Imagine starting the new year and discovering you won the $840 Million Powerball jackpot! Well, that’s what happened to the lucky winner in Michigan. Despite the odds of winning (1 in 290 million to be exact), this person won big time!
According to the Michigan Lottery, the cash payout is $425 million. The winner can take the cash payout or annual annuity payments, although they haven’t disclosed the payment terms yet. In the past, typical Powerball annuity payments were distributed for 29 years. Most winners choose the lump sum payout, but no right or wrong decision exists.
Although I do not know who the winner is, I thought I would share some advice. (And hey, if you do know who this new millionaire is, please pass my thoughts along!)
Don’t make any decisions for at least a month, including quitting your current job. A pause will provide time to catch your breath, think about a long-term game plan, and determine the next steps, hopefully with people you trust and value.
Formulate your professional team
Much like a general manager of a sports team, you need a professional team, which would consist of an attorney, certified public accountant (CPA), financial advisor, and insurance consultant. You might hire several of each, so be prepared to interview at least three to four firms in all three areas. Each of these professionals has a different specialty that will be required to manage your full financial picture:
- Attorney: Advise on establishing estate planning documents like wills, trusts, financial and medical powers of attorney, and language suitable for your situation and establish legal structures such as LLCs, where appropriate.
- CPA: Advise on personal tax issues, prepare individual income tax returns, and provide ongoing tax advice (gifting, charitable donations, etc).
- Financial Advisor: Advise on financial planning issues, including developing a long-term income plan and establishing a prudent investment portfolio, considering your risk profile, initial asset allocation, implementation , ongoing monitoring, managing risk, budgeting, etc. An advisor can also help you decide if it makes sense to take the lump sum or annual annuity payments.
- Insurance consultant: Where necessary, advise on personal liability protection, umbrella coverage, and other areas where you might be exposed to lawsuits.
Your team should work in concert, always keeping your personal situation and goals in mind. Meeting with them separately or in a group regularly, is desirable.
Beware of unexpected requests
You may receive unwanted requests from strangers, friends, relatives and charitable organizations for donations or business opportunities. You may feel overwhelmed by these requests but try to stay focused and respond if you feel the need. Obviously, you’ll want to ignore requests from total strangers.
Live a normal life
It might not be easy but try to stay true to who you are and your values. Money can’t buy happiness, but it certainly can make things easier.
Best of luck!