An Interesting Follow Up - PowerBall

I found this NBC.com followup article on colorful PowerBall winner Wild Willie an interesting read.

As I've posted before, I'm not a fan of lotteries at all.  So, it was interesting to hear Willie and his wife's take on the $4 Million they netted after taxes, fees, etc. as a curse.  Willie further noted that $4 MM is not much money these days.

Based on their ages, $4 MM should be more than enough for a comfortable retirement, but they have done a lot of the things professionals tell you not to do after coming into big money.

First, if you win the lottery stay anonymous if you can.  Not all states and not all games permit one to stay anonymous, but even if you have to give your name out when you collect your check, meaning its a public record, you can avoid appearing on the Today Show and engaging with the media.  Also, some states permit one to collect a lottery winning via a Trust, which also can help with gifting and taxes (note, I am not a tax professional), and can also help shield the winner from publicity.  You want to get advice on that before you sign your winning lottery ticket because, generally, you have to collect in the name of the person/entity that signs the ticket. So you would need to create the Trust before signing the ticket.   Now, Wild Willie didn't have control over that since he was part of a lottery pool, but he could have avoided the extra publicity.

Second, most professionals also advise people coming into large amounts of money not to make any quick emotional decisions.  Don't quit your job, don't buy a new home, don't buy new cars, etc.  Here, Willie did all of that in a month.  You need to get some good advice, some good tax advice, some good investment advice and figure out how much your winnings will earn, how much you can draw down from the "principal", what your goals are, etc. before you quit the job.  Obviously you not only lose your income stream when you quit your job, you lose health insurance and other benefits that you have to replace on the more expensive open market.  And, if you make a rash decision to quit your job and you need reemployment that can be difficult to obtain.

Furthermore, on the issue of new homes, new cars, vacation homes, homes for families, etc.  You may think you have $4 MM to spend on that, which you do if you are Willie, but often times lottery winners fail to factor in the carrying costs.  Those new homes will create higher utilities and insurance, second set of utilities and insurance on the vacation home, higher insurance on new cars, etc.  Not only do you spend your winnings on the goods, but then you have to continue spending to maintain those goods (for many years to come).  Think of this as lifestyle inflation on steroids.  

Finally, helping family.  I can totally understand Willie paying for cancer treatment for his father.  I am wondering why that treatment is not being paid by Medicare of Medicaid.  Helping your kids pay for a home or a graduate degree can be a good investment or it might not be.  Again, professional advice and taking a few months to plan can help one sort these issues out.