what to buy if you win the lottery

10 Things To Do When You Win The Lottery

Gallery: 10 Steps To Take When You Win A Lottery Jackpot

Editor’s note: This post was updated on January 12th, 2016, to reflect the current $1.5 billion Powerball jackpot and the 2016 lifetime exemption from estate and gift taxes.

The jackpot for tomorrow’s Powerball drawing has hit $1.5 billion. If you win it, you won’t ever have to worry about money again–right?

With good money management you–and your heirs–could live handsomely for many, many years. But from the moment that you claim that prize, you will be descended upon by vultures who want a hefty helping of those winnings. And if you didn’t have smart money habits up until now, you could easily turn out to be your own worst enemy by quickly squandering the fortune. (See my post, “Thieves And Forgers Rush In Where Big Spenders Dare To Tread.”)

The first precautionary step you should take between now and the drawing is to sign the back of the ticket, says Carolyn Hapeman, a spokeswoman for The New York Lottery. A lottery ticket is a bearer instrument, she explains, meaning that whoever signs the ticket and presents a photo ID can claim the prize. So if you haven’t signed the ticket and it blows out of your hand while you are waiting for a bus, or if you show it to a buddy in a bar and accidentally leave it on the counter, you’ve lost the loot.

Here are some steps to help you steer clear of additional risks. Most of them work well for other windfalls too–for example with sudden wealth that comes from an inheritance or the sale of a business.

1. Remain anonymous if your state rules permit it. Once people know you’re suddenly wealthy, you’ll be badgered by requests for handouts from everyone from charities to long-lost friends and relatives–not to mention all the financial “experts” who will be vying for your business. So check state rules to see whether you can dodge them all by remaining anonymous.

Rules on winner publicity vary by state. In New York, for example, winners’ names are a public record. Elsewhere it may be possible to maintain your anonymity by setting up a trust or limited liability company to receive the winnings, says Beth C. Gamel, a CPA with Pillar Financial Advisors in Waltham, MA. A client of Gamel’s who won a past lottery did that, and had a lawyer claim the prize on behalf of of the trust. In South Carolina, it’s also possible to remain anonymous.

Depending on where you bought the ticket, prize winners have between 180 days and one year from the date of the drawing to claim their prize. So find out what the state rules are and plot a course.

2. See a tax pro before you cash the ticket. You have the choice between taking the prize money all at once or having it paid out in 30 installments over 29 years in the form of an annuity. With a lump sum payment, you must immediately pay tax on the entire amount, says Michael A. Kirsh, a financial planner in New York. With an annuity, you are taxed only as you receive the payments. People who have trouble controlling their spending might prefer the discipline of receiving the money as an annuity. But this payout form has other drawbacks, Kirsh notes. You will want to compare the effective yield of the annuity with what you could earn by taking the money as a lump sum, paying the taxes and investing the proceeds.

Another issue to consider is whether taking an annuity will leave your family without the cash they need to pay estate tax if you die before the 30-year period is up, Kirsh says. In such situations people typically buy life insurance policies to cover the estate tax bill. (Powerball also says in its FAQs that it will cash out an annuity prize for an estate.)

You have 60 days from the time you claim your lottery prize to weigh the pros and cons. During this time, ask advisors to crunch the numbers and help you decide which type of payment suits you best.

3. Avoid sudden lifestyle changes. For the first six months after you win the lottery, don’t do anything drastic, like quitting your job, buying a home in Europe, trading up for a luxury car or building a collection of Birkin handbags. Meanwhile, set aside a fixed amount for splurgesit’s only natural to want to celebrate your windfall.

Save the big purchases for later. For example, you could rent a house in the neighborhood where you were thinking of moving, before you make any commitments, says Guerdon Ely, a financial planner in Chico, Calif. If you need a new car, buy a budget model for now.

4. Pay off all your debts. As I wrote in my post, “The Best Investment Advice I Ever Received,” there is no better investment than paying off debts. Whether it is credit card debt or a mortgage, your rate of return equals the interest rate on the loan. With today’s abysmal yields on relatively secure investments like CDs and Treasurys, that’s especially true. When you’ve paid down a dollar of debt, that’s a dollar you no longer owe. When you invest a dollar, you can’t be sure whether it will grow or shrink.

