Authored by Fred Dunkley via SafeHaven.com,
Luck is a tricky thing. And when it comes to those lucky Americans who have won windfalls in the lotteries, it seems to be short-lived. Winners become losers at breakneck speed.
Studies show that lottery winners are more likely to declare bankruptcy within three to five years than the average American.
In fact, nearly one-third of lottery winners declare bankruptcy, and it doesn’t end there. It’s usually followed by depression, drug and alcohol abuse and estrangement from family and friends.
Still, the average American will be riled by feelings of envious excitement at the stories of lottery winners in the early days when the elation is still real. The most recent story to gain widespread circulation was the March Mega Millions drawing that won an astounding $521 million for a single ticket sold in New Jersey, making it the fourth-largest payout of all time.
The pressure of winning is often enough to send someone into depression, particularly when they are publicly outed and soon to become the best friend of anyone who is hoping for a handout.
That fact alone has led to recent moves to keep their winning identities secret. The winner of the March Mega Millions drawing is a case in point, and it’s not easy. New Jersey—like many other states—makes it difficult to shield your identity because winners aren’t technically allowed to anonymously claim their prizes.
Another massive lottery winning in January in New Hampshire netted a ‘lucky’ Powerball Jackpot ticket-holder $560 million. Citing concerns for safety, the winner requested anonymity and fought and won a legal battle in the process.
But security is only the initial issue faced by lottery winners - many of whom are not equipped to handle a new breed of financing that runs into the hundreds of millions.
For many, sudden wealth is sudden despair. Everything from squandering earnings, making bad investments and falling prey to con artists awaits the winner.
In one publicized case, a West Virginia man won $315 million in a 2002 Powerball drawing and lost it all in about four years. His misfortune reportedly included thieves stealing $545,000 from his car and lawsuits over gambling debts.
"I wish I'd torn that ticket up," he said afterwards.
It’s a high-stakes game for people who have no experience handling massive amounts of cash.
"The average lottery winner is a blue-collar individual, and all of a sudden you give them tens of millions of dollars and you post their name across the world, and then you expect them to act responsibly — it’s an unenviable expectation," attorney Andrew Stoltmann, who has represented lottery winners, has said.
Of course, the lawyers and wealth managers are keen to descend on this unsuspecting crop of lottery winners for the lucrative fees but trying to manage sudden wealth alone doesn’t usually bear fruit.
Jason Kurland, who calls himself the "go-to" attorney for lottery winners, claim that most important thing the winner can do is to stay low, avoid publicity and hire a financial planner.
Kurland said lotto winners should assemble a team of professionals who are experienced in for that specific situation, and it shouldn’t just be a wealth manager. Everyone needs to have checks and balances, with that team that includes a lawyer, accountant and financial advisor.
Lottery-based investments also may tend to the high-risk, presumably on the notion that the lucky streak is going to be sustained.
And rather than going on a spending spree, lawyers advise lottery winners to take their winnings as an annuity—not all at once.
Hoarding a massive lump sum of cash is a losing move and taking it all at once means getting less. The latest Mega Millions $521 million turns into $317 million if taken out all at once.
This is one way to beat the bankruptcy forecast.
Another study says that lottery winnings raises the risk of bankruptcy even among the winners’ neighbors by roughly 2.4 percent. Researchers say that lottery winner lifestyle upgrades then tempt their neighbors to boost their own spending on visible markers of prosperity, even though they haven’t had a sudden run of financial luck.
None of this stops anyone from dreaming of winning the lottery, though. Lottery sale profits have consistently risen over the years:
(Click to enlarge)
Comments
And a huge % of NFL players do the same. Shocker.
Managing big money is not easy even for the pros. Add in friends, family and strangers with their hands out, not to mention scams and cons, and it ain't surprising so many lose it all.
In reply to And a huge % of NFL players… by City_Of_Champyinz
Idiots.
In reply to Managing big money is not… by Cognitive Dissonance
315 Million? Fuuuuuuck.
I am tighter than a frogs ass. And that is water tight.
Give me your 315 to manage. You won't go broke. But you will have to sign a paper saying I can say NO to dumb decisions.
That part about neighbors going broke == HILARIOUS. Jeebus. What goes through some minds I don't know.
In reply to Idiots. by TheEndIsNear
Pissing away a few hundred million in a few years sounds like a lot of fun.
You can't take it with you.
Way better than giving it to accountants, lawyers, and financial planners so they can have fun and piss it away.
But what do I know? I never pay The Stupidity Tax, so I can never win.
In reply to 315 by DownWithYogaPants
I hereby volunteer to take winnings from those whose lives would otherwise be ruined by accepting them. I would stash them in savings and keep doing all the same shit (some good, some stupid) that I do all the time....I'll certainly never retire, I enjoy what I do too much. I'm too much of a tightwad to buy stupid fancy stuff. Please don't put yourself through any more agony - I'm here to help!
In reply to Pissing away a few hundred… by hedgeless_horseman
Islam is poison
In reply to And a huge % of NFL players… by City_Of_Champyinz
Not sure were that came from, but okay. I’ll play:
Say no to crack.
In reply to Islam is poison by Disgruntled Goat
"Nearly One-Third Of U.S. Lottery Winners Declare Bankruptcy".
This is because over 2/3rd's of the U.S. population are dopes with no proper up-bringing or boundaries.
In reply to And a huge % of NFL players… by City_Of_Champyinz
It has to start with a child being given an allowance. Some nominal amount to make them learn about deferred gratification. This can start long before they can do any chores of any significant magnitude. But people don't work with their kids much.
My mother the lawyer used to lend me money and make me sign an IOU. Those IOU's were iron clad. She did not do open lines of credit. That note had to be paid off before any further loans were made. She was hard core.
