So Here’s What Actually Happens If You Win The Lottery

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Okay, we know winning the lotto is very unlikely, but we’re dreamers. We believe that any of you could strike it rich, so you should know what happens if you actually do buy a winning lottery ticket. While, yes, you get paid some solid cash, there are other important things that happen that you should know about.

The First Few Hours

If you bought a lottery ticket and found out that you won (this is assuming it’s for the Mega Millions or any other big-winning lottery), the first thing you’ll likely want to do is call your closest loved one. Experts say this approach is wrong. The first thing you want to do is keep a low profile and seek out the proper experts, like financial planners and lawyers, to advise you on next steps. And, we guess you can talk to your loved ones who won’t say anything to anyone.

After The Initial Shock Wears Off

Each state has its own protocol for handling big lottery winnings, but most likely, you’ll start the legal claiming process by spending a good chunk of a day (or two) just filling out paperwork from the state’s Game Accounting office. If you won a smaller prize, you can typically go to your regional office, but if you won something like the Mega Millions, you’ll have to trek to your state’s designated office (yes, there’s only one). You’ll want your financial planner and/or lawyer with you to decide whether you’d like to claim your winnings all at once, if you want your winnings in regular installments or if you want a “30-year annuity.”

You’ll also have to decide whether you’re willing to do a press conference, which is typical when someone wins the big national prize. You can opt out, but you should know that your identity is likely going to be revealed eventually. Again, that’s where your lawyer comes in. They should help you decide how to keep yourself safe since lottery winners are one of the biggest targets of robbery and threats in the United States.

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The Fine Print

Depending on whether you want to take your entire prize up front or in installments over time, your tax situation will vary. Taking your prize upfront likely means you’ll have to pay taxes on your winnings each year, whereas the taxes in installments are withheld before it gets to you.

Speaking of taxes, the amount taken out of your winnings varies by state. In New York, for example, you’ll have to fork over 8 percent of the lump sum to the state department alone. In Missouri, it’s 4 percent.

According to Fortune, about 29 percent of the winnings then go to a section called “education,” which is for state-funded programs. Cool, right? Then, another 5 percent goes to the owner of the store where the winning ticket was sold, another 5 percent goes to the state’s federal funds, and another 11 percent goes to miscellaneous state funds. Basically, your state makes bank off your winnings. And this is why you’ll only get about 50 percent of the total cash prize in the end.

The Weird/Sad Stuff

It’s not likely, but you could be told that you can’t claim your winnings… yet. Lottery winners in Illinois were not allowed to be paid out until Illinois’ budget crisis was resolved. Yep, the state can also mess with you.

What’s more, it’s worth noting that only about 30 percent of lottery winners manage to keep their winnings. The other 70 percent blow it in under 10 years. (We know.) The secret to staying wealthy after receiving your winnings? Stay grounded and surround yourself with a team of professionals who can protect you, your family and your money.