Claiming Your Prize – Tips for Collecting Your Winnings


Here are some pieces of advice for you on how to claim the grand prize:

Hire Professionals

Hiring professionals should happen even before you claim your winnings. Perhaps the first professional you should look for is a lawyer. Lawyers have different specializations, like doctors.

For guidance regarding lottery winnings, there are tax lawyers, asset protection lawyers and trust & estate lawyers. Of course, you could always consult the attorney you have already worked with in the past.

After all, this professional can introduce or refer you to other experts who can help you in managing your windfall. A lawyer will help you keep your winnings legally; minimize tax liability; protect your identity; set up trust in claiming winnings; represent you in court and more.

In choosing a lottery attorney, the crucial factors to consider are fees, experience, background and references.

For fees, do not expect to work with a pro-bono attorney since you will have the money to pay him. Regarding fees, talk with your attorney upfront about payment agreement. If he tells you pay him a percentage of your winnings, better look for another lawyer.

It is always best to work with someone experienced in handling legal manners of lottery winnings. Thus, take time to research the background of the lawyer and ask for references.

David Quilty of Money Crashers recommends hiring a team of professionals.

You probably aren’t a tax attorney, a family planning attorney, or a licensed accountant. When you win a lottery jackpot, you need to surround yourself with professionals. Hire yourself a good attorney who is well-versed in financial issues, as well as a solid fee-based financial advisor and a CPA.

Read: What to Do if You Win the Lottery

Then what you want to do is start hiring your professionals. You want to call a lawyer for sure—I am talking about if you win $1 million or more, you should do this stuff. Call an attorney, a financial planner, an accountant––that’s the team you’re gonna need. Obviously the bigger the jackpot, the more necessary it is to get a team like that. Get your team in place, keep quiet, and don’t tell anybody.

Read: A Lottery Lawyer Explains What You Should Do if You Hit the Jackpot

Apart from enlisting the services of a tax attorney, you might also need the help of an accountant to deal with tax-related matters of winning the lottery. A tax and accounting professional could advise you on claiming a lump sum or annuity in claiming the prize.

He will also tell you how much you could give to friends and family members according to gift tax exemptions.

Then, you might need to hire a financial planner or an investment advisor. This person will help preserve your wealth and create a steady income out of your winnings for life.

Robert Pagliarini of Pacifica Wealth says:

Find a good attorney to guide you through the initial steps and who can introduce you to others as needed. And at a minimum, you will also want a CPA and a Certified Financial Planner who have experience guiding clients who have received sudden money.

Read: Won the lottery? 6 things you should do before you claim your win

Take The Annuity or The Lump Sum

We are familiar with people who win big windfall from the lottery and then lose them so quickly. To preserve your fortune, experts recommends taking the annuity rather than the cash option for lottery winners. So, no matter what stupid decisions you make this year, you’ll have an enormous check waiting for you next year – all the way until the end of your annuity year.

Nick Holeman, a certified financial planner at Betterment, recommends taking the annuity option:

If you get a huge lump sum, it’s easier to make a mistake, whereas if you choose the annuity, then at least if you mess up and blow the first year’s worth, you have another chance.

Robert Pagliarini of Pacifica Wealth says:

You’ll want your accountant and financial advisor to review both options and discuss the pros and cons of each.

Speaking of the pros and cons, here are some of them you might want to know without consulting a professional.

Annuity lets you receive your winnings as a pension or allowance.

Pros: you could have guaranteed income in years to follow. This is a good option for people who honestly admit they cannot control their spending urges.

Cons: You could run out of money immediately after receiving the annuity, like William Post III. In 1988, Post won $16.2 million in the Pennsylvania Lottery. He received his first annual payment of about $500,000 but has spent $300,000 in 3 months only.

Receiving your winning through annuity also involves the disadvantage of you dying even before you receive all your money. Increasing tax rates could also reduce your annuity.

Lump sum is a onetime cash payout that some professionals may warn you against. Still, the decision is yours after learning its pros and cons.

Pros: Taxes could be low when you take the lump sum. Through smart investment strategy, you could multiply your money. Just calculate how much you will spend and stick to it. This is where you will definitely need the help of an investment advisor and/or financial planner.

Cons: The money could run out immediately. Thus, it is wise to have strict control of your spending. Also, make sure that you will give away only a set amount of money to friends and relatives. Whatever you do, consult with your financial planner so you will know the effects of your spending on your assets.

Remain Anonymous

Deborah Jacobs of Forbes recommends remaining anonymous if your state rules permit it.

Rules on winner publicity vary by state. In New York, for example, winners’ names are a public record. Elsewhere it may be possible to maintain your anonymity by setting up a trust or limited liability company to receive the winnings, says Beth C. Gamel, a CPA with Pillar Financial Advisors in Waltham, MA. A client of Gamel’s who won a past lottery did that, and had a lawyer claim the prize on behalf of the trust. In South Carolina, it’s also possible to remain anonymous.

Read 10 Things To Do When You Win The Lottery

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