The very first thing that you must do is to sign the lottery ticket, make a copy of the ticket, then put the actual ticket in a safe deposit box at the bank. From now, you’ll be working with the copy.
The next thing that you need to do is to put together your team. It should consist of an estate attorney, your financial planner and your CPA.
Your CPA can guide you in how to handle the taxes that you will still owe. Although the lottery commission will withhold a certain percentage of the winnings, there will be additional taxes. Lottery winning are usually taxed at 28%. But, if your winnings are more than $3 million, the estate is taxed at the rate of 55%. If your winnings are more than $10 million, it could be taxed at a rate up to 60% depending on State, Federal and Local laws.
Another thing your professionals can help you with is knowing how to spend wisely, and how much to spend. Almost 1/3 of all lottery winners end of bankrupt. And, almost 70% of the winners are broke within 7 years of their windfall.
Your financial planner can advise you on how to deposit your winnings in various bank accounts, and then how to invest the money. You want to be aware of banks’ procedures, as they only insure accounts up to $250,000 per depositor, per FDIC insured bank. It is complicated, so even that must be carefully reviewed.
Asset protection will become a priority, now that you have assets. The estate attorney will most assuredly have to assist you in this. For instance, imagine that the lottery ticket winner gets killed in a car accident on the way home from claiming his winning ticket. Who gets the money then? The lawsuit will determine a lot of it.
Without a basic estate plan, the state of Ohio will most likely designate the beneficiaries of the estate. We recommend developing at least a basic estate plan and an Irrevocable Trust to manage the taxes on the winnings after the lottery winner dies, and protecting their identity.
In conclusion, PLANNING IS ESSENTIAL. If you don’t have a CPA and a financial planner, I can put the team together for you. If you do have those professionals, I am looking forward to teaming up with them. To make sure your winnings become a legacy, last a lifetime, and beyond, call 216-831-0042 to speak to Albert G. Hehr, III Esq. at Meyers Roman Friedberg & Lew