Powerball - are you the winner?

Question

So the winner of the latest Powerball in California hasn't come forward to claim their winnings yet.Powerball Winner

So I started thinking about this and day dreaming about what I would do with $40 million.  Would I retire?  Would I continue to invest in real estate?  Would I go on a whirlwind world tour?

The answer is yes, probably some of all of that in a certain order.Here's what I would do.

First, I'd play it exactly like the person who won has done so far. Lay low for a while, figure out what to do, build a plan, talk to some advisers, then execute. You have six months to claim the prize, so I'd let all the excitement die down.

Stay anonymous - in Colorado, you can claim lottery winnings through an LLC. Many other states don't allow it. Send my lawyer to go claim it and keep my name out of it.

Stay anonymous for real. Like, MAYBE I'd tell my family. Some of them. I might make them sign non disclosures. But the number of lottery winners who end up broke within 10 years approaches 100% due to family and "friends" who are suddenly around to help the winner spend their money.

Set up some annuities for family and friends, anonymously, for those who are not investment minded and for whom a windfall would be disastrous.  If they talk about how they are suddenly getting money every month from some mysterious benefactor, reply with "WOW!  Me Too!  I wonder who it is????"  This helps explain my own sudden increase in spending/investing.

Go on a vacation.  A real one.  For like a whole week, maybe even two!  I haven't had a real vacation in years.

Come back and start serious research for investing.  I could buy like 200 houses like the ones I currently buy (usually less than $250K) or I could do something really amazing.  The possibilities would suddenly feel endless and I'd probably end up in analysis paralysis for a couple of months.

Start focusing on what I really want to do.  What is that?  Who knows, but it's nice to dream about, no?

Andrew B. · Answer

if I win the lottery, first thing I'm doing is calling everyone I know and asking to borrow $500. Anyone willing to give me the money, I keep in contact with them after I collect my winnings. If anyone tells me to kick rocks...guess what I'll tell them when they come looking for money.

Anthony Gayden · Answer

@Linda Weygant

I stopped playing the lottery a long time ago when I finally realized that the best way to become wealthy was with my investments.

Bill S. · Answer

The lottery is one tax I don't pay since it's voluntary.

Tyler Weaver · Answer

@Neil Henderson There are estate planning strategies (properly setup trust) other than gifting money that would not create an enormous tax liability for them as well. This is relevant to investors who plan on passing money on to their family, not just the lottery winners.

Brian Garrett · Answer

With $40 million (assuming that's after taxes) that doesn't go nearly as far as the most recent lotto.  At $447 million (o.k. $447.8 million - but what's $800,000 between friends) after taxes lets assume half of that at $223.5 million.  My plan with that would follow much of Linda's outline.  I love the LLC aspect (I didn't know but absolutely will do that here in CO).  Immediate family would be called together.  Anyone of the immediate family living remote would be asked to come for a very important announcement.  No mention of why, just basically "get yer asses to my house asap".  Once together anyone with a mortgage would be paid off.  Anyone under the age of 18 would have either college paid for or some equivalent set aside for them.  The kids would also be required to watch and take a test on "Brewster's Millions" (http://www.imdb.com/title/tt0088850/) so they understood what's really important.  Anyone retired, they also would have something set up for them that would match similar amounts.  The condition is - that's it.  Don't ask me for any more money as you won't get it.  This would be along the lines of the annuities mentioned as well.

After that,  I'd go to work on building a great long-sustaining real-estate biz along with buying an airplane or two (I'm a pilot for fun.  :D)I do like the $500 loan from friends.  That's a pretty sweet litmus test.

Linda Weygant · Answer

Me too.  On the one hand, you can't win if you don't play.  On the other hand, lotteries are for people who are bad at statistics.

Linda Weygant · Answer

This is correct.  So gifts of $14000 a year to people, but then you might run into life time limits.  It'd be tricky and something you'd have to plan out very carefully.

Dylan Vargas · Answer

@Linda Weygant Only from a bean counter!!!!! Ha ha LOL! I would basically do the same but not tell family and keep them wondering where I am getting this lifestyle. Kind of like a joke by making them think a million reasons.

Powerball - are you the winner?

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