We’ve all had dreams of striking it rich and quitting a job we hate in a blaze of glory. And Wednesday’s $725 million jackpot presents the perfect opportunity for winners to live out the fantasy. But as tempting as it may be, a financial planner is warning caution.
Not because you need to keep working (it’s not like you’ll need the money). But because it’s never prudent to make major lifestyle changes immediately upon coming into money, whether it’s a lottery jackpot or something more routine like a significant raise or an inheritance. Take a few months to think through any life-altering decisions, and let your emotions even out.
“Don’t make any visible life changes. Don’t quit your job, don’t go out and buy a Ferrari, don’t buy a mansion,” Emily Irwin, managing director of advice and planning at Wells Fargo’s Wealth & Investment Management, tells Fortune. “Maybe you have student loans you want to pay off, that makes sense. But try to avoid that mega purchase.”
In fact, Irwin advises winners not to do anything at all for the first day or so. Take some time to scream into a pillow if you need to, and soak in the news, she says. Then get down to business. Take a few days to really consider what your goals are and where you want to go in your life.
“I would try to take a moment and enjoy it privately before all of the chaos begins,” she says. “Because once the chaos begins, you have to make some tough decisions.”
Before accepting the prize, Irwin advises winners to assemble a team of professionals who can help them manage it effectively, such as a lawyer, a financial advisor, and even a philanthropic advisor. Scope out professional organizations to find someone trustworthy, and aim to hire advisors who have experience with tax planning and ultra-high-net-worth individuals (yes, it’s a thing). “This is a real circumstance where paying the rate for the help makes sense,” says Irwin.
Not only will these professionals be able to help you with the immediate issues of collecting the money and paying taxes, but they can also help you think through what you will do with the money going forward.
Then, check out your state’s public disclosure laws. Some states, including Georgia and Illinois, allow winners to collect their winnings anonymously. But others, like New York, do not. If you bought the ticket in one of those states, Irwin says you may want to consider creating an LLC, trust, or some other entity to claim the prize that does not require you to reveal your name.
Not only will that help prevent people from trying to scam you, but it allows you to tell your loved ones and friends about your newfound fortune on your own terms, if at all.
“Really try to work with someone on a communication plan amongst your family,” she says. “Instead of making big gifts right away, think about putting a sort of mission statement in place where you set expectations for individuals.”
And while the lump sum is enticing—and what most winners opt to take, over the annuity—Irwin says the best choice comes down to knowing yourself and your money habits.
In theory, the lump sum could lead to potentially higher investment gains over time. But the truth is, many lottery winners burn through their winnings quickly and impulsively, ending up financially strapped later in life.
“If you think depending on your circumstances or your personality you might not be able to say no, you know you’re going to cave when the ask comes, you might consider taking the annuity because that’s a built in, every year, you’ll have something you receive,” says Irwin. It gives you a little cover for the next 29 years.
This story was originally featured on Fortune.com
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