Brisk Mega Millions sales swell jackpot to $540 million; here's some advice if you win
Peninsula Daily News
Print This | Email This
Most Popular this week
Long-distance connection: Family photos go home to Canada from camera found on West End beach by California resident
Mega Millions is played in Washington state and 43 other jurisdictions.
No player had all six numbers, 09-19-34-44-51 and Mega Ball 24, in Tuesday's drawing, so the $356 million jackpot rolled over — and since has grown as more players in the 42 states, District of Columbia and U.S. Virgin Islands in which Mega Millions is played plunk down $1 wagers en masse.
Lotto ticket sales closes Friday at 7:45 p.m., and the five numbers and sixth Mega Ball number will be drawn just before 8 p.m. The results will be here: http://www.megamillions.com .
To win, a ticket must hit the five numbers in any order plus the Mega Ball sixth number exactly. Those odds are one in 176 million, say Washington State Lottery officials.
A ticket winner has the option of taking the entire jackpot in a 26-year annuity, meaning that he or she would receive 26 equal payments totaling the jackpot (less federal income taxes, of course), or taking a lesser amount in a lump sum (again, after taxes).
The estimated lump-sum cash value of Friday's jackpot is now $389 million. The latter option would allow the winner to walk away with $389 million before taxes instead of receiving about $20.76 million (before taxes) annually for 26 years.
If you're already making financial plans after you hit the Mega Millions jackpot, you can count on the IRS taking about 25 percent. But here's a bonus: Because Washington residents don't pay a state income tax, a Washingtonian would receive more winnings than, say, a winner in California, Georgia or New York.
Courtesy of the Atlanta Journal Constitution (http://www.ajc.com) and The Associated Press, here are some Q&A — in case you win Friday's Mega Millions jackpot:
Q: What do I do with the ticket?
A: Before anything else, sign the back of the ticket. That will stop anyone else from claiming your riches if you happen to drop it while you're jumping up and down. Then make a photocopy and lock it in a safe. At the very least, keep it where you know it's protected. A Rhode Island woman who won a $336 million Powerball jackpot in February hid the ticket in her Bible before going out to breakfast.
Q: What next?
A: Relax; breathe; take time to think about your next move. Don't do anything you'll regret for the next 30 years, like calling your best friend or every one of your aunts, uncles and cousins. It doesn't take long to be overwhelmed by long-lost friends, charities and churches wanting to share your good fortune. You've waited a lifetime to hit the jackpot; you can wait a few days before going on a spending spree.
Q: So whom should I tell first?
A: Contacting a lawyer and a financial planner would be a lot wiser than updating your Facebook status. Make sure it's someone you can trust and, it's hoped, dealt with before. If you don't have anyone in mind, ask a close family member or friend. Oklahoma City attorney Richard Craig, whose firm has represented a handful of lottery winners, says it's essential to assemble a team of financial managers, tax experts, accountants and bankers.
Q: Remind me, how much did I win?
A: As it stands now, the Mega Millions will pay out a lump sum of $389 million before taxes. The annual payments over 26 years will amount to just over $20.7 million before taxes.
Q: How much will I pay in taxes?
A: This partly depends on where you live. Federal tax is 25 percent; then there's your state income tax. In Ohio, for example, that's another 6 percent. And you might need to pay a city tax depending on the local tax rules. So count on about a third of your winnings going to the government. [Again, no state or local income tax in Washington state!]
Q: Should I take the cash payout or annual payments?
A: This is the big question, and most people think taking the lump sum is the smart move. That's not always the case.
First, spreading the payments out protects you from becoming the latest lottery winner who's lost all their money. Don McNay, author of the book "Son of a Son of a Gambler: Winners, Losers and What to Do When You Win the Lottery," says nine out of 10 winners go through their money in five years or less. "It's too much, too fast," he says. "Nobody is around them putting the brakes on the situation."
Q: But what if I'm good at managing the money?
A: Invested properly, the lump sum option can be a good choice. There's more planning that you can use to reduce estate taxes and other financial incentives. Others, though, say that with annual payments, you are taxed on the money only as it comes in, so that will put you in a lower tax bracket rather than taking a big hit on getting a lump sum. And you still can shelter the money in tax-free investments and take advantage of tax law changes over the years.
Q: Should I try to shield my identity?
A: Absolutely. This will protect you from people who want you to invest in their business scheme or those who need cash in an emergency. Lottery winners are besieged by dozens of people and charities looking for help.
"There are people who do that for a living. Unless you understand that, you can become a victim very quickly," says Steve Thornton, an attorney in Bowling Green, Ky., who has represented two jackpot winners.
Q: So how can I protect myself?
A: Again, it somewhat depends on where you live. In Ohio, you can form a trust to manage the money and keep your winnings a secret. In other states, including Washington, you can form a trust but still be discovered through public records. And a few states require you to show up and receive your oversized check in front of a bunch of cameras, making it impossible to stay anonymous.
Thornton set up a corporation in the late 1990s to protect the identity of a client in Kentucky who won $11 million. "No one had done this before, and there were legal questions about whether a corporation can win," he says. "We were able to hide their names."
Q: Is it OK to splurge a little?
A: Sure, it's why you bought a ticket, right? "Get it out of your system, but don't go overboard," McNay says. But remember that if there's a new Mercedes-Benz in the driveway, your neighbors will probably be able to figure out who won the jackpot.
Q: How much should I help my family and others?
A: It's certainly a natural desire to help relatives in need and take care of future generations. But use extreme caution when giving out your money.
Jack Whittaker, a West Virginia contractor who won a nearly $315 million Powerball jackpot in 2002, quickly fell victim to scandals, lawsuits and personal setbacks. His foundation spent $23 million building two churches, and he's been involved in hundreds of legal actions.
"If you win, just don't give any money away, because the more money you give away, the more they want you to give. And once you start giving it away, everybody will label you an easy touch and be right there after you. And that includes everybody," Whittaker said five years ago.
Last modified: March 29. 2012 11:15AM