Top tips to help lottery winners protect their finances

Life can change in an instant with a winning lottery ticket, but keeping that fortune safe requires a calm plan and the right advisors. Whether you’re looking at a lump sum or an annuity, these practical steps can help you protect your privacy, manage taxes, and build lasting wealth.

First 24–72 hours: secure the ticket and slow down

• Sign the back immediately. This helps establish ownership if the ticket is lost or stolen.
• Make copies (front and back) and store the original securely, such as in a safe or safe deposit box.
• Do not announce your win publicly. Limit who knows to a very small circle.
• Check your state’s claim window and anonymity rules before taking any action.

Assemble an independent, fiduciary team

No single professional can handle every aspect of a windfall. Build a team that works solely in your best interests and coordinates together:

• CPA/tax advisor: Models federal and state taxes, estimated payments, and timing strategies.
• Trusts and estates attorney: Structures trusts and legal entities for privacy, asset protection, and inheritance planning.
• Fiduciary wealth manager: Designs an investment plan aligned with long-term goals and risk tolerance.
• Insurance specialist: Reviews liability, property, life, and umbrella coverage to protect new wealth.
• Security and privacy pro (optional): Hardens cybersecurity, social media, and personal safety protocols.

Vet credentials, verify fiduciary status, and understand how each advisor is paid. Avoid high-pressure pitches and commission-driven products you don’t understand.

Use trusts and legal structures for privacy and control

Where permitted, claiming through a trust or other entity can help you:

• Preserve privacy: Keep your name out of the spotlight in states that allow it.
• Protect assets: Add guardrails against lawsuits and creditors.
• Control distributions: Set rules for how and when funds are used by you and beneficiaries.
• Ensure continuity: Name successor trustees and create a long-term governance plan.

A trusts-and-estates attorney can tailor revocable and irrevocable trusts, spendthrift provisions, and a will to your situation.

Lump sum vs. annuity: deciding what fits you

There’s no one-size-fits-all answer:

• Lump sum: Maximum flexibility and the ability to invest immediately. Requires strict discipline, a written plan, and a diversified portfolio.
• Annuity: Payments spread over many years can reduce the risk of overspending and smooth out income. Coordinate beneficiaries and estate planning around payment schedules.

Some winners take a lump sum and create their own “paycheck” by setting a spending policy, while others prefer the built-in guardrails of an annuity. Let your spending habits, tax situation, and goals guide the choice.

Taxes: plan before you claim

• Set expectations: Federal and, in many cases, state taxes will significantly reduce the headline amount. Don’t budget off the pre-tax figure.
• Withholding isn’t final: Initial withholding may not cover your full liability. Your CPA should model conservative estimates and schedule quarterly payments.
• Residency matters: Changing domicile for tax reasons is complex—get legal guidance before moving.
• Charitable strategies: Consider donor-advised funds or foundations to align giving with tax planning and values; use qualified appraisals for non-cash gifts.

Create a spending and investment policy you can live with

• Cooling-off period: Institute a 60–90 day freeze on major purchases.
• Cash buckets: Keep 12–24 months of expenses in high-quality cash equivalents; invest the rest according to a diversified plan.
• Written rules: Use an Investment Policy Statement and a spending policy (for example, a set percentage of portfolio value per year).
• Debt and obligations: Pay off high-interest debt first; handle requests from others via a formal grant or gifting process with limits.
• Insurance and titling: Update beneficiaries, retitle assets to trusts where appropriate, and increase umbrella liability coverage.
• Security: Enhance home and digital security; minimize personal information online.

Common mistakes to avoid

• Overspending without a budget or controls.
• Ignoring taxes and under-withholding.
• Speculative or illiquid investments you don’t understand.
• Unvetted “advisors” and pressure from acquaintances.
• Publicizing your win and compromising privacy and safety.

Quick action checklist

• Sign and secure the ticket; stay discreet.
• Hire a trusts-and-estates attorney, CPA, and fiduciary wealth manager.
• Evaluate claiming options and privacy rules in your state.
• Choose between lump sum and annuity with a full tax and cash-flow model.
• Establish trusts, update your will, and set beneficiary designations.
• Create a budget, spending policy, and diversified investment plan.
• Set up charitable giving structures if desired.
• Review insurance, security, and cybersecurity.
• Revisit the plan regularly and adjust as your goals evolve.

With a thoughtful strategy and a trusted team, a lottery windfall can fund your goals, protect your family, and endure for generations.