Thursday, November 15, 2018

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It finally happened.

A clerk counts out the $300 worth Mega Millions Lotto tickets purchased by a customer. 

Leonard Ortiz | Orange County Register | Getty Images
A clerk counts out the $300 worth Mega Millions Lotto tickets purchased by a customer. 

South Carolina lottery officials are encouraging the winner to sign the back of the ticket and put it in a safe place — and then take a deep breath.

And while all eyes might be on the Palmetto State for more information about the newest member of the one-percenters club, there’s a pretty good chance that the world will never find out who won.

South Carolina is one of a handful of states that allow winners to receive their prize anonymously. For the person (or group of people) laying claim to the massive Mega Millions jackpot, that’s good news.

“Last night’s winner should definitely take advantage of that anonymity,” said Jason Kurland, a partner at Rivkin Radler, a law firm in Uniondale, New York. “The luxury of going through this process without having to worry about cameras and reporters is invaluable.”

He added, though, that it might be harder to keep the secret closer to home.

“This jackpot captured the imagination of the entire nation, so I’m sure residents of South Carolina are eager to find out who the winner is,” said Kurland, who helps lottery winners navigate their sudden windfall. “If someone all of a sudden quits their job and starts spending money, people will be talking, I’m sure.”

It’s also important to tell as few people as possible about your win. Past lottery winners have discovered the hard way that long-lost friends and family — not to mention complete strangers — can come calling, looking for loans or outright handouts.

Top 10 lottery jackpots

RankAmountDate wonGameWinner locations
1$1.586 billionJan. 13, 2016PowerballCA, FL, TN
2$1.54 billionOct. 23, 2018Mega MillionsSC
3$758.7 millionAug. 23, 2017PowerballMA
4$656 millionMar. 30, 2012Mega MillionsKS, IL, MD
5$648 millionDec. 17, 2013Mega MillionsCA, GA
6$620 million???Powerball???
7$590.5 million18-May-13PowerballFL
8$587.5 millionNov. 28, 2012PowerballAZ, MO
9$564.1 millionFeb. 11, 2015PowerballNC, PR, TX
10$559.7 millionJan. 6, 2018PowerballNH

And given the sheer size of this jackpot, the stakes are pretty high. Regardless of whether the winner chooses to take the haul as an annuity spread out over three decades or as an immediate lump sum, the amount will be life-changing.

The lump-sum option — which most lottery winners choose — is $877.8 million. Even after federal tax totaling 37 percent and South Carolina’s 7 percent income tax, the total take would be roughly $491.7 million.

Many financial advisors recommend taking the lump sum. If the windfall is managed and invested properly, you could end up with more over time than the annuity option would deliver.

And while investing and saving might not seem as exciting as spending, there would be no shortage of money available for that, as well.

Experts say it’s OK to splurge on yourself upfront, whether it’s for a new car, new house, overseas vacation or something else you’ve been coveting. The important thing is to set boundaries right away, even when the amount of the win seems unlimited.

“It’s important to set up a preliminary plan and budget right from the start,” Kurland said. “Emotionally, having an initial structure in place is extremely helpful for winners, because this is such an overwhelming experience.”

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One common way to help ensure the money lasts is the so-called 4 percent rule. That is, if you withdraw no more than 4 percent of your money each year, it should last decades as long as it’s properly invested in a diversified portfolio, said certified financial planner Jim Shagawat, president of Windfall Wealth Advisors in Paramus, New Jersey.

Applying that withdrawal rate to the after-tax estimate of $491.7 million would mean about $19.6 million could be tapped each year without depleting your wealth.

Additionally, lottery winners in South Carolina get six months to claim their prize. During that time, the winner should assemble a team of experienced professionals to help determine how to handle their new wealth, including an attorney, financial advisor and tax advisor.

“I’m sure the winner is extremely anxious and overwhelmed,” Kurland said. “Like most of my clients, they probably don’t want to wait too long to claim, but they should at least take a few weeks to get their ducks in a row, establish a financial plan and take care of estate planning so that once the funds hit their account, they can hit the ground running.”

Meanwhile, the Powerball jackpot stands at $620 million for Wednesday night’s drawing. The chances of hitting it are slightly better: 1 in 292 million.


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