The lottery, aka the math tax.

The best bet following a big lottery winner is the over/under on how long before the winner files for bankruptcy. Almost always bet the "under".

I have my plan already. First I call my lawyer, get four certified copies of the ticket made, and rent five safety deposit boxes. Deposit the original in one, and the copies in the others, JIC. I then thank Jebus that you usually have ~1 year to claim. I proceed to get everything in order and settle any debts I may have, and make sure I'm running in the black. I then hire a PI to track down my real parents, and evaluate my real family to see if I have anything to fear from them. If so, I cease being SteveDave and become Miguel Sanchez and/or Lionel Hutz. Only after everything is in order do I step forward and claim my prize. I then will follow the advice of a lotto winner I saw on TV:

"I make ~$2,000 a day on interest alone. That's my daily budget. If it costs 4,000, I don't buy anything for two days."

Brilliant. Happiness is working because you want to. True Happiness is being able to say take this job and shove it. They say money can't buy happiness, so I'll settle for renting it.

I think the reason a lot of people win the lottery and then go bankrupt is the fact they were playing the lottery in the first place, rather than putting their money into savings/investments. I don't think it is uncommon for people to spend $25-$50 a week (some people spend like half their paychecks). Imagine putting that into some growth funds with an IRA or stocks and they could easily hit 1 million by retirement (well, if you started really early).

Is it possible to have a lawyer or some legal-type person claim the money for you? I think that'd be a good idea to keep yourself anonymous from the masses and from "long lost friends". I remember reading a story about some big lottery winner that would receive dozens of letters a day from people all over the country, asking them for money. Even after a few years, people still sent letters.

@Summermodoin'_GitEmSteveDave: "Now, when I press down on your foot and say "Hello, Mr. Thompson," just smile and nod.

"Hello, Mr. Thompson."

"I think he's talking to you."

If the jackpot is big enough, and given the weird/desperate things people will do when the economy is in the toilet like it is these days, one probably should add a fifth person to that list: a bodyguard.

Or claim the award anonymously, which is what a recent Powerball winner in DC did. All they made public was his age and which quadrant of the city he lived in. My guess is he and his family quietly sit on the money for a year and then (equally quietly) get the hell out of Dodge.

Can a Non-Profit claim a lotto prize, tax free?

Forget a call screener. You should move and change your numbers before you claim your prize. I had a friend who was friends with a large lottery winner and people would just show up at the house all the time to ask for money.

Some states allow you to claim your prize anonymously. If your state permits that, then you should definitely take advantage. Otherwise it is important to have disappeared prior to claiming the prize.

@Summermodoin'_GitEmSteveDave: I'll buy that for a dollar!

A fine set of plans that they are. Mine is to get my ducks in a row, just like you, then disappear into a remote countryside somewhere under a different name and run a small hobby farm, and rent out the rest of the acreage to farmers.

Farming's been in my family for generations, I just feel bad that it's going to take a lottery win to get back into it.

"Having more money does not insure happiness"

Fortune cookie fortune from my lunch last Thursday

@Saboth: Lottery tickets cost a dollar. I would go out on a limb and say that the majority of people that purchase lottery tickets by one ticket. If you buy one ticket for every drawing between the time you are 18 and the time you are 65, you've spent less than $5,000 over a 48 year period.

$104 per year is not going to accrue into millions.

@Smashville:

I don't think most of the people that play only spend a dollar. Sure, you and I would spend a dollar, but you ever go to a convenience store on a payday and the work truck pulls up? "Gimme a 12 pack of bud, a case of cigs, and $50 in lotto tickets". I don't think that is outside the norm for the majority of people that play.

I fully understand if I win the lottery I'm going to blow it. But, I'm going to have the best 5 years of my life. If it's an insane big jackpot I'll put a couple mil in the bank for retirement. Then sell all of my belongings except for clothes and my laptop, pack up, and travel the world. See as much of it as I can. Obviously first class the whole way, and I'd have to pay to have my best friend tag along. I think I could blow 20 million in a couple years that way pretty easy. When it gets down to a million or so left I return home, but a modest house, furnish it and go back to a normal life.

@Smashville: Actually a fair number of weekly players buy five or 10 tix a drawing hoping to "increase their chances." They don't understand that with each additional ticket purchased, the rise in their odds of winning is so infinitesimally small that it's senseless to buy any more than one.

