Newby Billionaire through the lottery? Next step: your own Family Office

You won the lottery, and it was a “B” iggie, like in illions of “B” dollars. Now what?

Holders of two tickets faced this issue last week. On January 22 in Michigan, a Mega Millions ticket hit the jackpot at $ 1.05 billion. Two days earlier, on January 20, in Maryland, a winning Powerball ticket ranged to three quarters of a billion dollars.

If you are the one with a winning ticket, billions of thoughts must occur to you. If this is your first time winning a big lottery – and I guess it is – you don’t want to blow that up. How can you best manage this opportunity – a 1 in over 300 million chance of the Mega Millions jackpot – without making costly mistakes?

Your first step

Let’s break this down into phases.

Phase 1 is what to do NOW.

To get started, you need to sign the back of your ticket and put it in an ultra-secure place.

Then, think about the notoriety you want. Do you want everyone to know that you won this big amount? You may not be able to avoid it. For example, a spokesperson for the Michigan Lottery told the New York Times

NOW
that “Michigan law requires that the winners of games played in different states, such as Mega Millions and Powerball, be publicly identified.” However, in Maryland, the Powerball winner can remain anonymous.

Think about it; consider setting up a trust to maintain anonymity. You have time (check to be sure) before you have to claim your winnings. For example, if you purchased your ticket in Michigan, prizes must be claimed within one year of the date won, according to the Michigan Lottery website,

In the meantime, you may want to keep quiet about this, even with your friends and extended family, as you work on your next crucial phase.

Your “Family Office”

Phase 2 is what to do next.

I just spent some time reading about lottery winners. All articles are well intentioned and helpful. But here’s the real scoop.

You should do not go hire a financial advisor and a lawyer and a tax accountant, as almost every copywriter advises. Instead, with hundreds of millions of dollars in after-tax earnings, you don’t need a random team; you need a machine. What kind of machine? The kind that your peers (very wealthy people) have. The machine is called a “family office”.

A family office is your own business that takes care of everything financial for the very wealthy – from managing investments and paying bills to tax planning and fundraising for charitable causes.

Your family office will have your own full-time CPA, tax lawyer and financial manager. They will be responsible for organizing your new financial life. You won’t be looking for stocks to buy on your own. You won’t read about how to save taxes or fund your favorite charity on your own. You will have your own family office experts in charge, with the aim of making your life as easy, safe and productive as possible.

Resources

To start exploring, check out the Institute of Private Investors. According to its website, “Very wealthy families rely on IPI to provide them with a safe zone where they can learn from each other and from leading experts, while fostering lifelong relationships with like-minded peers. ideas. ” (Full disclosure: I am a former professional member of the IPI.)

What you should not do

There are many mistakes lottery winners make, just like others who have suddenly become very wealthy.

The Journal of Accountancy cautioned against lending money to family and friends, and highlighted issues with making immediate decisions and not thinking long term. Forbes urged lottery winners to stay on budget and avoid sudden lifestyle changes.

CNBC has raised two mistakes made by previous lottery winners: don’t lose your ticket and don’t carry cash.

USA Today has listed a number of dos and don’ts after winning a multi-million dollar lottery, including telling everyone you know you are a winner, which makes you a target. for people looking for money (and possibly putting you in personal danger); buy everything for everyone (or for yourself); and support business ideas from friends and family.

What has to be done

Avoiding mistakes is just the start. The end of your story as a lottery winner must be happy. Here is the wisdom of the store owner who sold the winning Powerball ticket in Maryland, who told The Associated Press: “I just hope whoever won it uses it wisely and others people will benefit. ”

This is the best advice any lottery winner can benefit from. New wealth can lead to disaster. Properly managed, it can and should lead to a happy ending that many can benefit from.

Lottery experience

If you have won the lottery or gained new wealth and want to share your experiences with me anonymously, write to me at [email protected]. Likewise, let me know if you need any help researching how to set up a family office. I’ll be happy to write a column on how to do this.