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What should you do if you win the Mega Millions jackpot?
Experts say first call should be to a financial professional
YOUNGSTOWN
If luck is on your side during tonight’s Mega Millions drawing, making you the winner of a record $1.6 billion jackpot, it might be tempting to scream your good news from the rooftops – or in a Facebook post.
Tempting though that may be, financial advisers urge lottery winners to keep their newfound wealth under wraps.
As Poland-based certified financial planner Frank Filisky puts it: “Sometimes when someone is really fortunate, emergencies come out of the woodwork.”
That’s one reason why he advises clients who come into a large sum of money to do their financial planning before sharing the news.
PNC Financial Services Group also recommends limiting the number of people you tell.
“While you might want to shout this life-changing news from the rooftops, limit your circle of confidantes to a few trusted family members or friends,” PNC’s wealth management division said in a guide it put together for lottery winners. “Money can change, disrupt or end relationships. It also can lead to you hearing from relatives or friends you never knew existed.”
PNC also warned that “fraudsters and thieves” might come out of the woodwork, so be cautious.
With the Mega Millions at a record amount, Ohio is seeing “an uptick in the amount of people playing,” said Danielle Frizzi-Babb, an Ohio Lottery Commission spokeswoman. “A lot of people are playing the game – regular players, those who are playing for the first time and those who play only when the jackpot is high.”
Lottery proceeds go toward education in the state. In 2017, $1.041 billion went to the education fund, down from $1.066 billion in 2016.
The lottery provides no benefits to local governments, said Mahoning County Auditor Ralph Meacham.
Even if a local person were to win the lottery, it wouldn’t help Mahoning County, he said.
“It doesn’t affect your property taxes or your [local] income taxes,” Meacham said. “The state of Ohio will get an increase in its income tax. But they don’t share it” with local governments, “so there’s no benefit to the county except to have someone pass money around from winning.”
If you are the lucky winner, experts say your first call should be to a financial professional.
Filisky said hiring a financial planner or adviser is a must.
“There are tax consequences. There are investment consequences. There are family issues,” he said. “The nice thing about a certified financial planner is, they’re holistic. They consider any and all aspects of a person’s financial picture.”
In its guide, PNC recommended consulting an attorney and an accountant in addition to a financial planner.
Filisky said a meeting with a financial professional should take place before sharing the news of your winnings or spending any of the money.
“You want to do all your pre-planning up front before you take any action,” he said.
That planning process would involve looking at your financial situation, what type of lifestyle you’d like to live, your health and longevity, and any friends or family members you wish to include in your prosperity.
As for whether you should take a lump sum or annual payments that add up to a greater payout, Filisky said that depends. If you believe you do not have a long life expectancy, it would be better to go for the cash.
If you are younger and don’t have any health concerns, it might be better to go for the annuity payments.
“If they have longevity in front of them, maybe take the annual payout, which means they’re drawing a paycheck as long as they live,” Filisky said.
PNC recommends lottery winners come up with a set of priorities. That means taking into account an emergency reserve, debt, retirement planning and current and future obligations, according to PNC’s guide.
After the planning is done, experts say it’s time to enjoy your winnings.
“Most importantly, don’t deprive yourself,” PNC said. “After you have met all other obligations and consulted a team of professionals, splurge on that dream vacation or new car. Have fun!”
Contributor: Staff writer David Skolnick.