Has any Lotto winner ever taken the yearly payment option?

[billyfsu76]

I think the details of every winner of a big lottery like Powerball or MegaMillions is made public record. Does anyone know if any of them have ever taken the yearly payments instead of the lump sum? I know there's a substantial decrease in the prize amount if you don't do the payments but understandably I do not recall anyone ever choosing the scheduled payments.

 

[LesClaypool]

The smaller the number, the more I'd be tempted to take the annual payout.

1 million, after tax, in lump sum payout form, is less than $500,000 (I think). Just not a lot of money.

I'd rather have $50,000/year for 20 years, in that scenario.

In either scenario there, I'd have to keep working.


The bigger the number gets, the more I'd rather have the lump sum though, and the more likely I'd have enough not to have to work again.

 

[EveryoneBleedsGarnet]

I would definitely take the yearly payments, but I also don't play the lottery because I'm afraid I might win it.

 

[SeaPA]

I know there have been some; I think maybe that guy from Lakeland who got killed was getting paid in that fashion.

There have been a whole bunch who should have gone that way. In fact, I'd argue that any winner of a significant sum, who has little to no financial experience/savvy, would be better off taking the annual payments. It's way too common for a winner of multi-millions to piss it all away long before the annual payments would've ended.

 

[noleit]

I know there have been some; I think maybe that guy from Lakeland who got killed was getting paid in that fashion.

There have been a whole bunch who should have gone that way. In fact, I'd argue that any winner of a significant sum, who has little to no financial experience/savvy, would be better off taking the annual payments. It's way too common for a winner of multi-millions to piss it all away long before the annual payments would've ended.

Better to have won then piss it all then never to have won at all - except when death is involved.

 

[FSUdawg]

Correct me if I am wrong. If a person wins and takes the yearly option, then dies, don't the payments stop? I was under the impression that you cannot pass the payments on to someone else in your will.

 

[SeaPA]

Correct me if I am wrong. If a person wins and takes the yearly option, then dies, don't the payments stop? I was under the impression that you cannot pass the payments on to someone else in your will.

That is NOT correct, the unpaid winnings definitely flow to your heirs. I think it varies by game; with some they continue making the annual payments, with some they pay out the remainder in a lump-sum (or the heirs have an option of lumpsum or continuing the annual payments) - but it's not "die & lose the remainder."

 

[seminole97]

I know there have been some; I think maybe that guy from Lakeland who got killed was getting paid in that fashion.

There have been a whole bunch who should have gone that way. In fact, I'd argue that any winner of a significant sum, who has little to no financial experience/savvy, would be better off taking the annual payments. It's way too common for a winner of multi-millions to piss it all away long before the annual payments would've ended.

Somewhere I saw a stat that over half of lottery winners have more debt when they get their last payment from the lottery than before they won.

found this online trying to find out if the FL Lotto payment is over a 20 year period (I thought I read somewhere it was bumped to 30 years):

It's the same all over the country, said Don McNay, a Kentucky consultant who specializes in advising lottery winners and people who gain sudden wealth because of personal injury claims.

"Ninety-eight percent of Powerball and Mega Millions winners take the lump sum,'' McNay said Thursday. "But I advise people to take the money over time, if you are 84 or 30.''

Why?

"At least 70 percent of winners run through the money in five years or less,'' McNay said, "and it doesn't make any difference whether they win $1 million or $100 million.''

People who amass wealth by selling a business or inheriting a fortune are less likely to lose it quickly because they have time to plan, he said. But he tells lottery winners, "Don't take the $100 million, take the $5 million a year. If you run through that the first year, you have 19 more chances to figure it out.''

Reminded me of Francisco's 'money' speech:
"But money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. It will give you the means for the satisfaction of your desires, but it will not provide you with desires. Money is the scourge of the men who attempt to reverse the law of causality – the men who seek to replace the mind by seizing the products of the mind.
Money will not purchase happiness for the man who has no concept of what he wants; money will not give him a code of values, if he's evaded the knowledge of what to value, and it will not provide him with a purpose, if he's evaded the choice of what to seek. Money will not buy intelligence for the fool, or admiration for the coward, or respect for the incompetent. The man who attempts to purchase the brains of his superiors to serve him, with his money replacing his judgment, ends up by becoming the victim of his inferiors. The men of intelligence desert him, but the cheats and the frauds come flocking to him, drawn by a law which he has not discovered: that no man may be smaller than his money."

The real kicker in that article I found above was something I saw at the bottom:

Wealthy people can now give up to $14,000 a year to anyone without notifying the IRS. Larger gifts must be reported but without any tax burden until the giver hits a lifetime total amount of $5.25 million in reported gifts.

