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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

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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

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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

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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

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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?
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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 tjthw8s   » Sun Aug 12, 2018 6:28 pm

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60 million after tax?? Waaaay too much. Not about to buy the McMansion & a dozen Ferraris.

Honestly, it's just bring my retirement plans forward by a decade or so. Sell the current residence, use the money to buy the RV & the boat, embrace the Snowbird cliche.

I'm already in my 50s, the current life expectancy in North America for males is approximately 85. Family history slightly more than average, so say I make it to 90 without extensive time in assisted living.

Given my current lifestyle, I could live quite comfortably on less than 100k$ (say twice my current income) per year--that amounts to only 4 million (not including any investment interest) for the rest of my life.
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Re: Your lotto numbers roll in, what do you do?
Post by Annachie   » Mon Aug 13, 2018 2:16 am

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I'd start by making my neighbours an offer they couldn't refuse.

Renovate/landscape the new houses/land.

Drop a mill to various local charities. (The local football/netball club needs A$60,000+ to re-surface the netball courts for example)

Then invest the rest and live off of it.
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You are so going to die. :p ~~~~ runsforcelery
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still not dead. :)
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Re: Your lotto numbers roll in, what do you do?
Post by Julia Minor   » Tue Aug 14, 2018 2:14 pm

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Pay off debts.

Pay off the mortgage on Mom's house.

I know we're assuming the payout is after taxes, but just to play it safe stash around $20 million in something interest-bearing for any future taxes.

Stick another $20 million or so into some sort of trust to give me a steady income so I can retire early.

Start researching charities -- Alzheimer's research and literacy programs are definites, but I'm certain there's other causes that could use a boost.

Get my passport and do some wish-list traveling.
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Re: Your lotto numbers roll in, what do you do?
Post by Daryl   » Wed Aug 15, 2018 1:50 am

Daryl
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Location: Queensland Australia

Tomorrow night (Thursday) Australia has a $100M AUD jackpot draw.
We don't have to pay tax on it, and receive it as a lump sum. Obviously any earnings like interest are taxed, but the principal isn't.
I've drawn up my plans already. Wine, women and song; then if any is left I'll just waste it.
Annachie's suggestion of buying out the neighbours is a good one, but since I settled here forty odd years ago in a hidden pocket, some of the richest people in our state have bought all around me, so not likely to accept an offer.
Slightly more seriously, the same boring things as others suggest. Look after family, travel even more than I do now (no more cattle class though), and be kind to those who need it.
There have been surveys on lump sum lottery winners done at two and five years after the win. Those who had been careful and were comfortable before, had grown the win by sensible investing. Those who had been broke were broke again
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Re: Your lotto numbers roll in, what do you do?
Post by Vinea   » Sat Aug 25, 2018 11:29 am

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Ive heard the saying about family wealth that the 1st generation earns it, the 2nd generation preserves it and the 3rd generation wastes it...
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Re: Your lotto numbers roll in, what do you do?
Post by isaac_newton   » Wed Aug 29, 2018 6:11 am

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Vinea wrote:Ive heard the saying about family wealth that the 1st generation earns it, the 2nd generation preserves it and the 3rd generation wastes it...


I think that there is an old proverb in the north of england 'from clogs to clogs in three generations'
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