Be Careful if You Win the Lottery: Four Steps To Protect Your New Asset
By Gerri Green

It’s everyone’s dream to win the lottery, but you have to take some very important steps to keep that dream before claiming your winnings.

1st Step
DO NOT TELL ANYONE This is your first and most important step. Do not tell your children, not your parents, not your closest friend. Obviously, if you are married, you will have to inform your spouse. Why do I emphasize not telling anyone? Because it will not take long for your phone to start ringing incessantly and people knocking at your door. They will all be begging for money and they will all have heart-breaking stories. In fact, several years ago, someone tried to kidnap a lottery winner. Therefore, until you have in place a team of financial professionals, mums the word.

2nd Step
The 2nd step is almost as important as the 1st. Print your name clearly on the back of the ticket-one name only and enter your address and signature. Make several copies of the ticket, both front and back. Keep the copies with you. Then go to your bank and rent a safe deposit box and put your ticket in the box.

3rd Step
The 3rd step is to find a tax attorney. This search will not be simple as most of us have never had a need for a tax attorney. If you have a general purpose attorney, ask him or her for a referral to a tax attorney. Make it clear that you want an attorney that specializes in tax law only. If you don’t have an attorney but have an accountant, ask him or her for a referral. Make sure your request is in confidence. Before you contact the tax attorney, go online to your state’s consumer protection agency and see if the attorney has any outstanding complaints or lawsuits against him/her. Also go to your state’s bar association and research if the attorney is in good standing with the bar association.

Contact the tax attorney by telephone, not email. Create a list of questions you want answered at the meeting. Your list should include the following:
• Should I/we form an LLC, an S Corporation or a C Corporation? All of these legal entities limit your liability in case someone sues you and they have positive tax consequences.
• Should I/we take the money in one lump sum or as an annuity?
• What is the best way to give some of the money to my children/parents/friends and how much?
• How much of my after tax winnings should I spend each year without depleting my principle? (This question may be better answered by a certified financial planner.)
• Could you refer me to a Fee-only Certified Financial Planner?

When you meet with tax attorney, take notes and if you can, take someone with you who you trust. Make sure you understand all the attorney’s answers. If you don’t feel satisfied with the attorney’s advice, get up and leave. You want someone who will have your best interests at heart. You need a top-notch team surrounding you as they will be working with you for a long time.

Remember all this preparation is before you contact the lottery authorities. You want to have all your financial and tax issues in place so you know exactly how you’re going to handle all that money.

4th Step
LEARN TO SAY NO. As you can imagine, you and your family’s life will change. Many lottery winners say they wish they had just done nothing for several months or more, just to get used to everything. Turn to your financial advisors to make informed decisions. You can afford it now. Change your phone number and make sure it is unlisted. Get a post office box for your mail. As I said in the beginning of this article, you will have relatives, friends, strangers, charities, political parties, etc. pressuring, threatening and manipulating you to get some of your money. Just tell them they have to talk to your financial advisors.

Now if you should ever win the lottery, you are well prepared to keep that dream solvent.
Good Luck!!