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(NECN: Peter Howe, Mansfield/Easton, Mass.) - On the heels of Friday night’s $190 million Mega Millions drawing, gamblers in 43 states have another 600 million reasons to play Powerball, whose Saturday night jackpot is expected to crest over $600 million.
But if you think winning Powerball would be a one-way trip down Easy Street, many experts and studies caution: Winning that much money, so quickly, can actually create a whole host of life-changing problems many bettors never foresee.
"There are many issues that will come up, family-related, personal, that will be very hard to overcome unless you have some professional help," said Joan Gagnon, president of Gagnon Wealth Management LLC in Mansfield, Mass. She’s a certified public accountant and chartered financial planner who has been a member of the Sudden Money Institute, a network of experts who help people cope with suddenly becoming ridiculously rich. Most recently, Gagnon’s been advising a winner of several million dollars on a Massachusetts Lottery scratch ticket.
One key thing Gagnon says she’s learned from years of helping people manage big winnings or inheritances or settlements: Besides hiring a financial expert like herself and a tax accountant and an estate lawyer, "It's very important to also have a psychologist on retainer." Yes, she says, many people experience euphoria when they learn they’re suddenly millionaires or multimillionaires.
But quickly, having people know you have that much money can begin to affect all sorts of relationships in your life. "A lot of times it causes marital issues that maybe were on the surface before, and now they've become full blown … A lot of people just have anxiety. Think about winning that kind of money."
With very few exceptions, all states participating in Powerball – including all six in New England – require winners’ names to be disclosed. (Powerball says the only five states where you can stay anonymous and claim winnings are Delaware, Kansas, Maryland, North Dakota and Ohio.)
And while it is great to have a lot of money – having everyone know you suddenly have a lot of money is where experts say many problems begin.
Examples of problems experts say you should think about if you overcome the 175-million-to-1 odds and win:
- Friends, relatives, and scammers pressure you for money.
- You become a target for trumped-up lawsuits and need costly liability insurance.
- You learn you owe millions more in taxes than the lottery withholds on your winning.
- Or in some nightmare scenarios for parents, drug pushers and cults target your kids or your kids turn lazy and unmotivated, expecting they won’t ever have to work and will get a fat inheritance.
Gagnon said she knows of lottery winners who have, very intelligently, changed their phone numbers and e-mail accounts and moved out of their homes to another state while setting up their plans and trusts for their winnings. (With Powerball, depending on the state, you have between 90 days and 12 months before you have to step forward and claim your winnings.) "Take a vacation, take it slow, let it sink in, and make your plans," Gagnon said is strong advice for a big winner to take.
And even considering all the potential pitfalls that need to be planned for, Gagnon says she wouldn’t discourage anyone from spending $2 on a ticket just to enjoy a few days of big dreams. "It’s fun. It’s a way to dream about all you’d do with all that money," Gagnon says – as long as you realize if you really do win, you better get serious about a thorough plan for your privacy, your personal security, your taxes, and your relationships with all your family and friends.
With videographer Mike Bellwin