Powerball jackpot: How to handle becoming a multimillionaire overnight
Powerball jackpot reached an estimated $1.5B
Some lottery players who have nabbed multimillion-dollar jackpots still end up losing it all.
Becoming a multimillionaire overnight can come with its problems and winners can run the risk of spending all of their winnings, especially if they don't keep their privacy or properly manage their assets, according to Emily Irwin, managing director for advice and planning at Wells Fargo’s Wealth & Investment Management.
A man rides a bike past advertisements for the Mega Millions and Powerball lottery on July 29, 2022, in New York City. (John Smith/VIEWpress via Getty Images / Getty Images)
After the winner or winners are announced, they have an opportunity to decide if they want to collect the prize in a lump sum or annual payout. This choice will matter depending on if the winner is known to be someone who saves versus someone who spends in extravagant ways or is likely to become a "bank" for their friends and family, Irwin said.
POWERBALL JACKPOT SOARS TO $1.2B, SECOND LARGEST IN GAME'S HISTORY
Even before deciding, winners need to ask themselves a variety of questions about their financial behaviors, especially with such a significant prize on their hands.
George Hollins buys a Powerball ticket at the Shell Gateway store on March 26, 2019 in Boynton Beach, Florida. (Photo by Joe Raedle/Getty Images / Getty Images)
The Powerball jackpot reached an estimated $1.5 billion after there were no winners in Wednesday's drawing.
With that in mind, putting together a team of trusted financial advisers that are comfortable and skilled to work with such a significant amount of wealth is "critical," according to Irwin.
That team, she said, should consist of an attorney, accountant, investment professional, someone who specializes in charitable giving and a trusted family confidant, all of whom can help someone make "financial decisions based on your goals and values."
This team can help the individual build a plan, which would help give them "a sense of freedom to say yes and to say no and understand the parameters as opposed to always being in a constant state of flux," she added.
The other key is privacy. Lotto players should keep the winnings confidential from the moment they discover you have the winning ticket, especially as they work through the financial process with their advisers and family, according to Irwin.
A customer at the 7-Eleven on Chino Hills Parkway in Chino Hills receives there lottery tickets on Wednesday, July 27, 2022. (Photo by Will Lester/MediaNews Group/Inland Valley Daily Bulletin via Getty Images / Getty Images)
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"The more that you can maintain your confidentiality, the better position you might be in," she said, adding that some states allow for more privacy than others.
However, if a state does not allow you to remain anonymous, then a winner can potentially work with their team of advisers to take the winnings in the name of an LLC or a trust agreement as opposed to their individual name.
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This will set them up for success because it not only keeps them safe, but it also gives them some psychological comfort, she added.