Your Monetary Future: If lottery goals got here true | Gary Boatman

Did you ever dream of hitting a huge lottery jack pot? You might get a chance this week because the two inter-state lottery prizes total over a billion dollars.

What would you do if you won all this money? Have a plan. This planning really starts after you win because the odds are very small — actually 1 in almost 300,000,000.

Many times groups of co-workers have gone together to purchase pooled tickets that they plan to share if they win. This gives you more chances to win something. Of course, splitting with co-workers will reduce your share’s total value.

If you buy tickets this way, everyone should have a photo copy of all tickets the group owns. There have been court cases where someone claimed the winning ticket they had was an individual purchase and not part of the group’s holdings. This would likely end up in court.

If you win, the first thing you need to do is keep quiet. Winners are swamped with request from friends, relatives and people wanting help that they never knew before. Maybe turn off your social media accounts and tell very few people. Put together a team of a lawyer, an accountant and a financial planner. Many experts suggest signing the back of the ticket and making several copies to prove ownership if you are separated from your winning ticket.

Where you buy your winning ticket determines if you have to be named in public as the winner. In Pennsylvania, your identity will be revealed. If you bought the ticket in Ohio, you may be able to conceal your winnings. Do not make a special trip across state lines just for this purpose, but if you are there, that is a big benefit. If you win, it might be a good idea to go away on a trip for a week or two to let some of the news cycle die down.

Sometimes you can create a trust or family limited partnership to help protect your identity. People can still possibly identify you, but it takes more work. You need to make sure that you have an up-to-date estate plan because things can change quickly. Also, there cannot be any holes in your liability insurance because your odds of being sued will increase if you are thought to have deep pockets.

Taxes will claim a big share of your winnings. You will be in the maximum income tax rate of 37%. Pennsylvania used to exempt winning of residents if they purchased their tickets in state, but that changed in the new law. You will pay state taxes and the federal tax law limits your deductions for paying local taxes to $10,000.

You will have to make a decision whether to take a lump sum payment or receive your prize over 30 payments. The figure announced as the prize is taking your winning over time. It is bigger because the undistributed money will be earning during the 30 years.

Someone who is not good with money and will spend everything might need to not have total access. There have been a number of reported cases where winners won millions of dollars and were bankrupt a few years later.

If you can control spending and have a good financial team, you can often earn more by taking the reduced lump sum and investing. With this size of investments your asset allocation would include many things that a normal citizen does not need to consider.

As with all gambling, do not spend more buying tickets than you can afford to lose. Buying tickets is not an investment, it is a way to help senior citizens and have a very small chance to have a different life. Remember, 1 in 300,000,000! Good luck anyways.

Your Financial Future is written by certified financial planner Gary W. Boatman, MBA and CFP, who also wrote the book, “Your Financial Compass: Safe Passage Through The Turbulent Waters of Taxes, Income Planning and Market Volatility.” If there is an area that you would like to see discussed in the column, send your suggestions to [email protected].