Wow, you won the lottery! Now what? While the choice is yours whether you'll manage a lottery windfall on your own or turn to outside help, navigating the territory of sudden wealth isn't something you want to gamble on. Not everyone has the luxury of being their own financial adviser or attorney, so putting together a team of professionals will be critical for many lottery winners looking to steer their way through the labyrinth. You may want to look beyond referrals from friends and family, and ask around for those who specialize in serving the wealthy in your community.
A Certified Public Accountant is an invaluable addition to your team in the handling of your new cash. More specifically, she can take you through the tax implications of the lump sum or annuity payout options so that you can make a more informed decision on which to choose. Lottery winners have the choice of receiving one-time or sequential payments over time, which could have specific tax consequences. You can step up the search by looking for a CPA with a financial planning designation, through the American Institute of CPA's.
Entering the realm of new money can be an overwhelming experience for lottery winner. With the stress of fending off long-lost relatives and getting your taxes squared away, a lawyer or several may be, at the very least, a reassurance to you. A local financial adviser interviewed by Kansas City television station KSHB suggested that a winner solicit the assistance of a couple of different attorneys. You might choose to have one attorney handle tax matters, while another deal solely with estate planning -- and another to handle everyday emergencies.
There's no set number of people you should enlist to assist you. It's all a matter of what you're comfortable with. As there is some overlap in the types of services that different advisers provide, you may find that having just one adviser suffices. If taxes are a special bugaboo, a tax attorney could help you break down the finer points of your overall tax liability. As career resource Accounting Web points out, although lotteries may withhold a certain percentage of your winnings for federal taxes, you may still have to pay additional federal tax, up to 39.6 percent in 2013; not to mention, state taxes vary widely.
Financial planners are the workhorses of your team, the ones who'll actually invest your money. These are the ones who recommend different investment vehicles and manage your portfolio. One winner of a shared $224.2 million Powerball ticket noted that hundreds of financial advisers approached him and his co-winners following their win. The challenge for the winner became weeding out the good from the bad. He found that some quoted steep rates for the same wealth-planning measures that others provided for a fraction of the cost. Others charged him for services they never provided. To make sure you are hitching yourself to the right star, check credentials through professional organizations such as the National Association of Personal Financial Advisers.
Timothea Xi has been writing business and finance articles since 2013. She has worked as an alternative investment adviser in Miami, specializing in managed futures. Xi has also worked as a stockbroker in New York City.