Avoiding financial pitfalls after winning the lottery
INDIANAPOLIS (WISH) — The winning Powerball lottery ticket is still floating out there, no one has claimed the prize quite yet.
The ticket is now worth $435 million and was sold at a Lafayette gas station Wednesday.
What would you do if you won the lottery?
“My personal splurge would probably be travel,” Exec. Dir. of the Hoosier Lottery Sarah Taylor said.
“I’d just love to have a Mustang,” Lafayette resident, Don Ho said.
But the wise know you have to be careful.
“That much money, if you don’t know how to manage the money, it could turn really bad,” Ho said.
“Nearly a third of lottery winners declare bankruptcy, which does not surprise me at all. It is very easy to establish a rapid pace of spending and very hard to say no to yourself,” bankruptcy attorney, Eugene Mogilevsky said.
Mogilevsky said if you have a winning ticket, don’t tell anyone except your spouse.
“As much as you would want to think that everybody would be happy for you, probably not,” he said, “Guard your ticket with your life.”
He said instead, pick up the phone to call an expert for advice.
“Google a good attorney, financial adviser,” he said, “Only then you would call the lottery or have your attorney do that for you and contact them because your attorney may think of other creative ways to preserve your confidentiality.”
The next question is what you want to do with the money.
“Do you want to take the lump sum or the yearly distribution?” he said.
He recommends taking the annuity.
He said it ends up being more money and you’re less likely to spend it all irresponsibly.
“That would probably include things like not just buying the expensive cars, could be buying planes, boats things they don’t need,” he said.
“I wish good luck to that person who won and I hope they make smart and wise decisions with it,” he said.
Another word of caution is that if you rack up millions in debt and run out of cash, you might be stuck with those bills for the rest of your life.
Sometimes bankruptcy doesn’t clear your debt if you had unnecessary and luxurious expenses.