What to do if you ACTUALLY win the lottery (& how to not lose it all)
Today I’m going to teach you what to do if you ever win the lottery, a massive inheritance, or any other huge infusion of cash.
1/3rd of lottery winners go bankrupt and I’ll be damned if I’m going to let that happen to you. So just listen and do what I say, please.
What to do if you win the lottery RULE #1: Shut The Hell Up
Shut your mouth right now, seriously.
Do not tell anyone.
Do not tell your boss, your loud-mouthed cousin with the mustache, or even your kids.
You can tell 1 person:
And then tell them this:
Shut The Hell Up.
This is your new motto for the next 6 months.
Lotto winner Mavis Wanczyk (who won the 758.7 million Powerball) did not follow this advice and decided to tell her boss, the press, and therefore the whole world.
Immediately after, random people came out of the woodwork and the police have had to watch her house.
Here are the scariest people who will try to find you, in descending order:
- Kidnappers who will hold you for ransom
- Scammy “wealth managers” who will bleed you dry
- Uncle Joe, who wants you to invest in his dumb idea for a themed bar
DON’T DO IT. You can always choose to reveal your new wealth later once you have the proper precautions set up. But once the genie is out of the bottle, you can never put it back in. Be quiet and tell no one for now.
What to do if you win the lottery RULE #2: You have 2 new best friends: your lawyer and your financial advisor
I get it, you don’t have a lawyer.
Now you do.
You call up the biggest, most white-collar law firm in the country (just google “highest paid law firm”) and tell them you want a lawyer to help with taxes and trusts.
When they ask why, tell them “I’ve recently come into some money and I’d like someone to coordinate my affairs.” They will charge you $500 or $600/hour. Pay it, happily.
This lawyer is now your conduit with the outside world.
Who contacts the lottery to tell them about the winning ticket?
Not you (see Rule #1). Your lawyer will handle that.
Who do they make the check out to? Is it to you?
Oh hell no. Your lawyer will set up an anonymous trust for you.
Your other new best friend is your financial advisor.
Considering I hate most financial advisors and most of you don’t need one (see page 153 of my book for why), this might seem unusual.
However, you just received millions of dollars out of the blue. It’s worth a few thousand bucks to get set up.
Go to napfa.org to find a fee-only financial advisor who can guide you through the next few months of setting up your new financial systems.
I have a list of questions to ask financial advisors in my book and signs to watch out for.
The one thing you want to look out for — the one sign you’ve chosen a salesperson, not a real advisor — is if they take a percentage of your assets.
DO NOT sign up with some nutty wealth advisor who sweet talks you with a beautiful British accent.
Just follow my directions from the book and your advisor can help you with the rest.
What to do if you win the lottery RULE #3: Do not change anything (with 3 exceptions)
You know all those movies about how a group of criminals gets away with a heist, but one idiot gets the entire crew caught because he goes out the next day and buys a fur coat and a $200,000 car? Do not do that.
For 6 months, don’t change anything.
No new car, no extravagant trips, don’t quit your job. Y
our lawyer and financial advisor will help you get set up.
This falls under Advice Everyone Says But Nobody Takes:
When someone dies or you get a huge amount of sudden money, do not change anything for 6 months.
If you really need to quit your job, when people ask what you’re doing now, your line is, “I’m doing some consulting.”
However, if you were a cashier at 7-11, I’m not sure if people are going to believe you’re a consultant. Anyway, your call.
I know most of you won’t follow this advice, so I came up with a list of acceptable things to spend money on:
- Extra guac at Chipotle
- Taco Bell Mexican Pizza
- I also hereby authorize you to buy every product from iwillteachyoutoberich.com/products
After 6 months? Just don’t spend it all in one place.
Frequently Asked Questions:
Do you pay taxes on lottery winnings?
US lottery taxes differ from other countries because winnings can consider taxable income for both federal and state taxes. Unfortunately, that means the government gets to claim 24% of your winnings right off the bat. On top of the federal tax deposit, you may also be required to pay local withholding taxes.
How much lottery money can you win before you have to report it to the IRS?
As a rule of thumb, if you receive $600 or more in gambling winnings, the payer is required to issue you a Form W-2G. If you have won more than $5,000, the payer may be required to withhold 28% of the proceeds for Federal income tax.