5. Assemble a team of legal and financial advisers. In situations like this it’s very hard to know “who’s trying to help you and who’s trying to use you,” says Ely. Rather than signing on to a group of advisors that someone else has put together, he recommends handpicking your own lawyer, accountant and investment advisor, and requiring them to work together.

Carefully vet each advisor before discussing your situation. Check broker records at the Financial Industry Regulatory Authority. For attorneys and insurance agents, see whether there have been any complaints filed with state disciplinary authorities.

If you live in a small community and don’t want lawyers there to know your business, seek out a professional in the nearest large city. Names can be found on, the nationwide lawyers’ directory that you can search by location and area of practice, and on the Web site of the American College of Trust and Estate Counsel, a group of trust and estate lawyers.

In effect, the team you put together will function as your board of directors, Ely says. You can start by having a fee-only advisor put together a long-term financial plan and running it by the group for comment. Once you’ve decided on a plan, they can provide checks and balances on each other. You can ask one of them to serve as quarterback, coordinating the group effort. That person can also play the “bad guy,” declining requests from people or organizations for gifts that you don’t want to make.

6. Invest prudently. Ely recommends putting the money in safe, short-term investments and not even touching it for the first six months. Then ask your advisors is to put together an investment portfolio divided half-and-half between equities (such as stocks) and fixed income (like bonds). Don’t fall for investments that you don’t understand or that sound too good to be true.

7. Live within a budget. Especially if you’re not accustomed to having a lot of money, it may take some discipline to preserve your winnings and not go on a wild spending spree. One way to restrain yourself is to only spend income–not principal. Especially in today’s investment world, “It takes a lot of principal to generate income and once you start spending principal, the principal quickly dissipates,” says Dennis I. Belcher, a lawyer with McGuireWoods in Richmond VA.

8. Take steps to protect assets. People who are worth a lot of money need to guard against losing assets to creditors. They include everyone from disgruntled spouses and ex-spouses to people who win lawsuits against you. If people think you have deep pockets they may look for reasons to sue. “If you win the Powerball, everyone’s going to be laying in front of your car so you can run over them so they can sue you,” says Ely. It’s prudent to ensure you are not an easy target.

The best defense is to erect a variety of roadblocks that make it difficult, if not impossible, for creditors to reach your money and property. These asset protection strategies, as they are called, can range from relying on state-law exemptions to creating multiple barriers through the use of trusts and family limited partnerships or limited liability companies. It may be possible to rely on a variety of strategies, either separately or in combination with each other.

9. Plan charitable gifts. You can offset one of the additional income from your lottery winnings (or the annuity payments if you take it that way) with an annual charitable deduction. For gifts to a public charity, donors are entitled to an income tax deduction for up to 50% of adjusted gross income (AGI) for cash contributions and up to 30% for donations of other appreciated assets held more than 12 months.

If you are take the $1.5 billion prize in a $930 million lump sum, and are unable to decide between now and year-end which charities to support, it may be worth considering a donor-advised fund. With a donor-advised fund, you can make a charitable donation this year and claim a federal tax deduction for your irrevocable contribution but postpone recommendations about which charities should receive grants from the account until some time in the future. If you don’t want to be badgered by requests, see my post, “How To Stay Anonymous When You Give To Charity.”

10. Review your estate plan. If your winnings have made you suddenly wealthy, this may be the first time that you need to plan for estate tax. The 2012 tax law offers more flexibility than ever before. As of 2016, each person has a $5.45 million limit on tax-free transfers, which can be applied during life, when you die or some combination of the two. So if you want to share some of your largess with family and friends, this is the ideal time to do that. For details, see my posts, “6 Ways To Give Family And Friends Financial Aid” and “Give Your Estate Plan a Checkup.”

I’m a financial journalist and author with experience as a lawyer, speaker and entrepreneur. As a senior editor at Forbes, I have covered the broad range of topics that…

I’m a financial journalist and author with experience as a lawyer, speaker and entrepreneur. As a senior editor at Forbes, I have covered the broad range of topics that affect boomers as they approach retirement age. That means everything from financial strategies and investment scams to working and living better as we get older. My most recent book is Estate Planning Smarts — a guide for baby boomers and their parents. If you have story ideas or tips, please e-mail me at: deborah [at] estateplanningsmarts [dot] com. You can also follow me on Twitter

If you didn’t have smart money habits up until now, you could quickly squander the fortune.

