OK. So you've won the lottery.
Now comes the hard part. How do you manage all those millions?
The Florida Lottery jackpot is expected to top $82 million for tonight's Lotto drawing -- the seventh-largest jackpot ever in Florida. And the chance of picking all six numbers is 1 in 22,957,480.
Still, you've got to dream. (For nonlottery players, those dreams probably will mean frustratingly slower lines at convenience stores today.)
If a sole winner chooses to take the jackpot over 30 years, it would amount to an estimated $2.7 million a year, before taxes.
If the winner chose the one-time, lump-sum payment option, it would amount to about $45 million before taxes, based on current interest rates. Assuming a 35 percent tax rate, that drops to $29.25 million after taxes.
In the spirit of the long shot, FLORIDA TODAY spoke with some financial advisers, and asked them how they would counsel their clients if they won the huge bundle of lottery cash.
QUESTION: Should you take the after-tax lump sum or the annual payout?
ANSWER: "As a certified financial planner, I would definitely recommend the lump sum," said Bob Mastrosimone, an investment adviser and chief executive officer of Mastro Financial Services in Melbourne. "That way, they can control what to do with the money at any given time."
If you don't really care about managing your wealth, then, by all means, take the annual payments, he said.
Q: Any way to lessen the taxes you pay by taking the lump-sum amount?
A: "There is no way to mitigate taxes on the lump-sum payout. It will be taxed at the top federal bracket of 35 percent," said Tim Armstrong, wealth coach at CPA Wealth Management Services in Suntree. "The only way to mitigate taxes after you receive the lump-sum payout is to invest the lump sum in federal tax-deferred or tax-free (municipal bonds) investments."
Q: If you want to share your winnings, should you just take money and distribute it, or should you set up a partnership or some other entity on the front end, so you don't end up paying taxes twice?
A: "I'd set up a trust," said Dennis Giles, owner of Action Accounting Inc. in Cocoa. "And then each person would get a percentage of whatever you wanted to give them."
Giles said the individuals who are part of the trust would be responsible for paying their share of taxes.
Officials at the Florida Lottery said, if someone wins the Florida Lotto or Mega Money jackpot, and dies before all the installments are paid, the balance of the prize will be paid to the winner's estate.
Q: So how would you invest your millions? Stocks? Bonds? Real estate?
"Some planners recommend investing part of the lump sum in a good commercial annuity, and investing the remainder in assets such as stocks and real estate that ideally can keep ahead of inflation," said Holly Hunter, a certified financial planner who attended the University of Florida and now runs Hunter Advisor in Portsmouth, N.H.
Hunter said some people may want a lump sum to invest in a second-career business and, obviously, pay off any debts.
Should you take the after-tax lump sum or the annual payout?
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