23 Lottery Winners Who Lost Millions

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Executioner
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23 Lottery Winners Who Lost Millions

Post by Executioner »

Winning that kind of money, you need to be smart: get a tax attorney, family attorney, and licensed accountant or financial planner.

https://www.yahoo.com/finance/news/23-l ... 14709.html

Example:
Lara and Roger Griffiths’ marriage ended in divorce less than a decade after the British couple won a $2.19 million jackpot. Roger chased his rock star dreams and spent big bucks for his band to release an album. Lara got a taste for the high life as the couple paid for exotic cars, an expensive house, designer clothes and accessories, and a pricey private school for their daughter.

They dumped hundreds of thousands of dollars into opening a salon, where Lara was later forced to work as an employee just to make ends meet. In the end, the couple was left with less than $10.
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FlyingPenguin
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Re: 23 Lottery Winners Who Lost Millions

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The ones who know what they're doing, they wait a long time to claim the prize. Get things in order, talk to an attorney, get a different mailing address. They prepare for the fact that EVERYONE they've ever known, and some they don't know, are going to come out of the woodwork asking for money.

Most of those people would have done okay if they just took the option to get a monthly check for the rest of their lives, for less total money. But failing that, the next best thing is giving most of it to a financial adviser (keep a chunk for whatever dream project you want to start), and have it all invested in such a way that you get a nice quarterly distribution.

Just 10 million invested conservatively, with a 4-5% return, can work out to at least $300K a year for life, guaranteed, and still leave the principle of $10 million or more for your beneficiaries. And bonus, taxes on earnings from a well managed portfolio are very low.

Sinking it all in some pipe dream small business, is not smart. A huge percentage of small businesses fail. Sure, take some of the money and start that dream business, just don't put all your eggs in one basket.
"Turns out I’m 'woke.' All along, I thought I was just compassionate, kind, and good at history. "

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Err
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Re: 23 Lottery Winners Who Lost Millions

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I'd also not spend much of it the first year other than pay off debts until the taxes are squared away. I doubt many of the winners are ready to be plunged into that tax bracket.
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Re: 23 Lottery Winners Who Lost Millions

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Well that large a payoff (if you take the lump sum) the fed takes an estimated tax payment out of it up front, so if anything you'd get some of it back the next year since they usually over estimate (and a tax accountant would advise you if you should squirrel away some more just in case), and after that you're done with the initial taxes on the prize itself.

You need to pay quarterly estimated taxes after that on any income from the investments (if you are wise enough to invest it), which if you're never had to, may throw some people off, but a good tax accountant will give you an estimated payment schedule.

Taxes on investment income, at least for now, is not very high. As someone who currently lives on investment income I can tell you that. My tax bracket went WAY down when that become our primary source of income, and despite our accountant's calculations, I still way overpaid estimated taxes the first year.

Part of what an investment manager does is arrange things so you tend to take distributions from non taxable income, like municipal bonds or lower tax investments.

I've heard stories that one way lottery winners screw up, is they get antsy waiting for the money (it can take a couple of weeks) and they'll borrow money up to the eyeballs at stupid interest rates, and put themselves deep in the hole even before the check goes into the bank and clears.
"Turns out I’m 'woke.' All along, I thought I was just compassionate, kind, and good at history. "

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