What to do if you won the record $1.602 billion Mega Millions jackpot

There’s lastly a winner for the large Mega Thousands and thousands jackpot — however the fortunate ticketholder might face sudden pitfalls, consultants say.

A single ticket offered in Florida matched all six numbers on Tuesday evening, marking the sport’s largest prize in historical past, in keeping with Mega Thousands and thousands. The profitable numbers had been 13, 19, 20, 32 and 33, and the gold Mega Ball 14.

After closing gross sales counts, the jackpot is price $1.602 billion, beating the earlier file of $1.537 billion from October 2018.

The fortunate winner has two payout decisions: a one-time lump sum of $794.2 million or 30 annuitized funds totaling the $1.6 billion-plus. Each choices are pre-tax estimates.

Whether or not the winner picks the lump sum or annuity funds, each choices include a large tax invoice, which is one pitfall to contemplate.

Whereas Florida does not tax lottery winnings, there’s an upfront 24% federal tax withholding that goes to the IRS. If the winner chooses the $794.2 million lump sum, they’re going to owe practically $190.6 million up entrance. However with the winner hitting the 37% federal earnings tax bracket, the ultimate invoice will seemingly be hundreds of thousands extra.

Along with taxes, the Mega Thousands and thousands winner will seemingly encounter different obstacles, consultants say.

“Let’s simply say the curse of the lottery is actual,” mentioned Andrew Stoltmann, a Chicago-based lawyer who has represented a number of lottery winners.

Many individuals taking part in the lottery haven’t got the infrastructure of monetary advisors or different professionals they will simply faucet for steerage after they win. “They usually haven’t got the data base to deal with a big sum of cash,” he mentioned.

Widespread blunders might embody dangerous investments, overspending and family members asking for extra money, Stoltmann mentioned.

The winner will even have a number of estate-planning challenges, in keeping with Warren Racusin, a wealth planning lawyer and accomplice at Lowenstein Sandler.

“Whenever you get a billion and a half {dollars}, Uncle Sam turns into your 40% accomplice in that,” he mentioned.

For 2023, the federal property tax exemption is $12.92 million, or double for married {couples} submitting collectively. With out adjustments from Congress, these thresholds will drop by roughly one-half after 2025 when provisions sundown from the Republicans’ 2017 signature tax overhaul.

The highest 40% federal property tax price might apply to belongings above these thresholds, relying on a number of elements.

In fact, there are a variety of planning methods, which can embody sure kinds of trusts, that may assist the lottery winner obtain their legacy objectives whereas minimizing the property tax invoice.

“That is one thing that may be a blessing or a curse,” Racusin mentioned. “For those who deal with it proper, it may be a blessing.”

Tuesday’s Mega Thousands and thousands drawing comes roughly three weeks after a single ticket offered in California received Powerball’s $1.08 billion jackpot. That recreation’s prime prize is again all the way down to $170 million, with roughly 1 in 292 million odds of profitable the jackpot.