The Powerball jackpot has jumped to $435 million, after Wednesday’s drawing failed to yield a winner for the top prize.
If you are lucky enough to pick the winning combo for this weekend’s drawing, there’s one thing you need to do right away: pause.
Even before you claim your winnings after the 10:59 p.m. ET Saturday drawing, it’s smart to assemble a team of experts.
The experts should include a lawyer, an accountant and a financial planner, said certified financial planner Joshua Mungavin, a principal and wealth manager at Evensky & Katz / Foldes Financial in Coral Gables, Florida. They can help you make decisions like whether to establish a blind trust or other entity to claim your winnings anonymously, and offer advice on taking the payout as a lump sum or annuity.
“There needs to be some consideration of what letting the world know you won the lottery will mean for your life,” he said.
Put the money in a savings account or certificate of deposit, and leave it there for at least a few months, said certified financial planner Hans-Christian Winkler, an independent advisor with ClaraPhi Advisory Network in New York.
“Emotions range up, down, sideways, and when you’re emotional, excited, you tend to make the wrong decisions,” he said. “Let it sink in.”
That pause gives you an opportunity to think through all your aims for that money, and prioritize those goals and purchases. Taxes — and oh boy, will there be taxes (see infographic below) — can also take a big bite out of your windfall, and it’s smart to plan for that bill from the outset.
Lottery site USAMega.com estimates the federal tax withholding on the $273.1 million lump sum would be nearly $68.28 million, and state taxes could knock out up to another $24.1 million (with New York the worst offender). Those figures are just the amounts withheld up front; your final tax burden is likely to be even higher.