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With a half-billion-dollar multistate lottery jackpot up for grabs, plenty of folks are fantasizing about how to spend the money. But doing it the right way – protecting your riches, your identity and your sanity – takes some thought and planning.

Making sure you don’t blow the nation’s largest-ever lottery jackpot within a few years means some advice is in order before the Mega Millions drawing Friday, especially if you’re really, really, really lucky.

With a $640 million multistate lottery jackpot up for grabs, plenty of folks are fantasizing about how to spend the money

With a $640 million multistate lottery jackpot up for grabs, plenty of folks are fantasizing about how to spend the money

 

Q: What do I do with the ticket?

A: Before anything else, sign the back of the ticket. That will stop anyone else from claiming your riches if you happen to drop it while you’re jumping up and down. Then make a photocopy and lock it in a safe. At the very least, keep it where you know it’s protected. A Rhode Island woman who won a $336 million Powerball jackpot in February hid the ticket in her Bible before going out to breakfast.

Q: What next?

A: Relax; breathe; take time to think about your next move. Don’t do anything you’ll regret for the next 30 years, like calling your best friend or every one of your aunts, uncles and cousins. It doesn’t take long to be overwhelmed by long-lost friends, charities and churches wanting to share your good fortune. You’ve waited a lifetime to hit the jackpot; you can wait a few days before going on a spending spree.

Q: So whom should I tell first?

A: Contacting a lawyer and a financial planner would be a lot wiser than updating your Facebook status. Make sure it’s someone you can trust and, it’s hoped, dealt with before. If you don’t have anyone in mind, ask a close family member or friend. Oklahoma City attorney Richard Craig, whose firm has represented a handful of lottery winners, says it’s essential to assemble a team of financial managers, tax experts, accountants and bankers.

Q: Remind me, how much did I win?

A: As it stands now, the Mega Millions will pay out a lump sum of $359 million before taxes. The annual payments over 26 years will amount to just over $19 million before taxes.

Q: How much will I pay in taxes?

A: This partly depends on where you live. Federal tax is 25%; then there’s your state income tax. In Ohio, for example, that’s another 6%. And you might need to pay a city tax depending on the local tax rules. So count on about a third of your winnings going to the government.

Q: Should I take the cash payout or annual payments?

A: This is the big question, and most people think taking the lump sum is the smart move. That’s not always the case. First, spreading the payments out protects you from becoming the latest lottery winner who’s lost all their money. Don McNay, author of the book “Son of a Son of a Gambler: Winners, Losers and What to Do When You Win the Lottery”, says nine out of 10 winners go through their money in five years or less. “It’s too much, too fast,” he says. “Nobody is around them putting the brakes on the situation.”

Q: But what if I’m good at managing the money?

A: Invested properly, the lump sum option can be a good choice. There’s more planning that you can use to reduce estate taxes and other financial incentives. Others, though, say that with annual payments, you are taxed on the money only as it comes in, so that will put you in a lower tax bracket rather than taking a big hit on getting a lump sum. And you still can shelter the money in tax-free investments and take advantage of tax law changes over the years.

Q: Should I try to shield my identity?

A: Absolutely. This will protect you from people who want you to invest in their business scheme or those who need cash in an emergency. Lottery winners are besieged by dozens of people and charities looking for help. “There are people who do that for a living. Unless you understand that, you can become a victim very quickly,” says Steve Thornton, an attorney in Bowling Green, Kentucky, who has represented two jackpot winners.

Q: So how can I protect myself?

A: Again, it somewhat depends on where you live. In Ohio, you can form a trust to manage the money and keep your winnings a secret. In other states, you can form a trust but still be discovered through public records. And a few states require you to show up and receive your oversized check in front of a bunch of cameras, making it impossible to stay anonymous. Steve Thornton set up a corporation in the late 1990s to protect the identity of a client in Kentucky who won $11 million. “No one had done this before, and there were legal questions about whether a corporation can win,” he says. “We were able to hide their names.”

Q: Is it OK to splurge a little?

