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Your lotto numbers roll in, what do you do?

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Re: Your lotto numbers roll in, what do you do?
Post by Daryl   » Sat Dec 23, 2017 5:55 am

Daryl
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Location: Queensland Australia

I believe that the US is different to most nations in how they handle Lottery winnings. Taxed and paid out in installments?

For Australia (and I believe others) we get a lump sum that isn't taxed, although earnings derived from investing it are.
My older brother won $60,000 back in 1969. Enough in those days to buy 20 cars or a number of houses. He bought holiday units that he lived on site in and serviced. Did quite well, then he embarked on a number of ventures that saw him get quite rich, but die broke in 2015.


Fireflair wrote:Yeah, one study says most lottery winners end up broke. There was another done on big lottery winners as well, that concluded that more than two thirds came out just fine. There was an article done by NPR a few years back about this subject. They interviewed the very first modern lottery winner. He didn't win much, respectively, but he put most of it away and kept on living his life as it was.

Since then things have changed drastically. When you win the lottery now you're required to go through financial counseling prior to receiving your pay out. The state will provide you with basic advice and make recommendations of advisors to assist you afterward. Most people tended to blow the money on the usual vices, or even if they didn't they bought things like cars and houses. Then they couldn't pay the taxes on them. In many ways it's the same trap that newly rich movie and music stars fall into.

However, if people get past that first 2-5 year hump of adjusting to having wealth, they statically do just fine. In fact, 85% of them find a job that they like. And the more meaningful and personally rewarding they find that job the more likely they are to handle their money well.
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Re: Your lotto numbers roll in, what do you do?
Post by pappilon   » Wed Feb 14, 2018 8:10 am

pappilon
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Another issue people in The States tend to either forget or never realize is that anything over $14,000/year/person ($28k joint)is a taxable transaction. Giving siblings & parents a cool mil costs you another 20%, well did. Don't know the penalty now under the new tax fiasco.

1) find good mental health counsellor for "Sudden Wealth Syndrome"
2) Good law firm with wealth management (family trust, educational trust etc), tax planning lik epass through LLC to invest the money under the new tax code.
3)good finacial advisor to work with you and your tax attorney
4) Pack up everything, sell the house and take a vacation for about 4 months to let all the hubbub settle down.
5) Find a nice home where you always wanted to live.
6) Remember: Happiness is not about the stuff, its about who you are.
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The imagination has to be trained into foresight and empathy.
Ursula K. LeGuinn

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Re: Your lotto numbers roll in, what do you do?
Post by Starsaber   » Fri Feb 16, 2018 12:32 am

Starsaber
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Joined: Thu Mar 24, 2011 9:40 am

0. Go on a leave of absence (at least a year) from my job after an appropriate amount of notice.

1. Pay off my house and buy my parents house (to "rent" to them).
2. Rent a second house for my parents to live in while remodeling their house.
3. Significant donations to the local library and the library in the town I went to high school in
4. Invest a good chunk of the rest (pretty conservatively, but enough to live comfortably).
5. Hire a personal trainer, nutritionist, and counselor to deal with physical and mental health issues.
6. Do some travelling (spread out with no trips longer than a week at a time to keep my cats from getting too mad at me).

After that would depend on how the first few went, though I'd probably end up buying a different house for myself eventually.
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Re: Your lotto numbers roll in, what do you do?
Post by pappilon   » Fri Feb 16, 2018 7:39 am

pappilon
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Posts: 1048
Joined: Tue Sep 05, 2017 11:29 pm

Daryl wrote:I believe that the US is different to most nations in how they handle Lottery winnings. Taxed and paid out in installments?

For Australia (and I believe others) we get a lump sum that isn't taxed, although earnings derived from investing it are.
My older brother won $60,000 back in 1969. Enough in those days to buy 20 cars or a number of houses. He bought holiday units that he lived on site in and serviced. Did quite well, then he embarked on a number of ventures that saw him get quite rich, but die broke in 2015.



Sorry, I must have run past your post previously.

In the US there are options. Lump sum which is about 5/8 of the announced jackpot, or 30 unequal payments, one when you claim the prize, the rest over 29 years, in 5% per year increases to compensate for inflation. Either way the payments are subject to 36% (I think, they just changed from 39.6%)federal then there is state tax, sometimes depending on where you live. TX WA and a few others have no state tax, CA does not tax lottery winnings.

Rule of thumb for cash option, your after tax payout is 1/3 of the jackpot. so a $300,000,000 jackpot would yield a net payout of ~$100,000,000. Of course the IRS only takes 20% up front, leaving you with a 13% liability to be paid down in quarterlty installments with the tax on the investment income as well.

Clear as mud, yeah?
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The imagination has to be trained into foresight and empathy.
Ursula K. LeGuinn

~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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