A Timeline for Lottery Prize Claiming Procedures

A Timeline for Lottery Prize Claiming Procedures

Posted: Tuesday, Nov 12,2019 | Time: 07:35 am | Edited by: The Lottery Lab Staff

Winning a lottery may seem like a dream come true. But it can all become a nightmare if you don’t take the right steps in the right way. Don't worry, The Lottery Lab is here to guide you through this crucial time so that you can make the most of your winnings. Here is a timeline for lottery prize claiming procedures that shows every step you need to take after winning a jackpot!

Before Claiming Your Lottery Prize

Don’t rush into claiming your winnings.  You typically have 180 to 365 days to claim your winnings. To avoid losing your prizes, it is important to know how much time you have to claim your money. During this time, address the following items first for a successful lottery win! The figure below demonstrates the approximate claim periods for each state.

1. Keep your lottery ticket safe 

Place your ticket somewhere safe, whether it’s a winner yet or not. A lottery ticket is the only valid proof of your win. Once you are sure your ticket is a winner, take some extreme precautions like making paper copies, storing digital copies, or storing the ticket in a safe deposit box in a bank.

2. Don’t quit your job yet

Quitting your job can be the first thing you want to do but don't make that decision too early. Leaving your job abruptly can make people suspicious and you don’t want to raise concerns. There are financial plans you need to address first. While you keep working, remember to keep your good fortune quiet.

3. Hire professionals

Every lottery claim process is unique depending upon various factors like state laws, the amount you’ve won, the lottery you played, and the payment method you chose. Therefore, the best thing you can do is hire a professional team of tax attorneys, financial advisors, and accountants. You are definitely going to need them for taxes, legal tips, and future financial planning advice.

Bonus Read: Why Do You Need To Hire a Lawyer After Winning a Jackpot?

4. Change your address and go unlisted

Once people get to know your name or contact number they are going to spam you with charity requests. Some might even seem difficult to ignore. Therefore, change your address and go unlisted before you claim your prize. As we recommend, the best way to ignore charity requests is not getting them in the first place.

When Claiming Your Prize

While claiming your winnings, you usually have two payment methods to choose from, lump sum or annuity. Let’s learn about their pros and cons so that you can pick the right one depending on your long-term plans.

1. Taking the Lump Sum

Taking a lump sum means you probably won’t receive the advertised jackpot amount. The advertised jackpot is usually based on the lottery paying you through an annuity over 20 or 30 years. Therefore, when you choose lump sum you often get the amount that equals about half of whatever the advertised jackpot amount was. Still, most winners opt for lump sum payment, because there are significant advantages to it.

Pros	Cons
You can increase the worth of the money by investing it prudently.	Poor financial management of the lump sum can lead you to bankruptcy.
Winnings are taxed at current rates which can increase in the future.	You give up a guaranteed income stream.
Older people are guaranteed all their money in one payment!	You received almost half of the advertised jackpot after taxes.

2. Taking the Annuity

This is a long-term payout that guarantees the full cash amount of the advertised jackpot over a period of 20 to 30 years. Different lotteries operate their annuities with different rules so get advice from your financial team.  One major factor to consider s what happens if you pass away before you have received all of the payments.  Consider the significant pros and cons of this payment method:  

Pros	Cons
Get long-term cash flow with annual payments.	You don’t get the opportunity to invest the lump sum.
It’s not possible to blow-through your entire winnings at once with annual payments.	With inflation, the value of your annuity amount can decrease.
You can maintain a better living standard with guaranteed cash flow.	If you die before payments, your heirs might not get it.
With experience, you will eventually get better at maintaining your budget and spending.	If the lottery goes belly up, your payments might too.

After Claiming Your Prize

Just because you have received your winnings doesn’t mean you can sit back now. Here are some things you need to take care of:

1. Sit and talk with the professionals you hired

If you hired the right people, they are there to help, so seek help from them often. In case you doubt their intentions, hire new people. Do not settle for less than trustworthy people. This kind of wealth can be scary; therefore, seek qualified help and use it to make informed decisions.

2. Pay off debt

Pay off your debts including student loans, credit card bills, auto loans, second mortgage, etc. get rid of all your interest debt and consult with your professionals to determine what to do with the rest.

3. Plan your spending

This is the part where you need to plan how you want to spend your money. Considerations include everything from home, property, cars, vacations, setting up a trust fund for college, putting money away for retirement, investing money in a new business venture, starting an emergency fund, etc.  

4. And of course, donate!

If you love your community this is your chance to give something back to the community. whether it’s a church, a charity, an NGO, or just a family member in need, share your fortune with them when you can afford it. Moreover, when you give to a qualified charity, you get to deduct the donation on your taxes.

Conclusion

Very few people actually win the Powerball lottery, no wonder it’s a dream come true. After winning a jackpot and living a lavish life, no one wants to go back to their normal life where they had to think every time they spent money. To avoid bankruptcy, plan your expenses in advance. If you have any more queries, check our answers to frequently asked questions on claiming a lottery jackpot.