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Win the lottery? How to manage the windfall

For everyone who's ever dreamed of winning big, it's hard to imagine that hundreds of millions of dollars brings new challenges – but it's true. Here's how to weather the money storm.

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It's important to get references and choose someone who's easy to talk with. It's also a good idea to make sure they've been in business for at least 10 years, said Myra Salzer, founder of The Wealth Conservancy, a wealth management firm based in Boulder, Colo.

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Also find out if the adviser was able to minimize client losses during the economic downturn.


One of the first decisions lottery winners must make is whether to receive their prize as a lump sum or take the winnings over a period of years. The decision needs to be based on their plans for the money, tax implications, and other considerations.

The $380 Mega Millions jackpot will be split among the two winning ticketholders. That's a $190 million each if paid in 26 annual installments. If taken as a lump sum, it comes to $81 million after taxes.

Wealth advisers say invested properly, the lump sum option is probably the best choice. However, impulse spenders might be better off taking annual installments to avoid squandering the newfound wealth.


If you come into a windfall, you may need to take time off work and really spend the time necessary to lay the groundwork.

Financial decisions such as setting up a separate bank account for the money and, in the case of a lottery, how to handle all the attention must be made quickly. Work, for at least a day or two, may need to wait.


Millions of dollars can be life changing. For those who come into such large sums of money, it can be a challenge to stay level-headed

Stories abound of lottery winners who squandered their money and ended up in poverty. Others saw marriages deteriorate and other personal relationships suffer.

Managing the emotional aspects of newfound wealth is no small task and should be taken seriously. It may include handling family and friends' expectations of their suddenly wealthy relative or friend.

Consider the case of William "Bud" Post III, who won a $16.2 million Pennsylvania Lottery jackpot in 1988.

The former carnival worker living on Social Security disability when he won experienced misery, leading him to refer to his good fortune as the "lottery of death."

Businesses he started with siblings failed. His sixth wife left him and his brother was convicted of trying to kill him. A girlfriend sued successfully for a third of the winnings.

In 1996, a bankruptcy judge auctioned off the $4.9 million remaining of his winnings to pay debts, leaving him with $1 million. He died at age 66 in January 2006 of respiratory failure.

For those who come into truly life changing wealth, maintaining a routine, friendships and some normal aspects to pre-wealth life is a good idea, Salzer said.

One of the first financial decisions that should be made is to set aside enough money to take care of necessities and basic wants. For some people that might mean $10 million from which $250,000 to $300,000 can be drawn a year to pay expenses.

"Beyond that is building your legacy," she said.

"Once financially secure, the whole world is available to you," she said. "The choices can be so paralyzing."