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How to manage half a billion dollars
NEW YORK (4/3/12)--If you are one of the three winners of that record $656 million Mega Millions jackpot, you're probably exhilarated today. You're also likely at sea about your next step.

The Associated Press and The New York Times (March 28) offered these ideas:

  • Sign the ticket. Not unlike a blank check, an unsigned ticket could be claimed by anyone who presents it to lottery officials. Protect your ownership rights by signing the ticket on the back, then photocopy both sides and lock the ticket in a safe or safe deposit box.
  • Slow down. Curb your impulse to call all your kith and kin or to post the news to Facebook or Twitter. The news will spread quickly enough; you need to get ahead of it with some feet-on-the ground planning.
  • Identify professional advisers. You'll need a lawyer, tax expert, accountant and financial planner. If you don't already have these kinds of pros on speed dial, ask trusted family or friends for referrals, or call the manager of your credit union and ask for recommendations.
The record Mega Millions prize grew to $656 million as dreamers scrambled to buy tickets before the Friday drawing. But taxes will take a significant cut--federal taxes alone will claim some 25%, and state and local taxes will bring the total tax bite to about a third. Still, you'll do all right.

Your advisers can help you decide if you should take the prize in a lump sum or in annuity payments over 26 years. If you have the discipline to stick to a plan, take the lump sum; if you're not sure you can handle that much money and those kinds of decisions, choose the annuity plan.

Splurge a bit, be a little generous to friends and family, but keep a rein on payouts until you get used to being one of the 1%. If you don't settle on your priorities for all that money, you could join the many lottery winners who find themselves broke in as few as five years.

And if you could use some help managing windfalls of the more common variety, read "Make the Most of Unexpected Good Fortune" and "Loans Among Friends and Family: Win-Win or Sure Loss?" in the Home & Family Finance Resource Center.

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