What Car to Buy If You Win the Lottery

Millions all over the world dream of bagging the lotto and finally being able to purchase a ride of their dreams. And to bring that desire closer, Lotteries are taking over the world.
In May alone, more than two earth-shaking jackpots were up for grabs. The 687.8 million dollar power-ball and the 1.5 billion mega lotto.

If you have that amount of cash at your disposal, what would you spend it on? A new gas guzzler is certainly one of them. Or even a fleet of powerful, gleaming gas guzzlers to blow your neighbor’s minds.

Of course, there are other important things like clothes, food, holidays and even condos that you could spend the free money on, but there is no better way than spending a fraction of the winnings on a car of your dreams.

Actually, exotic cars are one of the most jaw-dropping, exclusive, and sensible destinations for most lottery winners.

And with tons of supercars, hypercars, and sports cars to choose from, which vehicle or vehicles are worthy of a lottery winners’ newfound millionaire status? See what cars most lottery winners have bought:

2001 Honda Civic

Yes, you are a billionaire now. And the status comes with a lot of new factors, including walking around with a target on your head. For instance, everybody will be hitting you for some cash, whether it is somebody asking you to invest in his or her projects or somebody asking for a loan.

It can even be somebody who wants to separate you from your money forcefully. As such, sometimes it is better to cruise ‘undetected’ and what a better way to achieve that than in a 19-year-old Honda Civic?

The 2001 Honda was probably one of the most boring and unnoticeable of all Hondas.

There are only around a million of them globally, so chances of anyone paying attention to it are very low. And because you have some extra dollar bills, you can fine-tune it and add niceties such as updated suspensions, limited-slip differential, and supercharger.

Don’t make it too low. You might draw too much attention!

Lexus LC 500

There are countable units of this Japanese car, and that is what most lottery winners want. An extraordinary wheel that not only commands attention but also draws stares and delivers performance with its sleek and futuristic design.

The car cemented its place in the exotic sports car world, in Marvel’s superhero film, “Black Panther.” The machine excels at being a regular driver and handles almost every twist, including traffic lights or turn you encounter.

It is an attention-getter, stylish, and agile coupe. The stunner with an impeccable interior is fast, fun enough to drive, and pleasing to the eye. In fact, if looks could kill, this one would be serving several life terms.

Ferrari 488 GTB

The successor to the over and above classical Italia 458, the Ferrari 488 GTB is one of the finest luxury sports cars at the moment. The engine is an outright beast.
With a 3.9L twin-turbo V8, it is capable of producing up to 660 horsepower! Also, its 200 MP/H top speed is ideal for that speed maniac billionaire!

McLaren 720S

After conquering Formula One, British supercar manufacturer, McLaren, is now commanding local streets. A few years ago, the carmaker decided to use its advanced motorsports technology to start manufacturing cars that were street authorized and satisfied the craving of wannabe car racers.

And in less than eight years, the firm has stamped its authority with the McLaren 720S sports car, an amazingly fast wheel. Actually, it has a whopping 710 horsepower! Any street driver would be lucky to experience that.

The nose is designed to look like a white shark with each curve and line crafted for maximum performance. This is a car that not only whips competitors thoroughly in terms of speed, but it is also comfortable to drive for long hours and offers better rearward visibility.

Tesla Model S P100D

Currently, the Tesla S P100D is one of the trendiest cars at the country club. It will blow your mind away with its straight-line thrilling acceleration as well as whisper-quiet features.

Do you want a ludicrous speed and top range P100D so that you can fly away from stares and the paparazzi? This is the car for you! What’s more, a fully fitted P100D will take you back a mere $150,000, which means you can purchase several of them if you wish.

Aston Martin DB5

Let’s be honest, most of us admired James Bond at some point, and now that you have millions, you can mimic his exotic and high-class lifestyle at least for a while!
And what a better way to start it than with his set of wheels? For less than $300,000, you can have a unique Bond version of the Aston Martin.

But why not the original one in the Goldfinger film? After all, you have the chums. The regular Aston Martin DB5 currently goes for around $500,000. Just be sure to order for your coupe shaken, not stirred.

Also, note that the same car was last sold for $4.6 million in 2010. Good luck in finding your ideal ride.

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