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What Happens If You Win the Lottery?

What Happens If You Win the Lottery?

Winning the lottery—is it likely to happen for most of us? No, probably not. However, does that mean you can’t have some fun and dream about it? Of course not.

You might wonder exactly what happens when you win. For example, how much money do you actually get to keep? That can depend on taxes federally and in your state.

Do you have to tell the world you won? Whether or not you can remain anonymous when winning the lottery depends on the state laws where you live. 

The following are some fun lottery statistics and some details about what might actually happen if you were to win. 

What Are the Odds?

The odds of winning one of the massive multimillion jackpots in the United States is around 1 in 175 million. If you were to play every day, your odds still stay pretty low, but billions of dollars in lottery winnings are paid out in states around the country every year. 

New York sells the most lottery tickets volume-wise every year. New Yorkers pay more than $9 billion a year to try and win. North Dakota sells the least in lottery tickets annually, and what’s perhaps even more interesting is the fact that many lottery winnings are left on the table every year. In fact, there are around $800 million in lottery winnings that go unclaimed every year.

Men play the lottery every 18 days, on average, compared to every 11 days for women. 

A less fun statistic is the fact that in a Florida study of lottery winners, 70% had spent all of their winnings within five years. Around 1% of people in the Florida study went bankrupt every year. It made no difference whether you won more or less in terms of the likelihood you would go broke. 

A Gallup poll showed 67% of Americans say they’d keep working at their job even if they won $10 million, although whether or not that’s the reality is hard to say. 

What Happens as Soon As You Win?

If you were to win the lottery, you may wonder how everything would go. What would the first things be that would happen? It may be less exciting than you think—it would likely be a lot of paperwork. 

Before you can start the paperwork, you will need to sign your lottery ticket. Whoever has a ticket is considered the winner, which is why you need to claim it with your signature. Otherwise, if you were to lose your ticket, the person who found it could claim it. 

Once you sign the ticket, you can contact lottery authorities, but you might take the time to do so because that gives the media time to become uninterested in the winner, which can work in your favor. It can often take lottery winners anywhere from 180 to 365 days to claim their prize, so take your time. 

This gives you a chance to process everything as well. 

The paperwork you have to fill out and the specifics of the process can vary depending on the state where you live, but regardless you can assume you’re going to be met with a big stack of papers along with plenty of tax forms. 

New York is the state with the highest taxes on lottery winnings—you have to pay back more than 8.8% to the state. 

Should You Stay Anonymous?

The next thing that might happen to you if you win the lottery is that you may be asked by state officials if you’d like to participate in a press conference. Regardless of whether or not you participate in the press conference, you may not be able to stay completely anonymous.

Only six states let you stay anonymous if you win the lottery. These states are Delaware, Kansas, Maryland, North Dakota, Ohio, and South Carolina. 

Otherwise, if you win, you’re going to have disclose your identity, but some states do have different laws as far as how much you have to win to be required to have your identity revealed. There are quite a few specifics that really dictate how anonymous you can be. 

For example, in Texas if you win more than $1 million you may have the option to conceal your identity, but usually only if you opt for non-annuity payouts. 

Speaking Of, What Are Annuity Payouts?

As if you don’t have enough decisions facing you when you win the lottery, you also have to decide how you’ll take your money.

Sometimes you can decide how to receive your winnings—a lump sum or an annuity. 

An annuity is an annual payment, so you can get a set amount of equal payments over an extended period. You can also go with the lump sum option and get everything at once, but the tax liabilities may not be as favorable with this option. 

In some states, including Texas, how you choose to take your money also impacts whether or not you can stay anonymous. For example, if you do a lump sum option you can stay anonymous, but if you do an annual payout, your name is concealed only for 30 days. 

Hire Some Advisors

If you win the lottery you’re going to need a lot of help in the form of professional advisors. The sooner you can get them on your team, the better. 

For example, you’ll need at a bare minimum financial advisors, legal advisors and tax advisors.

They should all work together on things like tax and insurance planning, estate planning and investment management. 

Once all that’s taken care of, what’s next? It might be time to lay low. You might want to avoid interviews and the limelight, even if your name is public.

Focus on setting long-term financial goals, and if you think it would be beneficial, you might want to change your address.

Are you ever going to win the lottery, maybe not, but if you do, at least you’ll be prepared.

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