June 17, 2012 at 9:01 am

I believe that playign the lottery is not different than investing in the stock marke or mutual funds. You invest with the hope that the value of stock increases and you can sell to reap the profit. This is not a guaranteed win-win, just as you invest in a lottery tickey and hope it wins. Thus, I think it is just fine to invest in an gamble, if you are wise with your money. Just don't be an idiot, money is too hard to make to throw away.

Kevin
June 15, 2012 at 12:19 pm

@Joan: And that comment serves what purpose?

Joan Gagliano
June 15, 2012 at 11:40 am

Man evolved,then he created god. Wake the hell up.

John
June 15, 2012 at 11:24 am

Take the money and run! Run to a place where a million will last a while.

John
June 15, 2012 at 11:07 am

God is not opposed to gambling, Susan. No where in the Bible does it say that. In fact, many times they drew lots to decide their fates, which is gambling.

Just like any thing we do, gambling becomes a sin when we put it before God.