Originally posted on Forbes.com
Since this is Retirement Security Week, you may be thinking of buying a Mega Millions Lottery ticket to secure your retirement. One in five Americans have no retirement savings at all and one in three Baby Boomers have retirement savings of less than $25,000 according to the 2018 Planning and Progress Study commissioned by Northwestern Mutual.
Of course, it’s far better to save than to rely on chance. But, for fun, let’s say you’re in the game.
Someone will claim the prize (either because of tonight’s drawing or in a later lottery). The winner could just as easily be you as someone else.
Imagine winning $1.6 billion (today’s Mega Millions jackpot). A jackpot that size would set the record as the largest prize worldwide, according to Gregory Smith, president and CEO of the CT Lottery.
Would you quit your job, take a leave of absence or report to work tomorrow? A job would be an option, not a necessity.
Would you retire? No matter your age, you would instantly achieve retirement security. After all, it’s hard to picture spending that much money on living expenses, no matter how extravagant they might be.
You would have plenty left to fund your favorite causes and do some good for society in a very meaningful way. Begin by asking yourself: “What is the most amount of good that I can do with these winnings?” suggested Smith.
Dreams. That’s what lotteries are all about.
But, what about the practicalities?
If you’re bursting with glee and want to shout out to everyone that you are the lucky winner, stop. Take this advice from the top: before doing anything, that’s ANY THING, get appropriate legal and financial counsel. Why? To prepare a list of questions that you will need to answer, advised Smith.
What types of questions? The first should be what to do with the ticket.
Let’s say you sign the winning ticket, as you are advised by many to do. There is good reason for this advice: the ticket is a bearer instrument, meaning the person who presents the winning ticket can claim the prize.
That’s what “Jane Doe” did when she won $500 million in the January 2018 Powerball Lottery. She followed the instructions from the gaming commission that she located on their website.
Before submitting her signed ticket to lottery authorities, she realized that she would soon be living the sitcom Cheers where “everybody knows your name.”
Jane talked to attorney Bill Shaheen of Shaheen & Gordon, P.A., Dover, New Hampshire, about maintaining anonymity. If she had not signed the ticket, New Hampshire law would have protected her, explained Shaheen. A signed ticket, though, bumped into the state’s “Right to Know” rules that required the winner to be identified.
Shaheen set up a trust in New Hampshire for the purpose of claiming the prize. In a court action, he argued that Jane should be able to white out her name and replace it with the name of the trust to preserve her privacy. However, the lottery commission argued that “any alteration of the ticket would make it invalid.”
Shaheen provided the court with examples of lottery winners who were victimized by “the unscrupulous” through violence, threats, harassment, scams, and constant unwanted solicitation.”
That was persuasive. Quoting from an order issued on March 12, 2018: “[The] Court has no doubts whatsoever that should Ms. Doe’s identity be revealed, she will be subject to an alarming amount of harassment, solicitation, and other unwanted communications.”
The Court “permanently enjoined” the lottery commission from “disclosing Ms. Doe’s name.”
Good result. Good lawyer.
You can read the case files (Jane Doe v. New Hampshire Lottery Commission). The case is an eye opener.
Is it possible to protect your anonymity?
This is where your attorney comes into the picture. Different states have different rules. For example, in the state of Connecticut, a trust can be set up to claim the prize.
Will you take an annuity payout or lump sum?
Professor Dave Littell from The American College of Financial Services suggested that winners might choose the annuity option instead of a lump sum payment. He believes the annuity option “gives you the leeway to make a few mistakes along the way without risking the whole amount. It also allows you to grow into the role of handling, investing, and spending the money over time.”
Some will disagree, of course. A lump sum payout may be more appropriate in some cases. All will depend on your knowledge of things financial and your ability to manage a team of advisers.
Whatever you do, don’t jump into action.
Consider the importance of thinking through your options. There will be many. For example, you will need a team of advisers to include your lawyer, accountant and wealth manager. You’ll need to interview potential team members. You will likely be guided to set up your own “family office” to make your life manageable. You’ll want to learn from peers. One possibility is the Institute for Private Investors, since it offers non-commercial investor education to the ultra-high-net-worth. (Disclosure: I am a professional member of the IPI.)
Those options will need to be thought through. That will take time. The outcome will be rewarding: the ability to put your dream into action.
To read Julie Jason's books, go to: https://juliejason.com/books/julies-books.