A: Sure, it’s why you bought a ticket, right? “Get it out of your system, but don’t go overboard,” Don McNay says. But remember that if there’s a new Mercedes-Benz in the driveway, your neighbors will probably be able to figure out who won the jackpot.

Q: How much should I help my family and others?

A: It’s certainly a natural desire to help relatives in need and take care of future generations. But use extreme caution when giving out your money. Jack Whittaker, a West Virginia contractor who won a nearly $315 million Powerball jackpot in 2002, quickly fell victim to scandals, lawsuits and personal setbacks. His foundation spent $23 million building two churches, and he’s been involved in hundreds of legal actions. “If you win, just don’t give any money away, because the more money you give away, the more they want you to give. And once you start giving it away, everybody will label you an easy touch and be right there after you. And that includes everybody,” Jack Whittaker said five years ago.

 

 

 

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Only two of the three holders of the $640 million Mega Millions jackpot have collected their lottery prize, as officials urge them to do so.

The player who bought the ticket in Kansas has still not contacted officials, as two other winners from Illinois and Maryland celebrate their win.

Each winner is in line to receive $154 million as a lump sum.

A video producer, Tom Kreft, named by Wall Street Journal reporter Lauren Schuker as the Maryland winner today denied that he had won.

Maryland does not require lottery winners to be identified so the Mega Millions winner can claim the prize anonymously. The store will receive a $100,000 bonus for selling the winning ticket, which was purchased on the night of the draw.

One winning ticket was purchased in northeast Kansas, but no other information would be released by the Kansas Lottery until the winner comes forward, spokeswoman Cara S. Sloan-Ramos said.

No winner had contacted the agency by Saturday morning, Kansas Lottery Director Dennis Wilson said. “We sure want to meet the winner, but we want to tell them, sign the back of the ticket and secure it.”

Only two of the three holders of the $640 million Mega Millions jackpot have collected their lotery prize

Only two of the three holders of the $640 million Mega Millions jackpot have collected their lotery prize

Kansas law also allows lottery winners to remain anonymous, though lottery winners in Illinois are identified.

Mike Lang, spokesman for the Illinois Lottery, said his state’s winning ticket was sold in the small town of Red Bud, near St. Louis. The winner used a quick pick to select the numbers, he said.

“It’s just unbelievable. Everyone is wanting to know who it is,” said Denise Metzger, manager of the Motomart where Illinois’ winning ticket was sold.

“All day yesterday I was selling tickets and I was hoping someone from Red Bud would win. Never in my wildest dreams did I think this. I’m just tickled pink.”

While only three people hit the big jackpot with all six numbers, at least 42 tickets matched five of six numbers – 29 in California, 12 in Illinois and one in Kansas, according to lottery officials.

California Lottery Commission spokesman Alex Traverso said the payout on those tickets will be about $125,000 to $130,000.

The estimated jackpot dwarfs the previous $390 million record, which was split in 2007 by two winners who bought tickets in Georgia and New Jersey.

Americans spent nearly $1.5 billion for a chance to hit the jackpot, which amounts to a $462 million lump sum and around $347 million after tax.

The average American was more likely to be killed in a mass murder than win the jackpot. Fifty three times more likely, in fact. Dying in an avalanche sometime in the next decade is 160 times more likely than winning.

Unfortunately, not all Americans had a chance of winning the biggest jackpot in history as Mega Millions is only played in 42 states.

However residents in other non-playing states can purchase tickets in the states they are sold in as there is no residency requirement to play and win.

Even non U.S. citizens could have played, but the tax they would have to pay on winnings is different.

At 173-million-to-one, the odds of scoring the largest lottery win in US history are so long they’re literally unfathomable. And mathematicians say there’s no way to improve them – except by buying more tickets.

In theory, with such a massive jackpot would be possible to “invest” $173 million to play every number combination and then rake in $560 million in winnings.

That is, at $1 a ticket, and 173 million possible combinations, you could play every number and increase the odds of winning to 100% and rake in more than 320 percent profit. (Though, that begs the question: “If you’ve got $173 million laying around, why are you playing the lottery?”)

The three winning tickets are less surprising as there was only a 3% chance there is only one winning ticket.