I read a mathematician's take on this once ... he had crunched the numbers to find out how big a jackpot would make it worth your while to play. And he pointed out NEVER to bother buying that second ticket.

@Nighthawke: Don't worry, with the dearth of farmers under the age of 50 in the US, the government's going to start handing out scholarships and aid for you to go get a B.Ag. before too long, and I'm betting on generous aid to first-time farmland buyers, too.

The guy on TV who said he didn't buy anything for two days if it cost $4k is now bankrupt.
@Summermodoin'_GitEmSteveDave:

You continue to do everything normally, hire an investment firm to handle your money quietly, have them claim the prize. Then you let your friends and family know you have a job offer out of state, move, setup your new home and quietly do things to help people you want to help with the money without revealing yourself.

If I ever won the lottery, I'd call a lawyer and a financial planner *first* and then have the ticket claimed by them, in some legal way, on my behalf.

(Then we'd pay off our student loans, get our parents' retirements squared away, and go on a World Cruise.)

@Princess Leela: In a lot of states, when you claim the prize you agree to "promotional" appearances.

The first thing I'd do after I claim the money is quit. Then I will proceed to spend the rest of my life doing what I want rather than what the people giving me a paycheck want.

Oh, and buy a LOT of real estate. And deposit enough of the money on some sort of secure savings acct / high yield investment that guarantees me enough of an income to live on. The rest is play money.

Claiming your prize and thus having your name as public record & in the public eye, I don't think so. Get a lawyer you can count on and make a trust, the trust claims the prize, trusts and the trusties are no a matter of public record, require no reports filed like an LLC, you get paid from the trust. I win the lotto and there might be 3-4 people that will know, and 2 of them will be the lawyer and accountant, both that are required to keep their mouths shut. Wanna blow some money on stuff, you "got luck on a stock tip"

@Saboth: I think that's a symptom, certainly, of the fact that people don't think about money as they should, and people are really terrible at keeping track of it. If you ask a person what he will do with a $1000 windfall, he will likely say he will save it. In reality, he will likely not only spend it, but he will spend more than that and use the windfall as justification. People do this all the time with tax refunds, stimulus checks (remember the ones that went out in spring of '08?), inheritances, and lottery winnings. It's the same reason that sports stars end up broke when their careers end. It's the same reason that people sign up for variable rate mortgages and then lose their houses.

@SoCalGNX: If you make $2000 a day on interest you should probably only spend $1000 a day. That way you savings and budget will be able to keep up with inflation. You'll also be able to expand you budget quicker when your savings increase, as opposed to staying flat.

@egoods:

If its an insane big jackpot then you and your family should not have to work for many generations if it is handled right.

When I hear people say Im gonna blow it all in a few years and have a good time, I think what a monstrous waste of a once in many lifetimes opportunity.

Please dont come back five years from now seeking free mental help because you are depressed at having blown it all and wondering why things did not turn out differently.

@B1663R: I'm trying to come up with a joke about happiness insurance...but I'm failiing pretty miserably. (maybe it would be through MetLife? Watching Snoppy do the happy dance always makes me happy.)

@kylere: Isn't that a little sad, you win millions- but lose all your friends and family?

@Hil-fish:

Also, don't forget Michael Jackson! (broke at the end of career).

Lotteries are often referred to as a voluntary tax on the poor. You don't see the rich buying lottery tickets.

From the pictures I've seen (but never knowing any of them), those who win the lottery tend to hold lower paying jobs, and are no doubt less likely to have higher education. It shouldn't surprise that many are not able to manage the money. That's not to infer that they're stupid, but they probably lack the skills to handle it. The biggest reason that they don't get professional help to manage it is that they don't know that they need professional help.

I've got a business education and I already do invest (usually term deposits, plus others) and would be better able than most to manage a win. Then again, I don't play the lottery because I have a decent income...that, and the fact I wouldn't be able to keep my mouth shut if I actually did win.

In my(and I think most)states you cannot keep your name out. The will publicize the hell out of it so everyone will know. Making it anonymous would be a great potentially life saving benefit.

@squinko: No, I think one of the stipulations is that the Lottery can use your name/likeness to promote themselves.

I did read somewhere that you should establish a trust and use that to claim the prize, to help avoid some taxes and for inheritance issues. I wonder if establishing a small company would work too. Essentially, a company to manage your funds and investments.

@rbf2000: Not true at all. Send me $5 and I'll give you the detials of my system.

When I win the lottery, I'm taking all the money and buying more lottery tickets to triple or even quadruple my winnings.

