By Steve Garmhausen

Winning the lottery can feel like a dream come true, one where you enjoy instant freedom and the possibilities seem boundless. But for many, the thrill fades over time as the newfound wealth slips through their fingers. Lottery winners often end up broke, not because of bad luck, but because they have no idea how to manage their windfalls. With the news of two winning tickets for the $1.8 billion Powerball jackpot over the weekend -- the game's second-largest pot ever -- we thought it would be a good time to ask financial advisors: What steps should lottery winners take after winning a big jackpot?

Alicia Fuller, wealth manager, 360 Capitol Advisors: First, I would establish proof that you have a ticket. You can, for example, take a selfie with the ticket, or a video of you with it. Some people keep a photocopy of the ticket. I would not sign the back of the ticket. I would put it in a safe-deposit box. For the safety of your family, don't tell anybody except maybe your spouse. The most important part of all of this is to hire a team. You want a tax attorney who will work in conjunction with your CPA. You want an estate planning attorney, and you want your financial advisor. These four people are going to help you figure out, No. 1, should I go and claim this ticket myself? Should I create a trust and an entire estate plan and anonymously have this ticket picked up on my behalf? I would never tell anyone to pick up lottery winnings themselves; do it via a trust, or do it via an agent for the benefit of a trust.

Maybe six months out, after you've done all this prep, I would set up a philanthropic foundation if it's a huge amount of money. Because you're going to want to give to charity. It's going to make you feel good, but it's also going to help you from a tax standpoint. Understand that there are going to be a lot of tax implications. That's why you need a tax attorney, not just a regular CPA. Set a budget for yourself. I know this sounds kind of crazy if you just won $200 million. The statistical odds are super high that you will run out of money. A lot of people who have won lotteries in the past are now either bankrupt or have no money left.

Carolyn Choh, senior financial advisor, Financial Independence Planning: Put your ticket in a safe-deposit box until you collect your winnings. There are too many sad stories of lost tickets. And assemble a team with an advisor, a CPA, and an estate-planning lawyer. You'll have to choose whether to take payment in a lump sum or an annuity. It may sound like a good idea to take the take a lump sum. But I believe that you only get paid 60% when you opt to take it all up front. You'll then have a 37% federal income tax. If your state has an income tax, you will have to pay that too. So what you're going to pay in taxes is no laughing matter. If you choose a multiyear plan instead of a lump sum, your annuity will generally be paid over 30 years at a 5% increase in payout amount each year. So that's like a 40/60 investment portfolio -- fairly conservative. Of course, I feel I could probably beat that. But honestly, if you've got this lifetime annuity, you've won the game. So it may make a lot more sense to take the annuity. You'll end up with the full amount and pay less in taxes [by staying in a lower tax bracket].

A lump sum may be attractive for those who believe tax rates will be higher in the future than today -- and that's probably not an unsafe assumption -- and believe they can consistently earn more than 5% a year over the next 30 years. Or you may have some exigence -- let's say your son is starting a biotech company and they need seed money. Although if I were your financial advisor, I'd probably advise against that, since funding any start-up company is a high risk.

Brent Weiss, co-founder, head of financial wellness, Facet: Step No. 1 is to keep it private until you figure out a plan. Don't make it a public event. This is going to be a very challenging and exciting period for you, and if you start telling a lot of people it will change your relationships. No. 2 is hit the pause button. Any large life event, whether it's getting married, losing a loved one, or winning the lottery, is going to create heightened emotions, either positive or negative, and those heightened emotions keep our brain from making rational decisions. Lottery winners are 10 times as likely to blow their money than people who work hard for their money and are intentional with it. So the most important thing we can do is take a few months to get back to a state of calm before we start making financial decisions.

The third step, and yes, I'm biased, is to surround yourself with the right professionals, including a financial advisor. We're not taught how to budget in school, let alone how to manage $100 million. You need unconflicted, unbiased advice to help you make the right decision. That's a Certified Financial Planner, a CPA, and an estate-planning attorney. The last step is to create an intentional plan for your money. I would argue that the No. 1 mistake people make is not sitting down and thinking about the values they want to drive their decisions. We might immediately say, "I want a bigger house and a nicer car." There is nothing wrong with doing that. The important thing is that you're intentional about how to use this money in alignment with the things you want to achieve.

Ray Baraldi, senior financial advisor, 213 Strategic Partners: You hear all these stories about lottery winners and people coming out of the woodwork who ruin their lives. You'll never get your anonymity back once people know. And you might find that people will hear your name, Google you, and try to set up a scam on you. So the first thing is to find an attorney who you know has dealt with lottery winners in your state. Here in Pennsylvania, you can't claim lottery winnings anonymously, but you can claim them via an irrevocable trust to be able to claim the winnings anonymously.

As far as putting together a team of advisors, Google "lottery attorney" and your state name. Read through a couple of pages of results and you should be able to find multiple names of attorneys you should then interview. You'll have attorney-client privilege, so they won't go out and say, "I talked with a lottery winner." Go with an attorney you are comfortable with. For a financial advisor, start with candidates that hold the Certified Financial Planner designation; you can search through the CFP Board. Look for a bunch of different names and then see if there are Google reviews on them, or people in your town who know them. Having a local advisor you can meet with face to face would be really important. This could be your entire life savings, so trust is key. If you've won the lottery, you'll probably be in a manic state for a few days. You might be in a rush to claim, to make it "real." But you should slow that process down. Take a few weeks or a month, because time is on your side. Set up your plan first.

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September 08, 2025 16:41 ET (20:41 GMT)

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