The Mega Millions jackpot climbed to an astounding $1 billion on Friday, the second-largest lottery prize in United States history, just hours before the drawing. The Powerball jackpot on Saturday isn’t too shabby either: $470 million.
Just imagine if you won both. Nearly $1.5 billion! Congratulations; you are about to hear from relatives of your ninth cousin twice removed who swear they haven’t seen the news and just want to know how you’re doing.
Also: You are now the 1,650th-richest person in America! (Forget taxes for a moment; we’ll get to that later.) You knocked Herb Chambers, a self-made billionaire who turned a $500 loan from his mother into an empire of car dealerships in Massachusetts, down one spot on the Forbes World Billionaires list. You, on the other hand, facing odds of 1 in 88 quadrillion, turned several bucks’ worth of lottery tickets into nearly $1.5 billion.
After the winning numbers are drawn in Mega Millions and Powerball, you’ll be holding the tickets and wondering what to do. Will you take the lump sum? How about 30 years of annual payments? While you ponder that and browse islands for sale online, don’t do the following:
• Announce that you won
• Buy expensive things, or really anything at all, unless you can already afford it
• Quit your job
• Sign the winning ticket
Dennis J. Siciliano has given that critical advice to jackpot winners who have hired him to help them collect their prizes. Mr. Siciliano, an estate and business lawyer in Independence, Ohio, helped the winner of a $52 million Mega Millions jackpot in August 2004, serving as the trustee of a blind trust created to keep the winner’s name private.
“The bottom line is that once someone discovers that they won the lottery, the first thing they should do is secure the ticket,” Mr. Siciliano said. “Don’t tell anyone except close people.”
Mr. Siciliano, who has also helped winners of much smaller jackpots of around $1 million each, said he cautions people to resist their instincts. Slow down and be methodical. After all, it may take months to receive your winnings, he said.
“Proper planning upfront is really beneficial,” he said.
In addition to hiring a lawyer, you should find a wealth adviser and an accountant, Mr. Siciliano said. A wealth adviser will help you avoid spending all of your money too fast, a problem for some winners, and help you invest it so it lasts for years. An accountant can reduce what you might owe in federal, state and local taxes, as well as other surprise taxes you may encounter.
Before the drawing, as your mind raced about how you would spend the jackpot — maybe buy a boat, pay off student loans or move to the mountains — you might have considered sharing some with family members and friends. But it’s not that easy.
Distributing some of your winnings to other people may be subject to numerous taxes, including the federal gift tax and the estate tax. To share your prize without paying additional taxes may require proof that you bought the ticket with those people, Mr. Siciliano said.
“When is it truly a joint purchase or when is it one winner who is gifting over to others?” he said. “Could the I.R.S. investigate? Sure.”
Those three advisers should help point out other issues that may arise. For instance, if you buy the winning ticket in one state and then decide to move, you may have both states trying to collect taxes on your prize.
Another potential problem: If you signed your name on the back of the ticket, it could be difficult to remain anonymous. A New Hampshire woman who recently won $560 million signed her ticket after the drawing but then wanted to stay anonymous. She had to successfully sue to keep her name private.
Over the years, many winners have avoided the limelight by accepting their prizes under the name of a trust. Mr. Siciliano created the ABC Blind Trust to collect the $52 million prize, which the winner received in a lump sum of $21.8 million after taxes. A group of Manhattan co-workers claimed a $58 million jackpot in 2015 under the name Lucky 16 Trust. In 2016, $49 million was claimed in Texas by the It Will Buy Me a Boat Revocable Trust.
But in all likelihood, you won’t have these weighty issues to consider. Because you won’t win and will be back at work on Monday morning.