@Summermodoin'_GitEmSteveDave: Dad?!?

@Summermodoin'_GitEmSteveDave: I also vaguely remember watching a TV show where they suggested setting up a blind trust with the lottery winner(s) as the trust's sole recipients. Supposedly, the blind trust allows you to be paid the winnings but without the "long lost" relatives easily finding out that you're the lucky winner.

NOTE: this was awhile back and I've got late-stage Mom Brain, so this is a bit fuzzy. And standard disclaimer: IANAL.

@frank64: Here in IL, the anonymous winner would just so happen to always be related to powerful politicians.

I would first shut down all my phone lines and have a close family member add a line to their phone plan so my name doesn't appear anywhere. I'd hire the above people, and I'd pay off the house, the van, and any other outstanding debt. Then I would pay off my parents' debt, his parents' debt, and give my family a clean slate on top of cash to buy modest new houses and such. Open up retirement accounts, college funds for my children, and make sure first and foremost that their futures are secure.

But I'm one of those crazy people that thinks about long term and hates blowing money. I swear, I could win $50 million and still complain about the price of a loaf of potato bread. (Which is, THE BEST bread ;-) Or else Heidelberg here in upstate NY)

I'm putting $16,500 a year in my TSP. I'm 25 and will be a millionaire well before I retire. When I retire at age 56, I'll have at least 3 mil, maybe more depending on what I do with a Roth IRA for my wife and myself. That's my lottery. I don't have money to waste on lottery tickets. My goal is to go through life without a car payment and without having credit card debt. It's pretty simple, and saves alot of money.

"Live like no one else, so later you can live like no one else."

@TheBursar: Wow, if you need to save $1k/day to keep up with inflation... I'm in trouble.

@ARP: I think I read that if your winning is over $250k they can use your name.

An excellent way to deter inheritance issues is to get an estate planner. You can leave everything to a spouse tax-free, but only 2 million per child tax free. Every dollar over 2 million is taxed at 50%. A way around that is to use the money to purchase permanent life insurance on yourself and make the beneficiaries whoever you want. Life insurance money is not taxed if it is privately purchased.

I would continue my current behavior while hiring the appropriate specialists to set up a trust. I would take the cash option as most of the payment plans are annuities that could be wiped out by something like recent events.
Regarding my current job; I would call in rich.

@Coopon: That's absurd. Why do people think they deserve handouts just because they know someone with money. Try hard work, that usually works. Yes, I would definitely move and have a gate and a sniper.

I've had the crazy idea of setting up a blind trust so I can only withdraw money equal to my salary once per month. This way, I won't be able to go blow the whole wad on some crazy idea. I also have motivation to keep working, because if I don't have a job, I can't take money out, and it also deters mooching relatives/friends.

@Blueskylaw: You'll need more than a couple mil to retire.

@Blueskylaw: You, sir, are a dream crusher. Who takes lottery aspirations so seriously? egoods and I are having a five-year beerfest with our fictional lotto money, and you are not invited.

@Saboth: If you know how to spend a small amount of money wisely, chances are you'll do okay with a large amount of money. Sadly, most people don't meet that first criteria.

Also, on the few occasions that I've bought a ticket, I consider it a $1 donation to Texas state schools and parks.

The professional are some of the problem, you think family and friends might be an issue, how many accountants, money managers and lawyers will swarm you. I am sure they will want to charge you much more than they would charge others too. I think I would really try to keep it simple. Put it a large amount in some index funds and if you don't save as much in taxes, so what.

@egoods: I'm with you on the pack your things and travel the world part. But I don't know that I would blow all my money going top notch. I'd get a studio apartment near a major airport (NY, San Francisco, Chicago, etc.) to store a few things and to have a place to come home to once in a while. When I travel now, I'm generally not suffering. I don't stay in hostels, I buy business class when when its worth it (trans-atlantic/pacific), and eat at fairly nice places (unless the street food is the point). I would probably continue that trend. I would invest my money in such a way that I could continue that and perpetually travel for the remainder of my days.

@Mr_D: I agree about continuing to work. I would like to think that I would just keep working and upgrade a few things in life (ok, alot of things): Cars, house, electronics...

I would pay off my parents' house, my brothers' house, buy my own house, and convince a medical school (with a cash donation) to let my best friend attend for free. I don't think I would tell him why they changed their mind and gave him a full scholarship. Maybe in 20 years...