Millions of lottery tickets are sold in the United States every day, and thousands are sold in South Carolina. Every few days, someone somewhere wins a lot of money, sometimes millions, or even hundreds of millions of dollars. It won’t happen to most folks, but it does happen.
According to the South Carolina Education Lottery, since it began in 2002, South Carolina players have won more than $14 billion, the lottery has created more than 200 millionaires and seven Powerball jackpot winners, the largest winning $399 million in 2013. As recently as 2018, a Mega Millions jackpot winner received a prize of $1.5 billion.
Many people dream of hitting it big when they buy a ticket, but if you think winning the lottery means your worries are over, think again. Columbia financial advisor Bob Davidson said winning a lot of money is a big responsibility. He offered some tips on what to do if you’re one of the few lucky ones to win the lottery.
First of all, “you want to sign that ticket, take pictures of it, front and back, and lock it away somewhere safe,” he said. Next, you should assemble a financial team. “And that team would be an attorney, an accountant and a financial planner to help you navigate what’s going on with the winnings.”
Then, said Davidson, “you want to set long and short term goals with this money. Pay off all your debts, get yourself in the best financial position you can be in. There are also some tax tricks that you can do to lessen your tax hit that first year. For instance, you could set up a family foundation or a donor advised fund that would allow you to give gifts to charitable organizations over your lifetime.”
There are important things not to do as well, like quitting your job immediately or going on a spending spree. South Carolina law allows winners to be anonymous, which Davidson and lottery spokeswoman Holli Armstrong agree is wise. But some people choose to reveal their luck. Armstrong said if you choose to talk about your win, one thing you should never do is to post a picture of your ticket on social media.
“Lottery tickets contain a barcode, and that barcode is used for scanning and cashing,” she said. “That should not be shared. And texts and media posts can be shared multiple times with others, and it might go to people you didn’t intend to tell that you won the lottery.”
Some people share some of their plans for the money, said Armstrong. “The vast majority of our winners want to help their families, pay off their house, buy a car, give to their church, save for retirement, or take a vacation. We’ve had people that were Carolina Panther fans, and they’ve come in and want to get season tickets to watch the Panthers play. We’ve had winners that were so excited they were gonna put in a swimming pool. We’ve had winners that have wanted to buy a horse, or winners that have wanted to purchase a tractor.”
Davidson continued his list of things winners should do. “You probably want to set a budget. It sounds ridiculous to set a budget when you win $50, $100, $200 million, but you can get used to spending a lot of money very fast. Another big fundamental part of planning would be some asset protection. You’ve come into a bunch of money. How do you protect it from creditors or ill will or accidents or anything like that that happens? So that attorney that’s on your team would be involved to set up trusts, family limited partnerships, that can help protect some of these assets.”
The financial advisor added that big winners can make big mistakes, and the biggest is not making and sticking to a plan for the money. “We’ve had a client win a ginormous settlement from an auto injury deal. And I consider that the same as a lottery, right? These people weren’t expecting this tens-of millions-of-dollars windfall. We’ve got a plan in place, and by and large, they’re sticking with the plan. And their plan will work beautifully, for their lifetime and their kids’ lifetimes.
Davidson again stressed the importance of having a team - with a lawyer, accountant and financial planner - making a plan, paying off debts and protecting assets. He added that making charitable gifts works both for lowering taxes and giving back for one’s good fortune.
