Editor’s note: Robert Barnett is a family wealth and estate planning attorney with Carlile Patchen & Murphy LLP in Columbus, Ohio.
So, you just won the lottery! What you do in the next month can either make this a dream-come-true or a horrible nightmare.
How do you make sure you don’t end up with the latter?
First, call the Lottery Commission in the state where you bought your ticket (do not give them your name) to make sure they allow pre-signing the back of the lottery ticket. If, like most states, your state allows it, immediately sign your name on the back of the winning lottery ticket. Unsigned, the ticket can be cashed by anyone, regardless of whether they are the purchaser. Then go to a bank with a close, trustworthy family member and open a safety deposit box. Lock your ticket in the box. Make sure the family member sees you do this, but do not authorize anyone but you to access the box.
If you have severe creditor problems (“severe” means your debts are equal to a large percentage of the winning amount), put the unsigned ticket in the safety deposit box and find a qualified asset protection attorney (start with No. 3 below to work your way to finding this attorney).
Before any other adviser, hire a very well-qualified estate planning lawyer to quarterback your (small) team of advisors. Make sure this lawyer is a member of the American College of Trust and Estate Counsel, the most prestigious professional association of the nation’s most well-qualified estate planning lawyers.
Work with your new attorney to find an investment advisor who is either a certified financial planner or chartered financial consultant, as well as an accountant. You should not invest all your money through one investment adviser, but you can get started with this person in order to avoid any early financial missteps
Side note: You should seriously consider finding a good psychologist to help you cope with the significant changes in your life that inevitably lie ahead.
Have your lawyer check with the proper state Lottery Commission to see if state laws allow you to claim your winnings anonymously. If so, take whatever steps are necessary to do so.
Do not rush to claim your winnings. Get your team of advisers and strategy in place first. You have several months to make your claim (do check with the Lottery Commission to verify how many).
As much as you should try to keep the fact that you are the winner on the down low, people will undoubtedly find out that you’ve won. You may be besieged by family, friends, complete strangers and charitable organizations in person, by phone, and by mail, asking you for money. The less publicized you are, the less the bother, but be prepared: At best, it will be far greater than you can imagine.
If you end up claiming your lottery winnings in a trust, with at least a nominal trustee other than yourself, and have assembled the team of advisers described above, you can then interpose the trustee and the team between you and all the people requesting money from you. Tell them that managing the tax and investment aspects of your assets is now so complex and new to you, that to prudently manage your affairs, your team has to thoroughly vet all requests and you just may not be able to do everything you might want to.
Be sure to get a really good anti-spam filter installed on your computer and get a lesson on how to set it up to avoid phishing emails that attempt to find your user ID and passwords to your financial accounts.
Good luck, you can do it!