Would you know what to do?

One of the first decisions you will have to make is whether to take all of your winnings upfront in a lump sum, or take the jackpot in periodic payments — known as an annuity — to you and your heirs. While the lump-sum payment is typically smaller than the advertised prize since you are getting all of the money at once, Kurland says in most cases you should take the smaller sum.

“You can make more money investing it yourself,” he said. “And you can make very safe investments, but you’ll still make more money than if you take the annuity payments.”

There are exceptions, however.

One key consideration is taxes, which is why Kurland urges lottery winners to include a good accountant on their team of professionals.

“You’re going to be in the highest tax bracket no matter what,” Kurland said. Besides, he notes, your estate will continue to pay taxes on an annuity after you are gone.

But if you believe tax rates are going to go down — and you believe it enough that you are willing to bet potentially millions of dollars — it could make sense to defer the payments by taking the annuity. That way, later payments will be taxed at the lower rate.

Another argument for taking the annuity is that it forces discipline on the winner.

“Once in a while if I see one of my clients is going to spend like a drunken sailor and I don’t trust that they’re going to be able to safely invest, then I’ll say, ‘Maybe the annuity is for you,'” Kurland said. “But almost always, I like the lump sum.”

At the same time that you are deciding how to take your money, make sure your estate plan is in order, including a will or a trust. If you have been exercising prudent financial planning all along, you already have this in place and your winnings may only necessitate minor changes. But if not, it has never been more important than it is now.

“God forbid something happens,” Kurland said. “Even before we claim the ticket, it could be a nightmare with family. So, you need to get a will done, you need to get trusts, you need to get that estate planning in place pretty quickly.”

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