You can't pay >$600 to a subcontractor without filing a 1099, but 'wealthy' people can give away up to $14,000 to anyone without notifying the IRS? Wonder what that 'wealthy' threshold is...

 

[SeaPA]

The stuff about the gifting relates to Gift & Estate tax issues. It's nothing new, the rules have been in place for as long as the gift/estate tax rules have existed. The only change has been to the dollar amounts.

 

[Fijimn]

There is a gift tax....used to be on gifts of over $10,000 per year, per person.

 

[zlloyd1]

We've have done some work(new pool) for a couple who were lottery winners up north and they were on the payment plan. Of course every year the check came they bought up a bunch of useless land and cheap real estate and lived like the middle class the rest of the year. Can't imagine what they would have done with around 45 mil all at the same time. And of course now they are divorced

 

[On Iowa]

I think I remember reading that if you're on the payment plan and die, the payments stop rather than transfer to an heir. As such, anyone over probably 40 or so or in a higher risk group (aren't all lottery players?) would be wise to grab the lump sum.

 

[iupnole1]

My neighbor who lived across the street from me growing up won 29 mil about 20 years ago. He took the payments. It comes every January I believe. He said that's the best way to go about it and said he can't imagine others just taking the lump some

 

[Fijimn]

The theory of taking the lump sum is that you'll make a higher ROI compared with the future value of the payments. Of course, that theory only works if you count hookers and blow as ROI.

 

[SeaPA]

I think I remember reading that if you're on the payment plan and die, the payments stop rather than transfer to an heir. As such, anyone over probably 40 or so or in a higher risk group (aren't all lottery players?) would be wise to grab the lump sum.

I addressed this earlier in the thread; the payments ARE transferable to the heirs. From the Florida Lottery website FAQs:

What if someone wins a jackpot or top prize and dies before the annual installments are paid?
If a jackpot or top prize winner dies before receiving all annual installments, the balance of the prize will be paid to the winner's estate. Upon receipt of a court order, annual prize payments will continue to be paid to the winner's heirs. POWERBALL® and MEGA MILLIONS® jackpot annuities may be cashed out by the winner's estate.

 

[NDallasRuss]

...that theory only works if you count hookers and blow as ROI.

Of course you count them!

 

[Lemon Thrower]

i would not want to be a creditor of a state government. take it all now, avoid the payment risk.

 

[goldmom]

I think that a good financial advisor would look at the amount, the age of the winner, and discuss a lifestyle that the winner would like to have, or preserve at a current level they already have. If you are of a certain age and the jackpot is not huge (say 1 or 2 million after taxes) maybe you should take the yearly, combine it with Social Security, and live out a life that assures you can keep the lights on and the water running, enjoying your retirement, with anything left over going to your heirs.
Large jackpots definitely need the assistance of a good attorney and CPA, especially if you are older and want to pass your estate on with as small an inheritance tax as possible.

 

[Manch.]

Of course you count them!

Ya, of course. I didn't know what ROI was until my favorite drug dealing prostitute told me what it meant.

As for collecting after you have died, that's what lawyers and trust funds are for.

I worked with a lady who was about 62 and won just about a million (probably around 1997) and took the annual payments. After mortgaging a house and cabin and all the other BS, they sold the balance of the winnings to some investment firm so that they could make their payments, and after pissing away the money on the house they couldn't afford and their drug addicted kid and being scammed into selling the balance, they filed for bankruptcy in less than three years.

Also, I grew up with a kid who's father won about the same amount around 1990. He owned three successful pizza parlors at the time and the father was in his mid-fifties. I am not sure if a one time lump sum payoff was an option at the time, but he took the annual payment and sold his 3 restaurants. He opened up a single, bigger restaurant and after a couple years of success, he retired and sold the new restaurant to my buddie and his brother and the father has done nothing but play 18 holes everyday for 25 years. The father did everything right while the lady I worked with did everything wrong and came away with more debt than she had before winning and she had to unretire and start working part time to make ends meat.

 

[seminole97]

the lady I worked with did everything wrong and came away with more debt than she had before winning

From what I've read, that's actually the case for the majority of jackpot winners.

 

[BarryB1081]

Did ya win?

 

[EveryoneBleedsGarnet]

I saw somewhere that more than half of lotto winners end up admitting that they wish they had never won it, and yes a huge majority end up worse off after just a few years.

 

[West Duval Nole]

Here is an article on it. Only thing it doesn't take into consideration is inflation which would work in favor of lump sum. I would go lump sum for large amounts.

http://www.businessinsider.com/shou...or-the-lump-sum-if-you-win-the-lottery-2013-9