PHOENIX -- The Mega Millions jackpot, the biggest lottery award in the game's history at an estimated $540 million, has millions of people dreaming.
No doubt, winning half a billion dollars would change a person’s life. And while many people are dreaming how they’d spend their winnings, experts warn the first thing you should do is plan wisely.
So we asked people buying lottery tickets, what’s the first thing they’d do if they won Mega Millions.
“The first thing I’d do when I win is, I don't know, panic,” said Garret Guevara.
“First thing I'd do, I'd have to go to Hawaii,” said Xavier Vijil.
It's hard to know what you would do if you suddenly won $540 million.
“I hear it's a good idea to call an attorney so I’d probably do that first,” said Jim Saccoman. And that is precisely what the experts say you should do.
“It's important to talk to attorney, financial advisor or CPA before posting on facebook or twitter because that's when the people will prey on you,” said attorney Ralph Nelson. “I think a lot of people would be inclined to run right out to the Ferrari dealership and although you can do that later, you want a strategy that first week.”
The Acosta Nelson Group has experience developing such strategies.
“We've had a couple clients win the lottery not to the extent of 500 million dollars but 8-10 million of lottery winnings,” said CPA Robert Acosta. “A process should be implemented to get your accountant and attorney involved before you ever even go to the lottery office to collect your winnings.”
The experts say you need to immediately start thinking about investing, estate planning and how to give gifts without getting killed on taxes. And you have time, after all you have 60 days to decide if you want the cash payout or the annuity and you have 180 days to claim your winnings.T
he $540 million prize has a cash option of $389 million otherwise you would receive roughly 20 million dollars a year for 26 years. Ralph Nelson says, “You need to be honest with yourself, if you can’t be disciplined to invest and save then you should elect for the annuity so that you don’t risk losing it all.”
The Arizona Lottery suggests that as soon as you buy a ticket, you sign and fill out the back so only you can cash it in. And while your odds of winning the jackpot are 1 in 175 million, your chances of winning something are 1 in 40. In fact Arizona has paid out more than 2 million dollars since this jackpot started rolling in January. That’s including 2 $250,000 winners and 16 $10,000 winners.
Of course, Individual people queuing up for Mega Millions tickets aren't the only ones salivating over the record $540 million jackpot that could be won Friday.
Some state governments struggling through lean times know a hometown winner would bring a tax bonanza.
Taxes on a lump-sum payment option to a single winner could mean millions in badly needed revenue that could go to restore entire social service programs on the chopping block or fund hundreds of low-income housing units. It could allow states to forgo proposed new taxes or hire more state troopers.
If an Arizonan should win the jackpot, the state gets 5%.