The Powerball Jackpot Increases to $700 Million !

The Powerball jackpot increases, is up to an estimated $700 million.

The first precautionary step you should take between now and the drawing is to sign the back of the ticket. A lottery ticket is a bearer instrument, meaning that whoever signs the ticket and presents a photo ID can claim the prize. 

10 Things To Do When You Win The Lottery

1. Remain anonymous if your state rules permit it. In New York, for example, winners' names are a public record. Elsewhere it may be possible to maintain your anonymity by setting up a trust or limited liability company to receive the winnings. Depending on where you bought the ticket, prize winners have between 180 days and one year from the date of the drawing to claim their prize. 

2. See a tax pro before you cash the ticket. You have the choice between taking the prize money all at once or having it paid out in 30 installments over 29 years in the form of an annuity. With a lump sum payment, you must immediately pay tax on the entire amount. With an annuity, you are taxed only as you receive the payments. People who have trouble controlling their spending might prefer the discipline of receiving the money as an annuity.

3. Avoid sudden lifestyle changes. For the first six months after you win the lottery, don't do anything drastic, like quitting your job, buying a home in Europe, trading up for a luxury car. Meanwhile, set aside a fixed amount for splurges—it's only natural to want to celebrate your windfall.Save the big purchases for later. For example, you could rent a house in the neighborhood where you were thinking of moving, before you make any commitments. If you need a new car, buy a budget model for now.

4. Pay off all your debts. There is no better investment than paying off debts. Whether it is credit card debt or a mortgage, your rate of return equals the interest rate on the loan. With today’s abysmal yields on relatively secure investments like CDs and Treasurys, that's especially true. When you’ve paid down a dollar of debt, that’s a dollar you no longer owe. When you invest a dollar, you can’t be sure whether it will grow or shrink.

5. Assemble a team of legal and financial advisers. In situations like this it's very hard to know "who's trying to help you and who's trying to use you," says Ely. Rather than signing on to a group of advisors that someone else has put together, he recommends handpicking your own lawyer, accountant and investment advisor, and requiring them to work together.Carefully vet each advisor before discussing your situation. 

6. Invest prudently. Put the money in safe, short-term investments and not even touching it for the first six months. Then ask your advisors is to put together an investment portfolio divided half-and-half between equities (such as stocks) and fixed income (like bonds). Don't fall for investments that you don't understand or that sound too good to be true.

7. Live within a budget. Especially if you're not accustomed to having a lot of money, it may take some discipline to preserve your winnings and not go on a wild spending spree. One way to restrain yourself is to only spend income–not principal. Especially in today's investment world. It takes a lot of principal to generate income and once you start spending principal, the principal quickly dissipates.

8. Take steps to protect assets. People who are worth a lot of money need to guard against losing assets to creditors. They include everyone from disgruntled spouses and ex-spouses to people who win lawsuits against you. If people think you have deep pockets they may look for reasons to sue. "If you win the Powerball, everyone's going to be laying in front of your car so you can run over them so they can sue you," says Ely. It’s prudent to ensure you are not an easy target.The best defense is to erect a variety of roadblocks that make it difficult, if not impossible, for creditors to reach your money and property. 

9. Plan charitable gifts. You can offset one of the additional income from your lottery winnings (or the annuity payments if you take it that way) with an annual charitable deduction. For gifts to a public charity, donors are entitled to an income tax deduction for up to 50% of adjusted gross income (AGI) for cash contributions and up to 30% for donations of other appreciated assets held more than 12 months.

10. Review your estate plan. If your winnings have made you suddenly wealthy, this may be the first time that you need to plan for estate tax.

Source: Forbes