Once you’re sure that you are a winner, it is time to hire a team to provide legal and financial representation.At a minimum, you require an investment advisor, an accountant and a lawyer who are familiar with handling such windfalls.
This team will help you sort out the best ways to maximize your earnings and protect yourself from security threats and scams. Multi-million dollar jackpot winners faced it all, the scams, frivolous lawsuits, and debtors. Hiring a professional team protects them from both reputable and disreputable sources as well as managing charitable donations.
Notice that this advice is to hire a TEAM. Don’t simply hire a single person who promises to do it all. By having a lawyer, accountant, and investment advisor who each have an interest in your success, you have built-in protection against bad advice. The different advisors are likely to present you with advice from different perspectives and there will be a professional discussion of the merits of each option. Out-right bad advice from one member of the team will be balanced by the others.
Investment Advisor or Financial Planner
According to the National Endowment for Financial Education, 70% of lottery winners go broke within a few years due to poor money spending habits. When you win, you definitely don’t want to become a statistic. Therefore, the ultimate goal is to find a financial advisor right away. Interview several advisers and compare their responses. It will take a while and require some homework. But it is one of the most important decisions and you should be confident with the person you choose.
The first thing you need to do is make a call to a certified financial planner to help you navigate through the first important days when you’re still a naive millionaire. Make sure the financial planner you choose is a certified financial planner (CFP). A certified financial planner has mastered approximately 100 topics in financial planning, passed a certification examination, meets professional ethical standards, and meets continuing education requirements.
One of the first concerns will be tax minimization. Your financial team is likely to recommend ways to legally shield yourself from the IRS. They should provide recommendations on how to handle your estate, insurance, and tax planning, and they might refer you to specialists in these fields to address specific needs.
Work with your team to craft a long-term investment plan that balances your future goals and dreams. Work together to preserve wealth and create a stable income stream for life. Keep in mind that people are going to try to woo you with their hot-shot stock-picking prowess or quick-money schemes. Avoid them and look for a fee-only financial planner on an hourly basis.
The estimated cost for a basic financial plan ranges from $2,500 to $5,000. To put a financial planner on retainer can cost as much as $100,000-$200,000.
Accountant
Preparing your taxes will likely become more complicated. If you need help to prepare your taxes, you can hire a good certified public accountant for a flat fee. Certified public accountants help ensure that financial documents adhere to generally accepted accounting practices. The CPA on your team will help audit your financial disclosures.
The important difference between a CFP and a CPA is that the CFP is trained and certified to provide advice about how to invest your money. The CPA is trained and licensed to make sure that you properly document your financial activities. A CPA should not be consulting you on how to invest because this can create a conflict of interest. Instead, your CPA should be one of the more boring members of your team. Because of their limited role, an accountant only costs $10,000 to $50,000 per year.
Tax Attorney
You are going to need legal help to ensure that you can get your hands on as much of your prize as possible. Big jackpot winners often feel overwhelmed by the number of decisions they have to make even before claiming their jackpot prize. Every state has its own set of rules and procedures to follow for claiming prizes. Since most people don’t have experience claiming a major lottery prize, you can’t simply ask a trusted friend or do a quick internet search. A lawyer helps winners wade through the intricacies of the process while protecting their money, their identities, their hard-won cash, and their sanity.
For example, there are some states that allow lottery winners to claim their prizes anonymously. Other states allow winners to claim their prize money under the name of a trust they form to reduce public attraction. A trust also will protect against uncontrolled spending and can be helpful in fending off requests for handouts or charity.A good lawyer can help you protect your identity as much as possible.
Winning a lottery isn’t something you experience on a routine basis so you may be faced with many unexpected and unfamiliar decisions. A lawyer can help winners keep perspective about the legal and financial choices they make.
The right lawyer is aware of the pitfalls and dangers that winners face. They can help their clients make decisions about the proper moment to claim a prize, how to keep their lottery ticket safe, how to avoid overspending, how to keep their identity safe, and how to avoid scams and frivolous lawsuits.
Lawyers tend to charge on an hourly basis. Depending on the level of complexity that your situation demands, estimated costs range from $60-$300 per hour or more.