In reply to "Nearly One-Third Of U.S… by ebworthen
Never give a kid an allowance.
You steal from them a rare opportunity to develop self esteem.
Do work to earn money.
Never loan a kid money.
Make them save the money, if they want to spend it.
In reply to It has to start with a child… by DownWithYogaPants
incredibly lucky rich people are victims too, don't forget
Consider the sample population and this is no surprise at all.
Does anyone really expect one-in-three odds to stop people from pissing money away on lottery tickets?
In reply to Consider the sample… by one ping only
If I win the lotto, I'm going to buy 1,000,000 cases of Scotch for myself, and one cape for James Comey. I think he'd look good in a cape, and they wear well so he only needs one. Okay, just to be safe, 999,999 cases of Scotch, and two capes so he has a back up.
And then we have a massive 9.0 earthquake and your 1,000,000 cases of Scotch form a river of tears. Should have bought something a little more anti-fragile like silver/gold. On the other hand, one of my nephews had some firearms, gold, and a gallon jar of gunpowder stored in his safe when his house caught fire and the stored gunpowder turned the safe into a bomb. His kilo of gold was vaporized and spread amongst the ashes of the house.
In reply to If I win the lotto, I'm… by LetThemEatRand
Ay, shit is fucked up in America. Like, srsly.
Film at Eleven.
Stupid article. The smartest thing a winner can do, is protect their Identity.
Interestingly, the lottery officials really want to publish their identity. There's a lawsuit going on about that right now in New Hampshire. If the lottery officials win and force the winner to out himself/herself, they are also asking that the State change the license plate motto to "Live Streaming or Die."
In reply to Stupid article. The… by Yen Cross
More proof that wealth is best concentrated to those who can know how to manage it. Thank goodness for central bankers who, in all their infinite wisdom, take wealth from those plebes who dont know how to appreciate it and deliver it to those who are better stewards. Eat your peas proles.
Well, if they are going to regret it and don't want the pressure of having the tens of millions then I'll gladly take the cash and publicity for them. Pretty sure I'll never go broke since I'm not an idiot and I have no problems telling people to go fuck themselves.
A fool and his money were lucky to get together in the first place...
Managing money is easy.
Pretend you're poor.
People ask for money, tell them to fuck off.
Pay yourself a monthly amount and don't go over it.
Make up a will that gives the rest away when you die.
Done.
Ingenious article. Pulitzer Prize-winning article that is the inspiration.
Yen Cross has been increasingly moar perturbed. I remember seeing him shit on some dude out of nowhere, and I was outraged.
I reported him.
I play the lotto. I actually play the small ones. My state has one with 5 numbers that is won quite frequently. The prize is smaller but it would be enough for me to stock up on some real gold and get that Class C RV (used, of course).
There was a good article a while back about someone that had signed their ticket and couldn't unsign it. Not sure how it worked out. But if you play the big money tickets, don't sign them. If you win, get a lawyer and create a trust and then you have the executor of the trust sign the ticket. Otherwise your name will be splashed all over the fricking place. I like living a private life.
It doesn't help that most states legally require the identity of the winner to be publicly disclosed. Because their identity is legally required to be disclosed, many lottery winners are the subject of numerous baseless lawsuits. And they end up spending much of their winnings on defending themselves against frivolous claims in a legal system which is slanted against them. No fucking wonder they go broke. The state doesn't easily give up its money to lucky people.
There was that woman in New Hampshire that was fighting to remain anonymous. She signed the ticket. Best to wait and not sign until you have proper legal advice and set up a trust. It is my understanding that is one way to avoid having your name out there.
In reply to It doesn't help that most… by navy62802
Knew a lotto winner, it was 16 million, by today's standard it was a paltry sum but she drank herself to death, she timed it about perfect with the goose egg in her account.
Poor people are largely poor for a reason.
Let's not mention the fact that the IRS plays hell with your winnings too. You can expect to lose at least half of it to the IRS, Social Security, Medicare, etc. if it is $1 million or more. Any winnings more than $5,000 will likely trigger an automatic 25 percent federal tax withholding off the top before you see a dime of your winnings.
Here is what happens if you reach this tax bracket too:
39.6 Percent Tax Rate
Then you have to hire an accountant and an attorney to keep you protected from the IRS. Life gets complicated when you win any money in the U.S.,.
I thought that lottery winners had to pay a special tax that ended up being around 50%. I don't remember what it is called. Gift tax?
In reply to Let's not mention the fact… by Chief Joesph
I wouldn't mind one bit if suddenly I was burdened with the potentially debilitating challenge to remain solvent after having won a 300+million$ lottery.
The problem is not solvency its life expectancy.
In reply to I wouldn't mind one bit if… by SH_Resurrected
Well ... 2/3 of winners do ok?
I have never been drawn to wealth, but I know many people who are and some who have substantial holdings.
Of those I know who are drawn to wealth and those who hold it, I know none who are happy or content. They instead exhibit a constant restlessness, always wanting more, never being satisfied with what they have, and always fearful of dropping below a certain threshold. They judge people based on a how much money they have or don't have, and those who don't have, they consider as fools. I am a fool in the eyes of most people of my acquaintance for no other reason than that I am poor, but they tolerate me because I am at least related to money.
The irony is that, of all the people I know, I have the least amount of worldly wealth but am by far the most happy and content. This is a great mystery to those who know me, so in order to make sense of it they attribute my happiness to a sort of mindless imbecilic naivete: I'm happy because I'm an idiot and don't know how unhappy I should be if I really understood the truth of the matter.
I let them think what they want. Wealth has never drawn me and I don't see any evidence as to why it should. I have yet to meet a happy rich person, I mean a genuinely happy one. But I have met my fair share of happy poor people.