Financial Advice for Lottery winners
There's one person – or maybe a group of people – who has yet to claim the largest Powerball jackpot in history: an estimated $590.5 million.
The ticket was purchased on May 18 from a Publix supermarket in Zephyrhills, Florida. The winner has sixty days to claim the lump-sum cash option – estimated to be around $376.9 million – at the Florida Lottery office in Tallahassee.
Under Florida law, lottery winners in the state cannot remain anonymous; their names and city of residence must be made publicly available to anyone who asks. As of the morning of May 22, the Powerball winner has not yet surfaced.
So what if that person or group of people came to your firm before the prize was claimed and asked for advice on how to manage and invest his/her/their winnings? What would you say?
AccountingWEB spoke with five professionals from four accounting and wealth management firms, who offered ten tips on what they would tell the Powerball winner(s). Those interviewed include:
- Mira Finé, CPA, national director of tax operations, , Denver
- Scott Hitchcock, director of wealth management, , Seattle
- Rob Keasal, CPA, tax partner, , Seattle
- Kathy Scorcio, director of wealth management, , Tacoma
- Ken Travis, CPA, partner, , Dallas
1. Hire a strong professional team: This group should include any one or all of the following:
- A financial advisor who can help walk you through the initial stages of what you should do, how to claim the prize, and how to manage your portfolio.
- A CPA or an independent accountant who has experience working with high-net-worth clients.
- A tax/estate attorney to assist in asset protection and estate planning.
- A financial planner who can model cash-flow planning.
"When you hire an advisor, make sure it's someone you're comfortable with because you're going to be working with that person for a long time, " Hitchcock said. "You want to be working with someone who you can have honest conversations with because your life just changed significantly."
Finé added, "Do your homework ahead of time, and don't shortcut the search for a financial advisor."
2. Decide on taking the lump sum or an annuity: Several factors play into this decision, both Keasal and Scorcio said.
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